China Huaneng Group inks $1.2bn wind mega deal

The burgeoning health of China's wind energy sector was again underlined yesterday when China Huaneng Group, the country's largest power producer, announced that it has agreed to buy 1.8GW of wind capacity from six domestic suppliers.

According to Bloomberg reports, the Beijing-based firm signed framework agreements yesterday worth 8.06bn yuan ($1.2bn, £841m) with Sinovel Wind Group, Shanghai Electric Group, Dongfang Electric Corp, China Shipbuilding Industry Corp, China Shipbuilding Industry Corp and Zhejiang Machinery and Electrical Group.

Under the terms of the deals each of the companies will supply about 300MW of wind energy capacity to China Huaneng.

The deal is one of the largest of its kind anywhere in the world and provides further evidence of China's emergence as the world's largest and fastest-growing wind energy market.

In February, new figures confirmed China had overtaken the US as the world's biggest wind energy market and the sector is continuing to expand rapidly in response to a government target requiring that at least 15 per cent of energy comes from renewable sources by 2020.

According to recent figures from analyst New Energy Finance, investment in renewable energy in China reached $6.5bn in the first quarter of 2010, making it the largest renewable energy investor.

The sector's growth is being driven by several policy measures designed to curb China's huge carbon footprint, including recently mooted plans for a carbon tax that could be introduced as early as 2012.

The latest deal from China Huaneng is part of a wider plan at the company designed to deliver 20GW of wind energy capacity by 2020, which would represent 10 per cent of its expected total capacity and mark a sevenfold increase on the 2.8GW of wind capacity it currently has.

The state-run company said in a statement that it is seeking to set up wind farms in northern China and in coastal areas in the country's south east.

Earlier this week, the firm's president Cao Peixi said the company also aims to cut carbon dioxide emissions per unit of power generated by 30 per cent by 2020.

According to reports from Bloomberg earlier this year, China Huaneng also plans to float its wind energy division on the Hong Kong stock exchange later this year in an IPO that is expected to be worth at least $1bn.

Late last year China's largest wind energy producer, China Longyuan Power Group Corp, pulled off a $2.6bn IPO, one of the biggest ever seen in the renewable energy sector.