China Datang Corp Renewable Power Co, the country's second-largest wind-power producer, said it plans to expand its installed capacity by 2,000 megawatts annually from 2012 after raising the capacity to at least 5,500 MW by 2011 from 4,000 MW at end-2010.

Capacity may increase to as much as 6,000 MW by the end of next year and it will be further boosted through developing wind as well as diversified projects for the next 10 years, the company's president, Hu Yongsheng, said.

"Offshore wind power has become a new driver for growth and we are also diversifying the renewable energy business to the solar and biomass areas," Hu told a media briefing on its initial public offering Monday.

The company has set a price range of HK$2.33 to HK$3.18 a share, earning up to $1.01 billion in its share sale on December 17. The company had briefly postponed its IPO plans two weeks ago when Asian markets fell, spooking investors. Previous reports had put the Datang IPO at $1.5 billion.

Established in 2004, the wholly-owned renewable-energy unit of China Datang Corp, which had an installed capacity of only 79.9 MW in 2005, has attracted a total of $260 million in investment from seven key investors for its Hong Kong initial public offering, according to the IPO prospectus.

About 45 percent of the net proceeds from the share sale will be used for the construction of wind power projects in three of the company's operating regions, including the Inner Mongolia and northeastern development region, the central and western region as well as the southeastern coastline areas.

"The company operates in China's rapidly growing wind power sector, which benefits from regulatory support and increasing domestic demand for electricity," said Chen Jinhang, chairman of Datang Renewable Power.

The company owns the world's largest wind power project in terms of installed capacity - the Saihanba GW wind farm in Inner Mongolia - and the first offshore wind farm in China, Shanghai Donghai Bridge Wind Farm, which has a capacity of 102 MW.

China has already set up a target of raising the use of non-fossil energy to 15 percent of primary energy consumption in 2020, and reducing its carbon emission intensity by 40 to 45 percent relative to the size of its economy (ie the amount of carbon dioxide emitted for each unit of GDP) by 2020 from 2005 levels.

New energy sectors have seen tremendous growth in the country in recent years, with wind power, in particular, posting a growth rate of over 100 percent in the past three years.

In 2007, Datang Renewable Power generated 285.9 million yuan in net electricity sales. The figure jumped to 612.6 million yuan in 2008 and exceeded 1.38 billion yuan in 2009, representing a compound annual growth rate of 120 percent.

The strengthening cost efficiency of wind turbines will help Datang Renewable Power achieve a relatively high return from wind power projects, said the company.

In July 2009, the National Development and Reform Commission, the top economic policy planner, set benchmark tariff rates ranging from 0.51 yuan to 0.61 yuan per kilowatt-hour for onshore wind power plants.

The new tariff range is much higher than the previous tariff of 0.382 yuan and slightly higher than the 0.5 yuan set under the public bidding system. The higher tariff will help boost the profitability of wind farms.

"As a key theme in the Central Government's 12th Five-Year Plan, clean energy is no doubt a hot sector in the following years. This will make relevant stocks rather attractive," Castor Pang, research director at Cinda International, told China Daily.

According to Danish wind energy counsultancy BTM report, China ranked second in the world in terms of wind power installed capacity at end-2009. Datang Renewable Power ranked second in China and eighth in the world, said the same report.

Reuters contributed to this report.

China Daily

(HK Edition 12/07/2010 page2)