Report Summary

The power industry is vital to national economy and people’s livelihood. In 2003, China’s economy achieved rapid growth with an annual GDP increase of 9.1%, while the growth rate of power demand reached as high as 15%. A new cycle of investment and construction for the power equipment industry is emerging, bringing opportunities and driving the sector into an overall growth phase.

Since 2003, China’s power consumption demand has surged. Power rationing was implemented in most provinces and municipalities amid an electricity shortage. Power supply is projected to remain tight in 2004 and 2005, prompting the government to scale up investment in the power sector. In May 2003, the National Development and Reform Commission approved an additional 13 power station projects. The revised plan added 33 GW of new power generation capacity on top of the original 60 GW–80 GW of newly-launched power projects nationwide. Annual newly-started capacity is expected to reach 25 GW–30 GW from 2003 to 2005. Accordingly, power source construction will require an investment of RMB 600 billion, and power grid construction RMB 360 billion over 2003–2005. Investment in power generation facilities generates demand for power generation equipment, while grid investment drives demand for power transmission and transformation equipment. Therefore, the substantial growth in fixed-asset investment in power will bring considerable revenue to all sub-sectors of the power equipment industry. Based on experience shared by senior power industry professionals, primary equipment generally accounts for 35% of power source investment, and secondary equipment accounts for 10% of grid investment. Estimated accordingly, the annual market size of power primary equipment will stand at approximately RMB 70 billion, and that of power secondary equipment at around RMB 12 billion in the coming two years.

At present, power equipment manufacturers, especially large backbone enterprises, are operating at full capacity with a robust order backlog extending into 2005–2006. The whole industry has entered a period of rapid growth at an overall rate of roughly 40%. We believe the power equipment industry enjoys tremendous development prospects over the next 2–3 years.

This report is written by senior experts specializing in national energy projects, power construction and power market research. It draws extensively on data published and provided by the National Bureau of Statistics, General Administration of Customs, State Grid Corporation of China, China Electricity Council, China Electric Power Technology Market Association, China Electric Power Development Promotion Association, China Electric Power Construction Association, China Electric Power Planning & Engineering Association and relevant research institutions.

The report focuses on research into the new power sector reform plan, domestic power supply market, power grid operation, development trends of the power equipment market, power demand analysis and forecast, the West-to-East Power Transmission Project, national energy mix adjustment, and challenges facing the power industry after China’s WTO accession. Combining multiple factors in the new era, it objectively analyzes available opportunities and challenges with a rational perspective, and delivers detailed, prudent forecasts and demonstrations on the development trends of the power and power equipment industries. It provides practical industrial market consulting, business information and relevant data for operators in the power sector, external investors and researchers in related industries.