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State Grid Corp to construct UHV power grid in Brazil

The State Grid Corporation of China has made another foray into the overseas markets by inking a deal for a ultra-high voltage grid with Eletrobras, Brazil’s largest state-owned power company, in Rio de Janeiro on July 17, reports the Chinese-language National Business News.

Overseas assets of the State Grid Corporation have topped 100 billion yuan (US$16.1 billion), mainly in Brazil, Portugal, Australia, the Philippines and Hong Kong. The latest Brazilian deal is a breakthrough, marking the first export of the company’s UHV grid technology. A similar deal is in the works with India.

The deal, signed by Liu Zhenya, chairman of State Grid Corp, and Jose da Costa Carvalho, president of Eletrobras, calls for the Chinese state enterprise to construct the grid for a hydropower plant, which is the second largest such plant in Brazil. The project will have to pass an environmental impact assessment from Brazil’s related authority.

State Grip Corp estimates that the project will generate 18% investment returns, much higher than similar projects on the domestic market. In fact, investment returns rate for the company’s overseas projects reaches 16-18%, three to five times the domestic level, according to Shanghai’s China Business News.

Liu Zhenya pointed out that his company will sink US$30-$50 billion abroad by 2020, thereby raising the share of overseas assets to 10%. On the domestic front, it will invest 620 billion yuan (US$99.8 billion) in constructing UHV grids in the next five years.

The UHV grid in Brazil will extend 2,092 kilometers, transmitting power from the power plant in an Amazon drainage basin in the north to the southern and southeastern regions, where power consumption is high. Officials of State Grid Corp added that the UHV grid is especially needed by countries with highly uneven distribution in power generation.

In May, the company also signed an agreement with Russian Grids in Shanghai for cooperation in UHV and smart grids.

Since 2004, State Power Grid has been pushing global initiative aggressively, including acquisitions of a 25-year franchise for a power grid in the Philippines in 2008, a 100% stake in seven franchised power grids in Brazil in 2010, 25% interest in a power grid in Portugal in February 2012, a 41% stake in an Australian power firm in 2012, stakes in two Australian energy firms in 2013, and an 18% stake in HK Electric Investments, under the auspices of business tycoon Li Ka-shing, in 2014, becoming the latter’s second-largest shareholder.

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