Greening the world's power industry with strategic buys

Through its subsidiary in Brazil, State Power Investment Corp, one of China's top five power producers, has acquired a 33 percent stake each in two LNG-to-power projects－GNA I and GNA II－from Gas Natural Acu, a Brazilian joint venture between BP, Siemens and Prumo Logistica, in February.

Analysts said the move will help increase SPIC's overseas green generation capacity.

As an owner of 33 percent stake in the two projects, the company will advise on their operations and management strategies.

With a total installed capacity of 3 gigawatts, the two projects are the largest of their kind in Latin America.

Located in Port of Acu, Rio de Janeiro, GNA I has an installed capacity of 1.3 GW and will become operational in the first half of this year. With a capacity of 1.7 GW, GNA II will start operations in 2023.

The two projects will be able to supply energy to around 14 million households, SPIC said.

The company has also concluded the previously announced agreement to participate in potential future expansion projects GNA III and GNA IV.

The business expansion in Brazil is a long-term bet for SPIC that has already met its 2020 target of having more than 6 GW of overseas power generation capacity, said Wei Hanyang, a power market analyst at Bloomberg New Energy.

China's goal is to peak its carbon emissions before 2030 and reach carbon neutrality by 2060. For its part, the State-owned enterprise had pledged to cap its domestic carbon emissions by 2023 itself, said Wei.

To that end, choosing renewable energy as the entry point is a wise move as it will further facilitate SPIC to contribute to global clean energy and the development of a low-carbon power industry, he said.

Its larger goal, SPIC said earlier, is to emerge as a world-class integrated energy group with a global footprint, driven by innovation of nuclear power and other advanced energy technologies, with focus on clean energy development.

The world's largest investor in solar power plants, SPIC also sees its clean energy accounting for a big proportion of its overseas business, mostly through hydropower projects.

According to Joseph Jacobelli, an independent energy analyst and executive vice-president for Asia business at Cenfura Ltd, Chinese companies have an outstanding ability in cost control and are strong in technology advancements in renewable energy. Hence, they stand out on the global stage when bidding for projects abroad.

SPIC's total power generation capacity abroad exceeded 6.05 GW by the end of last year. Clean energy like hydropower, wind power, photovoltaic and related fields like energy storage account for more than 70 percent of the total.

Power generation capacity that is under construction overseas exceeds 2.2 GW. The company has a presence in 46 countries and regions, 37 of which are participating in the Belt and Road Initiative, according to a SPIC report released in February.

By the end of last year, SPIC's installed capacity of renewable energy in Brazil was around 1.77 GW, followed by Mexico (818 MW), according a company report this month.

According to Wei, the Latin American market has always been a hot spot for Chinese investors. And countries like Mexico are new destinations for State-owned energy giants, as long as they are able to manage short-term uncertainties well.

SPIC has completed its acquisition of Zuma Energia, a Mexican independent renewable energy producer, in November through its Hong Kong-based unit China Power International Holding Ltd.

It was the first direct investment by a Chinese power enterprise in the Mexican market as well as the biggest renewable energy acquisition in Latin America in 2020.

The investment in Zuma Energia signifies the company's continuous commitment to clean power generation, SPIC said, adding it also illustrates the company's confidence in the Mexican economy and its intent to offer operational and investment support to nearby countries.

SPIC will continue to provide clean, safe and economical power, said Qian Zhimin, its chairman.

SPIC has also contract-built the Hunutlu Power Plant project in Turkey, the country's first thermal power plant without any flue-gas stack and with a total installed capacity of 1.32 million kilowatts.

Equipped with advanced environmental protection and ultra-supercritical power generation techniques, the project will produce about 9 billion kWh of power annually, making it a major power source in Adana, a city in southern Turkey.

Zu Bin, board director of SPIC, said, "Our company is treating the project as an opportunity to continue contributing to cultural exchanges between China and Turkey and striving for mutual benefit."

SPIC said it would also further expand into markets like Vietnam, Chile and Myanmar. The company also plans to raise its total installed power capacity to more than 220 GW by 2025; and more than 60 percent of it would be clean energy, its top executive said.