China and Wind Power

From Reuters

ANALYSIS - State funding fuels China's global push in wind, sun
Tue Dec 22, 2009 11:14am IST Leonora Walet and Sui-Lee Wee

HONG KONG (Reuters) - When A-Power Energy Generation Systems secured a deal to supply turbines for a U.S. wind farm project in October, the little-known Chinese firm had an ace up its sleeve to help it clinch the deal.

A-Power was armed with $1.5 billion in financing from state-run Chinese banks to fund the 600 megawatt project in Texas.

While global peers have limited access to cheap state loans, Chinese renewable energy firms are getting a boost from Beijing as they win clean technology projects around the world. Much of that is via low-interest loans from big state banks for their clients to finance their purchases.

This support is giving China's renewable energy firms an edge over Asian rivals such as India's Suzlon Energy, Japan Wind Development and Australia's Infigen Energy, as well as heavyweights like German polysilicon firm Wacker Chemie and Danish wind energy firm Vestas Wind.

"I don't think A-Power could have done this deal without access to cheap financing," said Jacob Kirkregaard, a research fellow at the Peterson Institute for International Economics in Washington D.C, who recently published a paper on wind energy.

"China is clearly the big kid on the block, no doubt about that," he said, referring to the state support for renewable energy. "That's not something many Asian countries can emulate."

Shares of A-Power, which only entered the wind business in 2008, hit a 15-month high last Friday after it said it will supply wind turbines for the Texas project.

Such deals are unfolding as China aggressively develops its renewable energy sector and as its companies play catch-up with bigger, global peers including German solar cell producer Q-Cells AG and Spanish wind farm operator Iberdrola, which have built up solid track records, also with help from more than a decade of government subsidies.