Chinese to invest US$1 billion in Texas clean energy plant
Chinese investors expect to close one of the biggest investments by China in the U.S. power sector in September.
The project involving the China Petrochemical Corporation, more commonly known as the Sinopec Group, and Chinese banks will see the Chinese acquire an equity stake in and provide financing for the US$2.5 billion Texas Clean Energy Project being developed by Seattle-based Summit Power Group LLC.
It will be one of the biggest investments by Chinese companies in the U.S. power sector. Sinopec is Asia's largest oil refining and petrochemical enterprise.
The project will involve building a coal-gasification plant in Odessa, Texas that will convert coal into a combustible gas and use it to make electricity. Supporters claim coal gasification uses coal more cleanly and captures carbon dioxide for use in oil recovery.
The project has secured tax benefits and US$450 million in grants from the U.S. Department of Energy. It also has the necessary permits and a contract with San Antonio to buy its electricity for 25 years.
Analysts said Sinopec is looking to aggressively acquire energy reserves and seeks U.S. production expertise, currently through minority stakes and partnerships, but remains wary of a political backlash among U.S. politicians who oppose these deals.
The joint U.S.-China investment comes as both countries have urged collaboration on clean energy research and deployment.