Sunday, April 18, 2021
 
Columnist
Martin Hennecke
 
HN RENEWABLES
HKEx Stock Code : 00958 
 
Corporate Profile
The Group is mainly engaged in wind power generation and sale in the PRC.

Business Review - For the year ended December 31, 2012

In 2012, China's economic growth slowed down with slower power consumption growth compared to the previous year. The first three quarters of 2012 saw slower power consumption growth while the fourth quarter of 2012 saw a general steady recovery. Grid congestion intensified in certain regions and carbon credit prices in international markets dropped significantly. Under such a complex and volatile business environment, the management and employees of the Company made joint and innovative efforts to maintain safety production, improve economic efficiency, optimize business distribution and strengthen management capabilities so as to ensure healthy, efficient, sustainable and rapid development of the Company.

1. Maintain safety production and consistent growth of power generation

In 2012, the Company conducted a thorough assessment of equipment-related potential risks, reassured the management of its wind power turbines beyond warranty period, and strived to improve its operation and management capabilities. The Company fully completed the low voltage ride-through upgrading of its wind farms, thereby increasing the safety and stability of its equipment through technical innovation. At the same time, the Company reinforced marketing efforts to improve analysis of the power market, communications and coordination with power grid operators, and conducted multi-level marketing initiatives to resolve bottleneck issues relating to grid congestion with the aim of increasing power generation and achieving a leading position in terms of utilization hours in each regional market.

In 2012, the gross power generation of the Company amounted to 8,402.3 GWh, representing an increase of 22.8% compared with the previous year. The increase in power generation was primarily attributable to the growth of installed capacity as well as consistent improvement in operation and management capabilities.

2. Gradual improvement of infrastructure management and further optimization of project layout

In 2012, the Company overhauled its infrastructure management capabilities and completed a number of high quality wind power projects by focusing on cost control and a thoroughly refined management process. The Huaneng Xinjiang Santanghu Wind Farm Phases I and II received quality construction awards of power industry, and the Huaneng Shandong Hekou Wind Farm Phases I to IV Project received national silver quality construction awards. With a focus on economic efficiency, the Company also rebalanced its wind power development and construction by focusing on regions with quality wind resources and favorable on-grid access conditions.

As of 31 December 2012, the Company had 5,457.4 MW of installed capacity, representing an increase of 11.3% compared to the previous year. In particular, its installed capacity in economically efficient provinces such as Guizhou, Guangdong and Yunnan increased by 235.7%, 57.4% and 13.2%, respectively, compared to the previous year.

3. Expanding the approach to project development and strengthening preliminary efforts

In 2012, the Company expanded its development mode by taking collaborative development opportunities with wind power equipment manufacturers to secure quality resources. The Company continued to enhance its efforts in securing resources and, in particular, preliminary market development in provinces where it had not previously secured any resources.

In 2012, the Company entered into new development agreements with a total capacity of 3,720 MW and received approvals for 31 new projects with a total capacity of 1,550 MW, of which wind power projects accounted for 1,470 MW and photovoltaic power projects accounted for 80 MW. Most development agreements signed and projects approved in 2012 were located in regions with quality wind resources and favorable on-grid access conditions. This has laid the foundation for the development of economically efficient wind power projects.

4. Mitigating CDM market risks and pushing forward in project registration

In 2012, carbon credit prices in international market dropped significantly as a result of the Euro debt crisis and other unfavorable factors. Despite such unfavorable market conditions, the Company was fully committed to its investors and adopted a solid Certified Emission Reductions (¡§CERs¡¨) revenue recognition approach. At the same time, the Company strived to ensure the quality and progress of the Clean Development Mechanism (¡§CDM¡¨) projects and gave priority to project registration. In 2012, the Company achieved a record number of newly-registered projects.

As of 31 December 2012, the Company had 128 CDM projects approved by the National Development and Reform Commission (the ¡§NDRC¡¨), all of which were successfully registered with the United Nations Clean Development Mechanism Executive Board as of 31 December 2012, among which 35 were newly approved and 77 were newly registered in 2012. As of 31 December 2012, the Company received an aggregate certified emission reduction of 3,057,171 tons, including 1,175,221 tons received in 2012.

5. Enhanced financial control capabilities and effective reductions in financing costs

In 2012, the Company improved budget management and diversified funding approaches to ensure funding availability and to reduce financing costs. In October 2012, the Company successfully issued RMB2 billion corporate bonds at a weighted average coupon rate of 4.92%, which was significantly lower than bank lending rates. The Company reduced financing costs effectively by various approaches such as adjustment of the interest rate, term and manner of its deposits or borrowings throughout the year.

6. Breakthrough in the development of distributed power projects

In 2012, the Company constructed and operated the first national distributed wind project, the Huaneng Shaanxi Dingbian Langergou Distributed Demonstration Wind Farm. The project signified that the Company had resolved difficulties like fluctuations in frequency and voltage, as well as coordination problems when integrating wind generating units into the distribution grid. The project explored the approach for distributed power projects development and formulated relevant guiding principles. The Company accumulated valuable experience for further development of distributed wind power projects.

Business Outlook - For the year ended December 31, 2012

The PRC's ¡§12th Five-year Plan Regarding Wind Power Development¡¨ sets out that national installed wind power capacity will reach 100 GW and wind power generation will account for more than 3% of the total power generation in the PRC by 2015. Pursuant to such plan, the PRC government is in the process of strengthening the construction of the power grid, expanding the distribution of wind power and promoting wind power consumption in the power market. The government is improving relevant laws and regulations, considering the establishment of a Renewable Portfolios Standard, facilitating the guaranteed output of wind power, optimizing the distribution of wind power development, and promoting local consumption of wind power. It is an exceptionally new and rare opportunity for the development of wind power industry. However, at the same time, the Company also faces certain challenges including improving the profitability of existing projects and optimizing our overall business layout. In 2013, facing opportunities and challenges, the Company is fully committed and will further enhance its risk awareness, assess market conditions accurately, take effective measures to respond to challenges and resolve pressing issues proactively. At the same time, the Company will seize opportunities and take full advantage of favorable conditions, and will strive to take development to a new level.

In 2013, the Company will focus on performing the following tasks:

1. Persist in safe production and improve safety operation management

The Company will strengthen its overall management of equipment, further standardize the management of wind turbines beyond their respective warranty period and reinforce the centralized management of purchases of large components, generic materials and spare parts so as to reduce production costs. The Company will also take initiatives to explore and experiment with new technologies and methods in wind power, and will further formulate technical, production and management standards that are appropriate for the development of the Company.

2. Accelerate the optimization of business distribution to ensure effective development

The Company will further strengthen its preliminary development efforts through various ways including self-development and cooperative development, and will explore the potential to directly supply large customers as well as develop distributed power generation and wind-hydro synergized power generation. It will strive to optimize business distribution and effectively develop key areas with quality wind resources and favorable on-grid access conditions. The Company will endeavor to develop profitable power generation bases so as to gradually reduce its overall proportion of installed capacity in regions affected by grid congestion, and will effectively develop photovoltaic power and offshore wind power as and when appropriate.

3. Promote the scientific management of infrastructure to ensure an effective production ramp-up

The Company will further enhance the management of project construction by focusing on optimized design and cost control, improved control over the course of equipment installation and testing, and will further increase the reliability of operating units and the generating capability of newly-operated units. The Company will strive to develop advanced technological innovations and carry out further research on the development of distributed wind farms and actively develop low wind speed wind farm technologies.

4. Strengthen marketing efforts to improve profitability of existing assets

The Company will strengthen its analysis of the power market and closely follow policy trends regarding wind power grid connection and consumption, as well as policies regarding renewable energy subsidies. The Company will further explore the market, improve communications and coordination with relevant government agencies, power industry regulators and grid companies, actively participate in cross-regional power transactions, and reduce the percentage of wind power curtailment.

5. Further strengthen financial controls to effectively limit financial risk

The Company will ensure the availability of its capital, adopt a strategic cost management approach to strengthen cost management, and will formulate a cost-effective financial management strategy. The Company will also explore low-cost financing channels, enhance capital and budget management, further reduce funding costs, refine internal control mechanism and enhance its capability to manage and control financial risks.

6. Strengthen investor relations to improve the Company's transparency and popularity

In order to maintain a sustainable stable relationship with investors, the Company will improve communications with investors through various channels and approaches, and will continue to follow up on feedback from investors. The Company will also make accurate, true, complete and timely disclosure of the Company's information in strict compliance with regulatory requirements, keep investors duly informed of the business condition and performance of the Company to ensure that investors can accurately assess the growth potential and market value of the Company, and to improve market confidence and the reputation of the Company in the capital markets.

Source: Huaneng Renewables (00958) Annual Results Announcement
Chairman CAO Peixi Issued Capital (shares) 2,912M
Par Value RMB 1 Market Capitalisation (HKD) 7,716M
 
Login
Password
Register  Forget Password
Advanced Search
© 2021 The Standard, The Standard Newspapers Publishing Ltd.
Home | Business | Metro | Focus | Opinion | Markets | World | Sports | Entertainment | Monday Money | Property | Macau | Weekend