The joint venture is being formed based on the results of three previously established similar joint ventures.
The agreement is an extension and update of an existing deal between the companies. The three previously established joint ventures include a transformer factory in Shanghai and two others that are under construction in Shanghai and Wuhan.
The plants under construction will be used to design, manufacture and sell AC transformers up to 1,200 kilovolts (kV) and DC converters. The plants are expected to begin operation in 2009.
The integration of the three plants will increase Shanghai Electric and AREVA's power transformer production capacity to 70,000 megavolt-amperes (MVA) in the next five years. The plants can be further expanded to 85,000 MVA.