Shantou Dan Nan Wind Power Co' Ltd'

1
Shantou Dan Nan Wind Power Co. Ltd.
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• WIND POWER
• PROJECT DEVELOPMENT
• IN CHINA
• By
• Wim Lansink

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Presentation
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• My name Wim Lansink
• GM Director for Dan Nan
• Director Business Development China for Nuon
• Presentation Experiences with wind power
  development in China
• Development process
• Opportunities
• Obstacles
• Advices

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• Nuon ????????
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3
Dan Nan
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• Chinas first Sino-foreign JV for wind power,
  established in 1996 by
• Nuon, the Netherlands (55)
• Nan Fang, China (45)
• 1998 start operations 24 MWe project Nanao
  Island, Guangdong
• 2004 start construction 26 MWe project Nanao
  Island
• 2005 start construction two projects 40 MWe
  50 MWe
• Portfolio projects under development gt 600 MWe

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• ??Nuon ?? (55)
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• 1998?,????24MWe ??????
• 2004?,???26MWe ??????
• 2005?, ????????40MWe 50MWe
• ???????gt 600MWe

4
Development
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• Four steps
• Acquisition
• Exclusivity Agreement
• Pre feasibility
• Project proposal
• Feasibility
• Project Feasibility Study
• Contracting
• Loan, PPA, Equipment
• Development time 3 4 years

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5
Development
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• Our main development criteria
• Project scale gt 25 MWe
• Minimum 2 years on site wind measurements
• Always second opinion wind analysis by an
  independent internationally recognized expert
• Turbine installation Turn-key
• Subcontract for operations maintenance for
  minimum 5 years
• Non-recourse debt financing.

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Opportunities
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• Potential for wind power is huge and realistic
• Serious support from Chinese Government
  (incentives)
• Increasing power demand
• Environmental concern
• Tariffs are enclosing

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Opportunities
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• Our focus is on green field project development,
  not on concession projects (yet)
• Concession projects do not meet our development
  criteria
• Guangdong 1st province with fixed power tariff
  this opens the door to a long-term PPA
• Financial market is gaining confidence in wind
  power non-recourse financing comes in sight

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8
Obstacles
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• An approval for a project does not constitute a
  right to a project under Chinese law
  regulations
• Government can decide to have a project realized
  by another investor
• Protecting the development requires guanxi
• Approval system is clear but the approval
  criteria are not
• Obtaining approvals requires guanxi
• Obtaining approvals is time-consuming
• Power sector can make or break a project (grid
  PPA)

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Obstacles
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• Debt-financing difficult
• Non-recourse financing requires track record and
  long-term relationship
• Interest rates cannot be fixed
• Carbon credit trading only for companies with
  over 50 Chinese ownership
• Long-term PPAs are still rare
• As long as tariffs are not fixed wind power
  might be too risky for IPPs
• Debt financing on a non-recourse basis is hardly
  possible for IPPs in case tariff is not fixed

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Advices
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• To developers
• Always perform your own wind measurements
• Establish and maintain relations in order to
  protect development
• Make the development process clear to all parties
  involved (it takes more time than many like)
• Start discussions with banks in an early phase,
  especially when non-recourse financing is required

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Advices
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• To government
• Introduce a system that protects development
  rights for developers/investors
• Introduce long term PPAs with fixed tariffs
• Take the power sector out of the approval system
• Allow carbon credit trading for every company by
  excluding companies China only harms itself

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