People's Daily: SGCC Participates in Building European Transmission Grid with Capital Advantage and Core Technologies

The European Commission has long wanted the continent's power grids to work in unison, so far to little avail. Recently, the Reuters reported that State Grid Corporation of China (SGCC) would invest to establish a regional power network. But as our reporter found out in an interview, the company did not have such a plan. Instead, in the last two years, SGCC, catching the chance of European energy companies?? shrink after debt crisis and the privatization of state-owned assets, actively and steadily promoted the Going-out Strategy in Europe.

Carry out all-round cooperation with European countries

The press officer of Belgium??s Elia confirmed on August 12 that Elia was working with another five companies including SGCC to prepare to bid for 66% of Greek grid operator ADMIE, which was the major grid operator in Greece. The Greek government held its remaining 34% equity.

Not long ago, SGCC signed an agreement with Cassa Depositi e Prestiti (CDP) to buy a 35 percent stake in CDP Reti, wholly owned by CDP, for at least ??.1 billion. CDP had transferred a 29.85 percent interest in Italy's largest power transmission grid operator to the energy unit before completing the deal with SGCC. The transmission grid operator is the world??s sixth-largest grid operator according to the length of transmission lines,  holding 98.8% of the country's transmission grid.

An official with the Department of International Cooperation, SGCC, told the newspaper that SGCC was carrying out all-round cooperation in Europe focusing on energy infrastructure for strategic investment to, first, open up European market with joint efforts to get equity in utilities and infrastructure sector; second, promote the applications of UHV and Smart Grid in Europe and participate in grid construction and transformation; and third, share SGCC??s experience in technology and management to pursue mutual improvement.

This official said that SGCC was fully confident for the competitive equity acquisition, with its UHV and other core technologies, rich experience in operation and management, good reputation and financing capability in the international capital market.

European grid??s transmission capacity has almost reached its limit

An EU energy policy officer said that EU leaders made it clear early in 2011 that in order to build a unified energy market and achieve the strategic objectives in 2020, Member States should accelerate the interconnection of grids and gas pipelines to ensure a free energy transmission and supply inside the EU by 2015.

However, the progress was slow as the national conditions of the Member States differ, a unified market rule is absent, and cross-border transmission network infrastructure lags behind. In addition, due to international financial crisis and the European debt crisis, many European power grid enterprises would not or were unable to build new transmission lines. According to the operator's network report of European electricity transmission system, the current transmission capacity has been close to the limit. A third of planning projects were delayed. The lack of transmission capacity and investment has become a major obstacle in constructing a unified electricity market for the EU.

An EU Energy Commission officer said that SGCC was welcome to participate in the transmission network construction. EU welcomes all investors, whether from the Member States or other countries, as long as they abide by and respect the relevant laws on competition in the internal market.

SGCC comprehensively improves its globalization.

Since 2009, SGCC has seized the strategic opportunity to speed up its implementation of the ??Going-out?? strategy and greatly enhance its globalization on the basis of the UHV, Smart Grid, alternative energy and other core technologies.

Up to June this year, the company has actually invested nearly 3 billion U.S. dollars abroad and paid over 11 billion U.S. dollars in foreign equity investment. Finally, the size of foreign assets was over 23 billion U.S. dollars. From 2009 to 2013, overseas business profits grew from less than 800 million yuan to 3.2 billion yuan, with an increase of 309% and a return rate of 13%.

Next stage of internationalization strategy is increase overseas power assets to 8% of the company??s total by 2015 and contributed profits from the international business are over 15% of the total; by 2020, overseas power assets will achieve 10% of the company's total and the profit contribution rate will be over 20%.

It is analyzed that the European market has always been one of the key directions of SGCC??s overseas investment. After the sovereign debt crisis, the EU hoped to attract investment by privatizing state-owned enterprises. With its capital advantages, world-leading core technologies and advanced management experience, it is a win-win solution for SGCC to participate in European power construction. (Brussels and Beijing, August 13)

Source: People's Daily

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