Dear Shareholders,


2018 was a year of challenges for China Power Clean Energy. We always abide by the mission of a listed company and earnestly fulfil our promises to create value for shareholders and create clean energy for the society. In the past year, the Group was committed to its principal business, actively responded to China’s energy system reform, new strategies of Group’s development and other changes. We prevailed over unfavourable factors such as the reduction in water flow volume for hydropower generation, increase supply in power generation in the market, drop in natural gas tariff and inflating fuel prices. We strived to strengthen our operational management and maintain stable operating results.

BUSINESS REVIEW FOR 2018

Overcame unfavourable factors impacted on operating results

2018 saw China Power Clean Energy maintain its stable development. During the year, China Power Clean Energy recorded profit attributable to owners of the Company of approximately RMB185,323,000, representing a yearon-year decrease of 53.9%. Such decrease was primarily attributable to multiple adverse factors such as the drop in natural gas tariff, increase in fuel costs and significant reduction in water flow volume for hydropower generation. Profit from the natural gas power and hydropower generation segment decreased by 75.2% and 186.2% year-on-year, respectively. The Company achieved a better performance in actively striving for a larger share of power generation in the market and lowering the wind and photovoltaic power curtailment rate, which has, to a certain extent, slowed down the adverse effects of tariff policies and climate conditions on our performance. In 2018, the Company accounted for 42% of the power generation in the market, representing a year-on-year increase of 10 percentage points. The accumulated curtailment rates of wind and photovoltaic power were 20.4% and 1.1%, representing a year-on-year decrease of 11.6 percentage points and 3 percentage points, respectively. Profits from the wind power segment amounted to approximately RMB289,464,000, representing a year-on-year increase of 71.7%, respectively, which contributed to our profit. During the year, the Company generated 10,135,282.52 MWh of electricity in total.

Continuously optimised industrial layout

During the year, the Group continued to increase the proportion of its waste-to-energy power generation and natural gas power generation projects, with the industrial layout optimised on an ongoing basis. In 2018, the Group had a controlled installed capacity of 3,935.19MW and an additional installed capacity of 31.76MW. Operation also commenced as planned for Guiyang Environmental Wasteto-Energy Power Project (with an installed capacity of 24.0MW) and Zhejiang Yunhe Photovoltaic Power Project (with an installed capacity of 7.76MW). In 2018, the Group also obtained approval for Shandong Dezhou 240.0MW Natural Gas Thermal Power Joint Production Project, Hongze Sanhe 77.0MW Natural Gas Distributed Energy Project, Shandong Tai’erzhuang Environmental 10.0MW Power Project, Jilin Panshi 18.0MW Environmental Power Project and Hebei Handan Yongnian 24.0MW Environmental Power Project, which had a total approved capacity of 369.0MW. The Group obtained franchise rights for Hubei Huanggang 24.0MW, Hubei Huangmei 18.0MW, Hainan Wenchang 12.0MW, Heilongjiang Keshan County 9.0MW Environmental Power Projects, and development rights for Phase II of Hubei Chunyangshan 40.0MW Wind Power Project and Anhui Huaining Lashu 50.0MW Wind Power Project. Jiangsu Xiangshui 50.0MW Wind Power Project has been included in the 2018 Wind Power Development and Construction Plan by Jiangsu Development and Reform Commission. At the same time, the Group has made steady progress in project engineering quality and obtained the “2018 China Power Quality Project Award” (2018年度中國電力優質工程獎) for the Wu Hu China Power Environmental Power Project.

In 2018, with the strong support of all shareholders and the joint efforts of all staff, China Power Clean Energy managed to control the decline and maintain stable operating results, and completed its works as expected in this difficult year, under the impacts of many unfavourable factors. I would like to express my sincere gratitude to the shareholders on behalf of the Board and all the officers and staff!

PROSPECT FOR OPERATIONS IN 2019

China will continue pushing for high-quality development in 2019. On one hand, China has made new achievements in building an energy sector that is clean, low-carbon, safe and efficient, and taken new strides in promoting the high-quality development of the energy industry. Cost of new energy power generation is declining; wind power and photovoltaic power are undergoing a transition from the subsidy era to the parity era, which brings both challenges and great opportunities to the development of photovoltaic and wind power generation. The National Energy Administration’s target to ensure a further rise in the national average utilisation rates of wind power and photovoltaic power in 2019, which will further improve the profitability of wind and photovoltaic power segments. On the other hand, China aims to further increase the traded power volume in the market, and to promote the participation of different market entities in the marketbased electricity transactions. Accordingly, the on-grid tariffs of wind power, natural gas power, hydropower and photovoltaic power segments are likely to show a decline trend, affecting the efficiency of power generation. Overall, the “13th Five-Year Plan” has brought both challenges and opportunities to the new energy industry. We will continue to comply with the new development concept and stick to the supply-side structural reform as the underlying principle. On top of that and with reference to the strategic goal of “building a world-class clean energy enterprise”, the Group will work harder on acquiring new energy resources, continue to optimise its industrial layout and deliver economies of scale in its region. We will also be engaged in greater development of waste-to-energy power projects, and accelerate the Phase II expansion work of qualified waste-to-energy environmental power projects, so as to sharpen the competitive edges of the segment. The Group will promote the coordinated development of its existing projects in the region for wind and photovoltaic power projects. Relying on the existing environmental power projects, we will take the initiative to explore opportunities for the development of veinous industrial parks, and attempt to develop power projects which generate electricity with medical waste, food waste and sludge treatment. We will continue to strengthen our safety production, project construction and other areas of basic management, work on team building and staff capability development, continue to improve our management and asset quality, and enhance industrial efficiency.

I firmly believe that all of the Company’s management and staff will adhere to the core value of “innovation and creation, continuous endeavor and harmonious coexistence”, the entrepreneurial spirit of “green innovation and deployment” and the striver-oriented concept. We will take the initiative to overcome difficulties, continue to adhere to the new development concept, persist in promoting high-quality development, and return outstanding achievements to shareholders and the society.