China has set ambitious goals for its renewable energy production and Stanley Fan from Macquarie's Beijing office is on the ground helping to power the next phase.
"When it comes to producing power from renewable sources, China is now the world’s largest producer," says Stanley Fan, who works in Macquarie's Beijing office. “The central government has shown its commitment to the sector with a clear target to increase the share of renewable energy in the long term."
China is the biggest renewable energy market in the world, with total installed capacity of 728GW at the end of 2018, equivalent to more than one third of total installed power capacity, and Macquarie is committed to helping power the transition to a low carbon economy.
Stanley joined the Macquarie Asset Management Real Assets division in 2016 to take a lead role in the organisation's renewables strategy in China. A Beijing local with a finance and asset management background, his job is overseeing existing renewable projects and building new ones.
The scope of his role is diverse and includes originating deals, raising debt financing from local financial institutions and asset management post investment. One day he might be meeting with local government or engineering, procurement and construction (EPC) contractors and the next would find him negotiating interest rates. Stanley’s role also includes engaging with local communities, which is part of Macquarie’s commitment to supporting a cleaner China.
MAM is a significant investor in renewables, managing investments in 12.9GW of green energy generation capacity around the world. The MAM team has a 13-year track record of investing in renewable energy assets globally across wind, solar PV, geothermal and hydro, and signed the Principles for Responsible Investment initiative in 2015. Employing more than 300 energy specialists, Macquarie is also a leading global renewables developer and the leading renewables advisor globally.1
“We currently have an interest in 21 renewable energy assets located in 13 countries around the world”, says Stanley. “Many of these developments have grown in scale and size over the last few years. For example, Jinko Power, one of China's leading solar-farm operators in which a MAM-managed fund invested in 2014, has achieved a more than ten-fold increase in capacity since our investment, to reach 3.1GW by the end of last year," he says.
Helping to overcome some of the challenges with renewable energy is also part of Stanley’s remit: "A challenge for solar operators is that most of the population lives along the east coast, whereas much of the solar capacity has been developed in the West of China, leading to a reduction in the output in some areas. Furthermore, wind and solar are not baseload, so they cannot guarantee 24-hour supply."
Working with Stanley and other Macquarie investment team members, Jinko Power was one of the first to actively target new plants closer to the demand centres, despite challenges in land availability. “We have built up a lot of solar farms close to the centres of electricity consumption in the eastern part of China - closer to Shanghai and Beijing," says Stanley.
His role also covers Macquarie's interests in wind power in China, where he faces similar geographical challenges. “You get a better wind speed in the north but there is limited local electricity consumption; therefore you cannot fully dispatch to the state grid.
“You have to think strategically about how you’re going to overcome this. A good example is Shanghai Sineng, a Chinese wind developer which a MAM-managed fund has invested in. Sineng’s wind turbines are based mostly in Shanxi province, which is a compromise between proximity to the demand centres and wind resource, to overcome these challenges.
“A large part of my role is focused on coming up with innovative solutions as well as utilising new technologies, such as higher hub heights and longer blades on wind turbines that can generate power in lower-wind conditions," he says. “We’re also using drone technology to optimise the operations and maintenance of our turbines.”
These challenges, and working on solutions to overcome them, is what keeps Stanley's role interesting. That, combined with the remit to explore greenfield investments throughout China, means no two days are ever the same.