Page 10 - AsiaElec Week 17 2021

AsiaElec RENEWABLES AsiaElec

China’s renewable gencos take on more debt

CHINA CHINA’S state-owned renewable power gener- by a modest amount.
ators (renewable gencos) are set to take on more This divergence in the leverage trend of
debt in a bid to drive forward the government’s state-owned and private renewable gencos is in
renewable development. line with our view that state-owned gencos will
Fitch Ratings warned that the government dominate China’s future renewable investments,
would put more pressure on renewable gencos; as they optimise fuel mix and achieve organic
financial leverage in the medium term, while growth by using their strong funding capability.
some adequately funded private operators’ lev- Many private operators sold projects or
erage may also rise. equity to stay afloat amid tight liquidity, while
The rating’s agency forecast comes as 2020 some optimised operating portfolios by focusing
saw renewable gencos raise their leverage as a on less subsidy-reliant projects.
result of rising capital expenditure. Most renewable gencos’ 2020 earnings bene-
The renewable subsidiaries of China’s stat- fited from dispatch priority as electricity demand
ed-owned gencos, including China Datang recovered from April 2020, with national power
Renewable (Datang Renew), China Longyuan demand increasing by 3.1% for the year.
Power (Longyuan), CGN New Energy and Bei- China’s utilisation rate for wind and solar
jing Enterprise Clean Energy, saw net leverage, capacity improved to 97% and 98% respectively
measured by net debt/EBITDA, increase by in 2020, as curtailment was alleviated by strong
0.6x-1.4x in 2021. power demand in western China, and the start
Their capex rose by 23%-75% in 2020, and of operations of new ultra-high-voltage trans-
was mostly debt-funded, which offset the aver- mission lines.
age 10% increase in EBITDA. Major wind developers such as Datang
In contrast, private renewable gencos such as Renew, Longyuan and CNE saw utilisation
GCL New Energy (GCLNE) and Concord New hours increase by 2%-10% in 2020.
Energy (CNE, BB-/Stable) reduced debt via asset Fitch said that the net leverage of state-owned
or equity sales. renewable gencos would rise further in 2021 on
CNE sold 484 MW of wind farms and 160 aggressive investments, before the new projects
MW of solar farms in 2020, which reduced its add to earnings.
FFO net leverage to 4.5x, from 6.9x in 2019. China aims to increase wind and solar’s share
GCLNE, which announced solar capacity sales of power supply to 11% in 2021 and 16.5% in
of near 2 GW, saw its net debt/EBITDA decline 2025, from 9.7% in 2020.™

P10 www. NEWSBASE .com Week 17 28•April•2021