|From Tianjin to Tuscany|
Not surprisingly, State Grid invokes strong feelings among Chinese decisionmakers. Reformers see it as an overly-powerful beast that controls 90% of China’s power distribution, monopolistically supplying electricity to 1.1 billion people. On the other hand, corporatist types – who have favoured an alternative ideology known as ‘state-led capitalism’ – view the company as a national champion.
On the other hand, massive graft purges in the electricity sector – starting at the Three Gorges Dam in late March – seemed to be sending a message that the reformers had the upper hand and were readying to pare back the overmighty company’s influence. Indeed in June, the State Grid even made market-friendly noises for the first time, suggesting it would welcome private capital to help build a national vehicle-charging network for electric cars – thereby sharing the fruits of this growing business with entrepreneurs. It also said it would allow private-sector operators to feed new energy power sources (such as solar) into its nationwide system. CBN called both moves “an icebreaker”.
More recently the political pendulum looks to have swung the other way again, with State Grid expanding aggressively abroad. Back in the ‘national champion’ mode it has now unveiled a bold European strategy. Last month it bought a 35% stake in Italy’s grid operator, which is the sixth biggest in the world, according to the People’s Daily. That $2.8 billion deal may swiftly be followed by another. State Grid has joined a consortium with the Belgian grid operator Elia to bid for a 66% stake in the Greek electricity transmission firm ADMIE.
A top executive at State Grid told the Chinese press that it would make further investments in Europe, bringing its UHV and smart grid technologies to the continent.
Its timing is savvy. People’s Daily also comments that the EU is concerned that its target of linking member states with a ‘Eurogrid’ by 2015 is lagging – with many local governments and indebted firms unable to make good on grid commitments in the aftermath of the euro crisis. An EU energy commissioner has even told reporters that the EU welcomes State Grid’s participation in grid construction – so long as it abides by the relevant laws.
Read the whole story at Week in China.