Analysis of Global Power Market

Analysis of Macro Economy in China Fixed Asset Investment in Power Sector The total fixed asset investment (FAI) in power sector increased from RMB 772.8 billion in 2013 to RMB 809.4 billion in 2018 with a CAGR of 0.9% and is expected to reach RMB 917.5 billion in 2023 at a CAGR of 2.5% during the period from 2018 to 2023. The focus of fixed asset investment in power sector has shifted from the development of power generation to the construction of power grid. Influenced by the decrease in power generation projects of thermal power and nuclear, the fixed asset investment for power generation encountered significant decrease in recent years. There was significant growth of fixed asset investment in hydropower and wind power based on the related data of the first 5 months of 2019. According to the statistics from the CEC, compared to the same period last year, the fixed asset investments in the hydropower and wind power sectors during the period from January to May 2019 increased by 33.8% and 55.0%, respectively. Given that the decrease of FAI in thermal power is deep and slowing down, the total FAI in power generation is forecasted to gain slow recovery in the coming years. The State Grid has committed to invest RMB 512.6 billion in the construction of power grid in 2019, which is around 5% higher than that in 2018. The construction of Ultra-high-voltage (UHV) transmission network is still the core of power grid development in China. In accordance with the plan, the government is facilitating the development of 12 UHV lines including the UHV lines under construction in the Southwestern China, as well as in the middle reaches of Yalong River-Jiangxi, which will improve the capability of transmitting power generated in the Southwestern China to other regions. The capacity of transmitting power to other regions for power plants in southwest China has been greatly enhanced after the completion of several UHV circuits, such as Fujin-Fengxian (-), Jinpin-Sunan (-) and Yibin-Jinhua (-). There are several UHV circuits under construction in the southwest China, such as Baihetan-Jiangsu (I), and the capability of transmitting power generated in the southwest China to other regions keeps increasing. With the continuous development of power transmission networks and power distribution networks, the fixed investment for power grid has been growing steadily and will keep growing in the future. Fixed Asset Investment in Power Sector, China, 2013-2023E RMB Billion 1,200 CAGR: 2.5% CAGR CAGR 13-18 18-23E CAGR: 0.9% 884.0 900 857.6 846.2 867.5 886.6 903.3 917.5 823.9 809.4 772.8 780.5 340.8 278.1 283.4 288.0 291.8 294.7 -6.8% 1.6% 393.6 290.0 272.1 600 387.2 368.6 300 543.1 533.9 537.3 568.1 584.0 598.6 611.5 622.8 6.9% 3.0% 385.6 411.9 464.0 0 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E 2022E 2023E Power Sources Source: CEC, Frost & Sullivan Power Grid FROST SULLIVAN 11

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