The Shenyang-based manufacturer of distributed electricity generation equipment, A-Power Energy Generation Systems, has been chosen to supply wind turbines to a China-U.S. joint venture project which will develop a 600MW wind farm in Texas, USA.
At a recent joint press conference in Washington, D.C., it was announced that Shenyang Power Group, the U.S. Renewable Energy Group, and Cielo Wind Power LP have signed a joint venture framework agreement setting forth plans for developing a 600MW wind farm. The terms of the joint venture agreement include the joint venture project's plans to sign a definitive purchase agreement with A-Power for the purchase of up to 240 units of 2.5MW wind turbines. The joint venture agreement includes a delivery schedule starting in March 2010 and is subject to SPG securing third-party financing, among other conditions. A-Power currently has an annual production capacity for 1.1GW of wind turbines at its 320,000-square-foot facility in Shenyang. A-Power is a shareholder of SPG.
The joint venture project, which when established will be 49% owned by SPG, with the rest of the equity ownership jointly held by US-REG and Cielo Wind, is expected to be one of the largest wind farms in the United States. Upon completion, it is anticipated that it will generate enough electricity for 180,000 homes in America. The joint venture project is expected to cost total approximately USD1.5 billion, a portion of which is designated for wind turbine purchases, and its establishment is subject to, among other things, further due diligence by the parties, the securing of financing from commercial banks in China, and other project development conditions.
According to Jinxiang Lu, the chairman and CEO of A-Power and the CEO of SPG, as both a supplier to the joint venture project and an equity-owner of SPG, A-Power will be able to export its wind turbines for the first time and reduce its exposure to the intrinsic risks associated with such a large-scale project. He added that the company liked the tremendous opportunities in the United States, which he said is the world's largest wind power country and they were cognizant of the recent policy push by the Obama Administration in the renewable energy sector, and a stabilizing financing environment for renewable energy projects.
