INTERNATIONAL

First US power producer to enter China now plans exit

AES Corp, the first US power producer to enter China, about two decades ago, is looking to sell all or some of its assets there, because it cannot pass on higher coal costs in a state-regulated industry.

Sources said Virginia-based AES, which has a market value of around $10.5bn, has recently hired an investment bank to start the process.

A sale or sales is said to be potentially be worth $300-400m.

China’s sovereign wealth fund China Investment Corp acquired a 15 per cent stake in AES for $1.6bn in 2009.

The likely exit, or scaling down, underscores the challenging operating environment in China’s power industry, where coal fired power producers have little control over electricity prices, which are set by the state.

Chinese independent power producers such as Huaneng Power International Inc and Datang International Power Generation, which generate power but don’t own grid assets, have seen a sharp dip in their business in recent years as coal prices have surged.

And the profit outlook remains murky this year in the absence of a tariff regime that allows power producers to pass on fuel costs to consumers.

Saudi Electric plans 1700 MW oil plant

Saudi Electricity is looking for companies to build and operate a 1700 MW independent power plant (IPP) running on fuel oil.

Expressions of interest in running the plant at Rabigh on the west coast of the world’s largest oil exporting country will be submitted this month.

The Rabigh IPP2 plant is the fourth of five planned IPPs that will add a total of around 11 000 MW of power generation capacity. The other three are under construction and include the 1200 MW Rabigh IPP1.

SEC will buy electricity from the new company under a power purchase agreement.

Qatar targets overseas power projects

Qatar Electricity & Water Company (QEWC) will continue its policy of pursuing roles on power and water projects outside of its home market.

Abdulsattar al-Rasheed, chief executive officer of QEWC’s Ras Abu Fontas power plant, said that the company agreed that it was necessary to look to opportunities abroad. “We have a stake in a power plant in Jordan and also one in Oman. Now we are competing with Siemens in Dubai for the Hassyan power plant,” he said.

Investments will take the form of acquisitions and organic growth. “We want to see political stability. We don’t want to take any [unnecessary] risks outside the country,” says Abdulsattar al-Rasheed.

US wind market in difficulty

Investment in US wind farms and wind energy businesses tumbled 38 per cent last year to $9.7bn, as the economic climate worsened for wind-power companies, which are finding it increasingly difficult to attract venture backers.

According to data from Bloomberg New Energy Finance, venture capitalists have practically left the sector altogether.

They invested only $177.6m in wind startups last year, down 71 per cent from the year before, BNEF found.

Wind power is bucking a broader trend for clean energy, which is experiencing a surge of investment. Venture backers pumped $4.29bn into the green tech industry in 2011, up 13 per cent from the previous year, according to the National Venture Capital Association.

A key factor is a glut of turbine production, fuelled by investments over the last half-decade in the US, Europe, and Asia, and not enough demand.

Global purchases of turbines will fall 14 per cent this year from 2010 and stay within 2011 levels for two years, BNEF estimates.

That is hurting the biggest makers of turbines such as Denmark’s Vestas.

Smart Grid cyber spend to hit $14bn

Investment in Smart Grid cyber security is expected to hit $14bn by 2018 according to a new report.

But analysts at Pike Research say that while utilities are planning Smart Grid deployments at a greater pace than ever before, “cyber security is still way behind the attackers”.

“Cyber security remains a check-the-box exercise for many utilities, with spending limited to whatever is needed to survive compliance audits,” said Pike senior analyst Bob Lockhart.

But he added that more Smart Grid technology companies are now proactively seeking out security vendors for assistance in building cyber security into their products.

TenneT in wind power pact with Mitsubishi

European power grid operator TenneT and Japan’s Mitsubishi Corp have signed a letter of intent to join up for two more offshore grid connections.

The connections, HelWin2 and DolWin2, are both located in the German North Sea and are of crucial importance for the integration of offshore wind farms to the German onshore grid.

The projects have an investment volume of about $2.2bn and an expected third-party equity stake of around €340m ($443m).

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Asia: The Desertec Foundation and the Japan Renewable Energy Foundation have signed a pact to co-operate on developing an Asian Super Grid. The two non-profit organisations announced that they will work on a project that would interconnect the grids of Japan, Korea, China, Mongolia and Russia.

Bangladesh: The country’s cabinet committee has ratified an agreement with Russia signed in November for a nuclear power plant. The 2000 MW facility will be Bangladesh’s first nuclear facility.

Cameroon: In conjunction with Joule Africa, Cameroon is to develop a $1bn hydroelectric project. The project will increase the country’s installed power generation capacity by about 40 per cent and would have an installed capacity of more than 450 MW.

Indonesia: Wärtsilä will supply a new, gas fuelled power plant to Indonesia. The plant is to be located in Sei Gelam Jambi in Sumatra and will be powered by 11, 20-cylinder Wärtsilä 34SG generator sets in V-configuration, operating on compressed natural gas and providing an output of 110 MW.

Iraq: ABB has won a $60m contract from Shell Gas Iraq to build a gas power plant in the south of the country. The Khor Al Zubair project is part of an engineering, procurement and construction contract to build a 50 MW plant which will feed electricity to the facilities of the Basrah Gas Company.

Japan: The European Marine Energy Centre in Scotland is to help Japan develop its first marine energy test centre. The Orkney-based EMEC has signed a memorandum of understanding with the Ocean Energy Association of Japan.

Jordan: Russian company AtomStroyExport has offered Jordan a deal for four nuclear power reactors. If all four are built, 4000 MW of generating capacity would be added to the grid, more than doubling Jordan’s current capacity.

Kuwait: Alstom has been selected by the Kuwait Ministry of Electricity and Water to provide a fully integrated Smart Grid solution. The project includes an upgrade of a town district control centre’s energy management system, a new integrated distribution management system and an asset management system.

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