<P><FONT size=6>Citigroup£ºÖйú·çÁ¦·¢µçÐÐÒµ¼ò±¨ 09.25</FONT></P>
<P><FONT size=6>25 September 2007 ª¥ 4 pages</FONT></P>
<P><FONT size=6>China Wind Power Industry</FONT></P>
<P><FONT size=6>Sexy Growth but Not Risk Free</FONT></P>
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<P> A Food-for-Thought Investor Luncheon Event ¡ª We hosted the event on 25 Sep<BR>2007 with more than 70 investors discussing China Wind Energy with speakers:<BR>1) Alex Tancock, general manager of a wind power consultant firm Wind<BR>Prospect (HK) with experience in the UK, Australia and China; and 2) Yuchuan<BR>Tian, managing director of Hong Kong Energy (Holdings) Ltd, the renewable<BR>energy arm of Hong Kong Construction (190 HK, NR).<BR> High growth potential ¡ª China is the fifth-largest global wind market with<BR>1,700MW by end-2006. Wind Prospect forecasts this capacity will rise to<BR>30,000MW by 2020, implying a CAGR of 23% pa. Most of the increment would<BR>be in Northeast China with high wind speed and large load.<BR> Tariffs ¡ª Based on Wind Prospect, plants larger than 50MW are of limited<BR>profitability as they are granted on competitive biddings; but, projects smaller<BR>than 50MW each are determined at the local level, offering 5-12% project<BR>return, though PPAs are unlikely in place until after commissioning. Big<BR>projects are often broken up into 49.5MW each to avoid bidding.<BR> Risks ¡ª Key risks are (i) wind mast and data collection are rarely to global<BR>standards, (ii) data in feasibility report could be questionable, (iii) local entity<BR>may choose non-IEC compliant local turbines, (iv) delayed completion, (v)<BR>problems in grid connection and (vi) uncertain tariffs before completion.<BR> Rewards ¡ª Key rewards are (i) projects could be built quickly, (ii) less<BR>uncertainty after getting local government support, (iii) huge market in China,<BR>(iv) possible equipment cost cut once domestic manufacturers are familiar with<BR>them, and (iv) extra profit from CDM and carbon credits.</P>