China's Guohua To Buy 75% Stakes In 2 Australia Wind Farms

Dow Jones)- China's Guohua Energy Investment Co. has agreed to buy 75% stakes in two of Australia's biggest wind farms for A$88.6 million, placing a bet on the country's renewable energy sector just weeks after controversial carbon tax legislation was passed by parliament.

Guohua, a unit of China's state-owned coal giant Shenhua Group, is acquiring interests in the 65-megawatt Bluff Point and 75-megawatt Studland Bay wind farms in northwest Tasmania state from renewable energy producer Hydro Tasmania.

Australia has up to now been a laggard in using renewable energy use compared to other developed countries, such as Spain and Germany, as investors struggled to turn a profit on early projects that were competing for customers with generators of electricity produced from burning cheaply available thermal coal.

At the end of the 2008-2009 financial year, the last complete data available from the Australian government, renewable energy accounted for around 7% of total electricity generation in the country. Of this, wind energy contributed 1.5% to total power output.

However, this is set to increase sharply as Australia's government has set a target of having 20% of electricity supply coming from renewable energy sources like wind power by 2020. To achieve this goal, it has introduced policies that mandate electricity retailers to buy a proportion of their sales from renewable energy sources.

At the same time, Australia is also preparing to impose a tax on some of the country's biggest coal producers and users in an effort to cut pollution. The levy will be charged at a fixed price of 23 Australian dollars (US$23.50) per carbon ton from the country's top 500 polluters starting July 2012.

In a statement Thursday, Hydro Tasmania said the deal with Guohua values the two wind farms at Woolnorth at A$282 million. The company will retain the remaining 25% interests in both projects.

Hydro Tasmania expects the transaction to reach financial close in February, and Guohua will then be able to hold exclusive talks over six months on an equity investment in the A$400 million, 168-megawatt Musselroe wind farm that began construction this month.

Hydro has been looking for a new partner for the two wind farms--known collectively as Woolnorth--since September, following the break up of a previous joint venture with CLP Holdings Ltd. (0002.HK), Hong Kong's largest utility by capacity.

Following the break-up, CLP's TRUenergy unit took over the operating Waterloo wind farm in South Australia state, and assumed the interest that Roaring 40s held in the Cathedral Rocks wind farm.

Hydro Tasmania took ownership of the Studland Bay and Bluff Point wind farms, as well as some assets under development, including Musselroe.

It subsequently appointed Australia & New Zealand Banking Group Ltd. (ANZ.AU). to advise on the sale of part of its interests in the two operating projects.

Inaddition to investors in producing wind farms and new developments, Australia's wind energy sector is also attracting Chinese makers of turbines.

Xinjiang Goldwind Science & Technology Co. (2208.HK), one of China's big renewable energy national champions, already has an office in Australia led by a former Hydro Tasmania executive. Earlier this month, it signed agreements with Powercor Australia to connect 13 of its 1.5-megawatt class turbines in Victoria state to the Australian grid. 

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