In 2008, the nation's electricity demand grew by 5.23% over the Previous Year, while installed capacity increased by 74,260 MW to reach 793,000 MW, up 10.34% over the Previous Year. In the first half, the national power supply and demand are quire balanced. In the second half, impacted by the international financial crisis, the national economic growth has slowed down and power demand is dropping remarkably, with utilization hours decreasing in high percentage. In 2008, the national average utilization hours for power generation units with single capacity over 6000KW is 4677 hours, 337 hours lower than that of 2007.

As to power supply, it is a challenge to maintain substantial growth on the expanded base of nationwide installed capacity. In addition, given China's concerns about energy conservation and consumption reduction as well as sustainable development, the scale of construction commencements of the country's new power projects is expected to be appropriately controlled in the later years of the Eleventh Five-Year Plan. Moreover, the policy promulgated recently calling for the closure of 50,000 MW of small generation units during the Eleventh Five-Year Plan will effectively check the rapid growth in gross installed capacity. It is anticipated that the total new commenced capacity in 2009 to 2011 will be much smaller than that of 2005-2007.



With the rapid development of its power generation business in the national market in recent years, the Company's major service areas now cover the North China Region, such as BTT area, Shanxi Province and Inner Mongolia, etc, the Eastern Coastal Region, such as Zhejiang Province, Fujian Province and Guangdong Province, etc, as well as other provinces and regions such as Yunnan, Chongqing, Ningxia and Qinghai, etc. The BTT Power Grid, a service area in which the Company's current operating power plants are concentrated, remains one of the regions in China with the strongest economic growth, with its historical GDP and electricity demand growths both above the national averages. Since the second half of 2008, affected by the international financial crisis, the heavy industry in this region has cut its output and has driven the power demand dropping remarkably, which has lasted until the first half 2009. Since the second half 2009, the power demand has started to rebound strongly.