Market Research Report : Wind Energy Market in China 2012

Wind Energy Market in ChinaWind Energy Market in China

April 2012

Executive Summary

MarketGlobal wind power cumulative installed capacity is expected to reach X GW growing with a CAGR of y% between 20‐‐ ‐ ‐‐ Chinese wind power cumulative installed capacity is expected to reach Y GW growing with a CAGR of z% between 20‐‐ ‐‐‐

Drivers: Ch ll

Drivers & Challenges

Drivers: Growing Energy Demand

Untapped Potential

High Investment Potential

Challenges: Decline in Quality

Tariff Constraints

Lack of Grid Connectivity

Government Initiatives

Key Policies to Develop Wind PowerNational Renewable Energy LawNational Initiatives

Reduction in CO2 Emission

Local Wind Power Development Planning

Off‐Shore Wind Power DevelopmentDevelopment of Domestic ManufacturersWind Turbine Generator Production

Trends

CompetitionMajor Players

Company 1 Company 2 Company 3 Company 4

Reliance on Coal‐fired Power Plants

2WIND ENERGY MARKET IN CHINA 2012.PPT

p y p y p y p y

•Market Overview• Global

• China

•Major Wind Power Bases

•Drivers & Challenges

•Government Initiatives

•Trends

•Mergers & Acquisitionsg q

•Competition

•Key Takeaway


Key Takeaway

Global wind power market will grow at a CAGR of x% to reach USD Y bn in 20‐‐

•Global cumulative installed wind power capacity is expected to reach x GW growing with a CAGR of z% between 20‐‐‐ ‐‐

Global Market ‐ Overview Global Installed Wind Power Capacity

500

GW

Z%x6

5between 20 Value of the global wind power market is expected to reach USD y bn growing with a CAGR of x% during 20‐‐‐‐‐

• By the end of 20‐‐, wind power is projected to supply the world with x% of its electricityWind power is expected to produce y% of the world’s electricity demand by 20 100

200

300

400Z% x5

x4x3

x2x1

electricity demand by 20‐‐• Top five companies account for z% share of the global wind energy market

Wind Power Market GrowthGlobal Market Share (20‐‐)

0

100

20‐‐e20‐‐e20‐‐e20‐‐e20‐‐e20‐‐

150

200

USD bn

Z% x2C%

B%

Company 2

Company 1

0

50

100x1A%

F%E%

D%

Others

Company 5

Company 4

Company 3


020‐‐e20‐‐

F%

In 20‐‐, newly installed capacity in China accounted for X% of the global annual wind power capacity

•Wind power cumulative installed capacity in China is expected to reach x GW in 20‐‐ growing with a CAGR f % b 20

Domestic Market ‐ Overview Installed Capacity Growth

150

GWx4

of y% between 20‐‐‐‐‐

• In 20‐‐, X ranked first in terms of cumulative wind power installed capacity in the world

• In 20‐‐, Y led the world in newly installed wind‐energy devices reaching z GW

50

100

150Z%

x3

x2x1energy devices, reaching z GW

Rank‐ Cumulative Installed Capacity (20‐‐)Rank‐ New Installed Capacity(20‐‐)

020‐‐e20‐‐e20‐‐20‐‐

x1

40

50

GW

x3

x2x1

15

20

GWx1

0

10

20

30

x5

x4x3

0

5

10

x5x4x3x2


Country 5Country 4Country 3Country 2Country 10

Country 5Country 4Country 3Country 2Country 1

X region is expected to build y wind power plants with a total capacity of z GW by 20‐‐

• Finding 1

• Finding 2

X Base ‐ Overview Wind Power Target

40

GW

x3• Finding 3

0

10

20

30 Z%x3

x2

x1

Planned Construction (20‐‐) X – Unit Capacity Cost

020‐‐20‐‐20‐‐

Base Unit Capacity Cost (USD/Kw)

20‐‐e 20‐‐e 20‐‐e

X

Location Units Capacity (GW)

City 1

City 2

Coverage Area

City 3

City 4

City 5


Drivers and Challenges ‐ Summary

Drivers

Challenges

Drivers

Growing Energy Demand

U t d P t ti l

Decline in Quality

Tariff Constraints

Untapped Potential

High Investment Potential

Lack of Grid Connectivity

Reduction in CO2 Emission


Energy demand growing at a x% CAGR during 20‐‐ ‐‐‐ to drive the wind energy market in China

•Finding 1• Finding 2

Growing Energy Demand Impact

• Finding 3• Finding 4

Newly Installed Capacity (20‐‐)China ‐ Energy Demand

3,000

4,000

Mtoe

Z%

x3x2

x1

YX

X3%

X2% X1%

B

A

0

1,000

2,000x1

B%A%

X4%

D

C


20‐‐e20‐‐e20‐‐

Around x% untapped wind resources in the y bases to act as a major growth driver of wind energy in China

•Finding 1•Finding 2

Untapped Potential Impact

g•Finding 3

Wind BasesResource

Potential (GW)

Installed Capacity (GW)( )

A ‐ ‐

B ‐ ‐

C ‐ ‐Region

Total Area(104km2)

Exploitable Potential (GW)

D ‐ ‐

E ‐ ‐

F ‐ ‐

G ‐ ‐

‐ ‐ ‐

‐ ‐ ‐


Wind energy has received x share of investments vis‐à‐vis other renewable sources of energy in China

•Finding 1

• Finding 2

High Investment Potential Impact

g

• Finding 3

Investment in Renewable Energy (20‐‐‐ ‐‐)

E%

D%C%

E

D

C

B

A

B%

A%


Mandate of reduced carbon footprint under the 12th FYP to act as a major growth driver for the wind energy market

Reduction in CO2 Emissions Impact• Finding 1• Finding 2• Finding 3• Finding 4• Finding 5

Per Capita CO2 Emission Rise in Non Fossil Fuel UsagePer Capita CO2 Emission

6

8Z%

x3

tons

15

%

Z%Y%

Rise in Non Fossil Fuel Usage

0

2

4

6

x2x1

0

5

10 x%


020‐‐20‐‐19‐‐

020‐‐e20‐‐

Substandard equipment quality acts as a major challenge to the Chinese wind energy market

Decline in Quality Impact• Finding 1

• Finding 2

• Finding 3

• Finding 4

Wi d T bi E i t P iWind Turbine Equipment Price

1,000

USD/KWY%x1

200

400

600

800x2


020‐‐20‐‐

Fixed grid tariffs for wind power generation is expected to hinder the growth of the Chinese wind energy market

•Finding 1

Tariff Constraints Impact

Fixed Price Policy

Point 1X

Y A B C D

Z ‐ ‐ ‐ ‐

• Finding 2

• Finding 3

• Finding 4


Weak grid connectivity to have an adverse impact on the Chinese wind energy market

•Finding 1

• Finding 2

Weak Grid Connectivity Impact

Point 1Point 1Point 1Point 1

X Y Z

• Finding 3

• Finding 4


Government Initiatives ‐ Summary

Key Policies to Develop Wind Power

`Key Initiatives

National Renewable Energy Law

National Initiatives

Local Wind Power Development Planning


Key policies influencing the development of wind power in China

• Point 1 • Point 2 • Point 3

20 2020 20 20

Point 1 Point 2 Point 3

20‐‐ 20‐‐20‐‐ 20‐‐20‐‐ 20‐‐ 20‐‐

• Point 6 • Point 7 • Point 8 • Point 9 • Point 10 • Point 11 • Point 12

• Point 4 • Point 5


X has adopted several measures to encourage the development of wind power in the region

Local Wind Power Policies of X

Point 1Point 1

BA C

• Point 1

• Point 2 • Point 1• Point 1

• Point 2

• Point 3

• Point 1• Point 2


Installed wind power capacity in Y is expected to reach x% of the total wind capacity of the province by 20‐‐

Local Wind Power Development Planning in the Y

Point 1

Point 2

Point 3

Point 4

Point 5Point 5

Point 6


Trends ‐ Summary

Reliance on Coal‐fired Power Plants

Off‐Shore Wind Power Development

Key Trends

Wind Turbine Generator Production

Development of Domestic Manufacturers


Development of off‐shore wind power is an emerging trend with expected capacity of x GW by 20‐‐

• Finding 1• Finding 2• Finding 3

Off‐Shore Wind Power Development

Off‐shore wind power is set to• Finding 3

• Finding 4

power is set to be developed by

20‐‐

XY

X

X

20‐‐e 20‐‐e

A ‐ ‐

B ‐ ‐

y z

C ‐ ‐

D ‐ ‐

E ‐ ‐

Point 1 Point 2


F ‐ ‐

Domestic companies accounted for x% and y% of new and cumulative installed wind power capacities in 20‐‐


Development of Domestic Manufacturers

Growing domestic


participation in equipment

manufacturing

Market Share‐ New Installed Capacity

100

%

M%K%H%E%

20

40

60

80

N%L%

K%

J%

I%

G%

F%

D%

C%

B%

A%CBA


020‐‐20‐‐20‐‐20‐‐20‐‐20‐‐

Chinese wind energy players are focusing on the production of multi‐MW wind turbine generators

• Finding 1

• Finding 2

Wind Turbine Generator Production

Increasing production of

• Finding 3

• Finding 4

production of MW scale generators

Proportion of MW Scale TurbinesProportion of MW‐Scale Turbines

80

100

%Z%

x3x2

0

20

40

60 x1


20‐‐20‐‐20‐‐

Domestic Competition – Summary (1/2)

580

600

620

Net Income

Size of the Bubble Represents Market Capitalization in USD mn

500

520

540

560 e

420

440

460

480

a

c

340

360

380

400

b

c

d

320

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000

Total Income

Company 5Company 3Company 2Company 4Company 1


Domestic Competition – Summary (2/2)

Total Income and Profit for Major Domestic Companies

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000

USD

Company1y1

x1

C 3x3

Company 2y2

x2

Company 4y4

x4

Company 3y3

Company 5y5

x5

y4

BA


Note: All figures are in USD mn for the year ending 31st Dec 2010

Domestic Company – Company 1

Company Information Locations – China

Corporate AddressAddress 1,

Country 1

Tel No. ‐‐

Fax No. ‐‐

Website ‐‐

Year of Incorporation 19‐‐

Products and Services

Ticker Symbol ‐‐

Stock Exchange ‐

Products and Services

Category Products/Services

Power Generation Product 1, Product 2

Others Product 1 Product 2 Product 3 N D i ti

Key People

Headquarters

Others Product 1, Product 2, Product 3… Name Designation

Person 1 Designation





i i l S h K i

Domestic Company – Company 1

Financial Snapshot Key Ratios

Profit / Loss

Total Income

10,000 600

ProfitUSD mn

Total IncomeUSD mn

x43

Particulars y‐o‐y

change (20‐‐‐‐‐)

20‐‐ 20‐‐ 20‐‐ 20‐‐

Profitability Ratios

Operating Margin ‐ ‐ ‐ ‐ ‐

0

5,000

0

200

400

20‐‐20‐‐

x3

20‐‐

x2

20‐‐

x1

Operating Margin

Net Margin ‐ ‐ ‐ ‐ ‐

Profit Before Tax Margin ‐ ‐ ‐ ‐ ‐Return on Equity ‐ ‐ ‐ ‐ ‐Return on Capital Employed ‐ ‐ ‐ ‐ ‐Return on Working Capital ‐ ‐ ‐ ‐ ‐

Return on Assets ‐ ‐ ‐ ‐ ‐

Financial Summary

• The company incurred a net profit of USD x mn in FY 20‐‐, as compared to net profit of USD y mn in FY 20‐‐

• The company reported total Income of USD z mn in FY 20‐‐registering an increase of per cent over FY 20

Return on Fixed Assets ‐ ‐ ‐ ‐ ‐

Cost Ratios

Operating costs (% of Sales) ‐ ‐ ‐ ‐ ‐

Administration costs (% of Sales) ‐ ‐ ‐ ‐ ‐

Interest costs (% of Sales)registering an increase of z per cent over FY 20‐‐

• The company earned an operating margin of y per cent in FY 20‐‐ an increase of x percentage points over FY 20‐‐

• The company reported debt to equity ratio of y in FY 20‐‐, a decrease of x per cent over FY 20‐‐

Interest costs (% of Sales) ‐ ‐ ‐ ‐ ‐

Liquidity Ratios

Current Ratio ‐ ‐ ‐ ‐ ‐

Cash Ratio ‐ ‐ ‐ ‐ ‐

Leverage Ratios

Debt to Equity Ratio ‐ ‐ ‐ ‐ ‐

Financial Summary

Indicators dd/mm/yy

Market Capitalization (USD) ‐

Total Enterprise Value (USD) ‐

Debt to Capital Ratio ‐ ‐ ‐ ‐ ‐

Interest Coverage Ratio ‐ ‐ ‐ ‐ ‐

Efficiency Ratios

Fixed Asset Turnover ‐ ‐ ‐ ‐ ‐

Asset Turnover ‐ ‐ ‐ ‐ ‐

Current Asset Turnover


EPS (USD) ‐

PE Ratio (Absolute) ‐

Current Asset Turnover ‐ ‐ ‐ ‐ ‐

Working Capital Turnover ‐ ‐ ‐ ‐ ‐Capital Employed Turnover ‐ ‐ ‐ ‐ ‐

Improved Decline

Domestic Company –Company 1

Key Business Segments Key Geographic Segments

100% 9 x10x6x3

DCBA

100%x1

0%

50%

100%

x7

x8x9 x10

x4

x5x6

x1

x2 x3

50%

0%20‐‐

Key Recent Developments

20‐‐20‐‐20‐‐ A

Description News

Overview

• Company is a large scale power generation group with a total registered capital of USD xbn

• Company operates through x branch companies and y wholly funded subsidiaries with ti t di t ib t d ipower generation assets distributed over z provinces

• Total installed power generation capacity of the company is around x GW

New Business• In 20‐‐ wind farm construction of the company in x and y obtained final approval from the regulatory authorities in ChinaC t ti f th i d f f th i th i b ti i 20


• Construction of the x wind farm of the company in the y province began operations in 20‐‐

Chinese wind energy market is expected to grow at a CAGR of x% to reach y GW between 20‐‐ ‐‐‐

Huge untapped potential and supportive government policies to drive the wind energy market in China

Opportunities in the M k t Market Size

Government i i i

Growing demand for energy is expected to emerge as a major

h d i f h

Market Market SizeInitiatives

China adopted the Renewable Energy Law to promote the100

150

GW

Y%x4

x3growth driver for the Chinese wind energy market

Huge untapped potential

Law to promote the Chinese wind energy market

Government has d t d l

0

50

20‐‐e20‐‐e20‐‐

x2

20‐‐

x1

Challenges

Huge untapped potential of wind energy resources to act as a major growth driver of wind energy in China

adopted several measures to develop the major wind power bases in China

High investment in wind energy coupled with CO2 reduction target to drive

• Substandard Quality Turbines

• Tariff Constraints

• Lack of Grid Connectivity

Local government of the provinces have also announced several supportive policies to develop


the Chinese wind energy market in China

y policies to develop the wind power bases

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