Analysis of the Development Trends of the Power Industry in the Next 5-10 Years

I. Electricity Demand Forecast

According to the prediction of the Chinese Academy of Sciences' Institute of Finance and Development, the primary electricity demand during the 12th and 13th Five-Year Plans will maintain a stable growth trend, with an average annual growth expected to reach between 6.7% and 7%. By 2018, the primary energy electricity demand will reach 1.4 trillion kWh, and by 2020, it is expected to reach 1.6 trillion kWh. Social Electricity Consumption In terms of social electricity consumption, considering that China is in the middle and late stages of industrialization, social electricity consumption will continue to recover and increase according to a three-stage growth path.

Momentum Stage. During the latter half of the 12th Five-Year Plan, the growth rate of electricity consumption in China will remain at around 5.0%-7.0%, with total electricity consumption reaching 5.7-6.0 trillion kWh.

Recovery Stage. China will complete industrialization around 2020 and urbanization around 2030. Therefore, the growth rate of social electricity consumption will increase to around 5.5%-7.5% during this stage.

Stable Stage. The period from 2020 to 2030 will be the "stable stage." From 2020 onwards, as China's industrialization is basically completed, the growth rate of social electricity consumption will gradually decline, with an average growth rate decreasing to 3.0%-4.0%, and total social electricity consumption will reach around 10 trillion kWh.

II. Electricity Supply Forecast

During the 12th Five-Year Plan, the total investment in China's power industry reached 5.3 trillion yuan, of which power generation investment accounted for 2.75 trillion yuan (52% of total investment) and grid investment accounted for 2.55 trillion yuan (48%). At the same time, the power generation investment structure has been further optimized; power generation investment will tilt towards the west; and grid investment will tilt towards the main grid and distribution network. During the 11th Five-Year Plan, the total power investment is expected to reach 3.1 trillion yuan. Compared with the 5.3 trillion yuan demand during the 12th Five-Year Plan, there is still an investment gap of 2 trillion yuan. For power companies and the industry as a whole, the financing demand will still show an expanding trend.