OPINION: An expansionist State Grid could be good news
State Grid’s A$500m ($523m) acquisition of a 41% stake in Australian transmission company ElectraNet is proof that, although the process is not as fast as some had predicted, the Chinese are coming.
State Grid, like many other big, aggressive grid operators, has decided to move beyond its national market to take advantage of higher returns.
It now has a presence in Brazil, Venezuela and the Philippines, and earlier this year it paid $485m for a 25% stake in Portugal’s national grid company, Redes Energéticas Nacionais (REN). It is also reported to have had a bid for a stake in Spanish grid operator REE turned down by regulators because of rules that limit the amount of shares that can be owned by any single private company.
State Grid general manager Liu Zhenya said recently that the company plans to boost its overseas assets to as much as $50bn by 2020.
The good news is that State Grid “gets” renewables and grid integration. After facing strong criticism for being slow in connecting new wind capacity to the grid, it has now hooked up 50GW, and is due to complete a series of projects that will give China a unified transmission system for the first time by 2016.
The company has been at the forefront of testing cutting-edge technologies, and is known to be working on a wind-power grid-integration pilot in China with REE and Spanish turbine maker Gamesa. In September, it signed a memorandum of understanding with Dublin-based developer Mainstream Renewable Power, the UK’s National Grid and REN to collaborate on the 5GW Energy Bridge project, which seeks to flow electricity from Irish wind farms to mainland Britain.
And last month, it was reported that the group is interested in a role in the Desertec initative, which seeks to link renewables generation — mainly solar — in North Africa to European markets.
ElectraNet operates South Australia’s transmission system — last year, almost a quarter of the state’s power was generated by wind, making the company the largest connector of the energy source in the country. Demand is growing fast, and South Australia has set a target of sourcing 33% of its power from renewables by 2020.
State Grid has not always been successful in implementing new technologies, but with its deep pockets and willingness to experiment, its presence in global markets could be a powerful force for progress.