Banpu Plc (Banpu), a SET-listed coal miner and power generator, has started investing in its first solar energy project in China worth US$93 million, expecting to start selling power on-grid by mid-year.
Chief executive Somruedee Chaimongkol said Banpu had acquired a 100% stake in four solar power projects in Shandong province via its wholly owned Banpu Power Plc (BPP). The transfer of share ownership is expected in mid-2016 with the on-grid connection of the project.
"Entry into China's solar power sector is a part of BPP's strategy to invest in markets with attractive growth fundamentals and strong state support. We are building on the success of our solar business in Japan and a decade of power sector experience in China," she said.
With the additional power-generating capacity of the Shandong projects and the completion of the 1,320-megawatt Shanxi Lu Guang power project in 2017, Banpu is on track to increase its power-generating capacity to 4,300MW by 2025, of which some 20% should be renewables-based, said Ms Somruedee.
Shandong is China's third-largest province by GDP with a population of over 90 million. BPP has operated a 70%-owned coal-fired combined heat and power plant, Zouping, in Shandong since 2006, she added.
The power generated from all four solar projects will be supplied to the provincial grid with an agreed structure for power tariffs and subsidies. The total cost of all four plants is estimated at 604 million yuan ($93 million), which will be financed by a combination of debt and equity.
In the first quarter of 2016, Banpu posted revenue of $552 million, down 20% from the same period of last year due to weak global coal prices and the net loss of $5 million.
Banpu's power business EBITDA increased 10% from the last quarter of 2015 to $42 million, with China Power contributing net profit of $18 million.
BLCP, the operator of a coal-fired power plant in Map Ta Phut in Rayong, reported an equity income contribution to Banpu of $20 million.
The Hongsa coal-fired power plant in Laos reported an equity income of $1.4 million, with the last unit commencing commercial operation in March.
Coal business EBITDA was down slightly from the last quarter of 2015 to $78 million. Banpu is targeting average costs for its Indonesian operations of $43 per tonne in 2016, down from $49 in 2015, while costs in Australia are expected to drop to A$48 from A$49 in 2015.