Kate Mackenzie China state fund buys into US wind business

Hot on the heels of an eruption in the green stimulus/buy American debate, China Investment Corporation – a Chinese sovereign wealth fund – has agreed to buy a 15 per cent stake of listed US power generator AES, and to buy 35 per cent of AES’ wind generating business.

On the face of it, it’s perfect fodder for those fearing the US will lose the clean tech race, who are especially riled up right now about green stimulus money going to Chinese and European wind turbine manufacturers. And the US apprehension about foreign interests spreads far beyond renewable energy – witness the CNOOC/Unocol and DP World furores.

But it’s more complicated than that…

AES runs power generation and utilities, so it’s not involved in turbine manufacturing, which is the touchiest area of green stimulus jobs debate — partly because it’s labour-intensive, partly because it contains the promise of a quick-change career for those left unemployed by the recession. 

AES is also a very international company:

AES annual report 2008

Source: AES annual report 2008

Renewables, including wind, were about a fifth of its generation last year.

AES’ website doesn’t seem to have a regional/source breakdown, but its wind page lists the following projects:

In the US, we operate in five states:  California, Iowa, Minnesota, Oregon and Texas.  Globally, AES Wind Generation operates, acquires and develops greenfield projects, often with local partners.  We have minority stakes in China through Guohua Hulunbeier and in France with InnoVent.

In 2008, AES Wind Generation brought 285 MW online in China and the US (California and Texas), and construction is underway to expand our portfolio by 410 MW through projects in Bulgaria, China, Scotland and the US by 2010.

And AES chief executive Paul Hanrahan says the cash it raises from selling a stake will be used for expanding into Asia.

From Bloomberg:

“This just gives us a war chest of dry powder to execute on mergers and acquisitions,” Hanrahan said in a telephone interview. Access to capital markets has been “choppy,” he added, and any investment AES makes would need to be funded with equity or cash flow.


The company sees a number of “attractively priced” acquisition prospects around the world, Hanrahan said, without identifying any specific targets. AES is looking to expand its generation capacity in Asia, where power demand is growing faster than in the U.S., he said.

Related links:

Teaming up with China on clean tech (FT Energy Source, 26/10/09)
China’s energy landscape: room enough for everyone? (FT Energy Source, 10/08/09)