In 2017, affected by the coal industry de-capacity policy and the volume restriction on imported coal, the coal prices in the PRC remained high throughout the year, and the average coal price during the year was significantly higher than in 2016. Impacted by the high coal price, the Group's fuel costs had increased substantially over the previous year with a rise in unit fuel cost of more than 30%, resulting in a loss in the coal-fired power business. However, the result performance of the clean energy business was satisfactory. Profits from hydropower supported the Group's overall profitability. The newly operating wind power plants and photovoltaic power stations also contributed to the full-year profit.
In 2017, the total electricity sold by the Group amounted to 64,053,714MWh, representing an increase of 5.42% as compared with the previous year, and the profit attributable to owners of the Company was RMB795,272,000, representing a decrease of 66.39% as compared with the previous year. Basic earnings per share was RMB0.10. As at 31 December 2017, net assets per share, excluding non-controlling interests, was RMB3.04.
In 2017, the Group adhered to the "transformational development" strategy to accelerate the transformation towards low-carbon enterprise. The Group has stepped up its efforts in the development of clean energy in recent years and the total installed capacity of clean energy continued to grow, among which the total installed capacity of operating wind power and photovoltaic power has exceeded 1,000MW. The Group acquired highquality asset companies from its parent companies during the last quarter of last year. The companies are located in five provinces and autonomous regions in Guangdong, Guangxi, Anhui, Hubei and Shandong, and owned a number of clean energy projects in operation or under construction. It is expected that the Group's installed capacity of clean energy under commercial operation will increase by nearly 2,000MW upon completion of the acquisitions, which will help to enhance the Group's profitability and bring about opportunity for further expansion.
The Group devoted its efforts in enhancing the operational capacity of its coal-fired power segment, strengthening its electricity sales initiatives, developing the direct power supply market in an orderly manner, and actively promoting direct power supply transactions with large-volume end-users. During the year under review, the average utilization hours of coal-fired power of the Group recorded a year-on-year increase of 390 hours, which was higher than the increase in the national average utilization hours of coal-fired power. In order to proactively strive for favorable tariff policies, all the nineteen coal-fired power generating units of the Group had completed the ultra-low-emission technical upgrades, of which seventeen generating units secured ultralow emission tariffs, which in turn resulted in an increase in the average on-grid tariffs of the Group's coal-fired power. Moreover, in order to expand its source of income, the Group took proactive measures to develop its market share in sales of heat and the volume of heat sold (including an associate and a joint venture) grew by 24.28% year-on-year.
The Group continued to explore new business models for the development of the energy industry. Significant efforts were devoted to develop integrated energy projects (i.e. to supply electricity, heat, cold energy and industrial water simultaneously to users) and focused on investment in the key economic development zones in the PRC. Among which, the integrated energy projects in Anhui Hefei, Sichuan Chengdu, Sichuan Deyang, Guangdong Jiangmen and other cities have been progressing smoothly and the intelligent energy project located in Beijing has also obtained approval from the government. These integrated energy and intelligent energy projects have laid a sound and solid foundation for the Group's development layout in the future.
Power Generation and Electricity Sold
In 2017, the details of power generation and electricity sold of the Group are set out as follows:
| |
2017
MWh |
2016
MWh |
Changes
% |
| Total power generation |
66,683,402 |
63,403,445 |
5.17 |
| - Coal-fired power |
48,021,260 |
44,604,876 |
7.66 |
| - Hydropower |
17,067,759 |
18,075,229 |
–5.57 |
| - Wind power |
912,880 |
465,293 |
96.19 |
| - Photovoltaic power |
681,503 |
258,047 |
164.10 |
| |
|
|
|
| Total electricity sold |
64,053,714 |
60,760,318 |
5.42 |
| - Coal-fired power |
45,653,048 |
42,244,478 |
8.07 |
| - Hydropower |
16,852,555 |
17,819,196 |
–5.42 |
| - Wind power |
877,683 |
441,614 |
98.74 |
| - Photovoltaic power |
670,428 |
255,030 |
162.88 |
In 2017, the electricity sold of the Group's major associates and joint ventures are set out as follows:
| |
2017
MWh |
2016
MWh |
Changes
% |
| Total electricity sold |
9,579,150 |
20,498,973 |
–4.49 |
| Changshu Power Plant |
|
|
|
| - Coal-fired power |
16,138,900 |
16,988,901 |
–5.00 |
| - Photovoltaic power |
62,323 |
14,693 |
324.17 |
| Xintang Power Plant |
|
|
|
| - Coal-fired power |
3,377,927 |
3,495,379 |
–3.36 |
In 2017, the total electricity sold by the Group increased by 5.42% as compared with the previous year. In respect of coal-fired power, despite the Group arranged suspension of certain coal-fired power generating units for ultra-low-emission technical upgrade works and overhaul maintenance and repairs in the first half of the year, resulting in a slight year-on-year decrease in electricity sold in the first half of the year, the overall annual electricity sold of coal-fired power still grew by 8.07% as compared with the previous year. Electricity sold of wind power and photovoltaic power were up by 98.74% and 162.88% year-on-year respectively under the Group's vigorous efforts in promoting the development of clean energy.
Heat Sold
In 2017, the total heat sold by the Group (including an associate and a joint venture) was 17,458,011GJ, representing an increase of 3,410,517GJ or 24.28% as compared with the previous year.
In recent years, the Group has started to develop heat supply projects and carried out heat supply renovations for existing coal-fired power generating units which are suitable for heat supply in order to use residual heat as a new source to boost profit growth. As of 31 December 2017, the Group has accumulatively completed the heat supply renovations for ten power generating units (including an associate) and the heat supply renovations of another two power generating units are expected to complete within 2018.
Direct Power Supply
The Group actively participated in the reform of national power system and market, closely tracked the roll-out of relevant reform policies and analyzed opportunities arising therefrom to increase electricity sold through direct power supply transactions, and gradually expand its market share. In 2017, a number of coal-fired power plants of the Group participated in direct power supply transactions, the electricity sold through direct power supply transactions amounted to 13,317,562MWh, accounting for approximately 20.79% of the Group's total electricity sold.
Direct power supply is a way of open market trading of electricity. The tariffs will vary with supply and demand in the electricity market. In 2017, the Group exercised effective control over the tariffs of direct power supply, the average post-tax tariff of direct power supply in the second half of the year increased by 4.82% as compared with the first half of the year. For those power plants of the Group which participated in direct power supply transactions, the average post-tax tariff of direct power supply was at a discount of approximately 8.70% as compared with the average post-tax benchmark on-grid tariff.
On-Grid Tariffs
In 2017, the Group's average on-grid tariffs as compared to the previous year were as follows:
coal-fired power was RMB313.14/MWh, representing an increase of RMB4.06/MWh;
hydropower was RMB284.62/MWh, representing a decrease of RMB18.14/MWh;
wind power was RMB443.34/MWh, representing a decrease of RMB31.67/MWh; and
photovoltaic power was RMB723.98/MWh, representing a decrease of RMB77.37/MWh.
The year-on-year increase in average on-grid tariff of coal-fired power of the Group was because of the upward adjustments to on-grid tariffs for coal-fired power from 1 July 2017. The decrease in average on-grid tariff of hydropower was mainly due to the downward adjustments of on-grid tariffs for hydropower plants located in Hunan Province from 1 September 2016. The decrease in average on-grid tariff of wind power was mainly due to some wind power plants located in northwest area participated in the market trading of electricity at discounted on-grid tariffs. The decrease in average on-grid tariff of photovoltaic power was mainly due to the downward adjustments of on-grid tariffs by the National Development and Reform Commission for new photovoltaic power stations during the year.
The Group will continue to closely monitor the developments of environmental protection policies of the PRC government and strengthen the research on green energy tariff policies in order to actively seek for more green energy subsidies and increase revenue.
Unit Fuel Cost
In 2017, the average unit fuel cost of the Group's coal-fired power business was RMB209.19/MWh, representing an increase of 35.48% from that of RMB154.41/MWh of the previous year. Since the second half of 2016, market coal price rose rapidly and continued to hover at high levels this year, resulting in a significant increase in fuel costs as compared with the previous year. During the year under review, the Group continued to strengthen the management over coal procurement, conduct detailed fuel indicator analysis, and explore new channels of coal supply by enlarging the scale of centralized procurement and making timely adjustment to its coal inventory level in response to market changes with a view to enhancing its bargaining power and proactively controlling the fuel costs.
Coal Consumption
In 2017, the net coal consumption rate of the Group was 304.23g/kWh, representing a decrease of 0.70g/kWh as compared with the previous year.
In recent years, several of the Group's environmental friendly power generating units with large capacity and high parameter have commenced operation, which have achieved substantial effect in energy saving and emission reduction and helped maintaining the net coal consumption rate at a low level.
Utilization Hours of Power Generating Units
In 2017, with the rise in national total electricity consumption and the Group's proactive participations in direct power supply transactions, compounded with the notable results achieved by the PRC government in controlling the pace of coal-fired power development in the year, the newly-installed capacity of coal-fired power nationwide fell significantly year-on-year. The average utilization hours of the Group's coal-fired powergenerating units had rebounded to 4,104 hours, representing an increase of 390 hours as compared with the previous year. The average utilization hours of hydropower generating units was 3,553 hours, representing a decrease of 227 hours as compared with the previous year. The average utilization hours of wind power generating units was 1,853 hours, representing an increase of 272 hours as compared with the previous year. The average utilization hours of photovoltaic power stations was 1,530 hours.
