Energy

Transforming an onshore wind platform in China

In support of China’s ambitious renewable energy goals, Macquarie Asset Management transformed an onshore wind platform in line with the country’s aims to transition to a low-carbon economy

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Sector Climate change
Sub-sector Energy
Location China

Opportunity

Since the mid-2010s, China has had ambitious goals for its renewable energy production as it looks to move away from a dominance of fossil fuels such as coal in its energy mix and to instead meeting the country’s energy needs through renewable alternatives.

Recognising the future potential of wind energy in this, Macquarie Asset Management (MAM) - through its Macquarie Asia Infrastructure Fund 2 (MAIF2) – acquired a 50 per cent joint controlling stake in Shanghai Sineng (SHSN), a private wind development company in China, which, in 2017, had projects strategically located in northern China where there are strong wind resources.1

Approach

With further support from MAM, SHSN was able to secure competitive project-level financing packages from leading Chinese banks, totalling ~$US280 million, which decreased the average cost of project debt.

MAM actively managed the construction of SHSN’s portfolio in line with international health, safety and environment (HSE) standards for all projects. This included independent safety audits and training for engineering, procurement and construction (EPC) contractor and sub-contractors. In addition, a new Chief Operating Officer experienced in wind project development and with knowledge of international standards was appointed in order to strengthen management capability and standards.

SHSN also leveraged Macquarie’s global expertise to complement the platform’s capability gap in conducting wind resource assessment and optimising turbine selection.

Outcome

During MAM’s co-ownership of SHSN, the wind platform successfully secured and developed eight projects located in Shanxi and Inner Mongolia and delivered on its growth strategy by almost quadrupling capacity from 222 MW to 864 MW,2 supporting China’s renewable energy ambitions.3

In December 2021, MAIF2 entered into definitive agreements to divest SHSN through asset-level divestments and a sale-back of the fund’s stake to the co-shareholder – a move that underscored the significant demand from state-owned enterprises to acquire and operate renewable assets.

Near-quadrupling of SHSN’s energy capacity to 864 MW

Secured project-level financing packages totalling ~$US280 million

Received a fixed nominal feed-in tariff for 20 years

  1. Reuters, 2023
  2. As at 31 December 2021
  3. Energy Foundation China

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