China Huaneng Group, the largest power producer in China, is said to be preparing to list its wind energy unit in Hong Kong this year, with a view to raising up to US$1 billion. A Shanghai share offering is also under consideration. Huaneng already has a listed subsidiary – Huaneng Power International (0902.HK, 600011.SH, HNP.NYSE) – that builds and operates power plants.
The exact assets that state-owned Huaneng will include in the initial public offering remain uncertain, but the company is currently participating in the development of a US$14.6 billion wind farm in Gansu province, with a planned capacity of 10.65 gigawatts.
Huaneng’s planned IPO comes in the midst of a spate of wind-related Chinese IPOs. China Longyuan Power Group (0916.HK), the fifth-largest global wind power generator, raised US$2.6 billion in its December 2009 IPO, and Xinjiang Goldwind Science & Technology (002202.SZ) plans a US$1.5 billion Hong Kong IPO in the first half of 2010.
Raising funds in Hong Kong will allow Huaneng to accelerate its wind-power development plans, which already include 500 megawatts of completed capacity within the first half of 2010. Combined with China’s preferential policies and feed-in tariffs, and assuming no problems in electrical grid infrastructure, additional wind capacity will only increase wind’s importance in China’s electrical mix, where it currently accounts for a mere 1%.