Analysis of Global Power Market

Competitive Landscape of China's Power Operation Market Entry Barriers Regulation Barrier Power industry in China is implementing the market admittance system, which requires market participants engaged in power generation, transmission and distribution business to obtain government's permission first before conducting power business. Applicants will need to fulfill requirements on financial capabilities, qualifications held by personnel, environmental regulations, etc. in order to be granted with such permissions. Furthermore, initiation of power projects also need to obtain approval from administrative bodies (e.g. Water Affairs Bureau to approve hydropower project). Such regulatory procedures typically require bulk of documents and take long processing time, which is deemed as a significant entry barrier for new market players. Talent Barrier 2 • Regarding the requirement on manpower in power industry, human resources equipped with professional knowledge, proficient skillsets and relevant qualifications are in high demand. Power projects are generally specialised and complicated, which requires intensive involvement of experienced talents with specialties in power industry. To train and foster such employees will consume great amount of time and funds, and moreover, due to the limited supply in market, it is difficult to for new comers of power industry to recruit sufficient number of qualified professionals within a short period of time. Therefore, new entrants have to overcome talent barrier in order to complete with existing power market participants. 4 Entry Barriers 1 • Industry Experience Barrier Due to the significant influence of power industry to the society and human's daily life, power generation facilities and infrastructures must have high level of safety and stable performance during operation, and hence the successful track record of operating and maintain power generation project is highly regarded as a guarantee to ensure that the new power project can be functioning well. Moreover, managing a portfolio of power generation projects using different power sources requires not only unique expertise, but also highly systematic and integrated technical and managerial experiences, which are difficult for new comers to accumulate within short time. FROST & 3 • Capital Barrier Large-scale power projects have a long construction and project return period, which must be supported by sufficient capital for the continuation of business operation and maintenance. Due to lack of efficient funding channels, it is usually difficult for new comers to conquer capital barrier. SULLIVAN Source: Frost & Sullivan 90

View entire presentation