CHINA SHOPPING FOR U.S. WIND

China's State Grid in talks to buy AES' U.S. wind assets: sources
Wan Xu and Don Durfee (w/Ian Geoghegan and Jason Neely), February 27, 2012 (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…as China's cash-flush state-owned power companies go on an overseas buying spree…[T]he 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…

"…It would be State Grid's first foray into the United States…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…[The] agreement…[and] specific details… are still under negotiation…"



"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…[It] has a market value of $10.5 billion…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…[A] successful deal by State Grid would represent a significant step for China's efforts to enter the U.S. power market...

"…[T]he Chinese company signed a deal to buy a 25 percent stake in Portuguese power grid operator REN for around $508 million. [I]t bought seven Brazilian power transmission companies with investments totaling nearly $1 billion…[A] consortium led by State Grid [won] operation of the Philippine power grid…[in] 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…[wants] to sell all or part of its businesses in China, a deal that could raise $300-400 million…"