21st Century Business Herald reporter Zheng Qingting Beijing report Ten years to sharpen a sword. In the past decade, Three Gorges International Energy Investment Group Co., Ltd. (hereinafter referred to as Three Gorges International), from scratch, from small to strong, has widely participated in overseas clean energy investment and cooperation through greenfield investment, equity mergers and acquisitions, etc. Up to now, the company's total assets are nearly 100 billion yuan, the total installed capacity of power generation exceeds 16 million kilowatts, the business area involves nearly 20 countries and regions, and the number of Chinese and foreign employees exceeds 1400 people.
As an important platform for China Three Gorges Group to implement the "going out" strategy, China Three Gorges International's business covers the investment and development of clean energy projects such as hydropower, wind power and solar energy overseas, involving Asia, Europe, South America and other countries and regions, and has formed a hydropower and wind power market focusing on Pakistan and Brazil; a European offshore wind power market centered on Germany; and a European energy market with Portuguese power Company as an important partner.
The epidemic has ravaged the world, and since 2021, the overseas energy investment of Three Gorges International has still been very fruitful. At the beginning of the year, the company successfully entered Spain, the largest photovoltaic market in Europe, as of now, the installed scale of clean energy in the Spanish market has exceeded one million kilowatts, and the overseas clean energy investment business has expanded to the Middle East and North Africa.
In the past decade, what nodes has the rapid development of Three Gorges International experienced? What has been the result of the cooperation with EDF? What challenges have been encountered in the process of developing the European and American markets? Is the sudden outbreak of COVID-19 an opportunity or a challenge? In the context of the global energy transition, how will the company be laid out? In view of the above problems, Wang Yu, secretary of the party committee and chairman of the board of directors of the Three Gorges International, recently accepted an exclusive interview with a reporter from the 21st Century Business Herald in Beijing.
The past 10 years have gone through three major milestones
21st Century: 2021 marks the 10th anniversary of the founding of The Three Gorges International, what important milestones has the China Three Gorges International experienced in the past decade? Please briefly introduce the development achievements of Three Gorges International.
Wang Yu: Three Gorges International was established in October 2011, and by 2021 it will be the 10th anniversary, which can be described as "ten years of grinding a sword". In the past 10 years, China Three Gorges International has experienced three important nodes:
The first nodes were in late 2011 to early 2012. Seizing the opportunity, with the support and operation of the Three Gorges Group, we acquired a portion of the equity interest in the Portuguese Electricity Company (hereinafter referred to as "Portuguese Electricity") held by the Portuguese government, becoming its single largest shareholder. Through cooperation with Deutsche Telekom, the two sides learn from each other's corporate governance experience and jointly explore third-party markets. The two sides signed a strategic cooperation agreement to develop European wind power resources. Three Gorges International developed three hydropower stations in Brazil by way of equity participation and successfully entered the Brazilian market. Since then, through a series of mergers and acquisitions, it has become the third largest power producer in Brazil in a relatively short period of time, and has actively followed up other clean energy projects in the South American market.
The second node is the end of 2015. At that time, Three Gorges International had successfully entered the Brazilian market through its investment in Portugal's investment project in Brazil, and in early 2015 it tried to acquire two hydropower stations. At the end of the year, through bidding, Three Gorges International successfully obtained a 30-year concession for two large hydropower stations in Gibia and Ilia, Brazil. In 2016, it acquired 10 hydropower plants in Brazil by Duke Energy. So far, Three Gorges International has operated a total of 14 hydropower stations in Brazil, making it the third largest power generation company in Brazil.
The third milestone was the launch of the Belt and Road Initiative in 2013. Three Gorges International actively implements the "Belt and Road" initiative and develops clean energy in the Pakistani market. As an investment platform in South Asia, the Three Gorges South Asia Corporation has attracted joint investment from the International Finance Corporation (IFC) of the World Bank and the Silk Road Fund. The Karot Hydropower Station in Pakistan under construction is a priority implementation project of energy cooperation in the "China-Pakistan Economic Corridor", the first large-scale hydropower investment and construction project of the "Belt and Road", and the first hydropower investment project written into the joint statement of the Chinese and Pakistani governments, and will be connected to the grid in 2022. In addition, our second local hydropower project, the Kohala Hydropower Station, is also expected to start construction in 2022.
Overall, we seized the opportunity to enter the European and Brazilian markets, followed by clean energy investment projects in Pakistan through the Belt and Road Initiative. Opportunities have played a key role in the development of the Three Gorges International over the past decade, but opportunities have also been left to those who are prepared. For example, the acquisition of two large hydropower concessions in Brazil, the time is tight, the task is heavy, the Three Gorges Group based on its own industrial asset judgment ability, rapid decision-making, rapid action, and achieved good results. In the future, China Three Gorges International will strive to change from "opportunity-oriented" to "strategic-oriented" and give priority to the layout of important markets.
Jointly practice the "Belt and Road" initiative
21st century: As an important platform for China Three Gorges Group to implement the "going out" strategy, The distribution of China Three Gorges International Business involves Asia, Europe, the Americas and Africa. How does Three Gorges International divide the overseas market? What is the biggest difference between developing and developing a business?
Wang Yu: In the early days of the establishment of Three Gorges International, combined with the characteristics of the company, the overseas market was divided into European and American markets, resource-rich markets (Latin America and Africa) and China's peripheral markets (Pakistan and Southeast Asia). With the company's successful acquisitions of wind and solar projects in Jordan and Egypt, the surrounding market has also expanded into a number of new regions.
The market in developed countries is relatively stable, the supply is relatively stable, the implementation of contracts is guaranteed, the policy changes are small, and the predictability is high. But at the same time, market access and censorship are stringent. In developing countries, the market is immature and unstable, and there is great uncertainty in the consumption of electricity and the recovery of electricity bills.
In order to solve the problem of market operation in underdeveloped areas, on the one hand, China Three Gorges International signed strategic cooperation agreements with many well-known domestic engineering companies to use the market layout and tentacles of partners to obtain high-quality project resources; on the other hand, it also discussed cooperation with domestic mining enterprises to make the power produced strive to achieve local consumption, save transportation and other costs for mining enterprises, reduce market risks, and jointly practice the "Belt and Road" initiative.
Actively follow and explore overseas M&A opportunities after the epidemic
21st Century: What impact has the COVID-19 pandemic had on the development of Three Gorges International Business? Does it also bring some investment opportunities?
Wang Yu: The impact of the epidemic on the operation of existing assets is not particularly significant. Electricity is the basis for the operation of a country, and even in the case of the epidemic, the operation of existing assets has not been greatly affected, nor has it interrupted the construction of existing projects. Three Gorges International refers to the experience of domestic epidemic control and control to ensure that there are enough operation and maintenance personnel in the territory to maintain a stable supply of electricity. At the same time, we will actively coordinate the prevention and control of the epidemic and the construction of the project to ensure that the project construction has sufficient construction personnel. The Karot Hydropower Station project in Pakistan adheres to the dual grasp of epidemic prevention and control and safe production, and will be completed and put into operation as scheduled.
However, the epidemic has a great impact on the acquisition of our incremental assets, mainly in two aspects: first, in the past two years, many countries' economies have suffered heavy blows and faced the dilemma of insufficient demand; second, the epidemic in some countries is still very serious, not only is it difficult to concentrate manpower, but also due to insufficient start-up, it is difficult to provide the required equipment on time, making the development cycle of new projects longer.
At the same time, there are also some investment opportunities. Since the overall development of the Three Gorges Group is relatively good, from the perspective of investment, there should still be many investment opportunities. As the economic situation of various countries deteriorates due to the epidemic, projects that were previously discouraged from investing in have also made it possible to invest in the future. In addition, the company is also actively exploring new opportunities for overseas investment in the post-epidemic period.
In the past, through investment and mergers and acquisitions, the company successfully entered the European and Brazilian markets, the next step, to achieve more stable and better development, we must start from greenfield investment, improve efficiency. At present, the company has planned the development layout of greenfield projects in South Asia, Europe and Latin America.
Accelerating global emissions reductions presents both opportunities and challenges
21st Century: On September 21, 2021, President Xi Jinping attended the general debate of the 76th session of the United Nations General Assembly by video in Beijing and delivered an important speech, announcing that China will vigorously support the green and low-carbon development of energy in developing countries and will no longer build new offshore coal power projects. What impact will the introduction of this new policy have?
Wang Yu: When it was founded, China Three Gorges International adhered to the green development concept of the Three Gorges Group, focusing on clean energy projects, including hydropower, wind power and solar energy projects, and did not set foot in coal power projects.
Since the state put forward the "double carbon" target, enterprises have not only been unable to invest in coal power projects overseas, but even many of the coal power construction involved have stopped. For DG, this means that the competition will be fiercer in the future, as companies that previously invested in coal power projects will also move to clean energy. To meet this challenge, CTD must uphold the concept of green development, clean energy and sustainable development, and not rely solely on opportunities, but through improving management, strengthening coordination and fulfilling social responsibility, it must gain the trust of the local government and people, obtain more resources and win more opportunities.
21st century: With the COP26 conference, many countries have also proposed their own emission reduction targets, and global climate action has injected new momentum. Does this also provide new development opportunities for the Three Gorges International?
Wang Yu: Under the guidance of the United Nations Global Climate Action, many countries have introduced carbon peaks and carbon neutrality timetables. Developed countries have also formulated clean energy-based power policies and stopped nuclear power, coal power and other projects, which means that future energy development is bound to shift to the direction of clean energy, which also creates more opportunities for us to deploy clean energy overseas. But opportunities and challenges go hand in hand. With the arrival of opportunities, the competition will become more intense. In the end, we still have to rely on service and social responsibility to win the trust of the local government and people, and strive for more project resources to achieve sustainable development. In addition, due to the higher environmental protection requirements of various countries on the inundation, migration and other issues involved in the development of hydropower, making hydropower development more difficult, so in the future the company will also put more energy into wind power, solar energy and even hydrogen energy and energy storage.
Enter the third-party market hand in hand with Portuguese Electric
21st Century: 2021 is also the tenth anniversary of the cooperation between the Three Gorges Group and Portuguese-com, can you talk specifically about the cooperation process between the Three Gorges Group and Portuguese-Comédie?
Wang Yu: The cooperation between the Three Gorges Group and Deutsche Telekom has spanned the first decade. On the one hand, through dividends and market value management, China Three Gorges Has recovered more than half of the original investment amount. On the other hand, With the help of the Three Gorges Group, Desépéry also quickly returned to its investment grade rating and began to explore transformation, focusing on new energy and the distribution of electricity business. Looking at the ten-year cooperation and development process between The Three Gorges Group and Deutsches, it is actually a road of integrated development and mutual benefit and win-win situation.
In the past ten years, the two sides have respected each other, supported each other, trusted each other and worked together, from jointly developing third-party markets in Europe and South America, to carrying out talent exchanges and technical cooperation, to jointly fulfilling corporate social responsibility, and achieved fruitful cooperation results and injected strong impetus into their high-quality sustainable development. The cooperation between the two sides has not only deepened the investment and economic and trade cooperation between China and Portugal, but also promoted the cultural exchanges between the two countries, enhanced the friendship between the two peoples, and become a model for all-round economic and trade cooperation between China and Portugal.
Recently, CTG and Devolux signed a new round of strategic cooperation framework agreement, focusing on the new trend of global power industry development, giving full play to the respective advantages of both sides, consolidating the previous cooperation results, and further deepening the exchange of cooperation results in global project investment, new energy technology research and development, third-party market cooperation, talent exchanges and other aspects.
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