China's State Grid in talks to buy AES' U.S. wind assets:sources

BEIJING Mon Feb 27, 2012 6:30am EST

Related Topics

BEIJING (Reuters) - State Grid Corp of China has had talks with U.S. power firm AES Corp (AES.N) about taking a controlling stake in its U.S. wind power business, three sources said, as China's cash-flush state-owned power companies go on an overseas buying spree.

It wasn't clear how much State Grid would pay for the assets or how the business would be structured after the sale. Based on analysts' estimates, the assets could be worth around $1.65 billion.

The deal involves wind power assets with capacity of around 1,100 megawatts (MW) and would give State Grid a roughly 80 percent stake in AES's U.S. wind power business, sources with direct knowledge of the matter told Reuters. It would be State Grid's first foray into the United States.

The sources declined to be named as they were not authorized to speak with the media.

China's cashed up state power groups have been scooping up bargains, with dominant power distributor State Grid establishing a presence in the Philippines, Brazil and Portugal.

One driver for such deals is a tightly regulated Chinese market that holds down profits for power firms, said Shi Pengfei, vice president of the Chinese Wind Energy Association.

"Because domestic electricity prices are controlled by the government, expanding overseas could help power companies' profits," said Shi.

The company's president Liu Zhenya visited the United States earlier this month as part of a delegation accompanying Chinese Vice President Xi Jinping. Two of the sources said the companies signed an agreement during that trip, but the third source said a deal is still at the negotiation stage.

"The specific details of the American wind power project are still under negotiation," said that source, who is familiar with the talks.

AES Wind Generation, a wholly-owned part of AES Corp, operates more than 1,800 MW of wind power generation capacity in the United States, China and Europe. Of that, nearly 1,346 MW is in the United States, according to the company's website.

The company has wind power assets in Texas, California, Oregon, Minnesota, Iowa, West Virginia and Pennsylvania.

Arlington, Virginia-based AES, which has a market value of $10.5 billion, did not immediately respond to requests for comment, and State Grid's media official declined to comment when reached by phone.

Any deal would need both Chinese and U.S. regulatory approval.

Since the failure of China's state oil firm CNOOC's bid to buy California rival Unocal in 2005, few Chinese companies have tried to buy U.S. conventional energy assets.

There have been some U.S.-China energy deals since then, but a successful deal by State Grid would represent a significant step for China's efforts to enter the U.S. power market.

On February 22, the Chinese company signed a deal to buy a 25 percent stake in Portuguese power grid operator REN (RENE.LS) for around $508 million. In December 2010, it bought seven Brazilian power transmission companies with investments totaling nearly $1 billion.

In January 2009, a consortium led by State Grid took over the operation of the Philippine power grid after winning an auction for a 25-year operation license for $3.95 billion.

AES, in which sovereign wealth fund China Investment Corp CIC.UL holds a 15 percent stake, recently kicked off a process to sell all or part of its businesses in China, a deal that could raise $300-400 million, sources have told Reuters.

(Editing by Ian Geoghegan and Jason Neely)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (3)
Jeepgirl wrote:
Do not sell out America !!!!!!!!!!!

Feb 27, 2012 5:00am EST  --  Report as abuse
CountryPride wrote:
Stop the sale of America’s land and resources to Communist Chinese! Can an American own Chinese land? NO, then why should we allow the Chinese to buy our country for pennies on the dollar as our economy suffers. We should ban foreign land ownership immediately in America. Look at Canada, even they are drawing up a bill that ban birth tourism from China because it has become such a problem and there are so many rich Chinese scamming the system just like they are doing here.

Feb 27, 2012 6:38am EST  --  Report as abuse
RiderI wrote:
Gary Locke a US Commerce Secretary heavily thought with mounting evidence to be an Communist Chinese MSS espionage agent or spy. Allowed 80% of the US green tech stimulus to go over seas to crush the US green tech industries. Which is analogous to the Soviets trying to crush the nuclear physics energy. As the Nuclear industries of microwaves and other physics where needed to power our leadership in world wide energy production and new weapons defense programs. Since Gary Locke did not heed or help any company that came to them as the Stimulus was overwhelming allowed without any say or stop or committee from Gary Locke to be taken overseas. The whole industry wen down to last place. Now we see the Communist Chinese espionage units the MSS that control the SASAC which is the centralized economic unit of Communist China just like the Soviet KGB spies that admitted to the nuclear espionage economic attacks, are taken coming into finish off the industrial monopolistic hold on the US green tech industries.

I as the one of the most knowledgeable person on Communist China say not to any State Owned Communist Chinese party owning US major new high technological industries. As per North Korea, Vietnam the actions by Communist China to help Al Queada attack and praise them when they did against the USA. Say that they should not be allowed to under common law of fascist governance as compared to Democracy governance.

Rider I

Feb 27, 2012 7:10am EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

Track China's Leaders