Zhaoheng Hydropower Holdings Ltd.

completed

A developer and operator of hydropower generation businesses, the Sponsor owns 33 hydropower assets (which comprise 60 projects each with a power plant) with a combined installed capacity of 682.7 MW, located in seven Provinces across China (Fujian, Guangxi, Guizhou, Hebei, Hunan, Sichuan, and Yunnan). The Sponsor has majority ownership of all but two projects, which individually range in size from 0.64 MW up to 62.5 MW. Zhaoheng acquired 58 plants as operating or construction-in-progress projects since 2005 from previous owners, with the remaining 2 projects directly developed by the Sponsor.Most projects are small-scale run-of-river facilities located in the upper catchments of streams and small rivers. They are either isolated single facilities or, more commonly, one of a series of cascade projects on a watercourse that may be owned by the Sponsor and/or another power producer. These projects typically have high heads (300-600 m) created by relatively short diversions on these steep upper catchments. A project normally consists of a small diversion weir (usually between 3-20 m high, although the highest dam is 75 m high), a sediment basin, headrace canal/tunnel (commonly around 1-3 km), pressure basin, above-ground penstock, powerhouse, tailrace outlet and switchyard. Some projects incorporate dams with some live storage, usually on the upper-most diversion where a cascade series of projects exist. These structures are usually over 20 m high, but the storage volume is relatively minor due to the steepness of the site, and hence they are usually only capable of increasing the available flow by a small volume over a short period. The headraces commonly consist of a combination of canals and tunnels, although canals have typically been installed instead of tunnels where ground conditions allow for construction cost savings. Power is exported from the project-owned switchyard via grid-owned transmission lines that usually range from 35-220 kV. The Sponsor may have installed an access road to project structures, but in most instances this is limited to short lengths of earth road off established main roads. Each project typically has an office and a separate staff accommodation block located near the powerhouse.Each project is operated separately from its own control room, with the only shared facility between some projects located in the same catchment or locality being a transmission line for the export of power to the grid. Since projects are scattered throughout seven provinces in China over a large geographical expanse, the Company sets up a number of regional hub offices each overseeing management of a cluster of projects in the same area (e.g. the Lijiang office manages five projects - Jinzhuang 3, 4, and 5 and Xinzu 2, 3).The Sponsor’s projects are located in rural areas, mainly on or near forest, grazing and agricultural land accessed by local communities. The footprint of most projects (with an installed capacity of 0.64-10 MW) averages around 3.0-4.5 hectares of land per project, while projects with greater installed capacity may have a larger footprint depending on the size of the weir pond/reservoir. For example, the largest reservoir (Sanjiang) covers an area of about 1,460 ha. Project structures are located at various distances from human settlements, the closest being several hundred meters away. Project stream flow diversions are commonly in the range of 2-10 m3/s and up to 565 m3/s with generation relying on the high head in steep catchments. Some projects also divert side-streams to increase the available flow for generation, but these diversions are generally small scale. The Sponsor owns one inter-basin transfer project, Jinfeng (13.6 MW) in Yunnan Province, where the majority of the mean annual flow is transferred into a separate catchment.The proposed Investment (“the Investment”) by IFC will support the operational expansion of Zhaoheng to expand its portfolio of hydropower assets in China through IFC’s loan and equity financing. Equity will be invested in a corporate entity which may use the proceeds towards any existing and future projects, some of which are as-yet undefined. It is expected that loan proceeds will be used for financing the Menglang/Gaoqiao (Yunnan Province) and Banian (Guizhou Province) assets. These assets together comprise seven projects, arranged as cascade or stand alone projects, of which five are being constructed and two are awaiting start of construction.