By Zhang Qi (China Daily)
Updated: 2007-11-14 07:08

US-based strategic investment and advisory company Thornton Asia Infra would invest between $450 million and $900 million to build several waste power plants in China over the next six months, according to Thornton Asia CEO Michael C Lin.

"We will partner several Chinese enterprises to work on the business," Lin said. "We have made a verbal agreement with a Chinese company, which is quite famous in the IT industry, on the first deal, but I cannot reveal its name until the official agreement is signed."

According to the deal, the Chinese partner would provide the local documents needed to operate incineration power plants, while Thornton would provide funding and management experience.

Lin said 35 percent of the investment would come from Thornton's own funds and the rest from loans.

"We haven't finally decided which cities to pick up, but all Chinese cities which can daily generate 2,000 tons of garbage, or with a population over 5 million, could be possibiliies," Lin said.

But there are some challenges to opening waste power plants at competitive prices, such as tipping fees, which vary from city to city.

A waste incineration power plant receives $11 per ton for garbage from the Hangzhou government, while the fee is about $30 per ton in Shanghai. So, the plants' locations are particularly important.

Lin also said they planned to build each plant with an installed capacity of 75 MW, which would require three units each capable of generating 25 MW.

"Power purchase agreements, long-term feed contracts and land agreements are the paramount factors that an incineration power plant should have. So after signing official agreements with Chinese enterprises, we will work together to get them," he added.

Thornton was jointly funded by investment company Thornton Group and biomass power generation company Caletta Renewable Energy Co. Both are US-based.

Established 20 years ago, Thornton Group launched its Asia operations in 2000. Its entry into China was to develop infrastructure, and last year, it built roads in Northwest China's Qinghai Province.

Founded 50 years ago, Caletta processes more than 200 types of biomass and built more than 90 installations worldwide, according to Thorton Chairman James J Bulger.

(China Daily 11/14/2007 page14)