(Yicai Global) Sept. 20 -- Shares in Yunnan Wenshan Electric Power advanced today after the Chinese hydroelectric power generator said it will invest CNY12.7 billion (USD1.8 billion) to build two pumped storage power stations in southern Guangdong province to better cater for the rapid increase in renewable energy electricity generation.

Wenshan Electric’s share price [SHA:600995] was trading up 3.2 percent at CNY16.71 (USD2.38) as of 1.20 p.m. China time today.

Unit China Southern Power Grid Peak and Frequency Modulation Power Generation will invest CNY8 billion (USD1.1 billion) to construct a 1,200-megawatt pumped storage plant, called Longdong, in mountainous Wuhua county, Wenshan Electric said yesterday, citing the deal signed between the subsidiary and the local government.

A team will be sent out within the next three months to carry out preliminary work including survey and design, the Wenshan, southwestern Yunnan province-based firm said. No timeline was given.

It will also spend CNY4.7 billion (USD670.5 million) to build the second phase of the Meizhou pumped storage station, also with a power generation capacity of 1,200 MW and also in Wuhua, it said. Construction should be completed in 2025. The first phase, again with a capacity of 1,200 MW, came online earlier this year.

Pumped storage plants help to balance loads and can be used to steady the fluctuating output of intermittent energy sources, such as renewable energy. The stations usually consist of an upper reservoir, a lower reservoir, a water transportation system and an underground power house, it added.

The Wuhua government will help Wenshan Electric find other pumped storage sites to develop, said Wenshan Electric, which has already put 10,280 MW of pumped storage projects into operation. Wuhua, located in the east of Guangdong, has 12 mountain peaks around 1,000 meters high.

Last October, Wenshan Electric took over China Southern Power Grid Peak and Frequency Modulation Power Generation from its parent firm China Southern Power Grid through major asset restructuring. It then shifted focus to become an energy storage company to ensure stable operation of the grid as more power is generated by new energy sources. At the time, its stock price tripled.

Editor: Kim Taylor