The Company is a core subsidiary engaged in conventional energy business of SPIC, the ultimate holding company, and has been an ultimate platform for its conventional energy business and assets reorganization and also a leader of its technological innovation and institutional innovation. The Group is proactively implementing its transformation and development strategy with commitment to the development of clean energy and the building into an integrated energy company.
SPIC, the parent company of the Group, is an integrated energy group company mainly focused on electricity with integrated development. As of the end of 2017, the installed capacity of electric power of SPIC reached 126GW, of which clean energy accounted for approximately 45% of the total installed capacity, demonstrating its distinctive feature of clean development.
SPIC remained committed to support the development of the Company and facilitated the rapid development of the Company by injecting quality assets into the Company. In October 2017, the Company entered into agreements with SPIC and CPI Holding, a wholly-owned subsidiary of SPIC, respectively for the acquisition of their clean energy assets in five provinces and autonomous regions, namely Guangdong, Guangxi, Hubei, Anhui and Shandong, with a view to accelerating the transformation towards a clean energy company.
In the future, the Company will continue to strengthen the communication with the parent company and acquire more quality clean energy assets of the parent company at appropriate times so as to optimize its asset structure and enhance its market competitiveness on a continuous basis. Currently, apart from the information already disclosed by the Company, there is no other disclosable information in relation to the acquisition of the assets from the parent company.
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. 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.
In 2017, the hydropower, wind power and photovoltaic power plants of the Group did not participate in direct power supply transaction.
In 2017, the average coal price in China remained at high level throughout the year, the annual average coal price raised significantly as compared to 2016, which squeezed the profit margin of the coal-fired power segment.
In 2017, the government launched a number of policies to adjust and control the coal price. In 2018, it is expected that the government will continue to implement the policies to adjust and control the coal price and the supply and demand for coal will basically remain in balance.
In 2018, China Electricity Council anticipated that the national total electricity consumption will increase by 5.5% as compared with the previous year and the newly-installed capacity nationwide is expected to reach 120 million kilowatts, hence, the national supply of electricity will be fairly sufficient. Nevertheless, the power supply during the peak hours of electricity consumption in certain regions will remain tight. In conclusion, the Group expected that the fluctuation of utilization hours will be relatively stable in 2018 but will still be subject to uncertainties.
In 2017, the capital expenditure of the Group for the year was RMB8,501,931,000. Among which, the capital expenditure for the coal-fired power segment was RMB3,666,377,000, which was mainly used for the construction of new environmental friendly coal-fired power generating units with large capacity and technical upgrade for the existing power generating units. Meanwhile, the capital expenditure for the clean energy segment was RMB4,675,024,000, which was mainly used for the construction of new power plants and power stations.
In 2018, the Group has planned a capital expenditure of approximately RMB7,600,000,000. Of which, the expected expenditures for coal-fired power segment and clean energy segment will be approximately RMB3,400,000,000 and approximately RMB3,700,000,000 respectively, which will be mainly used for the construction of new power generating units and technical upgrade for the existing power generating units.