State-owned China Three Gorges expands overseas renewables investments

In our earlier case study on the acquisition of Energias de Portugal by China Three Gorges, we discovered that China Three Gorges Corporation, which is wholly owned by the Chinese state, participated in several other renewable energy initiatives abroad. This series of investments can be considered part of China’s plan to transition to a green and carbon-neutral economy.

  • China Three Gorges is a state-owned enterprise (SOE) and a key player in the new energy field. It is actively developing technologies that can contribute to the production of wind and solar power.
  • As we wrote in our earlier case study, in 2011 the company acquired Energias de Portugal, S.A., becoming its majority shareholder.
  • In 2020, Chinese President Xi Jinping announced a goal for the country to reach carbon neutrality by 2060.
  • To reach this ambitious goal, China is aiming at making a transition toward a green and circular economy by heavily investing in renewable energy and supporting overseas acquisitions.
  • This trend is reflected in the recent acquisitions by China Three Gorges in Europe and in the MENA region.

Investments and acquisitions by China Three Gorges

China Three Gorges (CTG) is China’s largest clean energy corporation and the world’s largest hydropower enterprise. As a key player in the field of new energy generating, CTG is actively developing technologies that can contribute to the production of wind, solar power, and the realization of offshore wind farms. These goals are reflected in the CTG strategy, which focuses on constantly seeking innovation, also through acquisitions of companies active in this field.

We previously analyzed the acquisition in 2011 of Energias de Portugal, S.A. (EDP), the fourth largest wind energy production company in the world. A proposal to raise the share participation in 2021 was blocked as some European government departments were concerned about the scale of Chinese investments in Europe in key industries.

In August 2022, Energias de Portugal, S.A concluded a deal with CTG. The Portuguese company sold to its majority shareholder its entire 50% participation stake in Hydro Global Investment Ltd, a 50/50 joint venture established between EDP and CTG. Hydro Global Investment Ltd focuses on the development of hydropower facilities. Its main asset is the 209-MW San Gaban III hydro project in Peru. Specifically, the Portuguese company will divest its equity to China International Water & Electric Corporation, a subsidiary of China Three Gorges.

Furthermore, in June 2022, CTG reached an agreement with Nexwell Power to acquire a portfolio of 619 MW in photovoltaic projects in Spain both operating and under construction. Nexwell Power is a UK-based independent solar power producer. CTG entered the Spanish market two years before, in 2020, when it acquired 13 solar plants built by X-Elio renewables company.

The focus is not just on the European market as CTG is also active in the Middle East and North Africa region. Through its subsidiary, China Three Gorges South Asia Investment, CTG purchased 100% of Alcazar Energy Partners in 2021, one of the Middle East and North Africa’s leading independent renewable energy developers and producers. Alcazar Energy Partners has a portfolio of five solar and two wind projects in Jordan and Egypt.

Strategic collaborations and the CCP’s ambitious goals

The Three Gorges is a clear example of China’s national plan to reach carbon neutrality by 2060. China encourages the investing in renewable energy projects making China a leader as a global investor in renewable energy. According to Xi Jinping’s plan, renewable resources will make up 80 percent of the nation’s mix. To reach this ambitious goal, national companies are encouraged to make strategic overseas investments. The CTG is certainly pioneering the efforts to contribute to China’s green transition, as it operates in 47 countries with 89 ongoing international contracts. CTG’s plans also fit into the country’s “going out” strategy and the “Belt and Road” initiative. According to Wu Shengliang, board chairman of China Three Gorges International Ltd “with the energy shortage in Europe, European governments are attaching more attention to the investment and the continuous development of clean energy”.

Nevertherless, as the acquisitions made by CTG already showed, Europe is not the only destination of Chinese investment in renewables. The R&D and know-how that comes from partnerships combined with foreign investments, made a significant contribution to CTG’s growth. These acquisitions can be seen as a strategy whose ultimate goal is acquiring expertise and to accelerate China’s transformation into a green and carbon-neutral country by 2060.

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