China’s influence on global power infrastructure to continue

The growing influence of China in national power infrastructures across the world is set to have a transformative effect over the next decade, according to a leading utilities analyst.

While Chinese offers of investment are being well received in Latin America, particularly Brazil, countries such as Britain have expressed caution, while Australia recently denied Chinese investment in a part of its grid infrastructure altogether.
Matt Rennie of EY
Australia-based Matt Rennie, Global Power & Utilities Transactions Leader, told Power Engineering International, “There has been a rising trend over the past ten years of Chinese outbound investment into both developed countries such as Portugal and in Australia, and in developing countries such as in Africa and the Middle East.  This has been evident in both the generation and networks sectors, and looks set to continue given the strong demand for these outbound assets within China."

The most profound effect is set to be experienced by developing countries, Rennie says.

“Global power markets will be affected differently across developed and developing markets.  In developing markets, we expect to see mass electrification policies in Sub-Saharan Africa, Vietnam, Indonesia and India provide for large new installations of coal and gas-fired power stations and an increasing share of renewables.”

“These countries require almost 100GW of new capacity to realise their policy ambitions.”

Meanwhile Rennie says the developed world looks set to experience Chinese investment in a different way, according to the more advanced nature of power in those societies.

“In developed countries, we expect to see a realisation of the current trend towards decentralised power, with solar/battery installations providing for “virtual power plants” which will dispatch into the grid, lessening the impacts of the network peak, and causing shifts in the value of underlying network and retail companies who will need to adapt to maintain their place in the market.

It was reported late last week that UK Prime Minister Theresa May faces a test of the government’s attitude to overseas investment in critical infrastructure as Chinese companies are expressing interest in the prospect of ownership of National Grid’s gas network assets.

China is pursuing investment in electric power infrastructure throughout the world.
Chinese investment has been particularly welcomed in Brazil but in Australia the government stepped in to prevent Chinese acquisition.

Phil Hewitt, director at energy analysts EnAppSys, told Power Engineering International that concerns about Chinese ownership were misplaced. "I think that there is no imminent threat to national security with Chinese infrastructure funds owning the gas network. There is a danger they may pay too much for it," he said.



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