Analysis Of The Core Factors Affecting The Return Of Chinese Enterprises' Overseas Energy Investment Projects

In recent years,the overseas investment business of Chinese enterprises has been developing rapidly.With its strategic position in the national economy and the expected good profits,the energy and power sector has gradually become the hotspot of Chinese enterprises' overseas investment.In particular,hydropower and renewable energy,such as wind power and photovoltaic industries,are increasingly preferred by overseas investment enterprises because of their clean,economic,abundant and renewable characteristic.The evaluation standard of overseas investment projects' profitability is the net present value(NPV)and the internal return rate(IRR)of the project.On the purpose of researching and judging the boundary conditions for Chinese enterprises' overseas investment projects objectively and precisely,this paper selects three Chinese enterprises' projects as the research object: Indonesia hydropower station project,Pakistan hydropower station project and Brazil wind farm project.Through the vertical and horizontal comparison of the financial indicators between the financial models of the three typical projects,the paper draws the conclusion that there are several core factors that influence the NPV and IRR of the project.The three projects selected in this paper are located in different continents,with obvious differences in investment incentive policies,taxation,electricity market,tariff mechanism,etc.For each project,sensitivity analysis is carried out in comparing fixed assets investment plan,financing cost and liquidity,total cost,tax,generation benefit,project solvency and profitability.From the results of economic evaluation and sensitivity analysis of the project,we can see that the IRR of Chinese enterprises' overseas investment energy projects is the result of multiple boundary conditions,but different boundary conditions play different roles.The core boundary conditions for determining the profitability and solvency of overseas investment projects are four factors: total investment in fixed assets,electricity price,and effective electricity in spot-market,as well as bank loan interest rate,among which the bank loan interest rate is the most important factor.