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Bloomberg
The Chinese government’s moves to ramp up renewable energy consumption have sparked optimism over the future of China Longyuan Power Group Corp, the country’s biggest wind power producer.
Around half of the 29 analysts covering Longyuan have raised their price targets for its Hong Kong-listed stock over the past month, according to data compiled by Bloomberg. Following a 29 percent rally this year, which far outperforms a 3 percent gain in the benchmark Hang Seng Index, the stock is still trading about 14 percent below the 12-month analyst consensus target of HK$8.22.
Driving the bullishness on Longyuan and other Chinese wind power producers like Huaneng Renewables Corp. and China Datang Corp. Renewable Power Co. is a series of initiatives taken by the government recently to boost renewable energy demand and ease curtailment — a problem caused by overly rapid wind turbine installation and infrastructure bottlenecks. Grid operators have been forced to cut back on purchases as they are unable to fully absorb the intermittent power from renewables such as wind and solar.
China, the world’s largest wind power producer, is considering setting a national target to reduce average wind curtailment rates to less than 10 percent next year and to about 5 percent by 2020, according to an April 12 government policy proposal document. The country is rolling out a clean-energy quota system to require minimum levels
of renewable power use, holding regional grids, power distributors and generators responsible. In addition, China is clamping down on the ability of local authorities to plan new wind power projects in regions where the most turbines stand idle, slowing the expansion of the industry to a pace manageable for the electricity grid.
In light of the recent improvement in the overall wind power industry, China is expected to build more wind farms this year to meet rising demand. Zhou Yiyi, a Shanghai-based analyst at Bloomberg New Energy Finance, said she
expected China to add 21.3 gigawatts of onshore wind capacity this year, compared with the 16.8 gigawatts in 2017.