New energy has become the hottest area for Chinese power enterprises to invest in abroad

In recent years, China's outward direct investment has continued to grow, with the investment structure increasingly optimized. In the power sector, China's major power enterprises mainly focus on green investment. In 2022, new energy became the area witnessing the largest number of China’s overseas investment projects, accounting for about 58% of the total. Among them, there are eight solar power generation projects, accounting for 33% of the total number, with investments totaling US$1.331 billion, and six wind power projects, accounting for 25% of the total number, with investments totaling US$519 million.

Over the past few years, Chinese power enterprises have been actively expanding business cooperation in the fields of electric energy storage, electric vehicles, offshore wind power, and renewable energy. In terms of the number of projects, in 2022, the number of new energy projects invested by Chinese power enterprises abroad increased by 55.6% from 2020. In particular, the development and investment of overseas energy projects, especially photovoltaic and wind power, have begun to take shape, covering regions like Southeast Asia, Europe, Oceania, and Latin America.

From the perspective of investment destinations, countries along the Belt and Road are key areas for China’s overseas investment in electric power. In 2022, China's major power enterprises invested a total of 16 power-related projects in those countries, accounting for 66.7% of all power projects invested by China abroad. The actual completed investment amount was about US$1.95 billion, accounting for 57.7% of the total overseas investment of China's major power enterprises in 2022.

In September 2021, China announced that it would halt new coal-fired power projects abroad. Although this move would lead to a decrease in overseas market opportunities of the coal-fired power sector, which might affect the growth rate of overseas installed capacity of China's power enterprises in the short run, Chinese power enterprises show remarkable advantages in terms of market development capabilities, cost control capabilities and the cost-effectiveness of domestic photovoltaic and wind turbine equipment in the medium and long terms. In addition, Chinese power enterprises are constantly optimizing their decision-making mechanisms, management and control models, and cooperation patterns to enhance their competitiveness in the international market. As a result, their market share will continue to expand. Especially in the fields of new-type power system construction, source-grid-load-storage integration, "new energy+", and integrated development of hydropower, coal-fired power, wind power, solar power, and energy storage, China will further give full play to the advantages of its integrated value chain and industrial chain, and promote the transformation and development of Chinese power enterprises in overseas investment.

Source: People's Daily Overseas Edition