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Longyuan’s Profit Growth Slows as Power Demand Softens

(Corrects to say 59 megawatts of solar farms in last paragraph of story originally published March 25.)

China Longyuan Power Group Corp. (916), the nation’s biggest wind-farm developer, reported a slowdown in earnings growth as domestic electricity demand rose at a slower pace.

Net income rose 0.6 percent to 2.59 billion yuan ($417 million) in the 12 months ended Dec. 31 compared with a 29 percent surge a year ago when profit was 2.58 billion yuan, Longyuan said in a statement to the Hong Kong stock exchange. The mean estimate of 22 analysts compiled by Bloomberg was for profit of 2.8 billion yuan.

“Due to the general slowdown in economic growth, the growth of electricity consumption in China was moderate,” Longyuan said in the statement. “The problem of delivery and grid curtailment of wind power has not yet been materially improved in 2012.”

Installations of wind turbines in China fell 18 percent to 15.9 gigawatts last year from 2011, according to data compiled by Bloomberg New Energy Finance. Intensified grid congestion has driven down wind developers’ profits.

China Datang Corp. Renewable Power Co. (1798) and Huaneng Renewables Corp. (958), wind- and clean-energy developers, last week reported a decline in earnings, citing grid bottlenecks as one of the reasons.

To alleviate grid burdens, China implemented stricter approval processes for new onshore projects. Longyuan said today that it would be “difficult” to solve the problems in the short term.

The National Energy Administration excluded Jilin, Inner Mongolia and Heilongjiang provinces when issuing new permits for wind farms on March 19 because of grid overload. The NEA said it will work to improve connections of wind power to grids.

Longyuan added 1.6 gigawatts of wind farms last year, bringing its total installed capacity to 12.7 gigawatts. The company also built 59 megawatts of solar power projects in 2012.

To contact the reporter on this story: Feifei Shen in Beijing at fshen11@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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