China Ming Yang Wind Venture May Be Canceled on Subsidy-Cut …

June 23, 2012 by  
Filed under Green Energy News

China Ming Yang Wind Power Group
Ltd. (MY)
’s Bulgarian wind project with W.Power Ltd. may be canceled
should the country proceed with plans to cut state support for
the technology by almost a quarter, their joint venture said.

“This is a critical mistake for a country that needs to be
very careful with foreign investors,” said Jonathan Mann, chief
executive officer of the companies’ MW Power OOD venture.

Government proposals to reduce its wind subsidy by about 22
percent to 148.71 lev ($95) a megawatt-hour may be a “killer”
for the 124-megawatt wind farm development in Pleven, north
Bulgaria, Mann said by telephone from Bucharest, Romania.

Bulgaria, the European Union’s poorest country by economic
output per head, is seeking revenue to cut a budget deficit and
weather the effect of the euro area’s economic crisis. At the
same time, it’s promoting clean power to try to meet an EU goal
of getting 16 percent of its energy from renewables by 2020.
Most of the Balkan nation’s oil and gas is imported from Russia.

China Ming Yang, based in Guangdong, agreed to supply wind
turbines
to the project in February. The deal gave Sofia-based
W.Power access to funds from state-backed China Development Bank
Corp., which has told Mann it may withhold a loan of more than
100 million euros ($125 million) should that subsidy cut happen.

“The 22 percent cuts are horrible for the country,” said
Bulgarian Wind Energy Association Chief Executive Officer
Sebastian Noethlichs. “A lot of the western European developers
and investors are either pulling out or relocating staff back to
their home market and keeping a front office here.”

Chinese Loans

While others in Europe cut support as turbine prices fell,
“Bulgaria does not fall in step with these cost reductions,”
said Daniel Shurey, a Bloomberg New Energy Finance analyst.
“The proposed tariff will likely result in wind project returns
far below the hurdle rate required by foreign investors.”

Bulgaria proposed the cuts this month and they would take
effect from July 2012 to June 2013. A final decision is expected
June 28, Noethlichs said. While the government may reduce their
severity, the proposals are “realistically what this is going
to be,” he said. The Ministry of Economy, Energy and Tourism in
Bulgaria didn’t respond today to requests for comments.

The proposals also include reductions in solar subsidies of
as much 54 percent after panel prices declined by half in the
past year, as well as less support for biomass and hydropower.

To contact the reporter responsible for this story:
Sally Bakewell in London at
Sbakewell1@bloomberg.net

To contact the editor responsible for this story:
Reed Landberg at
landberg@bloomberg.net

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