AES China Expands Hydel Capacity - Analyst Blog

AES China Hydropower Investment Co. Pte. Ltd., a wholly-owned subsidiary of AES Corporation (AES), signed a pact with China Water Affairs Group to acquire interest in the Jianghe Rural Electricity Development Co Ltd. joint venture. Under the agreement, AES China will acquire 49% interest in Jianghe Rural for RMB 333.2 million (USD 48.8 million).
 
Jianghe Rural was formed as a joint venture between China Water Affairs Group and the China Water Investment Group. Jianghe Rural develops, constructs, and operates small to medium hydro projects in China. It has six small hydro projects with a total capacity of 241 MW located in China’s Yunnan and Fujian provinces.
 
China Water Affairs Group is an investor in water supply and treatment services in China. China Water Investment Group is a wholly owned subsidiary of the China Three Gorges Corporation that specializes in the development and operation of renewable energy projects in China.
  
AES China completed acquisition of 35% ownership in Jianghe Rural on June 3, 2010 and expects the transfer of the remaining 14% ownership to occur by the end of 2010, which is subject to approval by the Chinese government.
  
AES China expects the Jianghe Rural small hydropower projects to increase its aggregate hydroelectric operating capacity in the region to about 266 megawatt (MW). Currently, the company operates a 25 MW Cili hydroelectric power plant in Hunan province.
  
AES Corporation, incorporated in 1981, is a global power company spread over 29 countries in five continents, representing a highly-diversified earnings base. AES Corporation operates in two lines of business – Generation and Utilities.
  
Through its subsidiary AES China Hydropower Investment Co. Pte. Ltd., AES became one of the first US-based power companies to enter China. Currently, the company operates nine facilities in seven provinces and municipalities with a total generation capacity of 2,723 MW (99 MW under construction). The company’s operations in China include, coal, hydroelectric, natural gas, and wind.
  
Geographic disparity in the target markets of AES has resulted in a portfolio that is well-positioned for capitalizing on regional differences in power prices and weather-driven demand. Additionally, the company has an edge over its U.S.-focused Independent power producers, as most of its operations are located in the emerging nations.