China Resources (CR) is on the look out to acquire overseas renewable energy assets in the wake of its first overseas renewable energy deal.
A consortium owned by three China Resources group companies entered into a share purchase agreement to acquire a 30% equity stake in the 402MW Dudgeon offshore wind farm on Tuesday (19 December) the company’s CR Power unit said in a stock exchange disclosure. The seller in the GBP 600m deal was Statkraft UK Ltd.
CR Power’s wholly-owned CRP Overseas will take a 40% stake in the consortium company called Summit Plus International Limited. The remaining 60% will be held by two other CR investment units.
The Hong Kong-based company is interested in investing in solar, wind and other renewable projects globally, including in Europe, Australia and Southeast Asia, a CR Power spokesperson told Inframation. The investment is expected to allow CR Power to establish “a platform for cross-border expansion into European markets,” according to its stock exchange disclosure.
“We picked the offshore wind farm in UK for our maiden overseas deal because the market there is very mature with minimal political economic risks, which can then translate into stable return prospects,” the spokesperson said.
In the meantime, CR Power plans to know-how from its stake purchase of the British offshore wind farm, as it currently has little development experience in the field of offshore wind, he added.
While acknowledging that Europe has a “more established renewable market” that could signal more predictable returns, the spokesperson said CR Power is also studying some projects in Australia and Southeast Asia for possible investment.
CR Power was among bidders for Loy Yang B coal-fired power plants, but later lost to Chow Tai Fook Enterprises’ Alinta Energy.
“For future deals, we prefer to take a project-by-project approach rather than focusing on one particular region,” added the spokesperson. “The estimated project IRR and policy risks are an important aspect for consideration,” he added.
Meanwhile, the shifting policy environment in China – aimed at replacing coal-fired power producers with solar, wind and hydro plants – also prompted CR Power (which primarily runs coal-fired plants), to look overseas for growth.
“We used to add 5GW of installed capacity per annum in China, but that will not be the case anymore because of the slowing economy and the country’s strategy to curb carbon emissions,” the spokesperson added.