14/11/2011
Partners: ADB and China WindPower Group
The Asian Development Bank (ADB) in 2010 approved a $240 million loan package for the Jilin Wind Power Project in the northern region of the People’s Republic of China (PRC) in order to spur more private sector interest in wind power in the country. Jilin is one of the PRC’s best-placed provinces for wind power but the sector receives little private sector investment. In addition, ADB is supporting up to $120 million in B-loans, a lending instrument funded by commercial banks with ADB acting as lender of record. The funding consists of a dual currency (US dollar and yuan) loan of up to $120 million equivalent to China Wind Power to build and operate up to 800 megawatts of new wind farms in Jilin province by 2013.
The multi-project financing facility, ADB’s first in wind power, allows ADB to reach out to a number of small wind power subprojects that would normally struggle to obtain finance because they are hard to fund on a stand-alone basis. The structure and ADB’s participation is expected to attract private sector companies and commercial lenders to this under-resourced but promising sector. The PRC has a wind energy potential of 4,350 gigawatts (GW), one of the highest in the world.
Most wind projects in the PRC are being developed by large state-owned companies. China Wind Power’s wind farms will be among the few facilities that are majority-owned by the private sector. The PRC is the second-largest energy consumer in the world and by 2015 its energy sector will need up to $70 billion in annual investment to keep up with demand, more than the government alone can provide. As such, it is imperative that the private sector become more active in energy projects.
Greater participation by private companies should also improve operational efficiency within the wind power sector, helping the government achieve its goal of having 150 GW of installed wind power capacity by 2020, up from 21 GW now.
This case study is part of the “Development Effectiveness Report 2010” published by the ADB’s Private Sector Operations Department.