Texas Business reports: The Chinese are moving into West Texas wind power.
A-Power Energy Generation Systems Ltd., a provider of distributed power generation systems in China and a manufacturer of wind turbines, announced that Shenyang Power Group Company Ltd., an industrial construction company in which A-Power owns a 19.5% interest, signed a letter of intent with China Machinery Engineering Corporation, an international engineering contractor, on April 15 involving the development of a proposed 615 megawatt wind power generation project in Texas.
The aim of this planned arrangement is to assist SPG in securing from Chinese sources approximately 14 percent of the debt financing that is anticipated to be required to develop the project, as well as to find a suitable engineering, procurement, and construction (EPC) contractor for the Texas Wind Farm.
The agreement calls for SPG to appoint CMEC as the EPC contractor for the Texas Wind Farm project and for CMEC to assist SPG in obtaining approximately $260 million in debt financing from banks and other financing agencies in China for Spinning Star Energy LLC, the project company that was founded to own, develop, and operate the Texas Wind Farm.
As the EPC contractor, CMEC would be expected to procure equipment from suppliers designated by SPG.
The parties expect to have further discussions and negotiations regarding the details of the arrangements covered by the LOI and to prepare and finalize the multiple agreements that will be required to create binding obligations between the parties during May 2011. Notwithstanding any efforts that are made by the parties pursuant to the LOI or any final agreements that may be reached pursuant to the LOI, no assurances can be made that SPG will be able to secure any debt financing for the Texas Wind Farm project.
SPG was incorporated in May 2009 in China as an industrial construction company specializing in electricity generation projects and manufacturing of power equipment.
A-Power initially had contributed 62 percent of SPG's registered capital of RMB 1.0 billion, with the remaining capital contributed by other non-related entities that are active in the electricity generation industry. In October 2010, A-Power sold 42.5 percent of its ownership in SPG, reducing A-Power's ownership in SPG from 62 percent to 19.5 percent.
Spinning Star is the joint venture enterprise owned by United States Renewable Energy Group Wind Partners I, LLC and SPG that was founded to develop and operate a wind power generation project of approximately 615 megawatts of capacity in west Texas.
This wind project is currently under development and requires additional external financing for completion. The availability of the financing required to develop the Texas Wind Farm project is not assured.
SPG is a venture, between the Shenyang municipal government and some industrial companies, that was founded in May 2009 to seek opportunities to develop large-scale power generation projects both in China and overseas. In December 2009, SPG acquired a 49% interest in Spinning Star. Subsequently, in January 2011, SPG assumed management control over Spinning Star pursuant to a negotiated agreement with its joint venture partner in the project company.
China Machinery Engineering Corporation was restructured and renamed from "China National Machinery & Equipment Import and Export Corporation" on January 18, 2011. Established in 1978 as the first large national corporation integrating foreign trade with industry, CMEC is a large global conglomerate with engineering contracting as its core business. As a well-known international engineering contractor, CMEC has been listed among the largest 225 contractors in the world by Engineering News-Record for several consecutive years.
A-Power Energy Generation Systems Ltd., through its China-based operating subsidiaries, is a provider of distributed power generation systems in China and is expanding into the production of alternative power generation systems. Focusing on distributed power generation projects of 25 to 400 megawatts, A-Power also operates one of the largest wind turbine manufacturing facilities in China. A-Power acquired Evatech Co. Ltd., a designer and manufacturer of industrial equipment for amorphous-silicon photovoltaic panels, in January 2010, and acquired Hallys Corporation in May 2010.
In addition to the establishment of strategic relationships with some of the world's leading wind energy design and engineering companies, A-Power has formed joint research programs with Tsinghua University and the China Academy of Sciences to develop and commercialize other renewable energy technologies.