Hong Kong power utility CLP chips in to state-backed Greater Bay Area energy fund to gain access to low-carbon technology and projects

Eric Ng
·4-min read

CLP Holdings is boosting its investment in low carbon electricity generation and distribution in the Greater Bay Area as part of efforts to tackle climate change and ensure its long-term sustainability.

The company, the larger of Hong Kong’s two power utilities, has put an undisclosed sum into a fund spearheaded by state-owned China Southern Power Grid that is dedicated to energy investment in the region encompassing nine Guangdong cities as well as Hong Kong and Macau.

The CSG Energy Innovation Equity Investment Fund, set up in November, plans to raise 4.95 billion yuan (US$770 million), with phase-one funding of 1 billion yuan, People’s Daily reported.

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“While our investment is quite modest, it will provide tremendous opportunities for us to be in the ecosystem alongside important energy players in the mainland so that we can get access to emerging technologies and investment opportunities,” said Betty Yuen So Siu-mai, vice-chairman of CLP Power Hong Kong.

Potential investments in the bay area may be executed through the fund or separately, she told reporters after CLP Holdings posted a net profit of HK$11.46 billion (US$1.48 billion) for last year. That was up from HK$4.66 billion in 2019 when profits were dented by a HK$6.38 billion goodwill impairment on its Australia retail operations.

Earnings per share amounted to HK$4.53, slightly higher than Bloomberg’s consensus forecast of HK$4.48 based on the estimates of seven analysts.

CLP sees the bay area, with its population nine times that of Hong Kong, as an important potential source of new technology, customers and projects.

“We see not just opportunities in the provision of electricity – be it renewable energy or nuclear – but also services, such as supplying electricity to electric vehicles and data centres, and using our know-how to help customers better manage their energy supply,” said CLP Holdings’ CEO, Richard Lancaster.

After deregulation a few years ago, private and foreign firms are allowed to participate in mainland China’s power distribution, including electric vehicle recharging stations and power grids.

The first Chinese power distribution grid CLP invested in began supplying electricity to customers in a technology industrial park in Fangchenggang in Guangxi Zhuang autonomous region last April.

In the bay area, CLP already owns a quarter of the Daya Bay nuclear power station, which exports some 70 per cent of its output to Hong Kong. It also has a 17 per cent stake in the Yangjiang nuclear power project in western Guangdong.

The CSG Energy Innovation Equity Investment Fund will focus on research and development of digital information technologies to make power generation and supply more efficient and environmentally friendly.

Hong Kong’s leader, Carrie Lam Cheng Yuet-ngor, vowed in November to set the city on a path to achieving carbon neutrality by 2050, in line with targets in Europe, Japan and South Korea.

CLP pledged last year not to invest in any more coal-fired plants, and to phase out existing ones by 2050.

It started operating a newly-built natural gas-fired power generating unit in Hong Kong last year, and has begun construction of a similar facility there.

“The shift in 2020 to 50 per cent natural gas [in our fuel mix] lays the ground work for closing down our oldest coal-fired station in the next few years,” Lancaster said.

Some power generation equipment makers are in early-stage development of technology to produce hydrogen-based combined cycle gas turbines, which conjures up the possibility for CLP to replace natural gas with zero-emission hydrogen, he added.

CLP’s operating earnings grew 4.1 per cent to HK$11.58 billion last year, led by a 5 per cent gain in Hong Kong to HK$7.82 billion and a 7.9 per cent rise in Australia to HK$1.69 billion. Profit from mainland China decreased 1.9 per cent to HK$2.23 billion.

A fourth interim dividend of HK$1.21 per share was declared, raising the full-year payout to HK$3.1, up marginally from HK$3.08 in 2019.

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