Energy firms China Shenhua and China Guodian Corp. have submitted a merger proposal to the Chinese State Council which, if approved, would create the world’s largest power utility.
The combined company, National Energy Investment Corp. or NEIC, is set to be a major source of breakbulk demand as it will be the largest wind power developer and biggest coal producer, with installed capacity of more than 225 gigawatts.
“This merger marks the beginning of expected massive consolidation across China’s energy sector as the government is keen to internationalize state-owned enterprises. The biggest question is whether the newly created Titans can well manage the shock of reorganization, improve their decision-making process and work towards synergies,” said Frank Yu, consultant at research firm Wood Mackenzie.
Breakbulk demand in China’s energy sector is expected to rise significantly over the coming three years as the National Energy Administration forecasts that wind capacity will increase by 40 percent to 290 GW by 2020, accounting for one-quarter of power capacity.
Photo: Shenhua and Guodian plan to form the world’s largest power utility. Credit: Wikimedia