Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and the Securities and Futures Commission take no responsibility for the contents of this Web Proof Information Pack, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Web Proof Information Pack. Web Proof Information Pack of

HUANENG RENEWABLES CORPORATION LIMITED*

(A joint stock limited company incorporated in the People’s Republic of China with limited liability) WARNING This Web Proof Information Pack is being published as required by The Stock Exchange of Hong Kong Limited (the “HKEx”)/the Securities and Futures Commission solely for the purpose of providing information to the public in Hong Kong. This Web Proof Information Pack is in draft form. The information contained in it is incomplete and is subject to change which can be material. By viewing this Web Proof Information Pack, you acknowledge, accept and agree with Huaneng Renewables Corporation Limited (the “Company”), any of its sponsors, advisors and members of the underwriting syndicate that: (a) this Web Proof Information Pack is only for the purpose of facilitating equal dissemination of information to investors in Hong Kong and not for any other purposes. No investment decision should be based on the information contained in this Web Proof Information Pack; (b) the posting of the Web Proof Information Pack or supplemental, revised or replacement pages on the website of HKEx does not give rise to any obligation of the Company, any of its sponsors, advisors and members of the underwriting syndicate to proceed with an offering in Hong Kong or any other jurisdiction. There is no assurance that the Company will proceed with any offering; (c) the contents of this Web Proof Information Pack or supplemental, revised or replacement pages may or may not be replicated in full or in part in the actual prospectus; (d) this Web Proof Information Pack is in draft form and may be revised or updated by the Company from time to time and the changes, updates and/or revisions could be material, but each of the Company and its affiliates, advisors, sponsors or members of the underwriting syndicate is under no obligation, legal or otherwise, to update any information contained in this Web Proof Information Pack; (e) this Web Proof Information Pack does not constitute a prospectus, notice, circular, brochure or advertisement offering to sell any securities to the public in any jurisdiction, nor is it an invitation to the public to make offers to subscribe for or purchase any securities, nor is it calculated to invite offers by the public to subscribe for or purchase any securities; (f) this Web Proof Information Pack must not be regarded as an inducement to subscribe for or purchase any securities, and no such inducement is intended; (g) neither the Company nor any of its affiliates, advisors, sponsors or members of the underwriting syndicate is offering, or is soliciting offers to buy, any securities in any jurisdiction through the publication of this Web Proof Information Pack; (h) neither the Web Proof Information Pack nor anything contained herein shall form the basis of or be relied on in connection with any contract or commitment whatsoever; (i) neither the Company nor any of its affiliates, advisors, sponsors or members of its underwriting syndicate makes any express or implied representation or warranty as to the accuracy or completeness of the information contained in this Web Proof Information Pack; (j) each of the Company and any of its affiliates, advisors, sponsors or members of its underwriting syndicate expressly disclaims any and all liability on the basis of any information contained in, or omitted from, or any inaccuracies or errors in, this Web Proof Information Pack; (k) securities may not be offered or sold in the United States absent registration under the United States Securities Act of 1933, as amended (the “Securities Act”) or another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The securities referred to in this Web Proof Information Pack have not been registered under the Securities Act. The Company does not intend to register the securities under the Securities Act or conduct a public offering in the United States. This Web Proof Information Pack is not an offer of securities for sale in the United States. You confirm that you are accessing this Web Proof Information Pack from outside of the United States; and (l) as there may be legal restrictions on the distribution of this Web Proof Information Pack or dissemination of any information contained in this Web Proof Information Pack, you agree to inform yourself about and observe any such restrictions applicable to you. THIS WEB PROOF INFORMATION PACK IS NOT FOR PUBLICATION OR DISTRIBUTION TO PERSONS IN THE UNITED STATES. ANY SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT, AND MAY NOT BE OFFERED OR SOLD WITHOUT REGISTRATION THEREUNDER OR PURSUANT TO AN AVAILABLE EXEMPTION THEREFROM. NEITHER THIS WEB PROOF INFORMATION PACK NOR THE INFORMATION CONTAINED HEREIN CONSTITUTES AN OFFER TO SELL OR THE SOLICATION OF AN OFFER TO BUY ANY SECURITIES IN THE UNITED STATES OR IN ANY OTHER JURISDICTIONS WHERE SUCH AN OFFER OR SALE IS NOT PERMITTED. THIS WEB PROOF INFORMATION PACK IS NOT BEING MADE AND MAY NOT BE DISTRIBUTED OR SENT INTO ANY JURISDICTION WHERE SUCH DISTRIBUTION OR DELIVERY IS NOT PERMITTED. If an offer or an invitation is made to the public in Hong Kong in due course, prospective investors are reminded to make their investment decisions solely based on a prospectus of the Company registered with the Registrar of Companies in Hong Kong, copies of which will be distributed to the public during the offer period. No offer or invitation to the public in Hong Kong will be made until after a prospectus of the Company is registered with the Registrar of Companies in Hong Kong in accordance with the Companies Ordinance (Chapter 32 of the Laws of Hong Kong). * For identification purposes only. THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. CONTENTS

This Web Proof Information Pack contains the following information in relation to the Company from an amended version of the draft document:

• CONTENTS

• SUMMARY

• DEFINITIONS

• GLOSSARY OF TECHNICAL TERMS

• RISK FACTORS

• DIRECTORS, SUPERVISORS AND PARTIES

• CORPORATE INFORMATION

• INDUSTRY OVERVIEW

• REGULATORY ENVIRONMENT

• HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

• BUSINESS

• RELATIONSHIP WITH CONTROLLING SHAREHOLDER

• CONNECTED TRANSACTIONS

• DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES

• SHARE CAPITAL

• FINANCIAL INFORMATION

• FUTURE PLANS

• APPENDIX I : ACCOUNTANTS’ REPORT

• APPENDIX III : PROFIT FORECAST

• APPENDIX IV : PROPERTY VALUATION REPORT

• APPENDIX V : PROJECT PORTFOLIO OVERVIEW

• APPENDIX VI : TECHNICAL REPORT

• APPENDIX VII : TAXATION AND FOREIGN EXCHANGES

• APPENDIX VIII : SUMMARY OF PRINCIPAL PRC AND HONG KONG LEGAL AND REGULATORY PROVISIONS

• APPENDIX IX : SUMMARY OF THE ARTICLES OF ASSOCIATION

• APPENDIX X : STATUTORY AND GENERAL INFORMATION

YOU SHOULD READ THE SECTION HEADED “WARNING” ON THE COVER OF THIS WEB PROOF INFORMATION PACK. THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. SUMMARY

OVERVIEW

We are a leading pure-play renewable energy company in the PRC with a primary focus on wind power generation. According to Garrad Hassan, we ranked third in China and eighth in the world in terms of total wind installed capacity as of December 31, 2010. Among the top ten global wind power generation companies, we had the highest CAGR of total installed capacity from 2008 to 2010, based on the year-end capacity data published by these companies. Since our inception in 2002, we have been a pioneer and innovator in the fast-growing PRC wind power sector. From 2008 to 2010, our consolidated installed capacity and revenue from sale of electricity grew rapidly, at a CAGR of 195.9% and 166.2%, respectively, while our adjusted operating profit increased from RMB122.7 million in 2008 to RMB884.5 million in 2010, representing a CAGR of 168.5%. We believe that our execution track record and sizeable pipeline will support our profitable growth in the near future.

As of December 31, 2010, we had a consolidated installed capacity of 3,522.4 MW. We also had 1,202.0 MW capacity under construction and approximately 73,463.5 MW of wind power pipeline projects reserved for future development. Our installed, under-construction and pipeline wind power projects are principally located in six geographically diversified areas and cover 19 provinces and autonomous regions in China. These areas are strategically selected to achieve optimal return based on a combination of key considerations for wind farm development, including quality wind resources, high on-grid tariffs and the conditions of local grid connections and transmission.

In recent years, wind power industry in China has grown rapidly. During the past few years, the Chinese government has promulgated a number of preferential policies to support and encourage the development of renewable energy industries, such as a transparent fixed on-grid tariff regime, mandatory grid connection, mandatory power off-take and preferential tax treatments. In 2010, the country’s total wind installed capacity grew by 18,928 MW, or 73.4%, from that as of the end of 2009 and reached 44,733 MW as of the end of 2010, making China the largest market in terms of total wind installed capacity. Garrad Hassan expects that China will continue to be a global growth leader with an estimated total wind installed capacity CAGR of 21.8% from 2010 to 2015.

During the years ended December 31, 2008, 2009 and 2010, our consolidated installed capacity increased from 402.3 MW as of December 31, 2008 to 3,522.4 MW as of December 31, 2010, representing a CAGR of 195.9%. We generated revenue from the sale of electricity of RMB248.1 million, RMB847.1 million and RMB1,758.6 million and realized profits of RMB95.9 million, RMB281.2 million and RMB609.4 million from our continuing operations for the years ended December 31, 2008, 2009 and 2010, respectively, representing a CAGR of 166.2% and 152.1%. As of December 31, 2010, we also had a portfolio of wind power pipeline projects with an estimated capacity of approximately 73,463.5 MW, including 633.0 MW Advanced-stage Projects, approximately 3,346.7 MW Developing-stage Projects and approximately 69,483.8 MW Early-stage Projects. See “Business — Pipeline Projects.” We target to increase our consolidated installed capacity to approximately 5,100 MW by the end of 2011.

We are a subsidiary of Huaneng Group, the largest power generation company in China in terms of total installed capacity as of December 31, 2010. We are Huaneng Group’s sole renewable energy platform for the ultimate consolidation of its renewable energy businesses such as wind power.

We firmly believe in the evolution of renewable energies from alternative to mainstream and ultimately to the primary energy sources of our society. Our mission is to promote economic, social and environmental sustainability through the proactive, conscientious and rational development of wind power and other renewable energies. Our goal is to become a leading renewable energy company in the world with sustainable shareholder return.

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Sales of Electricity

We sell all of the electricity generated by our wind power projects to local grid companies where the wind farms are respectively located, pursuant to the terms and conditions of the PPAs we enter into with the local grid companies. Other than the grid companies in West Inner Mongolia which are owned by the government of Inner Mongolia, all of the grid companies which are our customers are ultimately owned by either State Grid Corporation of China (“State Grid”) or China Southern Power Grid Co., Ltd. (“Southern Grid”). Currently we do not sell electricity to any corporate or individual end-users.

Transmission limitations in the PRC wind power industry

As required by the Renewable Energy Law, the PPA typically provides that the local grid company shall purchase all the electricity generated by our wind power projects at on-grid tariffs fixed or approved by the PRC governmental authorities as long as our wind power projects have met all the national and industry technical specifications. The actual sale of electricity, however, may be limited by a number of factors, including, among others, the maximum transmission capacity and the stability of the local grids and the local demand for electricity. In recent years, the local grid companies in Inner Mongolia and Liaoning Province imposed restrictions on wind power generation companies, especially during winter season, to give priority to steam- electricity cogeneration companies which provide heat supply and to ensure the stability and safety of the local grids. Furthermore, local grid companies in West Inner Mongolia imposed additional restrictions on wind power generation companies due to the fact that the rapid construction of wind farms resulting from quality wind resources in West Inner Mongolia outpaced the development of local grids during recent years. As a result, a few of our wind farms in Inner Mongolia and Liaoning Province temporarily shut down one or more wind turbines in 2009 and 2010. As of December 31, 2010, we had 1,567.7 MW of installed capacity in Inner Mongolia and 799.5 MW of installed capacity in Liaoning Province, which accounted for approximately 44.5% and 22.7% of our consolidated installed capacity, respectively. Since we currently are not able to store the electricity generated by our wind power projects, our net power generation and revenue may be adversely affected in the event that electricity cannot be transmitted or dispatched due to grid congestion or other constraints. In addition, the PPAs with the local grid companies do not specifically provide any compensation for any financial loss caused by grid congestion or grid company’s otherwise failure in purchasing full amount of electricity generated by our wind farms, which we believe is consistent with the industry practice in China. See “Risk Factors — Risks Relating to Our Business and Industry — We rely on local grid companies for grid connection and electricity transmission and dispatch.” for more details. Furthermore, we are usually required under the PPAs to generate power in accordance with the dispatch orders of the local grid companies, and may be disconnected from the grids should we failed to comply with the dispatch orders. Generally the PPAs have a term of one year and will renew automatically unless terminated by either party by giving a 30-day written notice. See “Business — Sales and Distribution — Customers and PPA” for more details.

On-grid tariff which is subject to the PRC government control

According to the Circular regarding the Furtherance of On-grid Pricing Policy of Wind Power ( ) (the “On-grid Tariff Circular”) issued by the NDRC in July 2009, for onshore wind power projects approved on or after August 1, 2009, the on-grid tariff is determined based on the location of such wind power projects. The PRC government has categorized the onshore wind resources of China into four wind resource zones and applies a universal on-grid tariff to all the wind power projects in the same wind resource zone. The standard on-grid tariffs (including VAT) for the first, second, third and fourth wind resource zones are RMB0.51/kWh, RMB0.54/kWh, RMB0.58/kWh and RMB0.61/kWh, respectively. For wind power projects approved prior to August 1, 2009 but on or after January 1, 2006, the on-grid tariff is determined by referring to either a “government guided price” or a “government fixed price.” For wind power projects approved on or prior to December 31, 2005, the on-grid tariff is determined by the government on a project-by- project basis. See “Business — Sales and Distribution — On-grid Tariffs” for details.

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The table below sets forth certain selected operational data relating to our business as of the dates or for the periods indicated:

For the year ended or as of December 31, 2008 2009 2010 Selected Operational Data Consolidated installed capacity (in MW) ...... 402.3 1,549.8 3,522.4 Attributable installed capacity (in MW) ...... 263.8 1,387.1 3,339.8 Consolidated operational capacity (in MW) ...... 303.3 1,146.3 2,239.9 Weighted average consolidated operational capacity (in MW) ...... 184.3 693.1 1,541.5 Consolidated gross power generation (in GWh) ...... 477.5 1,884.5 3,788.9 Consolidated net power generation (in GWh)(1) ...... 427.4 1,606.6 3,404.9 Weighted average on-grid tariff (excluding VAT) (in RMB/kWh)(2) ...... 0.581 0.527 0.516 Weighted average on-grid tariff (including VAT) (in RMB/kWh)(3) ...... 0.679 0.617 0.604 Weighted average unit cost (in RMB/kWh)(4) ...... 0.303 0.247 0.260 Weighted average utilization hours(5) ...... 2,380.4 2,365.2 2,265.3

Notes:

(1) Consolidated net power generation represents the electricity sold to the local grid companies minus the electricity generated and sold during the construction and testing period. It is calculated by deducting from the consolidated gross power generation (i) auxiliary electricity and (ii) the electricity generated during the construction and testing period. Sales of electricity generated during the construction and testing period are not included in the revenue of electricity sales, but are offset against the cost of property, plant and equipment.

(2) Weighted average on-grid tariff (excluding VAT) is calculated by dividing our revenue from sale of electricity by our consolidated net power generation of wind power projects.

(3) Our weighted average on-grid tariffs (including VAT) in 2008 and 2009 were higher than the current highest standard on-grid tariff, primarily due to the fact that certain of our early wind power projects enjoyed relatively high on-grid tariffs prior to the establishment of the standard on-grid tariff regime on August 1, 2009, and that the standard on-grid tariffs only apply to wind power projects approved on or after August 1, 2009.

(4) Weighted average unit cost is calculated by dividing the operating expenses (excluding service concession construction costs) by consolidated net power generation.

(5) Weighted average utilization hours are calculated by dividing the consolidated gross power generation (excluding power generated during construction and testing period) in a specific period by the weighted average consolidated operational capacity in the same period.

The difference between our gross and net power generation was caused by (i) electricity generated during the construction and testing period; and (ii) auxiliary electricity which comprises electricity consumed by our wind farms in the course of electricity generation and lost during the transmission from the wind farms to the grid meter measuring the net power generation sold to the grid companies. During the years ended December 31, 2008, 2009 and 2010, electricity generated during construction and testing period accounted for approximately 8.1%, 13.0% and 7.8%, respectively, of our gross power generation. During the same periods, auxiliary electricity accounted for approximately 2.5%, 2.0% and 2.5%, respectively, of our gross power generation less electricity generated during the construction and testing period. The relatively high amount of electricity generated during the construction and testing period as a percentage of our gross power generation during the years ended December 31, 2008, 2009 and 2010 was primarily due to our rapid expansion in recent years. During the years ended December 31, 2008, 2009 and 2010, our consolidated installed capacity increased at a CAGR of 195.9% from December 31, 2008 to December 31, 2010. As a result, we had a large number of new wind power projects in construction and testing period during the years ended December 31, 2008, 2009 and 2010, the electricity generated from which was accounted for in the gross power generation but excluded from the net power generation.

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The table below sets forth our sales of electricity from continuing operations by region during the years ended December 31, 2008, 2009 and 2010.

For the year ended December 31, 2008 2009 2010 (RMB in (RMB in (RMB in millions) (%) millions) (%) millions) (%) Northeast China Region ...... 61.4 24.8 454.1 53.6 974.0 55.4 East China Region ...... 89.9 36.2 214.8 25.4 407.9 23.2 West Inner Mongolia ...... — — — — 124.5 7.1 South China Region ...... 96.8 39.0 137.7 16.2 162.8 9.2 North China Region ...... — — 40.5 4.8 46.1 2.6 Xinjiang...... — — — — 43.3 2.5 Other regions(1) ...... — — — — — — Total ...... 248.1 100 847.1 100 1,758.6 100

Note:

(1) Other regions include Shaanxi Province, Gansu Province, Anhui Province and Qinghai Province. None of our projects in these regions had completed construction as of December 31, 2010.

The table below sets forth the installed capacity of our wind power projects by region and their respective percentage of our consolidated installed capacity as of the dates indicated.

As of December 31, 2008 2009 2010 (MW) (%) (MW) (%) (MW) (%) Northeast China Region ...... 100.5 25.0 945.0 61.0 2,070.2 58.8 East China Region ...... 145.7 36.2 300.2 19.4 597.2 17.0 West Inner Mongolia ...... — — 148.5 9.6 297.0 8.4 South China Region ...... 106.6 26.5 106.6 6.9 261.1 7.4 North China Region ...... 49.5 12.3 49.5 3.2 198.0 5.6 Xinjiang ...... — — — — 99.0 2.8 Other regions(1) ...... — — — — — — Total ...... 402.3 100 1,549.8 100 3,522.4 100

Note:

(1) Other regions include Shaanxi Province, Gansu Province, Anhui Province and Qinghai Province. None of our projects in these regions had completed construction as of December 31, 2010.

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The table below sets forth the details of our wind power projects which we expect to complete by the end of 2011 and two solar power concession projects, as well as the estimated total under construction and pipeline capacity as of December 31, 2010.

As of December 31, 2010 Estimated total under Estimated installed Estimated capital construction/ capacity by expenditure pipeline Location No. of projects(1) 2011 (MW)(2) (RMB in millions)(3) capacity (MW) Wind Power Projects under construction ...... Northeast China 5 298.5 2,783.3 943.5 East China 2 68.0 652.8 68.0 West Inner Mongolia 0 0.0 0.0 0.0 South China 1 42.0 410.9 42.0 North China 2 99.0 891.0 148.5 Xinjiang 0 0.0 0.0 0.0 Other regions(4) 0 0.0 0.0 0.0 Advanced-stage projects . . . Northeast China 1 49.5 432.5 49.5 East China 1 30.0 288.0 79.5 West Inner Mongolia 0 0.0 0.0 0.0 South China 7 346.5 3,370.9 495.0 North China 0 0.0 0.0 0.0 Xinjiang 0 0.0 0.0 0.0 Other regions(4) 1 9.0 77.7 9.0 Developing-stage projects . . Northeast China 1 49.5 497.4 1,052.5 East China 4 188.5 1,820.3 679.0 West Inner Mongolia 0(5) 0.0 0.0 449.5 South China 1 49.5 470.3 328.2 North China 1 100.6 886.6 590.0 Xinjiang 0(5) 0.0 0.0 148.5 Other regions(4) 0(5) 0.0 0.0 99.0 Early-stage projects ...... Northeast China 0(5) 0.0 0.0 22,231.4 East China 0(5) 0.0 0.0 11,051.7 West Inner Mongolia 1 49.5 425.7 5,753.5 South China 3 138.0 1,311.0 3,503.8 North China 2 99.0 889.4 14,999.0 Xinjiang 0(5) 0.0 0.0 10,502.5 Other regions(4) 0(5) 0.0 0.0 1,442.0 Subtotal ...... Sixmain regions and other regions in the PRC 33 1,617.0 15,207.7 74,665.5 Solar Power Solar power concession projects ...... 2(6) 50.4 806.7 50.4 Solar power investment and development agreements ..... 0(6) 0.0 0.0 1,740.0 Subtotal ...... 2 50.4 806.7 1,790.4 Total ...... 35 1,667.4 16,014.5 76,455.9

Notes:

(1) Number of wind power projects which we expect to complete by the end of 2011 and number of solar power concession projects.

(2) Estimated installed capacity of wind power projects which we expect to complete by the end of 2011, and the two solar power concession projects.

(3) Estimated capital expenditure for wind power projects to be installed in 2011 and for the two solar power concession projects.

(4) Other regions include Shaanxi Province, Gansu Province, Anhui Province and Qinghai Province.

(5) We do not expect to complete any wind power project in this region by the end of 2011.

(6) We do not expect to complete any solar power project by the end of 2011.

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The table below sets forth the milestones we use to categorize our wind power pipeline projects.

Advanced-stage Developing-stage Early-stage Milestones Achieved Projects Projects Projects Development agreement ...... Wind resource assessment, or feasibility study, or internal evaluation ...... NDRC/DRC approvals ...... Estimated capacity as of December 31, 2010 (MW) ...... 633.0 3,346.7 69,483.8

To achieve our expansion targets, we estimate that the total capital expenditure will be RMB16.0 billion for wind power projects to be installed in 2011 and for the two solar power concession projects. Of this sum, we have already incurred RMB1.7 billion as of February 28, 2011 and therefore the total outstanding capital expenditure is estimated to be RMB14.3 billion. The sources of funding include bank borrowings, a portion of the proceeds from certain possible working capital raising activities, contributions from minority shareholders of our non-wholly owned subsidiaries, cash at bank and on hand and operating cash flow. We expect that bank borrowings will account for approximately 80% of the above-mentioned total estimated capital expenditure.

We plan to expand our wind power business by converting our pipeline projects into operating projects. We may also acquire wind farms in various development stages, complete their development and put them into operation. Our expansion plan, however, is subject to a variety of risks and uncertainties. We operate in a highly regulated and capital intensive industry. Development of wind power projects requires various governmental approvals and substantial capital. The successful implementation of our expansion plan may depend on, among others, our ability to obtain all the necessary governmental approvals and to secure sufficient funding. In addition, our business expansion may also be limited by the transmission and dispatch capacity of local grid companies. See “Risk Factors” for more details.

Sales of CERs

As a pioneer of the PRC wind power sector, we have successfully registered three out of China’s first 10 registered wind power CDM projects. As of December 31, 2010, we had applied for registration of 65 CDM projects, of which 46 had obtained NDRC approvals and 23 had been registered with the CDM EB. Among the 23 registered CDM projects, Phase II of our Fuxin Project was the second largest wind power CDM project in China in terms of installed capacity as of December 31, 2010, based on the data available on the website of UNFCCC. Leveraging on our experience accumulated from previous registrations, we made substantial progress in 2011. From the beginning of 2011 to the Latest Practicable Date, we successfully registered 11 CDM projects with the CDM EB and obtained NDRC approvals for another nine CDM projects, increasing our aggregate number of registered CDM projects and projects with NDRC approvals to 34 and 55, respectively.

The first CERs of our registered CDM projects were issued by the CDM EB in 2008. As of the Latest Practicable Date, we had secured buyers for 151 CDM projects by entering into CER sales agreements with independent international buyers, including four power companies, a financial institution and two professional CDM management companies. In 2009 and 2010, we generated net income of RMB28.7 million and RMB164.8 million from the sales of CERs, representing 9.5% and 25.7% of our profit before taxation. The CDM EB has declined to register some PRC wind power projects for CER credits in the past. Although none of our CDM applications had been rejected or delayed by the CDM EB as of the Latest Practicable Date, we cannot assure you that our applications will not be rejected or delayed in the future. See “Risk Factors — Risks Relating to Our Business and Industry — Our sale of CERs depends on the continuing effectiveness of CDM arrangements under the Kyoto Protocol.”

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Discontinued Hydropower Business

We used to operate hydropower business through a jointly controlled entity and a subsidiary. In 2009, we discontinued our hydropower operations and disposed of our equity interests in these two entities as they do not form our core business which is wind power generation. See “History, Reorganization and Corporate Structure — History and Development” for details.

OUR COMPETITIVE STRENGTHS

We believe our rapid growth and strong market position are largely attributable to the following principal competitive strengths, which distinguish us from our competitors.

• Strategically selected locations of our wind power projects with quality wind resources, high on-grid tariffs and taking into account the conditions of local grid connections and transmission

• A track record of profitable growth demonstrating our managerial strength and execution ability

• A pioneer and innovator in the fast-growing PRC wind power sector

• Expertise and experience in wind farm development and power generation leading to enhanced efficiency and profitability

• Experienced and professional management team dedicated to the development of renewable energies

OUR STRATEGIES

Our goal is to become a leading renewable energy company in the world with sustainable shareholder return. To achieve our goal, we intend to pursue the following strategies:

• Expand in areas with attractive returns and continue to increase market share in the wind power sector

• Develop other renewable energies with a focus on solar power

• Pursue opportunities in the international markets

• Continue our efforts to promote technological innovation and industry development

• Continue to control costs and improve profitability

RELATIONSHIP WITH CONTROLLING SHAREHOLDER AND CONNECTED TRANSACTIONS

Huaneng Group is our Controlling Shareholder. Huaneng Group directly holds 95% of our total issued and outstanding Shares. Huaneng Capital, a wholly-owned subsidiary of Huaneng Group, holds the remaining 5% Shares. Immediately after the relevant event, Huaneng Group will own, directly and indirectly, approximately 67.00% of our issued share capital.

Huaneng Group is a state-owned enterprise managed by SASAC. It is an incorporated business entity primarily focusing on the power generation with a diversified business portfolio. Huaneng Group is the largest power generation company in China in terms of total installed capacity as of December 31, 2010. We are

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Huaneng Group’s sole renewable energy platform for the ultimate consolidation of its renewable energy businesses such as wind power. However, Huaneng Group will retain certain wind power business through its listed and unlisted subsidiaries. See “Relationship with Controlling Shareholder” for details. Although currently we do not face intense competition from Huaneng Group due to the preferential government regulations and policies such as mandatory grid connection and mandatory power off-take, the potential competition may intensify in the event that such regulations and policies are amended or abolished. See “Risk Factors — Risks Relating to Our Business and Industry — We face competition from other renewable energy companies, in particular, other wind power developers. We may also face competition from non-renewable power developers.”

SUMMARY FINANCIAL INFORMATION

The following table sets forth summary consolidated financial information of our Group. We have derived all the consolidated financial information from our audited consolidated financial statements set forth in the Accountants’ Report in Appendix I to this document. The information should be read together with, and is qualified in its entirety by reference to, our audited consolidated financial statements and related notes included elsewhere in this document. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

For the year ended December 31, 2008 2009 2010 (RMB in (RMB in (RMB in millions) (%*) millions) (%*) millions) (%*) CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Continuing operations** Revenue ...... 570.3 100.0 918.4 100.0 1,768.5 100.0 Other net income ...... 35.6 6.2 85.3 9.3 249.8 14.1 Operating expenses ...... (447.6) (78.4) (464.2) (50.5) (884.0) (50.0) Operating profit ...... 158.3 27.8 539.5 58.8 1,134.3 64.1 Finance income ...... 9.2 1.6 12.2 1.3 22.2 1.3 Finance expenses ...... (72.2) (12.7) (251.4) (27.4) (515.1) (29.1) Share of profit of a jointly controlled entity ...... 0.1 0.0 3.1 0.3 — — Profit before taxation ...... 95.4 16.7 303.4 33.0 641.4 36.3 Income tax ...... 0.5 0.1 (22.2) (2.4) (32.0) (1.8) Profit from continuing operations ...... 95.9 16.8 281.2 30.6 609.4 34.5 Discontinued operation Profit from discontinued operation (net of income tax) ...... 11.1 1.9 39.4 4.3 — — Profit for the year ...... 107.0 18.7 320.6 34.9 609.4 34.5

Profit attributable to: Equity owner/shareholders of the Company ...... 53.2 9.3 264.4 28.8 528.3 29.9 Non-controlling interests ...... 53.8 9.4 56.2 6.1 81.1 4.6

Notes:

* Represents a percentage of each item to our revenue.

** Unless otherwise indicated, all financial information in relation to the consolidated statements of comprehensive income contained in this document refers to the financial information of our continuing operations.

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As of December 31, 2008 2009 2010 (RMB in millions) CONSOLIDATED BALANCE SHEETS Non-current assets Property, plant and equipment ...... 8,544.1 14,335.9 27,802.9 Lease prepayments ...... 14.7 22.7 65.1 Intangible assets ...... 358.4 411.6 394.8 Investment in a jointly controlled entity ...... 52.4 — — Other non-current assets ...... 21.2 1,164.5 2,690.1 Deferred tax assets ...... 21.3 16.3 12.7 Total non-current assets ...... 9,012.1 15,951.0 30,965.6 Current assets Inventories ...... 1.8 0.2 0.8 Trade debtors and bills receivable ...... 116.8 390.9 959.7 Prepayments and other current assets ...... 120.9 596.7 207.7 Tax recoverable ...... 0.0 6.9 0.5 Restricted deposits ...... 28.7 15.8 0.8 Cash at bank and on hand ...... 1,643.8 819.2 1,309.5 Total current assets ...... 1,912.0 1,829.7 2,479.0 Current liabilities Borrowings ...... 2,396.2 2,798.5 4,817.6 Obligations under finance leases ...... — 119.2 232.2 Other payables ...... 1,573.5 2,081.6 6,255.2 Tax payable ...... 4.5 12.6 6.3 Total current liabilities ...... 3,974.2 5,011.9 11,311.3

Net current liabilities ...... (2,062.2) (3,182.2) (8,832.3) Total assets less current liabilities ...... 6,949.9 12,768.8 22,133.3 Non-current liabilities Borrowings ...... 4,436.6 8,087.2 13,201.3 Obligations under finance leases ...... — 805.8 1,768.4 Retention payables ...... 48.6 324.4 761.8 Deferred income ...... 176.1 234.1 248.7 Deferred tax liabilities ...... 8.9 20.8 34.3 Total non-current liabilities ...... 4,670.2 9,472.3 16,014.5

NET ASSETS ...... 2,279.7 3,296.5 6,118.8 CAPITAL AND RESERVES Paid-in capital/Share capital ...... 451.5 451.5 5,800.0 Reserves ...... 1,222.8 2,131.7 (516.1) Total equity attributable to the equity owner/shareholders of the Company ...... 1,674.3 2,583.2 5,283.9 Non-controlling interests ...... 605.4 713.3 834.9 TOTAL EQUITY ...... 2,279.7 3,296.5 6,118.8

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During the years ended December 31, 2008, 2009 and 2010, we recorded revenue of RMB570.3 million, RMB918.4 million and RMB1,768.5 million, respectively, in 2008, 2009 and 2010. Our profit from continuing operations amounted to RMB95.9 million, RMB281.2 million and RMB609.4 million, respectively, during the same periods, accounting for approximately 38.0%, 33.0% and 34.5% of our revenue (excluding service concession construction revenue) for the respective period.

We recorded net current liabilities of RMB2,062.2 million, RMB3,182.2 million and RMB8,832.3 million as of December 31, 2008, 2009 and 2010, respectively. The increases in net current liabilities during the years ended December 31, 2008, 2009 and 2010 were primarily attributable to the increases in other payables and short-term borrowings, which in turn were primarily attributable to the continuous expansion of our wind power operations and were in line with the increases in our installed capacity as well as capacity under construction. Our consolidated installed capacity increased from 402.3 MW as of December 31, 2008 to 3,522.4 MW as of December 31, 2010. As of December 31, 2010, we also had 1,202.0 MW capacity under construction. See “Financial Information” for detailed discussion.

PROFIT FORECAST FOR THE YEAR ENDING DECEMBER 31, 2011(1)

Forecast consolidated net profit attributable to equity holders of our Company(2) ...... notless than RMB1,070.1 million (approximately HK$1,280.2 million)

Notes:

(1) The profit forecast is mainly based on our estimate on capacity growth, utilization hours, approved on-grid tariff, unit cost, CDM registration schedule and interest rate.

(2) The forecast consolidated profit attributable to equity holders of our Company for the year ending December 31, 2011 is extracted from the section headed “Financial Information — Profit Forecast for the Year Ending December 31, 2011” in this document. The bases and assumptions on which the above profit forecast has been prepared are set out in Appendix III to this document.

DIVIDEND POLICY

We may declare and pay dividends by way of cash or shares in the future. Distribution of dividends shall be formulated by our Board of Directors and subject to Shareholders’ approval. The amount of any dividends to be declared or paid in the future will depend on, among other things, our results of operations, cash flows and financial condition, operating and capital requirements, the amount of distributable profits and other relevant factors. In particular, under applicable PRC laws and our Articles of Association, we can only distribute dividends out of our after-tax profit after the following allocations have been made: (i) recovery of accumulated losses, if any; (ii) mandatory allocations to the statutory common reserve fund equivalent to 10% of our after-tax profit, unless the common reserve fund reaches 50% of our registered capital or above; and (iii) allocations to discretionary common reserve fund, subject to our Shareholders’ approval at Shareholders meeting.

In the future, we expect to distribute no less than 15% of our annual distributable earnings as dividends. We cannot assure you, however, that we will be able to distribute dividends in any amount each year or in any year. In addition, the declaration and payment of dividends may be limited by legal restrictions or financial instruments that we may enter into in the future. Under the current PRC tax laws and regulations, dividends paid by us to a non-PRC resident enterprise shareholder are subject to a 10% withholding tax.

SPECIAL DISTRIBUTION

We have agreed to declare a special distribution to Huaneng Group in an amount of RMB316.2 million, which is equal to our audited consolidated net profits attributable to equity owner/shareholders of the Company for the year ended December 31, 2010, prorated according to the number of days from January 1, 2010, the date immediately after the date on which our assets were valued for the establishment of our Company as a joint stock

—10— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. SUMMARY limited company, to August 5, 2010, the date of our establishment (the “Special Distribution”). We expect to pay such Special Distribution to Huaneng Group within six months commencing from the Listing Date with cash generated from operating activities. After taking into account our current cash balance and our anticipated cash flows from operating activities, we believe we will have sufficient working capital to pay the Special Distribution at that time.

The Special Distribution was not determined in accordance with our dividend policy as described in “Financial Information — Dividend Policy.” The Special Distribution is not an indication of our future dividend policy.

RISK FACTORS

We are subject to risks relating to our business and industry. These risks can be categorized into: (i) risks relating to our business and industry; and (ii) risks relating to doing business in China. For a description of these and other risks, see “Risk Factors.”

Risks relating to our business and industry

• We depend heavily on government support and incentives for renewable energies which may be changed or abolished.

• We rely on local grid companies for grid connection and electricity transmission and dispatch.

• Development of wind power projects are subject to various governmental approvals and permits. Failure to obtain necessary approvals and permits may materially and adversely affect our project development and results of operations.

• The weighted average on-grid tariff for electricity generated by our wind power projects has decreased during the years ended December 31, 2008, 2009 and 2010.

• If our sole customers, local grid companies, fail to perform their obligations under the PPAs, our business, financial condition and results of operations may be materially and adversely affected.

• The interests of our controlling shareholder may be different from ours.

• If we are not successful in converting our wind power pipeline projects into operating projects in accordance with our development plan and specifications, our expansion plan may be adversely affected and our revenue may fall below our expectations.

• We may not be able to complete the construction of our wind farms on schedule or within budget.

• We rely on suitable climatic conditions for the generation of electricity. If there are unforeseen climatic condition changes or if we fail to make correct assessment when selecting sites for wind farms, our electricity production, revenue and results of operations may be materially and adversely affected.

• Our operations depend on the performance of wind turbines and we rely on warranties from suppliers to protect us against under-performance or non-performance of the wind turbines during the warranty period.

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• Our sale of CERs depends on the continuing effectiveness of CDM arrangements under the Kyoto Protocol.

• We have a limited operating history and our historical growth rate during the years ended December 31, 2008, 2009 and 2010 may not be indicative of our growth rate in the future.

• Development and acquisition of wind power projects require substantial capital. If we fail to obtain capital on reasonable commercial terms, we may suffer from increased finance expenses and may not be able to expand as planned.

• Our significant net current liabilities and borrowing levels may limit our ability to obtain additional funding for our operations.

• We face competition from other renewable energy companies, in particular, other wind power developers. We may also face competition from non-renewable power developers.

• We procure a majority of our wind turbines and related components from a limited number of the PRC suppliers who may not have as long operating history as foreign suppliers.

• The slow-down of economic growth in China and the global economic downturn may adversely affect our business growth and profitability.

• The growth of our business depends on our ability to identify suitable sites and develop new wind power projects in a timely manner. If we fail to do so, our business and prospects may be adversely affected.

• The standards we use to categorize our projects and the underlying assumptions are internally developed and may not be comparable to classifications used by other companies.

• Performance of our wind power projects may be adversely affected by nearby objects.

• We may not be able to execute our business strategy and manage our growth successfully.

• Discontinuance of preferential tax treatments may have an adverse impact on our results of operations and financial condition.

• We may need to purchase and install additional equipment to comply with grid safety and stability requirements.

• Acquisition of wind farms involves risks.

• Title defects in relation to certain lands and buildings may adversely affect our operations.

• The services of our senior management and key employees are crucial to our success, and we may not be able to recruit and retain the personnel we need.

• We may not be able to keep up with technological innovations.

• Our Special Distribution is not indicative of our future dividend policy.

• We are not able to insure against all potential risks and may suffer economic losses if our operation is interrupted.

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• Our assets could be damaged and our operations could be disrupted by natural and man-made disasters, and we could face civil liabilities or other losses as a result.

• Our development and operation of wind farms are subject to various environmental, health and safety laws and regulations.

Risks relating to doing business in China

• Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business, financial condition, results of operations and prospects.

• Uncertainties in the interpretation and enforcement of Chinese laws and regulations could limit the available legal protections.

• Fluctuations in exchange rates could have a material adverse effect on our results of operations.

• You may experience difficulties in effecting service of legal process and enforcing judgments against us and our management.

—13— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. DEFINITIONS

In this document, unless the context otherwise requires, the following expressions shall have the following meanings.

“Articles of Association” or “Articles” the articles of association of the Company adopted on August 6, 2010, and as amended from time to time, a summary of which is set out in Appendix IX to this document

“Audit Committee” the audit committee of the Board

“Board of Directors” or “Board” our board of Directors

“Business Day” or “business day” a day on which banks in Hong Kong are generally open for normal banking business to the public and which is not a Saturday, Sunday or public holiday in Hong Kong

“CAGR” compound annual growth rate

“China” or “PRC” the People’s Republic of China, but for the purposes of this document and for geographical reference only (unless otherwise indicated), excluding Taiwan, the Macau Special Administrative Region of the PRC and Hong Kong

“Company,” “our Company,” “we” or “us” (Huaneng Renewables Corporation Limited), a joint stock limited company established in the PRC on August 5, 2010, and, except where the context indicates otherwise, (i) all of its subsidiaries and (ii) with respect to the period before the Company became the holding company of its present subsidiaries, the businesses operated by its present subsidiaries or (as the case may be) their predecessors

“Company Law” (Company Law of the PRC), adopted by the Standing Committee of National People’s Congress on October 27, 2005 and became effective on January 1, 2006, as amended, supplemented and otherwise modified from time to time

“Controlling Shareholder” the controlling shareholder of our Company, namely Huaneng Group

“CSRC” (China Securities Regulatory Commission)

“Director(s)” director(s) of our Company

“Domestic Shares” ordinary shares in our capital, with a nominal value of RMB1.00 each, which are subscribed for and paid up in Renminbi

“East China Region” the three provinces of Shandong, Jiangsu and Zhejiang as well as Shanghai

—14— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. DEFINITIONS

“Electric Power Law” (Electric Power Law of the PRC), adopted by the Standing Committee of National People’s Congress on December 28, 1995 and became effective on April 1, 1996

“euros” or “EUR” the lawful currency of the European Union

“Garrad Hassan” (Garrad Hassan (Beijing) Technology and Service Co., Ltd.), an independent third party industry consultant

“GDP” gross domestic product (all references to GDP growth rates are to real as opposed to nominal rates of GDP growth)

“Group” the Company and its subsidiaries from time to time

“HCI” (Huaneng Comprehensive Industrial Co.), a wholly-owned subsidiary of Huaneng Group

“HIPDC” (Huaneng International Power Development Corporation), a subsidiary of Huaneng Group

“HK$” or “Hong Kong dollars” or Hong Kong dollars, the lawful currency of Hong Kong “HK dollars”

“HNEIC” (Huaneng New Energy Industrial Co., Ltd.), a wholly-owned subsidiary of Huaneng Group and the predecessor of the Company

“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the PRC

“Hong Kong Companies Ordinance” the Hong Kong Companies Ordinance (Chapter 32 of the Laws of Hong Kong) as amended, supplemented or otherwise modified from time to time

“HPI” (Huaneng Power International, Inc.), a joint stock limited company incorporated in the PRC and the H Shares of which are listed on the Stock Exchange

“Huaneng Capital” (Huaneng Capital Services Corporation Ltd.), a wholly-owned subsidiary of Huaneng Group

“Huaneng Finance” (China Huaneng Finance Corporation Limited), a subsidiary of Huaneng Group

“Huaneng Group” (China Huaneng Group), a state-owned enterprise established in the PRC and the controlling shareholder of the Company

“IFRSs” the International Financial Reporting Standards, which include standards and interpretations promulgated by the International Accounting Standards Board (IASB)

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“Independent Third Party(ies)” person(s) or company/companies and their respective ultimate beneficial owner(s), which, to the best of our Directors’ knowledge, information and belief, having made all reasonable enquiries, are independent of the Company and its connected person

“Inner Mongolia” Inner Mongolia Autonomous Region of the PRC

“Latest Practicable Date” May 24, 2011, being the latest practicable date for the inclusion of certain information in this document prior to its publication

“Mandatory Provisions” (the Mandatory Provisions for Articles of Association of Companies to be Listed Overseas), for inclusion in the articles of association of companies incorporated in the PRC to be listed overseas, promulgated by the former State Council Securities Committee and other PRC government departments on August 27, 1994, as amended, supplemented or otherwise modified from time to time

“MEP” (Ministry of Environmental Protection of the PRC, formerly known as State Environmental Protection Administration)

“MOF” (Ministry of Finance of the PRC)

“MOFCOM” (Ministry of Commerce of the PRC)

“Mott MacDonald” Mott MacDonald Limited, an independent third party technical consultant

“NDRC” (National Development and Reform Commission of the PRC)

“New EIT Law” (The Enterprise Income Tax Law of the PRC) adopted by the National People’s Congress on March 16, 2007 and became effective on January 1, 2008

“Non-Competition Agreement” the non-competition agreement dated August 6, 2010 and as amended on November 23, 2010 between Huaneng Group and us

“Non-PRC Resident Enterprises” as defined under the New EIT Law, means companies established pursuant to a non-PRC law with their de facto management conducted outside the PRC, but which have established organizations or premises in the PRC, or which have generated income within the PRC without having established organizations or premises in the PRC

“North China Region” Shanxi province, Hebei province and the central part of Inner Mongolia

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“Northeast China Region” the three provinces of Heilongjiang, Jilin and Liaoning as well as the eastern part of Inner Mongolia

“NSSF” (National Council for Social Security Fund of the PRC)

“PBOC” (People’s Bank of China)

“People’s Congress” the PRC’s legislative apparatus, including the National People’s Congress and all the local people’s congresses (including provincial, municipal and other regional or local people’s congresses) as the context may require, or any of them

“PRC GAAP” generally accepted accounting principles in the PRC

“PRC government” or “State” the government of the PRC, including all governmental subdivisions (including provincial, municipal and other regional or local government entities)

“Promoters” the promoters of the Company, namely Huaneng Group and Huaneng Capital

“Provincial DRC” provincial development and reform commission of the PRC

“Qidong Wind Power” (Huaneng Qidong Wind Power Co., Ltd.) which used to be a subsidiary of our Company

“Renewable Energy Law” (Renewable Energy Law of the PRC), adopted by the Standing Committee of National People’s Congress on February 28, 2005 and became effective on January 1, 2006, amendment of which was passed on December 26, 2009 and became effective on April 1, 2010

“Renminbi” or “RMB” the lawful currency of the PRC

“Reorganization” the reorganization arrangements undergone by our Group as described in the section headed “History, Reorganization and Corporate Structure — Reorganization”

“SAFE” (State Administration of Foreign Exchange of the PRC)

“SASAC” (State-owned Assets Supervision and Administration Commission of the State Council)

“SAT” (State Administration of Taxation of the PRC)

“SAWS” (State Administration of Work Safety of the PRC)

“SERC” (State Electricity Regulatory Commission of the PRC)

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“SETC” (State Economic and Trade Commission of the PRC), a former ministry of the PRC government which was dissolved in 2003

“Shareholder(s)” holder(s) of our Shares

“Shares” shares in the share capital of the Company, with a nominal value of RMB1.00 each, comprising our Domestic Shares and H Shares

“Sinovel” (Sinovel Wind Group Co., Ltd.), an Independent Third Party supplier of our Company

“South China Region” the four provinces of Guangdong, Yunnan, Guizhou and Guangxi

“State Council” (State Council of the PRC)

“subsidiaries” has the meaning ascribed thereto in section 2 of the Hong Kong Companies Ordinance

“Substantial Shareholder” has the meaning ascribed thereto in certain applicable rules and regulations

“Supervisor(s)” one (or all) of our supervisors

“United States” or “U.S.” the United States of America, its territories, its possessions and all areas subject to its jurisdiction

“U.S. dollars”, “USD” or “US$” United States dollars, the lawful currency of the United States

“VAT” value-added tax

“West Inner Mongolia” the western part of Inner Mongolia

“Xinjiang” Xinjiang Uyghur Autonomous Region of the PRC

“%” per cent

“sq.m.” or “m2” square meters

—18— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. GLOSSARY OF TECHNICAL TERMS

This glossary contains certain definitions of technical terms used in this document as they related to us. Some of these definitions may not correspond to standard industry definitions.

“attributable installed capacity” or the aggregate installed capacity or capacity under construction “attributable capacity under construction” (as the case may be) of our project companies or individual projects under one project company in which we have an interest in proportion to the level of our ownership in each of those companies. It is calculated by multiplying our percentage ownership in each project company in which we have an interest, by its total installed capacity or total capacity under construction (as the case may be)

“auxiliary electricity” electricity consumed by a power plant in the course of generation and lost during the transmission from a power plant to the grid meter measuring the net power generation sold to the grid companies

“availability factor” (Availability Hours/Physical Hours) x 100%. Availability Hours means the hours when the wind turbine is considered as available to produce power; Physical Hours means the total hours during the availability measurement period

“capacity under construction” the capacity of our wind farms where construction work on the roads, foundations or electrical infrastructure has commenced

“CDM” the Clean Development Mechanism, a mechanism provided by Article 12 of the Kyoto Protocol, permitting industrialized countries to finance projects that reduce greenhouse gas emission in developing countries in exchange for emission credits

“CDM EB” the CDM Executive Board, which supervises the clean development mechanism under the authority and guidance of the Conference of the Parties to the UNFCCC

“CERs” Certified Emission Reductions, which are carbon credits issued by CDM EB for emission reductions achieved by registered CDM projects and verified by a DOE under the Kyoto Protocol

“consolidated gross power generation” or the aggregate gross power generation or net power generation (as “consolidated net power generation” the case may be) of our project companies that we fully consolidate in our financial statements for a specified period

“consolidated installed capacity”, the aggregate installed capacity, operational capacity or capacity “consolidated operational capacity” or under construction (as the case may be) of our project companies “consolidated capacity under construction” that are fully consolidated into our consolidated financial statements. It is calculated by including 100% of the installed capacity, operational capacity or capacity under construction of our project companies that we consolidate in our consolidated financial statements and are deemed as our subsidiaries. Since we wholly own or control all the project companies that operate our wind power business, our consolidated installed capacity,

—19— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. GLOSSARY OF TECHNICAL TERMS

consolidated operational capacity or consolidated capacity under construction equals to our total installed capacity, total operational capacity or total capacity under construction, as the case may be

“conventional energy” energy which is currently being adopted on a large scale and generated by utilizing conventional technologies, namely, thermal power and hydropower

“dispatch” the schedule of production for all the generating units on a power system, generally varied at short notice to match power production requirements

“dispatch priority” the ranking or preference of one producer or source of electricity generation capacity over other available producers or sources of electricity generation capacity

“DOE” designated operational entity accredited for monitoring CDM projects under the Kyoto Protocol

“g” metric gram

“gross power generation” for a specified period, the total amount of electricity produced by a power plant in that period, including auxiliary electricity and electricity generated during the construction and testing period

“GW” unit of power, gigawatt. 1 GW = 1,000 MW

“GWh” unit of energy, gigawatt-hour. 1 GWh = 1 million kWh. GWh is typically used as a measure for the annual energy production of large power plants

“installed capacity” the capacity of power generation units or wind turbines that have been completely assembled or erected in the case of wind power. For wind power, installed capacity includes the capacity of wind turbines in testing period

“kg” unit of mass, kilogram. 1 kg = 1,000 g

“km” unit of distance, kilometer. 1 km = 1,000 m

“kV” unit of electric potential, kilovolt. 1 kV = 1,000 volts

“kW” unit of power, kilowatt. 1 kW = 1,000 watts

“kWh” unit of energy, kilowatt-hour. The standard unit of energy used in the electric power industry. One kilowatt-hour is the amount of energy that would be produced by a generator producing one thousand watts for one hour

“Kyoto Protocol” a protocol to the UNFCCC and became effective on March 21, 1994

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“MW” unit of power, megawatt. 1 MW = 1,000 kW. The installed capacity of power plants is generally expressed in MW

“MWh” unit of energy, megawatt-hour. 1 MWh = 1,000 kWh

“net power generation” for a specified period, the total amount of electricity sold to the relevant local grid company by a power plant in that period, which equals to gross power generation less (i) auxiliary electricity and (ii) the electricity generated during the construction and testing period. Sales of electricity generated during the construction and testing period are not included in the revenue of electricity sales, but are offset against the cost of property, plant and equipment

“non-renewable energy” energy generated from energy sources which have been built up or evolved over a geological time-span and, if used, will be depleted

“operating projects” projects that the construction work has been fully or partly completed, and at least one of the wind turbines installed in the project has started producing electricity

“operational capacity” the capacity of wind turbines that have started to generate revenue after passing the continuous grid connection test

“pipeline projects” wind or solar power projects that have been identified and reserved for future development pursuant to the investment and development agreements that we entered into with various levels of local government under which we have the exclusive right or priority to develop wind or solar power projects at specified sites with certain estimated capacity. We classify our wind power pipeline projects into three categories — Advanced-stage Projects, Developing-stage Projects and Early-stage Projects, based on their maturity

“PPA” power purchase agreement entered into between a power producer and a grid company

“projects under construction” projects for which the construction work on the roads, foundations or electrical infrastructure has commenced, and the project company has received the project approval of the NDRC or Provincial DRC and detailed engineering and construction blueprints have been completed

“rated wind speed” the minimum wind speed below which a wind turbine cannot operate at full load under standard circumstances

“renewable energy” energy generated from sustainable energy sources that are regenerative or, for all practical purposes, cannot be depleted

—21— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. GLOSSARY OF TECHNICAL TERMS

“tidal-flat wind power projects” wind farms developed in tidal flat area. Tidal-flat area refers to the seashore area between the average highest tide mark and 5 meters deeper than the average lowest tide mark

“ton” metric ton

“total installed capacity” the aggregate installed capacity of power generation units in a country, in a region, of a power generation company or of a specific wind farm. The total installed capacity of a power generation company includes 100% of the installed capacity of power plants or power generation units in which the power generation company has an interest, irrespective of the percentage stake owned by the power generation company. Unless otherwise stated, total installed capacity refers to cumulative total installed capacity as of a certain date

“TWh” unit of energy, terawatt-hour. 1 TWh = 1 billion kWh

“UNFCCC” the United Nation Framework Convention on Climate Change

“VERs” Voluntary Emission Reductions that are carbon credits which are not mandated by any law or regulation, but originate from an organization’s desire to take active part in climate change mitigation efforts

“weighted average consolidated operational the aggregate amount of consolidated capacity operational for capacity” more than half a month in each month in a specified period (in MW) divided by the number of months in the same period

“weighted average utilization hours” the consolidated gross power generation less the electricity generated during the construction and testing period in a specified period divided by the weighted average consolidated operational capacity in the same period

“wind power density” measured in watts per square meter (W/m2) and is an indication of how much energy is theoretically available at the site for conversion by a wind turbine

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Risks Relating to Our Business and Industry

We depend heavily on government support and incentives for renewable energies which may be changed or abolished.

We depend heavily on government policies, regulations and incentives that support renewable energies for the operation of our wind power business. During the past few years, the PRC government has adopted a number of policies and regulations to encourage the development of renewable energies and to enhance the economic feasibility of developing and operating wind power projects. These policies and regulations include, among others, higher on-grid tariffs (as compared with coal power plants operating in the same region), mandatory grid connection, mandatory power off-take and preferential tax treatments. Moreover, the PRC government also encourages state-owned commercial banks to provide companies engaging in the renewable energies business with debt financing facilities at relatively low interest rates and on more favorable terms. As the construction of wind farms requires substantial capital, government policies which affect the availability of financings have a direct and material effect on our operations. In addition to the preferential government policies and regulations, certain of our wind power projects also benefit from supplementary on-grid tariffs provided by local governments as part of their incentives for the development of wind power industry. Furthermore, we have received government grants which primarily consist of income from sale of CERs and VAT rebate and refund from governmental authorities. During the years ended December 31, 2008, 2009 and 2010, we recorded government grants in the amount of RMB35.5 million, RMB65.9 million and RMB248.3 million in 2008, 2009 and 2010, respectively, representing 33.2%, 20.6% and 40.7% of our net profit for the respective year.

Other than the government policies and regulations of wind power sector, our business and operations may also be affected by government policies and regulations affecting upstream and downstream industries such as wind turbine manufacturing and grid sectors. For example, the PRC government has been supporting and encouraging the development of domestic wind turbine manufacturing industry during recent years, which is believed to have contributed to the technology advancement and decrease in wind turbine prices.

If any of these policies, regulations or incentives is changed or abolished, our business, financial condition and results of operations may be materially and adversely affected. For example, if the PRC government abolishes its policies of mandatory grid connection, mandatory power off-take and the fixed tariff regime, we may need to compete with not only renewable energy producers but also traditional power producers such as coal power plants in the sale of electricity. We cannot assure you that these favorable policies, regulations and incentives will not change in the future in a manner adverse to our business.

We rely on local grid companies for grid connection and electricity transmission and dispatch.

We rely on local grid companies for grid connection, including the construction and maintenance of the infrastructure and grids. Prior to obtaining the project approval from the NDRC or Provincial DRC, we need to obtain consent from the relevant local grid company to connect our wind farms to its grid. Under the current regulatory scheme, local grid companies are required by law to provide grid connection and related technical support for all the wind farms within their coverage. In practice, however, the local grid companies may take a number of factors into consideration in granting the consents, including the availability and stability of the existing grids, progress of construction and upgrade of local grids and the cost of grid connections. Many of these factors are beyond our control. We cannot assure you that we will be able to obtain all the consents from local grid companies in a timely manner, or at all. Failure or delays in obtaining such consents may prevent us from developing our wind power projects as planned, which may have a material adverse effect on our business, financial condition and results of operations.

We also rely on local grid companies for electricity transmission and dispatch services. Our revenue and profitability depend, to a large extent, upon the sale of electricity which is subject to dispatch to power grids. The

—23— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. RISK FACTORS dispatch of electricity generated by our wind farms is controlled by the dispatch centers of the relevant local grid companies pursuant to dispatch agreements between such local grid companies and us as well as applicable laws and regulations. According to the Renewable Energy Law and related regulations, grid companies in China are required to purchase in full amount the on-grid electricity generated by wind power projects which meet the grid connection technical standards in the areas covered by their power grids. Furthermore, wind power producers are entitled to the highest dispatch priority pursuant to the Provisional Measures on the Dispatch of Energy Saving Power Generation promulgated by the State Council in August 2007. Notwithstanding these favorable laws and regulations, the dispatch centers consider a variety of factors when dispatching electricity, including, among others, the local demand for electricity, interconnection agreements between power grids and the actual conditions of the grid such as equipment capacities and safety reserve margins. In certain areas of northern China, the local grid companies may also give dispatch priority to steam-electricity cogeneration companies to ensure the heat supply during the winter season. Moreover, the applicable laws and regulations require wind power producers to co-operate with grid companies to ensure the safety of power grids. As a result, the sale of electricity generated by our wind power projects may be limited by the actual conditions of the power grids such as grid congestion, restrictions on transmission capacity, grid connectivity and stability of the grid. In addition, we may need to compete with other power generation companies for grid connection in the event that the local grid does not have sufficient capacity to dispatch all the electricity produced by the power generation companies within its coverage.

In recent years the local grid companies in Inner Mongolia and Liaoning Province imposed restrictions on wind power generation companies, especially during winter season, to give priority to steam-electricity cogeneration companies which provide heat supply and to ensure the stability and safety of the local grids. Furthermore, local grid companies in West Inner Mongolia imposed additional restrictions on wind power generation companies because the rapid construction of wind farms resulting from quality wind resources in West Inner Mongolia outpaced the development of local grids during recent years. As a result, a few of our wind farms in Inner Mongolia and Liaoning Province temporarily shut down one or more wind turbines in 2009 and 2010. Given that power generation is affected by a number of interrelated and concurrent factors such as the wind speed, wind directions and wake effects, we are not able to estimate the financial impact attributable to such output limitations alone. However, such output limitations will negatively affect our net power generation and thus reduce our revenue. In addition, the PPAs we entered into with local grid companies do not specifically provide any compensation for any financial loss caused by grid congestion or grid companies’ otherwise failure in purchasing full amount of electricity generated by our wind farms, which we believe is consistent with the industry practice in China. Based on the transmission capacity of the existing local grids, we expect that some of our wind farms may continue to experience electricity output constraints in the near future. Since we currently are not able to store the electricity generated by our wind power projects, a reduction by the dispatch center in the amount of electricity dispatched to the grids could result in reduced net power generation and thus may have a material adverse effect on our business, financial condition and results of operations. As of December 31, 2010, we had 1,567.7 MW of installed capacity in Inner Mongolia and 799.5 MW of installed capacity in Liaoning Province, which accounted for approximately 44.5% and 22.7% of our consolidated installed capacity, respectively.

Development of wind power projects are subject to various governmental approvals and permits. Failure to obtain necessary approvals and permits may materially and adversely affect our project development and results of operations.

Almost all aspects of our wind power operations, including the design and construction of the wind power project, power generation, transmission and dispatch and on-grid tariffs, are subject to strict regulations and require various governmental approvals and permits. In particular, before we can commence construction of any wind power project, we need to obtain approvals from Provincial DRC or the NDRC depending on the estimated capacity of such project. Other than the Provincial DRC or NDRC approvals, we also need a number of local

—24— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. RISK FACTORS governmental approvals and permits for the construction and operation of our wind power projects, including, among others, environmental approvals. We cannot assure you that we will be able to obtain all the approvals and permits necessary for the development of new projects before the commencement of construction, in a timely manner, or at all. Any denial of an approval essential to a project may impair our ability to develop that project and in turn materially and adversely affect our results of operations. In addition, some application process may be prolonged due to various reasons, including but not limited to requirement of additional documents and information by different governmental authorities. Any delay in the approval process could cause delay in our project development and give rise to substantial additional costs. Historically, we have experienced certain delays in the approval process due to changes in administrative procedures and requirements. Nevertheless, we have not suffered any material loss due to such delays. We may experience delays and incur substantial additional costs in the future.

The weighted average on-grid tariff for electricity generated by our wind power projects has decreased during the years ended December 31, 2008, 2009 and 2010.

Our results of operations and financial condition are directly and significantly affected by the on-grid tariffs at which we sell the electricity generated by our wind power projects to the local grid companies. During the years ended December 31, 2008, 2009 and 2010, our weighted average on-grid tariff per kWh (excluding VAT) was RMB0.581, RMB0.527 and RMB0.516 in 2008, 2009 and 2010, respectively. The weighted average on-grid tariff (excluding VAT) is calculated by dividing our revenue from sale of electricity by our net power generation of wind power projects. During the same periods, our weighted average on-grid tariff per kWh (including VAT) was RMB0.679, RMB0.617 and RMB0.604, respectively.

The on-grid tariffs for wind power projects in China are determined by government authorities. For onshore wind power projects approved on or after August 1, 2009, the on-grid tariff is determined based on the location of such wind power projects. The PRC government has categorized China’s onshore wind resources into four wind resource zones and applies a universal on-grid tariff to all the wind power projects in the same wind resource zone. The benchmark on-grid tariffs (including VAT) for the four wind resource zones are RMB0.51/kWh, RMB0.54/kWh, RMB0.58/kWh and RMB0.61/kWh, respectively. For wind power projects approved prior to August 1, 2009 but on or after January 1, 2006, the on-grid tariff was determined by referring to either a “government guided price” or a “government fixed price.” For wind power projects approved on or prior to December 31, 2005, the on-grid tariff was determined by the government on a project-by-project basis after considering various factors such as the wind resources, construction conditions and the on-grid tariffs of other wind power projects in the same or neighboring areas with similar conditions.

Our weighted average on-grid tariffs (including VAT) in 2008 and 2009 were higher than the current highest standard on-grid tariff, primarily because certain of our early wind power projects enjoyed relatively high on-grid tariffs prior to the implementation of the standard on-grid tariff regime on August 1, 2009, and that the standard on-grid tariffs only apply to wind power projects approved on or after August 1, 2009. Consistent with the industry trend in the wind power sector of the PRC, the decrease in the weighted average on-grid tariff of our wind power projects during the years ended December 31, 2008, 2009 and 2010 reflected the fact that some of our early wind power projects enjoyed higher on-grid tariffs as approved by relevant government authorities on a project-by-project basis. Our weighted average on-grid tariff decreased over time due to change in the PRC government’s policy in relation to wind power on-grid tariff and our expansion into areas with quality wind resources but lower on-grid tariffs as compared to earlier projects. We cannot assure you that our weighted average on-grid tariff will not further decrease in the future due to changes in government policies or our further expansion into areas with quality wind resources but lower on-grid tariffs. Any further decrease in the on-grid tariff may have an adverse effect on our business, financial condition and results of operations.

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If our sole customers, local grid companies, fail to perform their obligations under the PPAs, our business, financial condition and results of operations may be materially and adversely affected.

We sell all of the electricity generated by our wind power projects to local grid companies where the wind farms are located pursuant to the terms and conditions of the PPAs we entered into with the local grid companies. See “Business — Sales and Distribution — Customers and PPA” for details. Currently we do not sell electricity to any corporate or individual end-users. As a result, we rely heavily on our sole customers, local grid companies, for our revenue and business operations.

Other than the grid companies in West Inner Mongolia which are owned by the government of Inner Mongolia, all grid companies which are our customers are ultimately owned by either State Grid or Southern Grid, two state-owned enterprises. Although we believe these grid companies are creditworthy, we cannot assure you that they will perform their contractual obligations pursuant to the terms and conditions of the PPAs and make full and timely payments for our electricity sold to them. In particular, the PPAs do not specifically provide any compensation for any financial loss caused by grid congestion or grid companies’ otherwise failure in purchasing full amount of electricity generated by our wind farms. If these local grid companies are unable or unwilling to fulfill their contractual obligations, our business, financial condition and results of operations may be materially and adversely affected.

The interests of our controlling shareholder may be different from ours.

Immediately following the completion of relevant event, Huaneng Group will directly and through its wholly-owned subsidiary own approximately 67.00% of our outstanding shares. Accordingly, Huaneng Group, as our controlling shareholder, will be able to exercise significant influence over us, including, among others, the timing and amount of the distribution of dividend, the issuance of new securities, the nomination of our Directors and Supervisors, the formulation of business strategies and policies, the approval of plans relating to transactions affecting our company, including mergers and acquisitions, amendments to our Articles of Association and other actions that require the approval of our Directors and Shareholders. See “Relationship with Controlling Shareholder.” At times, the interests of Huaneng Group may not be consistent with the interests of our other Shareholders. There can be no assurance that Huaneng Group will always vote or direct its nominated Directors to act in a way that will benefit our other minority Shareholders.

We are Huaneng Group’s sole renewable energy platform for the ultimate consolidation of its renewable energy businesses such as wind power. Nevertheless, Huaneng Group currently retains certain wind power business and engages in other renewable and non-renewable energy businesses. In the event of grid congestion or other situations that limit the local grid’s dispatch or transmission capacity, we may need to compete with other power generation companies in the affected areas, which may include Huaneng Group. In addition, if the PRC government changes the currently favorable policies and regulations toward wind power industry, we may need to compete with non-renewable power generators, including Huaneng Group. Furthermore, Huaneng Group is not able to control all business decisions of its listed subsidiaries simply by virtue of its shareholding in such listed subsidiaries, including decisions on whether or not to compete with us. See “Relationship with Controlling Shareholder” for further information.

If we are not successful in converting our wind power pipeline projects into operating projects in accordance with our development plan and specifications, our expansion plan may be adversely affected and our revenue may fall below our expectations.

As of December 31, 2010, we had a portfolio of wind power pipeline projects reserved for future development with an estimated capacity of approximately 73,463.5 MW. According to our current development plan, we expect to increase our consolidated installed capacity to approximately 5,100 MW by the end of 2011.

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However, the development of wind power projects is a complex process which involves numerous risks and uncertainties and we may not be able to convert some of our pipeline projects into operating projects as planned. Successful development of a wind power project depends upon many factors that are beyond our control, including, among others, our ability to obtain all required approvals from different PRC governmental authorities. Unexpected delay or failure in obtaining the required governmental approvals could increase our cost or prevent the commercial operation of the affected projects. See “— Development of wind power projects are subject to various governmental approvals and permits. Failure to obtain necessary approvals and permits may materially and adversely affect our project development and results of operations.”

We may not be able to complete the construction of our wind farms on schedule or within budget.

We normally engage third-party contractors for the construction of our wind farms. The construction of a wind farm involves many risks, including, among others, inclement weather, shortages of equipment, materials and labor, labor disturbances, unforeseen delays and other problems and unanticipated cost increases, any of which could give rise to delays or cost overruns. Moreover, if the third-party contractors fail to complete construction according to specifications, we may suffer from decreased power generation efficiency, increased operation costs and reduced profits. We cannot assure you that all the construction of our wind power projects will be completed on schedule or within budget. Any setbacks or delays in the completion of a project and other unforeseen costs or cost overruns could have a material and adverse effect on our business, financial condition and results of operations.

We rely on suitable climatic conditions for the generation of electricity. If there are unforeseen climatic condition changes or if we fail to make correct assessment when selecting sites for wind farms, our electricity generation, revenue and results of operations may be materially and adversely affected.

We rely on climatic conditions, particularly wind conditions which are variable and difficult to predict, for the production of electricity and generation of revenue. Historical data during the years ended December 31, 2008, 2009 and 2010 show that we experienced relatively low utilization hours from June to September and relatively high utilization hours from November to January, with average lowest and highest utilization hours being recorded in August and November, respectively, during the years ended December 31, 2008, 2009 and 2010. Generally our wind turbines can only generate power when the wind speed is between 3 meters per second and 25 meters per second. Moreover, if the wind speed falls within the range but is below the rated wind speed at or above which wind turbines are able to operate at full load, the power generation of our wind power projects will be adversely affected. As a result, our electricity generation and revenue depend on our ability to select suitable sites for our wind farms and place wind turbines at the most appropriate positions within the wind farm.

In selecting sites for the development of our wind power projects, we base our decisions in part on the meteorological and topographical data of the proposed area as well as the on-site exploration conducted by our technicians. Before we commence construction of a wind power project, we usually conduct continuous wind tests for at least twelve months, which measure, among others, the wind speed, prevailing direction and seasonal variations. We cannot assure you that (i) the actual wind conditions will conform to the historical measured data and (ii) the assumptions we make during our wind resource assessment will always be correct. Moreover, even if the actual wind conditions are consistent with our assessment, such conditions may be affected by variations in weather patterns which may change over time in a manner that may adversely affect our operations. As a result, the electricity generated by our wind power projects may fall below our expectations, which could in turn materially and adversely affect our business, financial condition and results of operations. Utilization of wind resources is also affected by wind turbine placement and interference between wind turbines, which involve uncertainties and exercise of considerable judgment. Any error of judgment in the site selection or placement of wind turbines may lead to less than optimal power generation, which in turn could cause the return on our

—27— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. RISK FACTORS investment in these projects to be lower than our expectations, and could have a material adverse effect on our business, financial condition and results of operations.

Our operations depend on the performance of wind turbines and we rely on warranties from suppliers to protect us against under-performance or non-performance of the wind turbines during the warranty period.

Our operations depend on the performance of our wind turbines. When we purchase wind turbines, we usually enter into a sales and purchase agreement with our suppliers with warranty clauses included. These warranties typically include (i) a power curve warranty, which entitles us to liquidated damages or deductions from warranty deposits if the power output of the wind turbine falls below a specified level, and (ii) an availability warranty, which entitles us to liquidated damages or deductions from warranty deposits and sometimes extension of warranty period if the annual utilization rate fails to reach a specified rate. However, we cannot assure you that the suppliers will fulfill their contractual obligations. If we incur losses and seek protection under warranties but the relevant supplier is unable or unwilling to perform its obligation thereunder, our results of operations may suffer and we may have to incur substantial costs to enforce our contractual rights.

In addition, the warranties expire in two to six years from the completion of commissioning and inspection, after which we may be exposed to the risks of under-performance or non-performance of the wind turbines. If any of our wind turbines fails to perform and we are not able to obtain sufficient indemnification under warranties, our financial condition and results of operations may be materially and adversely affected. Furthermore, we may experience a significant increase in the repair and maintenance expenses when the warranty periods expire. As of December 31, 2010, 149 units of wind turbines with an aggregate capacity of 154.8 MW, representing 6.1% of the total of 2,444 units of wind turbines installed as of December 31, 2010, or 4.4% of the consolidated installed capacity of 3,522.4 MW as of December 31, 2010, were out of warranty period and maintained at our own cost. Other than the 149 units, all of our wind turbines were still within warranty period and maintained by suppliers at no additional cost to us as of December 31, 2010. Upon expiration of the warranty periods, we will need to maintain the wind turbines at our own cost and may incur substantial costs in connection therewith.

Approximately 50% to 60% of our construction costs of a wind power project is attributable to the purchase price of wind turbines. The prices of wind turbines have a direct impact on our results of operations and financial condition through depreciation expenses. During the years ended December 31, 2008, 2009 and 2010, our depreciation and amortization expenses as a percentage of our operating expenses (excluding the service concession construction costs) amounted to 62.4%, 74.6% and 71.7% in 2008, 2009 and 2010, respectively. Therefore, our business, financial condition and results of operations may be materially and adversely affected if the depreciation and amortization expenses increase significantly in the future due to increases in wind turbine prices.

Our operations may also be affected by a number of other factors, including, among others, aerodynamic losses resulting from wear and tear of the wind turbines, degradation of the blades or other components or the need to shut down one or more of the wind turbines to avoid damage from extreme weather conditions. Since many of these factors are beyond our control, we cannot assure you that we will be able to generate and sell electricity in accordance with our projections in any given period of time. Any of the above factors may have a material and adverse effect on our business, financial condition and results of operations.

Our sale of CERs depends on the continuing effectiveness of CDM arrangements under the Kyoto Protocol.

We registered our first CDM project in August 2006 and started to generate income from sale of CERs in 2007. During the years ended December 31, 2008, 2009 and 2010, net income from sale of CERs amounted to RMB16.2 million, RMB28.7 million and RMB164.8 million in 2008, 2009 and 2010, respectively, representing

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17.0%, 9.5% and 25.7% of our profit before taxation during the same periods. See “Business — Our Wind Power Business — Carbon Credit Transactions — Clean Development Mechanism and Sales of CERs” for details. We need to go through a rigorous and complicated process to get our wind power projects registered with the CDM EB in order to receive CER credits, including obtaining approval from the NDRC and validation from a DOE. We cannot assure you that the CDM EB will approve all of our applications for the CDM project registration in a timely manner, or at all. The CDM EB has declined to register some PRC wind power projects for CER credits in the past. Although none of our CDM applications had been rejected or delayed by the CDM EB as of the Latest Practicable Date, we cannot assure you that our applications will not be rejected or delayed in the future. Further, should there be any material changes to the verification standards in the registration process or other changes to the registration policy, we may be unable to register our wind and other renewable energy projects as CDM projects in the future, which in turn could have a material adverse effect on our income from the sale of CERs, our financial condition and results of operations.

Pursuant to the CDM arrangements under the Kyoto Protocol, which was ratified by the PRC government in 2002, qualified emission-reduction projects in developing countries may earn CER credits which could be sold to industrialized countries with a greenhouse gas reduction commitment (the “Annex 1 Countries”). The Annex 1 Countries may use these CER credits to achieve compliance with their quantified emission reduction targets. Our sale of CERs depends on the continuing effectiveness of CDM arrangements under the Kyoto Protocol, the first commitment period of which will expire at the end of 2012. If the Kyoto Protocol is not renewed or if the PRC government discontinues its support for CDM arrangements, our sale of CERs and profit may be materially and adversely affected.

We have a limited operating history and our historical growth rate during the years ended December 31, 2008, 2009 and 2010 may not be indicative of our growth rate in the future.

We started wind power operations in the late 1990s. We commenced the construction of Nan’ao Project, our first wind power project, in July 1999. Phase I of Nan’ao Project was connected to grid and began operation in July 2000. In 2002, our predecessor, Huaneng New Energy Industrial Co., Ltd., was established as a wholly- owned subsidiary of Huaneng Group. In 2007, we put our first MW-class wind power project into commercial operation and commenced our large-scale wind power operations. Accordingly, we have a limited operation history for you to evaluate the performance of our business.

During the years ended December 31, 2008, 2009 and 2010, our consolidated installed capacity increased from 402.3 MW as of December 31, 2008 to 3,522.4 MW as of December 31, 2010. Our revenue increased from RMB570.3 million in 2008 to RMB1,768.5 million in 2010. However, due to our limited operating history, our historical growth rate may not be indicative of our future performance. We cannot assure you that we will grow at the same rate as we did during the years ended December 31, 2008, 2009 and 2010.

Development and acquisition of wind power projects require substantial capital. If we fail to obtain capital on reasonable commercial terms, we may suffer from increased finance expenses and may not be able to expand as planned.

We operate a capital intensive business and rely heavily on borrowings and finance leases as well as capital contributions from our Shareholders to meet our capital expenditure requirements. Similar to other wind power generators, it usually takes a long period of time for us to recover our investment in a wind power project. As a result, the cash generated from operations may not be sufficient to meet our capital needs and we may have to rely on debt and equity financing for the expansion of our business.

According to our business plan, we expect to increase our consolidated installed capacity to approximately 5,100 MW by the end of 2011. One of our important business strategies is to expand our wind power business

—29— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. RISK FACTORS through converting pipeline projects into operating projects and acquiring wind farms in various development stages on commercially attractive terms. We intend to finance our expansion mainly with bank borrowings and proceeds from certain possible capital raising activities, supplemented by cash generated from operations and other existing financing resources, including equity financing. Our finance expenses amounted to RMB72.2 million, RMB251.4 million and RMB515.1 million in 2008, 2009 and 2010, respectively. Our ability to obtain financing and the related finance expenses depend on numerous factors, including the macroeconomic and capital market conditions, government regulations and policies, credit availability from banks or other lenders and the continued success of our wind power business.

Since the beginning of 2010, the PRC government started to tighten its monetary policy, and the People’s Bank of China has increased nine times the reserve requirement ratio for the PRC financial institutions from January 1, 2010 to March 31, 2011. In addition, the People’s Bank of China increased the benchmark one-year lending interest rate by 75 basis points during the same period. We cannot assure you that the lending interest rates will not further increase in the future if the PRC government decides to further tighten its monetary policy. Given the significant capital expenditure requirements in connection with the development of our wind power projects, any increase in the lending interest rate may lead to a substantial increase in our finance expenses and reduction in profit.

In addition, we cannot assure you that financing for the development and acquisition of future wind power projects will be available on the same terms as historical ones or, on terms acceptable to us at all. In the event that we are not able to obtain sufficient financing through debt instruments on commercially acceptable terms, we may have to rely on equity financing through share offerings, which may result in dilution to the then existing Shareholders. If we are not able to obtain sufficient debt or equity financings, we may not be able to develop our wind power projects and implement our business strategies, in which case our growth rate and results of operations may be materially and adversely affected.

Our significant net current liabilities and borrowing levels may limit our ability to obtain additional funding for our operations.

We have relied on borrowings during the years ended December 31, 2008, 2009 and 2010 to fund the expansion of our wind power business and expect to continue to rely on borrowings as one of the most important financing resources for our future development. We typically fund 70% to 80% of the capital expenditure of a wind power project with bank loans and other borrowings. As of December 31, 2010, our net current liabilities totaled RMB8,832.3 million and our gearing ratio (which is calculated by dividing (i) the long-term and short- term borrowings and obligations under finance leases minus cash and cash equivalents (the “Net Debt”) by (ii) Net Debt plus total equity (including non-controlling interests)) reached 75.4%. As of the same date, our gross outstanding borrowings totaled approximately RMB18,018.9 million, among which RMB4,817.6 million will mature in less than one year.

Our substantial indebtedness and the relative proportion with short-term maturities may constrain our operational flexibility and affect our business and operations. For example, it could require us to dedicate a large portion of our cash flow to repay principal and interest of our debt, which in turn may affect our ability to plan for and react to business opportunities. It could also subject us to various restrictive covenants, although as of the Latest Practicable Date, there were no restrictive covenants under our indebtedness. The high leverage level may also make us vulnerable to adverse changes in general economic and capital market conditions, especially to the fluctuations in interest rates. Given our reliance on borrowings, increases in interest rates may result in significant increases in our finance expenses and in turn have a material adverse effect on our financial condition and results of operations. As of December 31, 2008, 2009 and 2010, it was estimated that a general increase or decrease of 100 basis points in interest rates of net floating borrowings, with all other variables held constant, would have decreased or increased our profit after taxation and retained profits by approximately RMB11.7

—30— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. RISK FACTORS million, RMB37.3 million and RMB103.5 million, respectively. Furthermore, our significant net current liabilities may limit our ability to obtain, or increase the cost of, additional financings to fund the further expansion of our business.

Any of these consequences could materially and adversely affect our financial condition and results of operations. We cannot assure you that we will always be able to obtain financing on favorable terms, or at all. If we are unable to obtain sufficient debt financing, we may have to rely on equity financing or curtail our development, which could have a material adverse effect on our business, financial condition and results of operations.

We face competition from other renewable energy companies, in particular, other wind power developers. We may also face competition from non-renewable power developers.

We face competition primarily from other renewable energy companies, especially wind power developers in the PRC. Renewable energy resources in the PRC, including wind, solar, hydro, biomass, geothermal and ocean power, benefit from various governmental incentives such as on-grid tariff premiums and dispatch priorities. If the PRC government strengthens its support for other renewable energy sources, we may face intensified competition from other renewable energy companies and our results of operations may be adversely affected.

The competition among wind power generation companies occurs mainly during the development stage, especially in selecting suitable sites and obtaining rights to develop wind power projects at a specific site. The development of wind power projects is limited by natural conditions, especially the quality wind resources that are found in limited geographic areas and at particular sites. We compete with other national or local wind power developers for desirable sites through entering into development agreements with local governments which provide us with exclusive rights or priority to develop wind power projects within a specific area during a specified period of time. We also compete with our competitors in a number of other areas, including obtaining relevant governmental approvals, adding our projected capacity into the local grid planning and securing bank borrowings. The preferential government policies, regulations and incentives for the wind power industry may attract new entrants into the market despite the relatively high barrier caused by the substantial capital requirement. Some of our existing or future competitors may have better access to local governmental support, financial and other resources than we do, providing them with competitive advantages in certain areas. Our business, financial condition and results of operations may be adversely affected as a result of such competition.

In addition, we may also face competition from power generators using nuclear energy and fossil fuels such as coal, petroleum and natural gas. Technological innovations in nuclear energy or fossil based power generation or discovery of large-scale new deposits of fossil fuel may reduce the operational cost of these nuclear energy or fossil based power generators or enable them to strengthened governmental support, which in turn may render our wind power projects less competitive.

We procure a majority of our wind turbines and related components from a limited number of PRC suppliers, who may not have as long operating history as foreign suppliers.

As an important component of our business strategy, we procure a majority of our wind turbines and related components from PRC domestic-brand suppliers. Wind turbine is the primary equipment of our wind power projects and costs for wind turbines constitute approximately 50% to 60% of our construction costs. Consequently, fluctuations in wind turbine prices could have a significant and direct impact on our business, financial condition and results of operations. In 2008, 2009 and 2010, capacity of domestic-brand wind turbines accounted for approximately 100.0%, 91.4% and 97.5% of the total capacity installed during each respective

—31— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. RISK FACTORS year. Capacity of wind turbines supplied by Sinovel, our largest wind turbine supplier, accounted for approximately 82.4%, 48.4% and 45.4%, respectively, of the total capacity installed in 2008, 2009 and 2010.

The wind turbine manufacturing industry in China is still in its early stage of development. There are a limited number of manufacturers that have the expertise and capabilities to produce multi-megawatt class wind turbines. Our reliance on a limited number of suppliers may expose us to certain risks such as difficulty in finding replacement suppliers at comparable prices in the event that we lose one or more of our primary wind turbine suppliers.

Moreover, compared with overseas wind turbine suppliers, the PRC domestic-brand suppliers generally have a relatively shorter operating history. Due to their limited operating history, the technologies employed by the PRC suppliers may be less sophisticated and the performance of domestic-brand wind turbines may be less desirable than those supplied by foreign manufacturers. Furthermore, wind turbine quality testing and certification by professional third-party experts is a relatively new concept in China, and no regulatory or mandatory requirements have been established in this regard. Although we believe we have benefited tremendously from our current strategy given the relatively low cost and in-time after-sales services provided by the PRC domestic-brand suppliers, we may suffer from under-performance or non-performance of wind turbines caused by technical or manufacturing defects, which may materially and adversely affect our power generation and results of operations.

In the past, demand for wind turbines and related components exceeded supply and many wind power developers experienced difficulties in obtaining qualified wind turbines or related components necessary for their operations. Due to the shortage of supply, the prices we paid for wind turbines increased by approximately 8.4% in 2008. Although the prices have decreased since the end of 2008 due to the advancement of wind turbine technology, the increasing competition and the decrease in the manufacturing cost resulting from increased economies of scale and decreasing raw material cost, we cannot assure you that the wind turbine prices will not increase again in the future. If another shortage in supply occurs, it may lead to delay in delivery, increase in price, less favorable terms or even insufficient supply of wind turbines to meet our growth needs. The occurrence of any such events could have a material adverse effect on our business, financial condition and results of operations. We cannot assure you that we will be able to obtain a sufficient quantity of wind turbines and other related components on commercially reasonable terms, or at all, if any shortage in supply occurs.

The slow-down of economic growth in China and the global economic downturn may adversely affect our business growth and profitability.

The global financial markets have experienced significant disruptions since 2008 and most of the world’s major economies have been or are still in recession. To the extent that there has been improvement in some areas, it is unclear whether the recovery is sustainable. China’s economy also faces challenges. In an effort to counteract the impact of international financial crisis on China’s economy, the PRC government has implemented a number of stimulus plans and other measures. There can be no assurance, however, that these measures will successfully avert an economic downturn if the global economic recession is prolonged or worsens.

Although our business is not directly affected by the economic downturn because of the preferential government policies providing for mandatory grid connection and mandatory power off-take, a slowdown in China’s economy may lead to less business activities and in turn reduced demand for electricity in general. Unexpected significant decreases in electricity demand may cause local grid companies to impose temporary electricity output constraints on electricity generation companies to avoid overburdening the grid. In general, local grid companies tend to impose such restrictions on non-renewable power plants in order to comply with the mandatory power off-take regulations in favor of renewable energy producers such as wind farms. However, they

—32— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. RISK FACTORS may have to impose similar restrictions on wind power generators in the event of a severe and dramatic reduction in electricity demand in order to maintain the safety and stability of the grid which can only be achieved when electricity generated from non-intermittent sources accounts for a certain percentage of the total electricity dispatched by the grid. Decreases in electricity demand may also affect grid companies’ financial condition and may eventually expose us to higher credit risks. Our suppliers may also experience difficulties and may not be able to supply us with equipment in a timely manner or on the same terms as before.

Moreover, our expansion requires substantial capital. A slowdown in China’s economy or the recurrence of any severe financial disruption in the global financial market may have a material adverse impact on financing available to us. The weakness in the economy could erode investors’ confidence which constitutes the basis of the credit market. Furthermore, the latest financial turmoil affecting the financial markets and banking system may significantly restrict our ability to obtain financing in the capital markets or from financial institutions on commercially reasonable terms, or at all. Although we are uncertain about the extent to which the recent global financial and economic crisis and slow-down of the Chinese economy may impact our business in the short term and long term, there is a risk that our business, financial condition, results of operations and prospects would be materially and adversely affected by the continuing global economic downturn and the slow-down of the Chinese economy.

The growth of our business depends on our ability to identify suitable sites and develop new wind power projects in a timely manner. If we fail to do so, our business and prospects may be adversely affected.

Our business expansion and future success depend, in part, upon our ability to identify suitable sites and develop new wind power projects at such sites. A site suitable for the development of wind power projects needs to be not only featured with quality wind resources, but also suitable for the construction of a wind power project in various aspects. The factors determining suitability of a site include, among others, its geographical conditions, proximity to transmission networks and availability of related facilities. We need to compete with other wind power developers by identifying such limited sites in a timely manner and securing our right to develop wind power projects at these sites by entering into investment and development agreements with local government.

Some of the investment and development agreements with the local government provide that if we fail to commence wind test or construction or power generation within a specified period of time, the local government has the right to reclaim the land use rights at no cost. As the construction and development of a wind power project involves numerous risks and uncertainties, including but not limited to our ability to obtain necessary governmental approvals and financing for the project, we may not be able to commence wind test, construction or power generation within the agreed period of time and may thus lose our land use rights and suffer substantial losses.

The standards we use to categorize our projects and the underlying assumptions are internally developed and may not be comparable to classifications used by other companies.

As disclosed in this document, we categorize our projects into three categories based on the stage of development: operating projects, projects under construction and pipeline projects reserved for future development. We further divide our wind power pipeline projects into three categories in accordance with their maturity: Advanced-stage Projects, Developing-stage Projects and Early-stage Projects. See “Business — Pipeline Projects.”

The standards we use to categorize our projects and the underlying assumptions are internally developed based on our experience and have not been verified by any third party. There is no unified or generally accepted

—33— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. RISK FACTORS standard or methodology in the wind power industry in the PRC for such categorization. Therefore, our categorization may not be comparable to classifications used by other companies.

Performance of our wind power projects may be adversely affected by nearby objects.

Performance of our wind power projects depends on the suitable climatic conditions at the sites they are located. Even if we have successfully identified the suitable sites and secured our rights to develop wind power projects, the climatic conditions of the relevant sites may be adversely affected by nearby objects developed later by third parties. Objects such as buildings or other large-scale structures near our wind farms may disrupt wind flows and result in reduced wind resources on a specific site. The investment and development agreements between the local government and us typically provide that we have the exclusive right or priority to develop wind farms at a specific site. Such agreements, however, do not prevent the local government from granting to third parties land use rights for nearby lands which, once developed, may have a negative impact on the climatic conditions of the sites on which we intend to develop wind farms. The performance of our wind turbines may be adversely affected by the development of objects nearby, which in turn may have an adverse impact on our results of operations.

We may not be able to execute our business strategy and manage our growth successfully.

We have experienced rapid growth during the years ended December 31, 2008, 2009 and 2010, increasing the consolidated installed capacity of our wind power projects from 402.3 MW as of December 31, 2008 to 3,522.4 MW as of December 31, 2010. We target to increase our consolidated installed capacity to approximately 5,100 MW by the end of 2011. We also plan to develop other renewable energies to expand our power generation capabilities and to diversify our revenue base. However, the successful execution of our business strategy and management of our growth depend on a number of factors, including, among others, our ability to develop and expand our portfolio of operating projects, to manage our existing and future assets, to maintain adequate control over our expenses and to obtain sufficient financing on favorable terms. Furthermore, our ability to execute our business strategy and manage our growth successfully are also subject to many risks which are beyond our control.

We are in the process of developing solar power business. As of December 31, 2010, we have entered into investment and development agreements with local governments to develop solar power projects with an estimated capacity of 1,740 MW and have been awarded by the PRC government two solar power concession projects with a total capacity of 50.4 MW. In addition, we are also developing offshore wind power projects and have commenced commercial operation of one project in Shandong Province. However, large-scale development of solar power projects and offshore wind power projects is subject to the establishment of economic feasibility which in turn depends on the promulgation and development of the pricing mechanism for such projects by the PRC government. If the economic feasibility cannot be established, our expansion in these areas may not be successful and our business and growth prospects may be adversely affected.

Discontinuance of preferential tax treatments may have an adverse impact on our results of operations and financial condition.

Prior to January 1, 2008, PRC entities were generally subject to the statutory income tax rate of 33% on their taxable income. A number of our subsidiaries, however, were taxed at various preferential income tax rates due to their engagement in state encouraged industries located in the western regions, their status as production- type foreign investment enterprises (“FIEs”) or their location in the designated coastal open area.

On January 1, 2008, the New EIT Law came into effect, which sets a unified 25% income tax rate for both foreign-invested and domestic enterprises. The New EIT Law, together with its implementation rules, provides a

—34— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. RISK FACTORS five-year transition period for the PRC entities established prior to March 16, 2007 that enjoyed preferential tax rates of less than 25% to gradually increase the applicable income tax rates to 25%. Accordingly, certain of our subsidiaries which were taxed at preferential income tax rates of less than 25% are now subject to the transitional rates and will eventually be subject to the statutory rate of 25% by the end of 2012. Such increase in tax rates may have a material adverse impact on our financial condition and results of operations.

Furthermore, certain of our wind power projects which have obtained government approval on or after January 1, 2008 are entitled to full tax exemption for three years, followed by 50% tax exemption for another three years commencing from the first year they generate operating income. Certain of our subsidiaries, being foreign-invested manufacturing enterprises scheduled to operate for a period of not less than ten years, are entitled to full tax exemption for two years followed by 50% tax exemption for another three years commencing from their respective first profit-making year after offsetting accumulated tax losses, if any.

In addition, pursuant to the “Notice on Value Added Tax Policy Regarding Comprehensive Utilization of Resources and Other Products” ( ), the wind power projects are entitled to a tax rebate equivalent to 50% of the VAT payable by the wind power business. During the years ended December 31, 2008, 2009 and 2010, we recorded VAT rebate and refund in the amount of RMB19.3 million, RMB36.9 million and RMB42.5 million in 2008, 2009 and 2010, respectively. If the PRC government discontinues any of the aforesaid preferential tax treatments or exemptions, our tax payable will increase and our financial condition and results of operations may be materially and adversely affected.

We may need to purchase and install additional equipment to comply with grid safety and stability requirements.

Wind power generators in China are required by laws and regulations to cooperate with grid companies to ensure the safety and stability of power grids. In order to comply with such laws and regulations, we may need to incur significant costs to purchase and install additional equipment, such as low voltage ride-through equipment, at our wind farms if requested by grid companies. The installation of additional equipment may also result in interruption to the normal operation of our wind farms and thus have a negative effect on our net power generation. If the PRC government adopts stricter grid safety and stability requirements, our business, financial condition and results of operations may be adversely affected.

Acquisition of wind farms involves risks.

We may acquire wind farms in various development stages, complete their development and put them into operation. Acquisition of wind farms or wind energy assets may involve risks. For example, we may not be able to complete the development of such wind farms and commence commercial operations as planned. We may also incur unanticipated costs and expenses or be exposed to unanticipated liabilities in connection with the acquisitions. The integration of acquired wind farms or wind energy assets into our business may require substantial resources and management attention, and may ultimately be unsuccessful. In addition, if the wind farms or wind energy assets are in new markets, we may be exposed to numerous risks associated with entering into new markets where we have limited experience. We cannot assure you that we will be able to achieve the financial returns as we expect at the time such acquisitions are made. Any failure in the potential acquisitions may have a material adverse effect on our business, financial condition and results of operations.

Title defects in relation to certain lands and buildings may adversely affect our operations.

As of February 28, 2011, we did not hold title certificates in relation to approximately 38.7% of the land and 27.0% of the buildings used or occupied by us. As a result, our rights to use such land or buildings may be challenged by third parties and we may have to vacate if any of the challenges succeeds. If we lose rights to use

—35— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. RISK FACTORS these land, we may have to relocate and may not be able to expand our wind power business as planned, which may have a material adverse effect on our business, financial condition and results of operations. We are currently applying for title certificates for these land and buildings. However, we cannot assure you that we will be able to obtain all the title certificates in a timely manner, or at all. See “Business — Property” for further details.

The services of our senior management and key employees are crucial to our success, and we may not be able to recruit and retain the personnel we need.

Our success depends on the continuous effort and services of our experienced senior management team and key employees. Because the wind power industry is relatively new in the PRC, there is a scarcity of highly qualified personnel with relevant experience and expertise. If we lose one or more members of our management team or key employees, we may have difficulty in finding his or her replacement in a timely manner, or at all, which may be disruptive to our business. In addition, we need to recruit and retain highly skilled and dedicated employees for our operations and expansion. We may not be able to successfully compete with other wind power producers in the recruitment and retention of desired employees. Training of new employees with no prior relevant experience could be time consuming and require a significant amount of resources. If we are not able to recruit and retain sufficient qualified employees, our business and results of operations may be materially and adversely affected.

We may not be able to keep up with technological innovations.

The wind power industry is rapidly evolving and subject to continuous technological innovations. Our continuous success will depend on our ability to keep up with the changes in technology in a timely and effective manner. For example, technological innovations may improve the performance of wind turbines and increase the availability factor. If we are not able to upgrade our equipments and technologies to keep up with technological changes in this regard, our competitiveness and results of operations may be negatively affected. Furthermore, technological innovations may require substantial capital expenditures in research and development as well as in upgrade of equipment. If our efforts in technological innovations are not successful, our results of operations and prospects may be materially and adversely affected.

Our Special Distribution is not indicative of our future dividend policy.

We have agreed to declare a special distribution to Huaneng Group in an amount of RMB316.2 million, which is equal to our audited consolidated net profits attributable to equity owner/shareholders of the Company for the year ended December 31, 2010, prorated according to the number of days from January 1, 2010, the date immediately after the date on which our assets were valued for the establishment of our Company as a joint stock limited company, to August 5, 2010, the date of our establishment (the “Special Distribution”). We expect to pay such Special Distribution to Huaneng Group within six months commencing from the Listing Date with cash generated from operating activities. See “Financial Information — Special Distribution” for further details.

The Special Distribution was not determined in accordance with our dividend policy as described in “Financial Information — Dividend Policy.” The Special Distribution is not an indication of our future dividend policy.

We are not able to insure against all potential risks and may suffer economic losses if our operation is interrupted.

Our business is exposed to risks inherent in the construction and operation of wind power projects, such as manufacturing defects, failure or substandard performance of wind turbines, improper installation or operation of

—36— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. RISK FACTORS equipment, labor disturbances, natural disasters, environmental hazards and industrial accidents. Occurrence of material operational problems, including but not limited to the above events, may materially and adversely affect the profitability of a wind power project.

We currently maintain insurance coverage that is typical in the wind power industry in the PRC and in amounts that we believe to be in line with the customary practice of other PRC wind power generators. However, our insurance coverage may not provide adequate coverage in certain circumstances. In particular, in line with industry practice in the PRC, our wind farms do not maintain business interruption insurance, or any third party liability insurance other than that included in construction all risks insurance or erection all risks insurance to cover claims in respect of bodily injury or property or environmental damage arising from accidents on our property or relating to our operation. We cannot assure you that such accidents will not occur in the future. A serious uninsured loss or a loss significantly exceeding the limits of our insurance policies could have a material adverse effect on our business, financial condition and results of operations.

Our assets could be damaged and our operations could be disrupted by natural and man-made disasters, and we could face civil liabilities or other losses as a result.

Our assets, including, among others, wind turbines, transformers, interconnection infrastructure, buildings, vehicles and other equipment, could be damaged by fire, earthquake, flood, acts of terrorism and other natural or man-made disasters. Such natural or man-made disasters may also result in a severe disruption to our business operations. While we seek to take precautions against such disasters and purchase levels of insurance coverage that we regard as commercially appropriate, should any damage occur and be substantial, we could incur significant losses and damages not recoverable under insurance policies in force. See “— We are not able to insure against all potential risks and may suffer economic losses if our operation is interrupted.”

We may also face civil liabilities or fines in the ordinary course of business as a result of damages to third parties caused by natural or man-made disasters mentioned above. These liabilities may result in us being required to make indemnification payments in accordance with applicable laws that may not be fully covered by our insurance policies, which could have an adverse effect on our business, financial condition and results of operations.

Our development and operation of wind farms are subject to various environmental, health and safety laws and regulations.

Our development and operation of wind farms are subject to various environmental, health and safety laws and regulations. These laws and regulations require us to undergo environmental impact assessments and review processes and implement environmental, health and safety programs and procedures to control risks associated with the siting, design, construction and operation of wind power projects. For example, we are required to prepare and submit an environmental impact assessment report to the relevant environmental protection authorities for approval before we can start the construction of a wind power project. When the construction is completed, the wind power project also needs to go through certain inspection process to ensure its satisfaction of environmental protection requirements prior to commercial operation.

If we do not comply with applicable laws and regulations, we may be subject to penalties or fines or may even be required to cease operations of the relevant projects. In addition, the PRC government may adopt more stringent environmental, health and safety laws and regulations in the future. Any such change could result in a substantial increase in the costs of compliance, which in turn could materially and adversely affect our business, financial condition and results of operations.

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Risks Relating to Doing Business in China

Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business, financial condition, results of operations and prospects.

All of our assets and operations are located in China. Accordingly, our business, financial condition, results of operations and prospects may be influenced to a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as a whole.

The Chinese economy differs from the economies of most developed countries in many aspects, including the level of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented measures since the late 1970s emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the Chinese government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industry policies. The Chinese government also exercises significant control over the Chinese economic growth through allocating resources, controlling payment of foreign currency denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.

While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall Chinese economy, but may have a negative effect on us. For example, the Chinese government has implemented certain measures, including interest rate increases, to control the pace of economic growth. These measures may cause decreased economic activity in China, which could in turn reduce the demand for electricity and adversely affect our business and results of operations.

Uncertainties in the interpretation and enforcement of Chinese laws and regulations could limit the available legal protections.

We and all of our subsidiaries through which we conduct our operations are organized under the PRC laws. The PRC legal system is based on written statutes. Since the late 1970s, the PRC has promulgated laws and regulations dealing with economic matters, such as the issuance and trading of securities, shareholder rights, foreign investment, corporate organization and governance, commerce, taxation and trade. However, many of these laws and regulations, in particular, the regulatory regime relating to renewable energy projects, are relatively new and will likely continue to evolve, are subject to different interpretations and may be inconsistently implemented and enforced. In addition, there are only limited volumes of published court decisions that may be cited for reference, and such cases have limited precedential value as they are not binding on subsequent cases. These uncertainties relating to the interpretation, implementation and enforcement of the PRC laws and regulations and a system of jurisprudence that gives only limited precedential value to prior court decisions can affect the available legal remedies and protections.

In particular, the PRC power industry, including the renewable energy sector, is a highly regulated industry. Many aspects of our business, such as electricity generation, grid connection and the setting of on-grid tariffs, are subject to PRC laws and regulations. As the PRC legal system and the PRC power industry develop, we cannot assure you that changes in such laws and regulations, or in their interpretation or enforcement, will not have a material adverse effect on our business, financial condition or results of operations.

—38— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. RISK FACTORS

Fluctuations in exchange rates could have a material adverse effect on our results of operations.

The value of the RMB against Hong Kong dollar, U.S. dollar and other currencies is affected by, among others, changes in China’s political and economic conditions and China’s foreign exchange policies. The conversion of Renminbi into foreign currencies, including U.S. dollars and Hong Kong dollars, is based on rates set by PBOC. The PRC government allowed the Renminbi to appreciate by more than 20% against the U.S. dollar between July 2005 and July 2008. Between July 2008 and June 2010, this appreciation halted and the exchange rate between the Renminbi and the U.S. dollar remained within a narrow band. Since June 2010, the PRC government has allowed the Renminbi to appreciate slowly against the U.S. dollar again. It is difficult to predict how market forces or the respective policy of the PRC or the U.S. government may impact the exchange rate between the Renminbi and the U.S. dollar and other currencies in the future.

There remains significant international pressure on the PRC government to adopt a substantial liberalization of its currency policy, which could result in further appreciation in the value of the RMB against the Hong Kong dollar and the U.S. dollar. To the extent that we need to convert U.S. dollars or Hong Kong dollars we receive from certain possible working capital raising activities to pay our bank loans and operating expenses, appreciation of the RMB against the U.S. dollar or Hong Kong dollar would have an adverse effect on the RMB amount we would receive from the conversion.

You may experience difficulties in effecting service of legal process and enforcing judgments against us and our management.

We are a company established under the laws of the PRC and all of our business, assets and operations are located in China. In addition, a majority of our Directors, Supervisors and executive officers reside in China and substantially all of their assets are located in China. As a result, it may not be possible to effect service of process elsewhere outside China upon us or such Directors, Supervisors or executive officers. Moreover, China does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States, the United Kingdom, Japan or many other countries. As a result, recognition and enforcement in China of judgments of a court in other jurisdictions in relation to any matter not subject to a binding arbitration provision may be difficult or impossible.

Our Articles of Association and certain applicable rules and regulations provide that most disputes between holders of H Shares and our Company, our Directors, Supervisors or executive officers arising out of or in connection with the Articles of Association or the Company Law and related regulations concerning our Company’s affairs, are to be resolved through arbitration. Under the current arrangement for reciprocal enforcement of arbitral awards between the PRC and Hong Kong, awards made by the competent PRC arbitral authorities that are recognized under the Arbitration Ordinance can be enforced in Hong Kong. Hong Kong arbitration awards are also enforceable in the PRC. On July 14, 2006, the Supreme People’s Court of the PRC and the Hong Kong Government signed an Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters. Under this arrangement, where any designated People’s Court or Hong Kong court has made an enforceable final judgment requiring payment of money in a civil and commercial case pursuant to a choice of court agreement, any party concerned may apply to the relevant People’s Court or Hong Kong court for recognition and enforcement of the judgment. Although this arrangement became effective on August 1, 2008, the outcome and effectiveness of any action brought under the arrangement may still be uncertain.

—39— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. DIRECTORS, SUPERVISORS AND PARTIES

DIRECTORS AND SUPERVISORS

Name Residential Address Nationality Non-executive Directors CAO Peixi, Chairman Room 401, Unit 3, Building 3, Chinese ( ) No. 47, Jiading Road, Sifang District, Qingdao, Shandong Province HUANG Long, Vice Chairman Room 501, Unit 2, Building 13, Chinese ( ) Block 2, Yutaoyuan, Xicheng District, Beijing ZHAO Keyu Room 2307, Building 2, No. 5, Chinese ( ) South Linxiang Street, Shizhong District, Jinan, Shandong Province Executive Directors ZHAO Shiming Room 402, Unit 1, Building 8, Chinese ( ) Lianxiangyuan Community, Fengtai District, Beijing NIU Dongchun Room 906, Building 4, No. 3, Chinese ( ) Block 1, Sanlihe, Xicheng District, Beijing YANG Qing Room 701, Unit 6, 3rd Floor, East Chinese ( ) Baizhifang Street, Xuanwu District, Beijing HE Yan Room 1204, 1st Floor, No. 32, Chinese ( ) Beiwa Road, Haidian District, Beijing Independent non-executive Directors QIN Haiyan Room 8, Middle Door, Building 1, Chinese ( ) Zhuanjiaolou Beili, Chaoyang District, Beijing DAI Huizhu Room 2, Unit 1, North Building 2, Chinese ( ) China Electric Power Research Institute, Qinghe, Haidian District, Beijing ZHOU Shaopeng Room 201, Unit 1, Building 2, No. Chinese ( ) A-1, West Changwa Street, Haidian District, Beijing WAN Kam To 23A, The Colonnade, 152 Tai Chinese ( ) Hang Road, Hong Kong

—40— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. DIRECTORS, SUPERVISORS AND PARTIES

Supervisors

XU Ping Room 6, Unit 3, South Chinese ( ) Building 12, China Electric Power Research Institute, Qinghe, Haidian District, Beijing WANG Huanliang Room 701, Unit 1, Building 3, Chinese ( ) East Baizhifang Street, Xuanwu District, Beijing LIANG Zongxin Room 507, Building 2, No. 7, Bei Chinese ( ) San Street, Fucheng Road, Haidian District, Beijing

Auditors and Reporting Accountants KPMG Certified Public Accountants 8th Floor, Prince’s Building 10 Chater Road Central, Hong Kong

Legal Advisers to the Company As to Hong Kong law and U.S. law: Skadden, Arps, Slate, Meagher & Flom 42/F, Edinburgh Tower 15 Queen’s Road Central Hong Kong

As to the PRC law: DeHeng Law Offices 12/F Tower B, Focus Place, 19 Finance Street Beijing 100033 the PRC

Independent Industry Consultant Garrad Hassan (Beijing) Technology and Service Co., Ltd. Room 2608 & 2609 Fosun International Center No.237 North Chaoyang Road Chaoyang District Beijing 100020 the PRC

Independent Property Valuer Jones Lang LaSalle Sallmanns Limited 6/F Three Pacific Place 1 Queen’s Road East Hong Kong

Independent Technical Consultant Mott MacDonald Limited Victory House, Trafalgar Place Brighton BNI 4FY United Kingdom

—41— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. CORPORATE INFORMATION

Registered office 10-11th Floor, No. 23A Fuxing Road, Haidian District, Beijing, the PRC

Head office in the PRC 10-11th Floor, No. 23A Fuxing Road, Haidian District, Beijing, the PRC

Principal place of business in Hong Kong 8th Floor, Gloucester Tower, The Landmark 15 Queen’s Road Central Hong Kong

Company’s website www.hnr.com.cn (information on the website does not form part of this document)

Joint company secretaries Ms. SONG Yuhong Ms. MOK Ming Wai (HKICS)

Authorized representatives Mr. ZHAO Shiming (Executive Director and President) Room 402, Unit 1, Building 8, Lianxiangyuan Community, Fengtai District, Beijing Ms. MOK Ming Wai (HKICS) Flat B, 19/F, Block 7 South Horizons, Apleichau, Hong Kong

Audit Committee Mr. ZHOU Shaopeng (Independent Non-executive Director) (Chairman) Mr. ZHAO Keyu (Non-executive Director) Mr. WAN Kam To (Independent Non-executive Director)

Nomination Committee Mr. ZHAO Shiming (Executive Director and President) (Chairman) Mr. ZHOU Shaopeng (Independent Non-executive Director) Mr. QIN Haiyan (Independent Non-executive Director)

Remuneration Committee Mr. NIU Dongchun (Executive Director) (Chairman) Ms. DAI Huizhu (Independent Non-executive Director) Mr. QIN Haiyan (Independent Non-executive Director)

Principal Bankers China Development Bank Corporation No. 29 Fuchengmenwai Street Xicheng District Beijing the PRC

China Construction Bank Corporation No. 25 Finance Street Beijing the PRC

Industrial and Commercial Bank of China Limited No. 55 Fuxingmennei Street Xicheng District Beijing the PRC

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Certain information and statistics set out in this section have been extracted from various government publications, market data providers and other independent third party sources. We believe that the sources of this information are appropriate sources for such information and have taken reasonable care in extracting and reproducing such information. We have no reason to believe that such information is false or misleading or that any fact has been omitted that would render such information false or misleading. The information has not been independently verified by us.

Overview of the PRC Economy and the PRC Power Industry

The PRC is one of the fastest growing economies in the world. Between 2001 and 2010, its real GDP grew at a CAGR of 10.7%. According to the Twelfth Five Year Plan for National Economy and Social Development (the “Twelfth Five-Year Plan”), the PRC government expects to achieve an average 7.0% annual GDP growth during the period from 2011 to 2015.

Since 2001, the growth of power generation in the PRC has been at a rate higher than the GDP growth in most years. From 2001 to 2010, power generation in the PRC grew at a CAGR of approximately 12.4%, as compared to the PRC’s real GDP CAGR of 10.7% over the same period. The faster growth of power generation since 2001 has largely been driven by rapid industrialization and also by rising residential power demand as per capita income increased. According to China Electricity Council (“CEC”) and China National Bureau of Statistics, power consumption by the industrial sector increased from 1,044.5 TWh in 2001 to 3,131.8 TWh in 2010, representing a CAGR of 13.0%.

Real GDP Growth Rate Over Power Generation Growth Year Preceding Year Rate Over Preceding Year (%) (%) 2001 ...... 8.3 9.2 2002 ...... 9.1 11.7 2003 ...... 10.0 15.5 2004 ...... 10.1 15.3 2005 ...... 10.4 13.5 2006 ...... 11.6 14.6 2007 ...... 13.0 14.5 2008 ...... 9.6 6.5 2009 ...... 9.1 6.6 2010 ...... 10.0 13.5

Sources: International Monetary Fund, World Economic Outlook Database, April 2010; BP Statistical Review of World Energy, June 2010; China National Bureau of Statistics; CEC

The following table shows that despite the fact that the PRC had higher annual economic growth rate and per capita power generation growth rate than G7 countries from 2005 to 2009, it had lower per capita power generation than G7 countries.

2009 Per Capita Power Real GDP Growth Rate Per Capita Power Generation Growth Countries Generation 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 (kWh) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) G7 countries(1) ...... 10,477 2.4 2.6 2.2 0.2 (3.4) 1.6 (0.2) 1.0 (0.5) (5.4) PRC...... 2,791 10.4 11.6 13.0 9.6 9.1 12.8 14.0 13.9 5.9 6.1

Sources: BP Statistical Review of World Energy, June 2010; International Monetary Fund, World Economic Outlook Database, April 2010; China National Bureau of Statistics

(1) G7 countries include Canada, France, Germany, Italy, Japan, United Kingdom, and United States

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Supply and Demand for Power in the PRC

The PRC had a total installed capacity of approximately 962 GW at the end of 2010. As shown in the following table, the PRC’s total power generation grew faster than its total installed capacity since 2001, resulting in increasing average utilization hours from 2001 to 2004. However, with rapid build-up of installed capacity from 2005 to 2009, growth of power supply surpassed growth of power demand and hence utilization hours decreased. In 2010, average utilization hours reached 4,605 hours, up 135 hours from previous year; this represented the first rebound in utilization hours since 2004.

Average Year Total Installed Capacity Total Power Generation Utilization Hours(1) (GW) (TWh) (hours) 2001 ...... 338.6 1,480.8 4,501.6 2002 ...... 356.6 1,654.0 4,758.3 2003 ...... 391.4 1,910.6 5,108.5 2004 ...... 442.4 2,203.3 5,285.0 2005 ...... 517.2 2,500.3 5,211.0 2006 ...... 623.7 2,865.7 5,023.6 2007 ...... 713.3 3,281.6 4,908.8 2008 ...... 792.7 3,494.5 4,641.4 2009 ...... 874.1 3,725.1 4,470.3 2010(2) ...... 962.2 4,228.0 4,605.0

Sources: China Electric Power Yearbook 2010; CEC; BP Statistical Review of World Energy, June 2010

(1) Total power generation in a year divided by the average amount of the total installed capacity for the same year and the previous year multiplied by 1,000

(2) Based on CEC’s 2009 and 2010 National Power Industry Statistics Report

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The following table sets out, as of the end of 2010 and in each province, municipality and autonomous region in the PRC, the total power installed capacity, wind power grid-connected installed capacity, and percentage of gross power generation by all energy sources.

Wind Power Grid- Gross Power Total Power connected Generation By All Installed Capacity Installed Capacity Energy Sources (MW) (MW) (%) Guangdong ...... 70,889 756 7.5% Jiangsu ...... 64,702 1,373 8.3% Inner Mongolia ...... 63,722 10,000 6.2% Shandong ...... 62,684 1,580 7.3% Zhejiang ...... 57,209 249 6.1% Henan ...... 50,566 49 5.4% Hubei ...... 49,065 57 4.8% Shanxi ...... 44,287 371 5.1% Sichuan ...... 42,244 — 4.0% Hebei ...... 42,154 3,725 4.9% Yunnan ...... 36,156 292 3.2% Fujian ...... 34,050 485 3.2% Guizhou ...... 32,844 — 3.1% Liaoning ...... 32,275 3,084 3.2% Hunan ...... 29,901 38 2.6% Anhui ...... 29,330 — 3.5% Guangxi ...... 25,150 — 2.4% Shaanxi ...... 23,580 — 2.4% Gansu ...... 21,547 2,194 2.1% Jilin ...... 20,347 2,209 1.6% Heilongjiang ...... 19,652 1,915 1.9% Shanghai ...... 18,584 141 2.2% Jiangxi ...... 16,322 84 1.5% Xinjiang ...... 16,069 1,362 1.5% Ningxia ...... 12,914 717 1.4% Qinghai ...... 12,616 — 1.1% Chongqing ...... 11,554 47 1.2% Tianjin ...... 10,942 26 1.3% Beijing ...... 6,312 114 0.6% Hainan ...... 3,864 205 0.4% Tibet ...... — — 0.0% Total ...... 962,190 31,072 100.0%

Source: CEC

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Energy Sources

The PRC is a country with abundant coal resources, but relatively limited oil and gas resources. As such, coal power generation units have accounted for the majority of power generation installed capacity in the PRC. In addition to coal power generation, significant new power generation projects that utilize hydroelectric, natural gas, wind and nuclear energy as energy sources are under development. The following table sets forth total installed power generation capacity in the PRC by energy source by the end of 2008, 2009 and 2010. In particular, percentage of wind power total grid-connected installed capacity in total installed capacity by all energy sources increased from 1.1% by the end of 2008 to 3.2% by the end of 2010.

Energy Source(1) As of December 31, 2008 As of December 31, 2009 As of December 31, 2010 Installed Capacity by Installed Capacity by Installed Capacity by Energy Source Energy Source Energy Source (%) (%) (%) Thermal ...... 76.0 74.5 73.4 Hydro ...... 21.8 22.5 22.2 Wind ...... 1.1 2.0 3.2 Nuclear ...... 1.1 1.0 1.1 Total ...... 100.0 100.0 100.0

Source: CEC

(1) Exclude smaller energy sources such as solar power and tidal power

The PRC’s Energy and Environment Related Targets

Energy scarcity and environmental deterioration are major global concerns. Due to rapid economic development, rising living standards and continuous increase in per capita energy consumption in the PRC, energy shortage has been a limiting factor for the PRC’s economic development. In order to speed up the development of renewable energy, promote energy conservation and reduce pollution, mitigate climate change, and better meet the requirements of sustainable social and economic development, the PRC published the Medium- and Long-term Development Plan for Renewable Energy in September 2007. In this plan, the PRC set a target to raise the percentage of renewable energy in total primary energy consumption to 15% by 2020. On November 25, 2009, the Chinese State Council also announced at their executive meeting that the PRC would commit to reducing carbon dioxide emissions per unit of GDP by 40% to 45% by 2020 from its 2005 level. Furthermore, in the outline of the Twelfth Five-Year Plan published in 2011, the PRC government set a target to increase the percentage of energy from non-fossil fuel in total primary energy consumption from 8.3% by 2010 to 11.4% by 2015, further reducing energy consumption per unit of GDP by 16% and carbon dioxide emissions per unit of GDP by 17% by 2015 from the level in 2010.

Background and Restructuring of the PRC Power Industry

In January 1997, the State Power Corporation was established to take ownership of state-owned power generation assets and virtually all of the high voltage power transmission grids and local power distribution networks in the PRC. The State Power Corporation was responsible for the investment, development, construction, management, operation and ownership of power plants, the inter-connections of interprovincial and interregional power grids, and the transmission of power across regions.

In March 1998, the SETC was established to assume the governmental and administrative functions in relation to the power industry. The Electric Power Bureau was established within the SETC and given the responsibility of promoting reform policies and regulations, formulating development strategies, specifying technical requirements and industry practice and supervising the operation of the power industry.

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As a result of further restructuring of the PRC power industry, in December 2002, the State Power Corporation was reorganized into two power grid companies and five large independent power generation groups. The two power grid companies are State Grid and Southern Grid. The State Grid owns and manages six regional power grid companies, namely, northeast China, north China, east China, central China and northwest China power grids and Tibet Power Grid, which in turn own and operate interprovincial high voltage power transmission grids and local power distribution networks in 26 provinces, autonomous regions and municipalities. Southern Grid owns and manages interprovincial high voltage power transmission grids and local power distribution networks in five provinces and autonomous region, namely, Guangdong, Guizhou, Yunnan and Hainan provinces, and Guangxi Zhuang Autonomous Region.

In addition to State Grid and Southern Grid, Inner Mongolia power grid consists of the Western Inner Mongolia power grid and the Eastern Inner Mongolia power grid. In order to ensure the security and stability of the power system, the Eastern Inner Mongolia power grid is operated by State Grid and the Western Inner Mongolia power grid is operated by Inner Mongolia Grid Company, an independent provincial grid corporation.

As of the end of 2010, the five largest power generation groups owned and managed approximately 50% of the total installed power generation capacity available in the PRC. The remaining 50% was primarily owned by provincial, local and other power companies. The table below sets out the approximate installed capacity in the PRC controlled by the five large independent power generation groups.

Installed Capacity as of December 31, Power Generation Groups 2010 (GW) Huaneng Group ...... 113.8 China Datang Corporation ...... 105.8 China Guodian Corporation ...... 95.3 China Huadian Corporation ...... 86.1 China Power Investment Corporation ...... 70.7 Others ...... 490.4 Total ...... 962.2

Source: CEC

Pursuant to the on-going reform of the electric power industry, a new industry regulator, the SERC, was established under the State Council in 2002. The main responsibilities of the SERC include ensuring fair competition in the electric power industry, monitoring the quality and standard of power plant production, administering electric power business permits and handling electric power market disputes.

In July 2004, the State Council issued further guidance on approval requirements for different types of power plants. For example,

• wind farms with installed capacity of 50 MW or above need approval from the NDRC; others need approval from Provincial DRC or other equivalent authorities. See “Regulatory Environment — Laws and regulations in the PRC wind power industry and renewable energy — Approval of wind power projects” for further details;

• coal power plants need approval from the NDRC; and

• hydropower plants on major rivers with installed capacity of 250 MW or above need approval from the NDRC; others need approval from Provincial DRC or other equivalent authorities.

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Transmission and Dispatch

All electricity generated in the PRC is dispatched by power grid companies, except for electricity generated by power plants which are not connected to a grid. Power plants liaise with the relevant power grid companies annually to determine the volume of electricity to be dispatched. The power dispatched to each grid is administered by dispatch centers owned and operated by the power grid companies.

The main system for the transmission and distribution of power in the PRC consists of six interprovincial power grids owned by State Grid and five interprovincial power grids owned by Southern Grid. The table below shows the total installed capacity of the power plants connected to the power grids as a percentage of the total installed capacity in the PRC by the end of 2009, and the total power generated on those grids as a percentage of the total power generated in the PRC in 2009.

As of or for the Year Ended December 31, 2009 Power Grid Installed Capacity Power Generation (%) (%) State Grid ...... East China Power Grid ...... 21.6 23.2 Central China Power Grid ...... 21.2 19.7 North China Power Grid ...... 17.9 19.5 Northeast Power Grid(1) ...... 8.2 8.1 Northwest Power Grid ...... 8.1 7.8 Tibet Power Grid ...... 0.1 0.0 Southern Grid ...... Guangdong Provincial Grid ...... 7.4 7.3 Guizhou Provincial Grid ...... 3.1 3.3 Yunnan Provincial Grid ...... 3.6 3.2 Guangxi Provincial Grid ...... 2.9 2.5 Tianshengqiao Plant ...... 0.3 0.3 Hainan Provincial Grid ...... 0.4 0.4 Western Inner Mongolia Power Grid ...... 5.1 4.8 Nationwide Total ...... 100.0 100.0

Source: China Electric Power Yearbook 2010

(1) The Eastern Inner Mongolia power grid is operated by Northeast Power Grid

The PRC’s energy sources, such as coal and hydroelectric resources, are principally located in the northern, central and south western inland provinces, but the provinces with the highest power consumption are located in the eastern and southern coastal areas of the PRC. As a result of plans to develop large power plants in areas with abundant energy sources, the expansion of the PRC’s power transmission capabilities is of major importance. The PRC plans to expand the interconnected power grids to enable the transmission of power generated by mine- mouth power plants and hydroelectric power plants over long distances to areas of high power consumption.

According to State Grid’s Twelfth Five-Year Development Plan, State Grid will invest approximately RMB1,700 billion in grid construction and upgrade, including approximately RMB500 billion for ultra high voltage infrastructure development. In particular, in inter-regional grid construction, a total of 40,000 km of Ultra High Voltage Alternating Current (“UHVAC”) transmission lines are expected to be constructed by 2015 and substation capacity is expected to reach 430 million kVA.

During the Twelfth Five-Year period, Southern Grid also plans to invest more than RMB400 billion in grid construction and upgrade. According to the target of the West-East power transmission project, the total transmission capacity will reach 43 GW. Pursuant to the plan, Southern Grid targets to construct 15,600 km of 500 kV AC transmission lines with substation capacity of 61.57 million kVA, 1,225km of ±500kV DC

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THE RENEWABLE POWER GENERATION INDUSTRY

Renewable power generation technologies include, among others, wind, solar (thermal and photovoltaic), mini-hydro, biomass, wave and tidal. According to Renewables 2010 Global Status Report, a report issued by Renewable Policy Network, renewable energy accounted for 19% of the global power generation in 2008, and is forecasted to reach 23% in 2030 according to World Energy Outlook 2009, a report issued by the International Energy Agency (“IEA”). The principal factors which contribute to increasing demand for renewable energy include:

• concern over the security of energy supply in developed countries;

• increasing worldwide environmental awareness and concern for environmental sustainability; and

• renewable energy technologies becoming more economically efficient.

Global Wind Power Industry

Wind power is the fastest growing renewable energy in the world due to its cost efficiency, resource availability and the maturity of the technology in comparison to other types of renewable energy technologies. According to Global Wind Energy Council (“GWEC”) and Garrad Hassan, global wind installed capacity grew at a CAGR of 26.2% from 2001 through 2010, bringing total installed capacity from 23,900 MW as of December 31, 2001 to 197,167 MW as of December 31, 2010. The top five countries in terms of total wind installed capacity by the end of 2010 were China, U.S., Germany, Spain, and India. From 2001 to 2010, total wind installed capacities of these five countries grew at CAGRs of 68.8%, 28.3%, 13.4%, 22.5%, and 27.6%, respectively. The following table sets forth global total wind installed capacity from 2001 to 2010.

Worldwide Wind Power Development 2001-2010

Year End Total Installed Capacity (MW)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 23,900 31,100 39,431 47,620 59,091 74,052 93,820 120,291 158,738 197,167

Source: GWEC Global Wind Report 2010, Garrad Hassan

Garrad Hassan expects that global wind installed capacity will increase at a CAGR of 16.7% between 2010 and 2015, reaching 427,461 MW in 2015. The following table sets forth Garrad Hassan’s global and regional wind installed capacity in 2010 and estimations for 2011 through 2015.

Forecast For Wind Power Development 2010-2015

Year End Total Installed Capacity (MW)

10-15E Region 2010 2011E 2012E 2013E 2014E 2015E CAGR Europe(1) ...... 86,423 96,498 106,666 117,691 129,701 142,775 10.6% Americas ...... 46,220 55,575 67,855 81,136 98,937 118,851 20.8% PRC...... 44,733 59,733 74,733 89,733 104,733 119,733 21.8% Rest of Asia(2) ...... 16,416 19,051 22,231 26,239 30,229 34,048 15.7% Pacific(3) ...... 2,398 3,148 3,898 4,748 5,598 6,448 21.9% Africa ...... 977 1,677 2,707 3,607 4,607 5,607 41.8% Total ...... 197,167 235,682 278,090 323,154 373,805 427,461 16.7%

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Source: Garrad Hassan

(1) Europe figure includes Russia and Turkey

(2) Rest of Asia includes Middle East but not China, Russia or Turkey

(3) Pacific includes Australia, New Zealand and Pacific Islands

At the end of 2010, Europe represented 43.8% of global wind installed capacity. However, according to Garrad Hassan, the global wind power market will continue to diversify geographically from Europe to the Americas and the PRC in the future. Garrad Hassan expects the Americas and the PRC to experience greater growth than Europe in the near future; from 2010 to 2015, wind installed capacity in the Americas and the PRC are projected to grow at 20.8% and 21.8% respectively while Europe’s is projected to grow at only 10.6%. Africa is expected to grow the fastest, at a CAGR of 41.8% from 2010 to 2015, but it remains a much smaller market in terms of both total installed capacity and annual new installation.

Regional Wind Power Markets

Europe

Europe is the largest wind power market in terms of installed capacity, with 86,423 MW at the end of 2010. Within Europe, Germany and Spain are the two largest wind markets, with 27,155 MW and 20,676 MW at the end of 2010. Growth of wind energy in the leading European markets of Germany and Spain is forecasted to remain relatively flat before seeing a gradual decrease beyond 2015 as saturation levels are approached. Spain is also constrained in the near-term by grid development requirements. A ramp-up in activity is taking place in a number of emerging European markets such as Turkey, Romania and Poland, partly due to the aggressive deployment targets set by the European Union for 2020 and partly as investor confidence returns with economic recovery. Perhaps the most notable developments in Europe are in the offshore wind sector, where projections are dominated by projects being developed in the UK. The following table sets forth Garrad Hassan’s wind installed capacity growth expectations for Europe on a national basis from 2010 through 2015.

Forecast For Europe Wind Power Development 2010-2015

Year End Total Installed Capacity (MW)

10-15E Region 2010 2011E 2012E 2013E 2014E 2015E CAGR Germany ...... 27,155 28,533 29,646 30,976 32,696 34,988 5.2% Spain ...... 20,676 22,094 22,747 23,513 24,164 24,548 3.5% Italy ...... 5,797 6,878 8,008 9,310 10,514 11,621 14.9% France ...... 5,660 6,595 7,524 8,491 9,562 11,036 14.3% UK ...... 5,415 6,885 8,608 10,517 12,864 15,338 23.1% Rest of Europe ...... 21,720 25,513 30,133 34,883 39,900 45,244 15.8% Total Europe ...... 86,423 96,498 106,666 117,691 129,701 142,775 10.6%

Source: Garrad Hassan

Asia

Asia is the second largest wind power market in terms of installed capacity, with 61,149 MW at the end of 2010. Within Asia, the PRC is the largest wind power market, with 44,733 MW at the end of 2010. Wind power installation in Asia has become dominated by China in recent years where growth is expected to remain strong.

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Initial indications suggest that efforts to reduce the gap between total new installations and those that are grid- connected have had limited success in 2010, despite the amendments to the Renewable Energy Law in 2009 which imposed clearer guidelines and technical standards on grid operators and wind farm operators, respectively. This anomaly is expected to be mitigated over the coming years, but either way China is expected to experience continued outstanding growth. India, an early mover in wind energy, has seen more subdued growth as its market moves from one previously dominated by self-generation units to utility-scale wind farms. The following table sets forth Garrad Hassan’s wind installed capacity growth expectations for Asia on a national basis from 2010 through 2015.

Forecast For Asia Wind Power Development 2010-2015

Year End Total Installed Capacity (MW)

10-15E Region 2010 2011E 2012E 2013E 2014E 2015E CAGR PRC...... 44,733 59,733 74,733 89,733 104,733 119,733 21.8% India ...... 13,064 14,864 16,864 19,364 21,864 24,364 13.3% Rest of Asia ...... 3,352 4,187 5,367 6,875 8,365 9,684 23.6% Total Asia ...... 61,149 78,784 96,964 115,973 134,962 153,781 20.3%

Source: Garrad Hassan

Americas

The Americas is the third largest wind power market in terms of installed capacity, with 46,220 MW at the end of 2010. Within the Americas, the U.S. is the largest wind market, with 40,181 MW at the end of 2010. Installation in the Americas is dominated by the U.S. with a notable contribution from Canada. Brazil and Mexico are the most active among the Latin American nations. The U.S. still does not have a firm and stable renewable energy policy on which projects and project investors can rely beyond the very short-term. In the absence of a long-term federal policy, state-level mandates are expected to drive much of the growth within the industry in the short- to medium-terms. The following table sets forth Garrad Hassan’s wind installed capacity growth expectations for the Americas from 2010 through 2015.

Forecast For Americas Wind Power Development 2010-2015

Year End Total Installed Capacity (MW)

10-15E Region 2010 2011E 2012E 2013E 2014E 2015E CAGR U.S...... 40,181 47,181 56,181 66,181 80,406 96,569 19.2% Canada ...... 4,009 4,859 6,359 8,010 9,906 11,977 24.5% Rest of Americas ...... 2,010 3,515 5,295 6,925 8,605 10,285 38.6% Total Americas 46,220 55,575 67,855 81,136 98,937 118,851 20.8%

Source: Garrad Hassan

PRC

According to Garrad Hassan, the wind power total installed capacity in the PRC from 2002 to 2010 was 465 MW, 563 MW, 760 MW, 1,267 MW, 2,555 MW, 5,866 MW, 12,020 MW, 25,805 MW and 44,733 MW, respectively. Of the global total wind installed capacity of 197,167 MW at the end of 2010, the PRC accounted for approximately 22.7% and was ranked the largest country in terms of total wind installed capacity at the end of

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2010. The total grid-connected installed capacity at the end of 2010 reached 31,072 MW, according to China Electricity Council.

In September 2007, the NDRC released its Medium- and Long-Term Development Plan for Renewable Energy. This sets out targets for renewable energy up to 2020, with a 10% contribution to total energy consumption by 2010 and 15% by 2020. The Medium- and Long-Term Development Plan also sets a target for wind installed capacity to reach 30 GW in 2020. To meet its targets, the PRC government has announced its intention to invest about RMB2 trillion in the development of renewable energy. In addition, this plan also includes a “mandated market share” policy, which sets targets that the market share of power generated from non-hydro renewable sources shall reach 1% by 2010 and 3% by 2020. Given that power generated from photovoltaics and biomass is likely to be modest given its current rate of development, achievement of these targets will likely to rely heavily on wind power. However, because of the rapid development of wind power industry in the PRC during the Eleventh Five-Year period, the PRC government has set a new target of 150 GW by 2020 in its Draft of Twelfth Five-Year Plan for Renewable Energy Development, far exceeding the original target by over 120 GW. In the Twelfth Five-Year Plan, the PRC aims to add over 70 GW wind installed capacity during the relevant period.

With a land mass of 9.56 million square km and 32,000 km of coastline (including islands), the PRC has abundant wind energy resources with significant development potential. According to GWEC, at the end of 2009, the China Meteorological Administration published a new wind assessment based on measurements at a hub height of 50 meters. This assessment shows that the PRC has an onshore potential to develop 2,380 GW of class 3 wind power (average wind power density >300 W/m2) and 1,130 GW of class 4 wind power (average wind power density >400 W/m2), as well as an offshore potential (water depth of 5-25 meters) to develop 200 GW of class 3 wind power.

The PRC government believes the areas with high potential for wind power development in the PRC are northern China and the south-eastern coastal areas. Additionally, some parts of inland China influenced by lakes or other special topographic conditions also have abundant wind energy resources. The most abundant wind resources in northern China include the regions of Inner Mongolia, Jilin, Liaoning, Heilongjiang, Gansu, Ningxia, Xinjiang and Hebei. The most abundant wind resources along the coastal areas and offshore are found in Shandong, Jiangsu, Zhejiang, Fujian, Guangdong, Guangxi and Hainan.

Garrad Hassan expects that the PRC will have the highest wind installed capacity CAGR from 2010 to 2015 among the top five countries in terms of total wind installed capacity at the end of 2010, including the PRC, U.S., Germany, Spain, and India (in descending order of their total installed capacities at the end of 2010).

The following table sets forth the estimated total installed capacity during the period from 2010 to 2015 and the wind installed capacity penetration rates in selected countries in 2010. Despite experiencing fast growth, the PRC’s wind power penetration rate is still relatively low.

2010 Year End 2015 Year End 2010-2015 Total Wind Expected Total Expected Wind 2010 Year End 2010 Installed Wind Installed Capacity Total Penetration Country Capacity Installed Capacity CAGR Installed Capacity Rate(1) (MW) (MW) (%) (MW) (%) PRC...... 44,733 119,733 21.8 962,190 4.6 U.S...... 40,181 96,569 19.2 1,042,993 3.9 Germany ...... 27,155 34,988 5.2 127,701(2) 21.3 Spain ...... 20,676 24,548 3.5 97,447 21.2 India ...... 13,064 24,364 13.3 169,749 7.7

Source: Garrad Hassan (1) Wind installed capacity divided by the national total installed capacity in each country (2) The total installed capacity of Germany was as of the end of 2009

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The following table sets forth the China Wind Power Report’s estimate of China’s onshore wind resources in selected provinces with technically exploitable wind resource of more than 10 GW.

Province/Autonomous Region Technically Exploitable Wind Resources (GW) Inner Mongolia ...... ~150 Xinjiang ...... >100 Gansu ...... >100 Hebei ...... >40 Jiangsu ...... >10 Jilin ...... >10

Source: China Wind Power Report 2008

The uneven distribution of wind resources in the PRC influences where wind power capacity will be installed in each province. Wind power production capacity has so far been located mainly in North China. As shown in the table below, Inner Mongolia, Hebei, Liaoning and Jilin are the most developed areas. The following table sets forth the PRC’s total wind power grid-connected installed capacity by province, total wind power grid- connected installed capacity by province as a percentage of the PRC total and gross wind power generation by province as of December 31, 2010.

Wind Power Grid-connected Wind Power Installed Grid-connected Capacity as % Gross Wind Installed of the PRC Power Regions Capacity Total Generation (MW) (%) (GWh) Inner Mongolia ...... 10,000 32.2% 17,455 Hebei ...... 3,725 12.0% 5,711 Liaoning ...... 3,084 9.9% 4,700 Jilin ...... 2,209 7.1% 3,317 Gansu ...... 2,194 7.1% 2,084 Heilongjiang ...... 1,915 6.2% 3,306 Shandong ...... 1,580 5.1% 2,666 Jiangsu ...... 1,373 4.4% 2,300 Xinjiang ...... 1,362 4.4% 2,315 Guangdong ...... 756 2.4% 1,180 Ningxia ...... 717 2.3% 1,230 Fujian ...... 485 1.6% 1,270 Shanxi ...... 371 1.2% 554 Yunnan ...... 292 0.9% 350 Zhejiang ...... 249 0.8% 466 Hainan ...... 205 0.7% 249 Shanghai ...... 141 0.5% 216 Beijing ...... 114 0.4% 306 Jiangxi ...... 84 0.3% 145 Hubei ...... 57 0.2% 66 Henan ...... 49 0.2% 108 Chongqing ...... 47 0.2% 50 Hunan ...... 38 0.1% 42 Tianjin ...... 26 0.1% 13 Total ...... 31,072 100% 50,097

Source: CEC

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The Leading Wind Farm Operators in the PRC

The following table sets forth the PRC’s leading wind farm operators, their respective total installed capacity as of the end of 2010, and the percentage of the PRC’s total wind installed capacity in 2010.

Total Wind Percentage of Installed China Wind Company Capacity Power Capacity (MW) (%) China Longyuan Power Group Corporation Limited(1) ...... 6,556 14.7 China Datang Corporation Renewable Power Co. Ltd.(2) ...... 4,028 9.0 Huaneng Renewables Corporation Limited(3) ...... 3,522 7.9 China Huadian Corporation(4) ...... 2,557 5.7 China Guangdong Nuclear Power Holding Co., Ltd.(4) ...... 2,364 5.3 Shenhua Guohua Energy Investment Co(4) ...... 2,346 5.2 China Power Investment Corporation(4) ...... 1,708 3.8 Beijing Energy Investment Holding Co., Ltd.(5) ...... 1,170 2.6 China Resources Power Holdings Co., Ltd.(4) ...... 977 2.2

Source: Company information, Garrad Hassan, CEC

(1) China Longyuan Power Group Corporation Limited’s 2010 Annual Report

(2) China Datang Corporation Renewable Power Co. Ltd.’s 2010 Annual Report

(3) Company information

(4) Garrad Hassan

(5) Beijing Energy Investment Holding Co., Ltd.’s company website

The Leading Wind Farm Operators Globally

The following table sets out the top 10 global wind power generation companies by total installed capacity by the end of 2010 and their respective percentage of the total global wind installed capacity.

Percentage of Total Total Installed Global Wind Installed Company Capacity Capacity (MW) (%) Iberdrola Renovables ...... 12,136 6.2 NextEra Energy Resources ...... 8,298 4.2 China Longyuan Power Group Corporation Limited ...... 6,556 3.3 EDP Renováveis ...... 6,437 3.3 Acciona Energy ...... 5,404 2.7 China Datang Corporation Renewable Power Co., Ltd...... 4,028 2.0 E.ON Climate and Renewables ...... 3,529 1.8 Huaneng Renewables Corporation Limited ...... 3,522 1.8 Enel Green Power ...... 2,654 1.3 China Huadian Corporation ...... 2,557 1.3 Total of the above companies ...... 55,360 28.1

Source: Garrad Hassan

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As shown in the table above, the global wind power market is relatively fragmented. According to Garrad Hassan, at the end of 2010, the combined total installed capacity of the top 10 wind generation companies was 55,360 MW, or approximately 28.1% of the global total installed capacity.

Offshore versus Onshore

The development of offshore wind power projects globally has evolved relatively slowly compared with onshore projects due to higher operation and maintenance costs, larger required capital expenditures and larger minimum investment sizes required to compensate for the associated larger fixed costs. However, offshore wind energy technology continues to mature.

The series of site concessions awarded by the UK government in early 2010 for a potential capacity of over 30 GW signaled a step-change in the scale of offshore wind farm development. Following delays due to fine- tuning of its financial support mechanism to provide sufficient incentives to development, Germany is now also set to see significant build-out in offshore wind development. However, plans announced by China trump even these considerable efforts with targets amounting to over 13 GW of installed capacity by 2015 and 30 GW by 2020. The first major tender for site concessions worth 1 GW of capacity were awarded in late 2010 to four projects located in Jiangsu Province. In contrast, delays and lack of political support have impacted the nascent North American offshore market and only a minor contribution to global build is expected from this continent in the next 5 years.

The table below sets forth Garrad Hassan’s estimation of total offshore wind installed capacity from 2010 to 2015.

Year End Total Installed Capacity (MW)

10-15E Country 2010 2011E 2012E 2013E 2014E 2015E CAGR Europe(1) ...... 2,766 3,538 4,561 6,547 9,586 13,879 38.1% Americas ...... 0 0 0 51 372 606 NA PRC(2) ...... 140 410 810 2,866 6,669 11,648 142.1% Rest of Asia(3) ...... 11 11 11 299 544 728 131.3% Total ...... 2,917 3,960 5,382 9,764 17,170 26,860 55.9%

Source: Garrad Hassan

(1) Europe includes Russian and Turkey

(2) Includes a substantial share from inter-tidal wind farm developments

(3) Rest of Asia includes the Middle East but not the PRC, Russia or Turkey

According to Garrad Hassan, the total offshore wind installed capacity globally is expected to reach 26,860 MW by 2015 from 2,917 MW at the end of 2010, representing a CAGR of 55.9%. In particular, total offshore wind installed capacity in the PRC is expected to reach 11,648 MW by 2015 from 140 MW at the end of 2010, representing a CAGR of 142.1%.

Overview of a Wind Farm

The principal component of a wind farm is the wind turbines. Each wind turbine typically comprises three blades, a nave, a gearbox, a generator, a cabin, a supporting tower and certain other secondary support systems. The remainder of the wind farm infrastructure includes access roads, concrete foundations, an electrical collection system, a step-up substation, and a box-type transformer as well as a control building.

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Wind causes the blades to rotate and the energy generated by this rotor is then transmitted to a generator that produces electric currents. Through the electrical collection system, electric power feeds into a step-up substation, which allows the power to flow to the grid at a pre-determined voltage.

The total installed capacity of a wind farm varies from project to project, driven largely by the site characteristics, available land, grid connection and limits imposed by the relevant planning consent and other government permits and approvals governing the project’s construction.

Overview of The PRC Wind Turbine Supply

The PRC wind turbine supply has increased dramatically over the past several years as new manufacturers have entered the market. The PRC domestic wind turbine manufacturers took full advantage of the domestic wind power market and covered about 87% of the total demand in 2009 and 90% in 2010, whereas foreign companies established in the PRC with wholly owned subsidiaries together only accounted for 13% of the market in 2009 and 10% in 2010, according to Garrad Hassan. Sinovel, Goldwind Science & Technology Co., Ltd, Dongfang Turbine Co., Ltd. and Guodian United Power Technology Co., Ltd. also joined the list of the world’s top ten largest turbine suppliers. The following table sets out the top ten wind turbine manufacturers in the PRC, their respective newly installed capacity, market share in terms of newly installed capacity and total installed capacity in the PRC as of the end of 2010.

Market Share as % of Market Share as % of 2010 Newly Installed the 2010 PRC Newly 2010 Total Installed the 2010 PRC Total Wind Turbine Manufacturer Capacity in the PRC Installed Capacity Capacity in the PRC Installed Capacity (MW) (%) (MW) (%) Sinovel Wind Group Co., Ltd...... 4,386 23.2% 10,038 22.4% Goldwind Science & Technology Co., Ltd...... 3,735 19.7% 9,079 20.3% Dongfang Turbine Co., Ltd...... 2,624 13.9% 5,952 13.3% Guodian United Power Technology Co., Ltd...... 1,643 8.7% 2,435 5.4% Guangdong Mingyang Wind Power Industry Group Co., Ltd...... 1,050 5.5% 1,946 4.3% Vestas Wind System A/S ...... 892 4.7% 2,904 6.5% Shanghai Electric Windpower Equipment Co., Ltd...... 598 3.2% 1,073 2.4% Gamesa Corporación Tecnológica, S.A ...... 596 3.1% 2,424 5.4% HARA XEMC Windpower Co., Ltd...... 507 2.7% 1,089 2.4% China Creative Wind Energy Co., Ltd...... 486 2.6% 683 1.5%

Source: Garrad Hassan, Chinese Wind Energy Association (“CWEA”)

The average size of wind turbines installed in the PRC is also increasing. It is clear that the size of wind turbines installed in the PRC has dramatically increased above 1 MW, with this segment accounting for over 85.7% and 92.5% in terms of newly installed capacity in 2009 and 2010 respectively, according to Garrad Hassan. While larger turbines are becoming more popular, the mid-size 1.5-2 MW is expected to remain a majority position in the market for the next few years.

Due to the rapid expansion of the wind turbine sector, the advancement of wind turbine technology, the increasing competition and the significant decrease in the cost resulting from increased economies of scale and decreasing raw material cost, wind turbine prices have declined since 2009. For example, the average selling

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Overview of Policies and Incentives for The PRC Wind Power Industry

Several favorable policies and incentives have been promulgated by the PRC government to encourage the development of the wind power industry.

Mandatory Purchase and Dispatch Priority

The Renewable Energy Law provides that all electricity generated from renewable energy shall be purchased in full amount. Grid companies shall purchase the full amount of on-grid electricity generated by approved renewable energy plants whose power generation projects meet the grid connection technical standards in the areas covered by the grid companies’ power grids, and provide grid-connection services and related technical supports. For details on the policies of mandatory purchase of the renewable energy, please refer to “Mandatory Purchase, Tariffs and Cost Compensation Program of the Renewable Energy” in the “Regulatory Environment” section in this document.

The Provisional Measures on the Dispatch of Energy Saving Power Generation provides that power producers are entitled to enjoy the highest dispatch priority if they use renewable energy including wind, solar and tidal power. For details on the policies of dispatch priority of renewable energy generation in the PRC, please refer to “Dispatch Priority of Renewable Energy Generation” in the “Regulatory Environment” section in this document.

Taxation

The wind power projects which have obtained government approval on or after January 1, 2008 are fully exempted from enterprise income tax for three years starting from the year when operating income is first derived from the sales of electricity, followed by 50% exemption from enterprise income tax for another three years thereafter. The wind power projects are also entitled to a tax rebate equivalent to 50% of the VAT payable by the wind power business. In addition, under the Interim Regulation of the PRC on Value Added Taxes, effective from January 1, 2009, general VAT payers are allowed to credit against output VAT in respect of input VAT on fixed assets purchased or self-manufactured. For details on the taxation of renewable energy industry in the PRC, please refer to “Taxation” in the “Regulatory Environment” section in this document.

On-Grid Tariffs

The on-grid tariff of renewable energy power generation projects in the PRC are determined by the price authorities of the State Council on the basis of being beneficial to the development of renewable energy and being economic and reasonable. For wind, in particular, the PRC government announced a tariff setting mechanism in 2009 that sets fixed standard tariffs for wind power projects according to regions and wind resources. The standard on-grid tariffs apply to all onshore wind power projects approved on or after August 1, 2009. For details on the policies of on-grid tariffs in the PRC, please refer to “Mandatory Purchase, Tariffs and Cost Compensation Program of the Renewable Energy” in the “Regulatory Environment” section in this document.

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The following table sets forth the comparison of the wind power tariff and the coal-fired power tariff by provinces.

Benchmark Tariff for FGD*-equipped Wind Power Tariff Coal-fired Generation(8) Area RMB/kWh (incl. VAT) RMB/kWh (incl. VAT) Guangdong ...... 0.61 0.50 Zhejiang ...... 0.61 0.46 Shanghai ...... 0.61 0.46 Hunan ...... 0.61 0.44 Hainan ...... 0.61 0.44 Guangxi ...... 0.61 0.44 Jiangsu ...... 0.61 0.43 Hubei ...... 0.61 0.43 Jiangxi ...... 0.61 0.42 Fujian ...... 0.61 0.41 Anhui ...... 0.61 0.40 Shandong(1) ...... 0.61 0.40 Sichuan ...... 0.61 0.39 Henan ...... 0.61 0.39 Liaoning ...... 0.61 0.39 Hebei(2) Zone 2 ...... 0.54 0.39 Zone 4 ...... 0.61 0.39 Chongqing ...... 0.61 0.39 Tianjin ...... 0.61 0.38 Beijing ...... 0.61 0.38 Heilongjiang(3) Zone 3 ...... 0.58 0.38 Zone 4 ...... 0.61 0.38 Jilin(4) Zone 3 ...... 0.58 0.37 Zone 4 ...... 0.61 0.37 Shaanxi ...... 0.61 0.34 Guizhou ...... 0.61 0.33 Shanxi ...... 0.61 0.33 Yunnan ...... 0.61 0.32 Qinghai ...... 0.61 0.29 Inner Mongolia(5) Zone 1 ...... 0.51 0.28 Zone 2 ...... 0.54 0.30 Gansu(6) Zone 2 ...... 0.54 0.28 Zone 3 ...... 0.58 0.28 Ningxia ...... 0.58 0.27 Xinjiang(7) Zone 1 ...... 0.51 0.22 Zone 3 ...... 0.58 0.22

Source: NDRC website (tariff information for Tibet is not available), after tariff increase in November 2009

* Flue gas desulphurization

(1) Although the wind power on-grid tariff in Shandong Province is RMB0.61/kWh (including VAT), all wind projects in Shandong Province enjoy a RMB0.09/kWh subsidy from the provincial government

(2) Zone 2 in Hebei includes Zhangjiakou and Chengde; Zone 4 includes all areas except for areas included in Zone 2

(3) Zone 3 in Heilongjiang includes Jixi, Shuangyashan, Qitaihe, Suihua, Yichun and Da Hinggan Ling area; Zone 4 includes all areas except for areas included in Zone 3

(4) Zone 3 in Jilin includes Baicheng and Songyuan; Zone 4 includes all areas except for areas included in Zone 3

(5) Zone 2 in Inner Mongolia includes Chifeng, Tongliao, Xing’anmeng and Hulunbuir; Zone 1 includes all areas except for areas included in Zone 2

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(6) Zone 2 in Gansu includes Zhangye, Jiayuguan and Jiuquan; Zone 3 includes all areas except for areas included in Zone 2

(7) Zone 1 in Xinjiang includes Urumqi, Yili Kazak autonomous prefecture, Changji Hui autonomous prefecture, Klamyi and Shihezi; Zone 3 includes all areas except for areas included in Zone 1

(8) The NDRC increased the on-grid tariff for coal-fired generation in select provinces in April 2011. However, details of the tariff increases have not been officially released. The tariffs shown in the table are before the tariff increase in April 2011

Solar Power Industry

Solar power is the generation of electricity from sunlight. The electricity can be generated through either concentrating solar power (“CSP”), where the sun’s energy is focused to boil water which is then used to provide power, or photovoltaics (“PV”). Solar PVs are arrays of cells containing a material that converts solar radiation into electricity. Materials used include amorphous silicon, polycrystalline silicon, micro-crystalline silicon, cadmium telluride, and copper indium selenide/sulfide. A PV system consists of multiple components, including solar cells, mechanical and electrical connection and mounting systems, and inverts to convert the DC generated into the AC. PV system could be grid-connected, off-grid, or combined with another source of power, such as wind turbine, to ensure a consistent supply of electricity.

Global solar PV industry has been growing rapidly. According to European Photovoltaic Industry Association (“EPIA”), from 2001 to 2010, the total PV installed capacity grew from 1,790 MW to 39,529 MW globally, representing a CAGR of 41.0%. European countries, Japan and U.S. accounted for 74.0%, 9.2% and 6.4% of the total PV installed capacity, respectively. In 2010, PV newly installed capacity reached 16.6 GW globally, representing an increase of 129.1% over 2009. European countries accounted for 13.2 GW or 79.7% of newly installed capacity in 2010. The top three countries in Europe in terms of PV newly installed capacity in 2010 were Germany, Italy and the Czech Republic, which collectively accounted for 11.2 GW or 84.7% of the newly installed capacity in 2010. Japan and U.S. were the largest markets next to Europe, accounting for 990 MW and 878 MW of PV newly installed capacity in 2010, respectively. The PRC added 520 MW in 2010, ranked as the fourth largest market after Europe, Japan and U.S. based on PV newly installed capacity. According to EPIA, global solar PV market is expected to reach at least 131.3 GW in 2015, representing a CAGR of at least 27.1% from 2010 to 2015.

The PRC Solar Power Industry

The annual average sunshine hours of two-thirds of the PRC’s territory is over 2,200 hours, with total solar radiation per unit area of over 5000 MJ/m2. These regions have favorable conditions for solar energy development, with very favorable conditions found in western China.

According to NDRC’s Medium- and Long-Term Development Plan for Renewable Energy issued in September 2007, the total installed capacity of solar power in the PRC is expected to reach 300 MW by the end of 2010 and 1.8 GW by the end of 2020. The following table sets out the details:

2010 Target 2020 Target (MW) (MW) Solar PVs for remote rural areas ...... 150 300 Grid-connected BIPVs in economically developed large and medium-sized cities ...... 50 1,000 Grid-connected large solar thermal power stations ...... 50 200 Other solar PV application in communication, meteorology, long-distance pipelines, railways, highways, etc...... 30 100 Grid-connected large solar PV power stations ...... 20 200 Total Solar Installed Capacity ...... 300 1,800

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However, according to EPIA, because of the recent rapid development of solar PV market, the PRC’s total PV power installed capacity at the end of 2010 reached approximately 893 MW, which surpassed the original 2010 target. According to the Twelfth Five-Year Plan, the PRC government targets to have installed capacity of 5 GW by the end of 2015. It is also believed that the NDRC may raise the 2020 total installed capacity target to 20 GW.

The following sets forth our key sources used to prepare this “Industry Overview” section:

• Garrad Hassan. We commissioned Garrad Hassan, an Independent Third Party, to prepare the Garrad Hassan Report for use in whole or in part in this document. Information extracted from the Garrad Hassan Report is contained in sections such as “Summary,” “Industry Overview,” “Business” and “Financial Information” of this document. We paid Garrad Hassan a total of RMB180,000 in fees for the preparation of the Garrad Hassan Report.

Garrad Hassan is a member of the Germanischer Lloyd AG (“GL”) group of companies, and is part of GL’s renewable energy consulting business, trading under the GL Garrad Hassan brand. With more than 750 staff in over 40 locations worldwide, Garrad Hassan offers a range of integrated global technical and engineering services, software products and trainings.

Garrad Hassan prepared the Garrad Hassan Report based on its in-house database, independent third- party data sources and publicly available data from relevant government departments and national and supranational industry associations. Where necessary, Garrad Hassan corroborated third-party information either with further independent sources or against its own experience. In deriving forecast data for future industry trends, Garrad Hassan reviewed both government targets for wind power industry and published lists of pipeline projects. Moreover, it also coordinated with local experts to provide an assessment of influences of factors such as grid capacity restrictions and development plans, planning restrictions, general political climate and financial environment. When preparing the Garrad Hassan Report, Garrad Hassan employed a three-step methodology. First, it reviewed in detail existing materials held in-house, including GHP’s Global Wind Turbine Installation Projection Database and GHP Offshore Wind Farm Projects Database. Second, it conducted primary researches to update and expand the existing knowledge base. Third, Garrad Hassan consulted its expert staff involved in projects across the industry value and supply chains for input on relevant topics to ensure that the analysis is based on fully up-to-date public domain and industry information.

Forecasts and assumptions included in the Garrad Hassan Report are inherently uncertain because of events or combinations of events that cannot reasonably be foreseen, including, among others, the actions of government, individuals, third parties and competitors. Specific factors that could cause actual results to differ materially include, among others, risks inherent in the renewable power industry, financing risks, labor risks and regulatory risks.

• BP Statistical Review of World Energy, June 2010. The BP Statistical Review of World Energy is an annual publication authored by BP since 1951 and currently has a worldwide circulation of 60,000 printed copies. The statistics in the BP Statistical Review of World Energy are taken from government and other primary sources as well as published data

• China Electricity Council. Founded in 1988, China Electricity Council (“CEC”) is a consolidated organization of China’s power industry enterprises and institutions and operates under the supervision of the State Electricity Regulatory Commission. The CEC publishes industry data reports such as Power Industry Monthly Statistics, Power Industry Statistics Express, and China Electric Power Yearbook

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• National Bureau of Statistics of China. Directly governed by the Central Government of the PRC, the National Bureau of Statistics is responsible for the collection and coordination of national statistics

• China Wind Power Report 2008. Sponsored by the Chinese Renewable Energy Industries Association and published by China Environmental Sciences Press, the report reviews the latest development trends in the wind power industry in China as well as abroad

• U.S. Energy Information Administration. Energy Information Administration is an independent statistical agency within the Department of Energy of the United States

• European Photovoltaic Industry Association. The European Photovoltaic Industry Association (“EPIA”) is the world’s largest photovoltaic industry association devoted to the solar photovoltaic (“PV”) electricity market

• International Monetary Fund (“IMF”) World Economic Outlook Database, October 2010. The World Economic Outlook (“WEO”) database contains selected macroeconomic data series from the statistical appendix of the World Economic Outlook report, which presents the IMF staff's analysis and projections of economic developments at the global level, in major country groups and in many individual countries. The database is updated biannually in April and September/October

• National Development and Reform Commission. The National Development and Reform Commission (“NDRC”) is a macroeconomic management agency under the State Council, and is responsible for studying and formulating policies for economic and social development. The NDRC sets the benchmark tariffs for power generation and grid companies in China. It is also responsible for drafting long-term development plans such as the Eleventh Five-Year Plan and the Medium and Long-term Development Plan for Renewable Energy

• Renewable Energy Law of the PRC. The Renewable Energy Law provides the legal framework for the development of renewable energy in the PRC. It was first passed and promulgated in 2005 by the National People’s Congress. An amendment was passed in December 2009 and became effective on April 1, 2010

• The Medium and Long-term Development Plan for Renewable Energy. Published by the NDRC in September 2007, the Plan sets forth the long-term national targets for various renewable energy sources in 2010 and 2020

• Global Wind Report 2010. Published by GWEC in March 2011. GWEC is the global wind industry trade association, providing a credible and representative forum for the entire wind energy sector at the international level. Its mission is to ensure that wind power establishes itself as one of the world’s leading energy sources, providing substantial environmental and economic benefits

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OVERVIEW

All of our operations are based in the PRC. Accordingly, our businesses are subject to relevant laws and regulations of the PRC. These laws and regulations govern areas including, among others, project approvals, power generation, transmission and dispatch, on-grid tariffs, environmental protection and safety. In addition, our operations are subject to general laws and regulations in the PRC, such as company law, the laws on Chinese- foreign joint ventures, labor law and tax law.

PRINCIPAL REGULATORY AUTHORITIES RELATING TO OUR BUSINESSES

We are principally subject to the governmental supervision by the following PRC government agencies:

NDRC and Administrative Departments for Investment of Local Governments

The National Development and Reform Commission of the PRC ( , “NDRC”) and administrative departments for investment of local governments, which are normally the local DRCs, are responsible for approving wind power projects.

The NDRC is responsible for drafting laws, regulations or rules related to the power tariff management, adjusting the policies on the power tariff, enacting national plans on adjusting the power tariff or determining the power tariff of significant national power projects. The NDRC shall solicit the opinions of the State Electricity Regulatory Commission of the PRC ( , “SERC”) before working on the items set forth above. The important documents shall be jointly signed by the SERC.

The NDRC is the PRC’s national authority for accepting and approving CDM projects.

National Energy Commission

On January 22, 2010, in accordance with the Notice of the General Office of the State Council on Setting up National Energy Commission ( ), the State Council decided to set up the National Energy Commission ( ,“NEC”) responsible for researching and drafting national energy development plans, reviewing the significant issues related to energy security and development, as well as generally coordinating the significant issues related to national energy exploitation and international energy cooperation. The Director of the NEC Office is concurrently held by the head of the NDRC and the Vice Director is concurrently held by the head of National Energy Administration ( , “NEA”). The NEA, which is under the administration of the NDRC, is responsible for the work of the NEC.

State Electricity Regulatory Commission

The SERC is responsible for the overall regulation of the national power sector, with direct leadership over its local branches. The SERC is also responsible for promulgating regulations for the power sector and rules for power market, supervising the operations and legal compliance of the power industry, issuing and administering Electric Power Business Permits ( ) and providing statistics and information of power market.

Ministry of Land and Resources

The Ministry of Land and Resources of the PRC ( , “MLR”) is responsible for planning, administration, protection and rational utilization of natural resources such as land, mineral and marine resources in the PRC, including enacting relevant laws and regulations and promulgating the rules governing the management of land, mineral and marine resources (with the exception of marine fishery resources managed by

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Ministry of Housing and Urban-rural Development

The Ministry of Housing and Urban-Rural Development of the PRC ( , “MOHURD”) is responsible for, among others, drafting laws and regulations related to prospecting, design, construction and construction control, as well as supervising and directing the implementation thereof. MOHURD is also responsible for formulating rules on the housing ownership, housing lease, housing area management, real estate appraisal and brokerage management, property management, housing requisition, demolition and relocation, and supervising the implementation thereof.

Ministry of Environmental Protection

The Ministry of Environmental Protection of the PRC ( , “MEP”) is responsible for enacting and implementing the policies and plans related to national environmental protection, drafting relevant laws and regulations and formulating ministerial rules. The MEP is also responsible for the coordination and supervision of the significant environmental protection issues.

State Administration of Work Safety

The State Administration of Work Safety of the PRC ( , “SAWS”) is responsible for supervising work safety of power generation operations and project construction, and implementing various safety regulations.

State Administration of Taxation

The State Administration of Taxation of the PRC ( , “SAT”) is responsible for drafting tax laws and regulations, formulating detailed implementation rules, enacting rules on tax service and collection and supervising the implementation thereof, monitoring and examining the implementation of the tax laws and policies, and directing and supervising the local tax administration.

State-owned Assets Supervision and Administration Commission of the State Council

The State-owned Assets Supervision and Administration Commission of the State Council ( , “SASAC”), which is authorized on behalf of the state to fulfill the investors’ responsibilities and supervise the state-owned assets of the central state-owned enterprises (except financial enterprises), has an indirect influence over us as our controlling shareholder, Huaneng Group is a state-owned enterprise under their direct supervision.

LAWS AND REGULATIONS IN THE PRC WIND POWER INDUSTRY AND RENEWABLE ENERGY

The regulatory framework of the PRC power industry is set out in the Electric Power Law of the PRC ( , “Electric Power Law”) which became effective on April 1, 1996. One of the purposes of the Electric Power Law is to protect the legitimate interests of investors, operators and users and to ensure the safety of power operations. The Electric Power Law also states that the PRC government encourages the PRC and foreign companies or individuals to invest in the power industry and set up power plants and regulates these investments. The Renewable Energy Law sets out the regulatory framework for the development and use of

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The main administration regulations governing the power industry include the Electric Power Regulatory Ordinance ( ) and The Regulations on the Administration of Electric Power Dispatch to Grids ( ), effective on May 1, 2005 and November 1, 1993, respectively. The Electric Power Regulatory Ordinance sets forth regulatory requirements for many aspects of the power industry, including, among others, the issuance of Electric Power Business Permit, the regulatory inspections of power producers and grid companies, and the legal liabilities from violations of the regulatory requirements. The Regulations on the Administration of Electric Power Dispatch to Grids regulates the power dispatch to grids.

The ministerial rules related to power industry are mainly set forth by the NDRC, SERC, MLR, MOHURD, MEP and SAT.

From construction to operation, wind power projects shall go through prescribed procedures to procure NDRC approval, land use rights, building ownership and Electric Power Business Permit. In addition, wind power producers should also comply with regulations related to electricity dispatch, on-grid tariffs and taxation.

Approval of Wind Power Projects

The Catalogue of Investment Projects Subject to the Government Examination and Approval ( ) issued by the State Council in 2004 provides that wind power projects with installed capacity of 50 MW or above should be approved by the administrative departments for investment of the State Council. Other wind power projects should be approved by the administrative departments for investment of local governments and report to the NDRC afterwards. The investment department of the State Council refers to the NDRC and the “administrative departments for investment of local governments” refers to the local DRC (planning commissions) and economic and trade commissions (economic commissions) with the functions of investment administration as provided by the local governments. The relevant approval procedure is stated in the Interim Measures on Examination and Approval of Enterprise Investment Projects ( ) issued by the NDRC dated September 15, 2004.

Obtaining the Land Use Rights and Building Ownership

In accordance with the Land Administration Law of the PRC ( ), “Land Administration Law”) as amended on August 28, 2004 and the Urban Real Estate Administration Law of the PRC ( ), “Real Estate Administration Law”), land use rights and real estate ownership should be registered and confirmed by certificates. Those certificates shall be obtained in compliance with the required legal procedures after the wind power projects are approved by the NDRC.

According to the Provisional Measures on the Use of Construction Land and Administration of Environmental Protection of Wind Power Project ( ) issued by the NDRC, MLR and MEP, which became effective on August 9, 2005, wind power project operators should, prior to obtaining NDRC approval, obtain preliminary consent on the use of the land from the provincial land resource administration department and solicit the opinion of the environmental protection administration department. Once the project is approved, the wind farm operators are required to strengthen the environmental protection design based on the requirements set out in the environment impact reports and in the NDRC approval. The power plant is allowed to start operations when it passes the environmental protection completion inspection in accordance with the legal procedure.

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Obtaining the Electric Power Business Permit

Pursuant to the SERC’s Provision on the Administration of the Electric Power Business Permit ( , the “Permit Provision”), which became effective on December 1, 2005, the electric power business permit should be obtained before engaging in any electric power business in the PRC. Unless otherwise provided by the SERC, any company or individual in the PRC may not engage in any electric power business (including power generation, transmission, dispatch and sales) without obtaining an electric power business permit from the SERC. According to the Permit Provision, an applicant for the electric power business permit for power generation should obtain relevant government approvals based on the power plant’s construction plan, generation capacity and environmental compliance.

Dispatch

Pursuant to the Regulations on the Administration of Electric Power Dispatch to Grids ( , the “Dispatch Regulations”) issued by the State Council, effective on November 1, 1993, all electric power producers and grid companies must comply with the general dispatch of the dispatch center. Dispatch centers are responsible for the administration and dispatch of power plants connected to the grid.

Pursuant to the Dispatch Regulations, dispatch centers are established at five levels: the national dispatch center, the dispatch centers of the interprovincial power grid, the dispatch centers of the provincial power grid, the dispatch centers of the power grid of municipalities under provinces and the dispatch centers of the county power grid. Each power plant receives on a daily basis from its local dispatch center an hour-by-hour output schedule for the following days based on anticipated demand on the weather and other factors.

The dispatch institutions must dispatch electricity in compliance with electricity consumption schedules, which are generally determined according to:

• power supply agreements entered into between a power grid and large or primary electricity customers, where such agreements take into account the electricity generation and consumption plans formulated annually by the PRC government;

• agreements entered into between a dispatch center and each power plant subject to the dispatch centers’ dispatch (“Dispatch Agreements”);

• interconnection agreements between power grids; and

• the actual conditions of the grid, including equipment capacities and safety reserve margins.

Dispatch Priority of Renewable Energy Generation

On August 2, 2007, the State Council approved the Provisional Measures on the Dispatch of Energy Saving Power Generation ( ), which is aimed at optimizing the efficient use of natural resources and encouraging energy savings to achieve sustainability. Pursuant to this regulation, renewable power producers (including wind, solar and tidal power producers) enjoy the highest dispatch priority. The dispatch priority of power generation units is determined in the following preferential order: (a) non-adjustable power generation units utilizing renewable energy sources; (b) adjustable power generation units utilizing renewable energy sources; (c) nuclear power generation units; (d) cogeneration units and resources comprehensive utilization power generation units; (e) gas-fired power generation units; (f) other coal power generation units, including cogeneration units without heat load; and (g) oil-fired power generation units.

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On-Grid Tariff Administration

The Electric Power Law sets out the general principles for the determination of power tariffs, according to which, tariffs are to be formulated to provide reasonable compensation for costs and a reasonable return on investment, to share expenses fairly and to promote the construction of further power projects. The on-grid power tariffs of power plants, the supply power tariffs between the grid companies and the sales power tariffs of the grid companies are based on a centralized policy, fixed in accordance with a unified principle and administered at different levels. The on-grid tariffs are subject to review and approval by the NDRC and other competent pricing bureaus.

In July 2003, the State Council approved the Power Tariff Reform Plan ( ) (the “Reform Plan”) and stated that their long-term objective is to establish a standardized and transparent on-grid tariff-setting mechanism.

On March 28, 2005, the NDRC issued the Provisional Measures for the Administration of On-grid Tariffs ( ), which provides regulatory guidance for the Reform Plan. For power plants within the regional grids that have not implemented competitive bidding tariff-setting mechanisms, on-grid tariffs will be set by relevant pricing bureaus based on economic life cycle of power projects and in accordance with the principles of reasonable compensation for costs, a reasonable return on investment and tax compliance. For power plants within the regional grids that have implemented competitive bidding tariff-setting mechanisms, on-grid tariffs are two folds: (i) a capacity tariff determined by the NDRC based on the average investment cost of the power producers competing within the same regional grid and (ii) a competitive tariff determined through the competitive bidding process. This NDRC regulation became effective from May 1, 2005.

The Circular Regulations on the Administration of Issues Related to the Electricity Energy Transaction Prices ( ) issued by the NDRC, SERC and NEA dated October 11, 2009 provides that other than the interprovincial or cross-regional electricity energy transactions, all on-grid power should be priced in accordance with the tariffs set by the pricing bureaus of the government unless otherwise provided by the state. All producers of renewable energy, except the hydropower producers, must comply with the on-grid tariffs approved by the pricing bureaus.

Mandatory Purchase, Tariffs and Cost Compensation Program of the Renewable Energy

The Renewable Energy Law provides that all electricity power generated from renewable energy shall be purchased in full amount. Grid companies shall purchase the full amount of on-grid electricity generated by approved renewable energy plants whose power generation projects meet the grid connection technical standards in the areas covered by the grid companies’ power grids. Power grid companies shall improve the power grid construction in order to better absorb electricity generated from renewable energy.

According to the Renewable Energy Law and the Provisions on the Administration of Power Generation from Renewable Energy ( ), the relevant pricing authority under the State Council determines the on-grid tariffs for renewable energy power based on the factors including the power generated from different types of renewable energy, different geographic locations, and the need to facilitate the development and use of renewable energy on a reasonable commercial basis. The pricing authority also adjusts and announces the on-grid tariffs according to the technology for developing and using the renewable energy.

The Provisional Administrative Measures on the Price of Renewable Electricity and Cost Sharing Program ( , the “Price and Cost Sharing Regulation”), which was promulgated by the NDRC and became effective on January 1, 2006, provides that for wind power projects that obtained approvals from the NDRC or provincial DRCs after December 31, 2005, the on-grid tariff is the “government guided price”, which shall be determined through public tender and then approved by the

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On July 24, 2009, the NDRC issued the Circular Regarding the Furtherance of On-grid Pricing Policy of Wind Power ( ) (the “On-grid Tariff Circular”), which became effective on August 1, 2009. For the wind power projects approved before August 1, 2009, the on-grid tariffs shall comply with the regulations issued then. In accordance with this On-grid Tariff Circular, for all onshore wind power projects approved thereafter, the on-grid tariff as determined by government guided price discussed above has been replaced by the geographically unified tariff. Specifically, the PRC is categorized into four wind resource zones, and all onshore wind power projects in the same zone are subject to the same standard on-grid tariff (including VAT), respectively RMB0.51/kWh, RMB0.54/kWh, RMB0.58/kWh and RMB0.61/kWh, applicable to that zone. For wind farms spanning across areas with different fixed on-grid tariffs, the higher tariff applies. The On-grid Tariff Circular continues the wind power tariffs sharing system as described above. For the wind power projects, the portion of tariffs which equals the average on-grid tariff of coal power generation with flue gas desulfurization is paid by provincial grid companies and the portion above by end users. The portion to be paid by the grid companies is adjusted according to the adjustments of the average on-grid tariff of coal power generation with flue gas desulfurization.

Pursuant to the amendment of the Renewable Energy Law which became effective on April 1, 2010, the “Cost Sharing Program” is changed to “Cost Compensation Program.” Under this program, the state financial authority initiates a renewable energy development fund out of financial resources from the annual designated funds arranged by the state financial authority, the additional tariffs for the power generated from renewable energy paid by the end users and other resources. The development fund for renewable energy may be used to compensate grid companies for the additional costs they incur to purchase power generated from renewable energy sources above the average on-grid tariff they pay to purchase power generated from non-renewable energy sources.

Designated Funds

The Guidance Catalogue on Renewable Energy Industrial Development ( , the “Catalogue”), issued by the NDRC on November 29, 2005, sets out the description and technical specifications for 88 types of renewable energy projects that may be entitled to preferential tax treatment or designated funding.

The Interim Measures on Administration of Designated Fund for the Development of Renewable Energy ( ), which became effective on May 30, 2006, states that the Ministry of Finance (“MOF”) will allocate funds from the PRC central financial budget to support the development of renewable energy, especially the development of power generation from wind, solar and ocean energy. The MOF will be responsible for granting the final approval for applications for funding support submitted by companies and individuals. The designated fund may be used for unprofitable renewable energy projects that provide substantial public benefits or subsidized loans to renewable energy projects that satisfy the necessary requirements for financing and are within the descriptions in the Catalogue.

CDM

CDM is an arrangement under the Kyoto Protocol to the UNFCCC. It allows industrialized countries with a greenhouse gas emission reduction commitment to invest in emission reducing projects in developing countries in order to earn CERs. These credits can be used by investors from industrialized countries against domestic

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The PRC approved and ratified the UNFCCC in 1993 and the Kyoto Protocol in 2002, but with no binding obligation to meet emission reduction targets. Among the central organizations that are responsible for policy- making, approval and supervision of CDM projects in the PRC, the National Climate Change Coordination Committee is responsible for policy-making and general coordination, while the National CDM Board is responsible for the examination and approval of CDM projects to be implemented in the PRC.

On October 12, 2005, the Measures for Operation and Management of Clean Development Mechanism Projects ( , the “CDM Measures”) were promulgated by the NDRC jointly with the Ministry of Science and Technology (“MOST”), the Ministry of Foreign Affairs (“MFA”) and MOF. The CDM Measures set forth general rules and specific requirements for the application for, and approval of, CDM projects, including, among others, the following:

• only companies wholly-owned or controlled by Chinese parties may carry out CDM projects in the PRC.

• the approval procedures of CDM projects includes (i) a review by experts from relevant organizations appointed by the NDRC, (ii) an examination of applications for approval of a CDM project by the National CDM Board and (iii) approval jointly by the NDRC, MOST and MFA, issued by the NDRC.

• for CDM projects, the resources of emission reductions are owned by the PRC government, but the CERs produced from a particular CDM project are owned by the PRC project owner, therefore, the income obtained from transfer of CDM emission reduction shall be owned by the PRC government and the project owner. The distribution proportions of the income between the government and the project owner are different according to different greenhouse gases. With respect to wind power projects that develop and utilize renewable energy and are encouraged as a matter of government policy, only 2% of the proceeds are payable to the PRC government.

ENVIRONMENT PROTECTION

According to the Interim Measures for Management of Construction Land and Environment Protection of Wind Power Projects ( ) jointly issued by the NDRC, MLR and MEP on August 9, 2005, the construction of wind power projects should be appraised on environmental aspects and approved by local provincial environment authorities. The wind farms should be designed and constructed according to the requirements of the environment authorities. After the construction, the facilities for environment protection of wind power projects should be inspected in accordance with relevant procedures. Otherwise, the project is not allowed to be put into operation.

SAFETY AND LABOR PROTECTION

The Work Safety Law of the PRC ( ), which became effective on November 1, 2002, is the principal law governing the supervision and administration of work safety and labor protection for power projects. In accordance with the Measures on Supervision and Administration of the Work Safety of Electricity Industry ( ), issued by the SERC in March 2004, power plants are responsible for maintaining their safety operations in accordance with requirements set by the regional grid in which they are located. Power plants are required to report to the SERC, the SAWS and relevant local governmental authorities any serious safety accident within 24 hours.

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The main PRC employment laws and regulations include the Labor Law of the PRC ( ), the Employment Contract Law of the PRC ( ) and the Implementing Regulations of the Employment Contract Law of the PRC ( ).

The Employment Contract Law of the PRC ( ) was promulgated on June 29, 2007 and became effective on January 1, 2008. This law governs the establishment of employment relationships between employers and employees, and the execution, performance, termination of, and the amendment to, employment contracts. Compared to the PRC Labor Law, the PRC Employment Contract Law provides additional protection to employees by requiring written labor employment contracts, limiting the scope of the circumstances under which employees could be required to pay penalties for breach of employment contracts and imposing stricter sanctions on employers who fail to pay remuneration or social security contributions for their employees.

TAXATION

The renewable energy industry in the PRC generally enjoys certain tax incentives and rebates.

Enterprise Income Tax Law

Prior to January 1, 2008, under the then applicable PRC law and regulations (the “Old EIT Law”), entities established in China were generally subject to a 33% enterprise income tax, or EIT. However, entities that satisfied certain conditions enjoyed preferential tax treatment. In accordance with the tax laws and regulations effective until December 31, 2007, foreign invested manufacturing enterprises scheduled to operate for a period not less than ten years were exempted from paying state income tax for two years starting from its first profit making year and were allowed a 50% reduction in its tax rate in the third, fourth and fifth years (“two-year exemption and three-year reduction by half”).

On March 16, 2007, the PRC National People’s Congress enacted the PRC Enterprise Income Tax Law (the “New EIT Law”), which, together with its related implementation rules issued by the PRC State Council on December 6, 2007, became effective on January 1, 2008. The New EIT Law imposes a single uniform income tax rate of 25% on all Chinese enterprises, including foreign invested enterprises, and eliminates or modifies most of the tax exemptions, reductions and preferential treatments available under the previous tax laws and regulations. On December 26, 2007, the PRC State Council issued a Notice on the Implementation of the Transitional Preferential Tax Policies ( ), or Circular 39. Pursuant to Circular 39 and the New EIT Law, certain of our subsidiaries are entitled to apply the transitional rates of 18%, 20%, 22%, 24% and 25% for 2008, 2009, 2010, 2011 and 2012 onwards, respectively. Further, as of January 1, 2008, the enterprises that previously enjoyed “two-year exemption and three-year reduction by half” of the enterprise income tax and other preferential treatments in the form of tax deductions and exemptions within specified periods may, after the implementation of the New EIT Law, continue to enjoy the relevant preferential treatments until the expiration of the time period. However, if such an enterprise has not enjoyed the preferential treatments yet because of its failure to make profits, its preferential time period shall be calculated from 2008.

Under the New EIT Law, the preferential tax treatment for encouraged enterprises located in western China and certain industry-oriented tax incentives are still available. The Chinese and foreign-invested enterprises within the state-encouraged industry located in western China are taxed at a preferential income tax rate of 15% for years from 2001 to 2010.

In addition, pursuant to the Circular on the Execution of the Catalogue of Public Infrastructure Projects Entitled for Preferential Tax Treatment (“Circular 46”) ( ) and Circular on the Implementation of the Catalogue of the Key Public

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Infrastructure Projects Supported by the State and Entitled for Preferential Tax Treatment (“Circular 90”) ( ), an enterprise set up after January 1, 2008 and engaged in public infrastructure projects is entitled to three-year full exemption followed by a three-year 50% exemption commencing from the first year it generates operating income. Accordingly, wind power projects which have obtained government approval on or after January 1, 2008 are fully exempted from EIT for three years starting from the year when operating income is first derived from the sales of electricity, and is 50% exempted from EIT for three years thereafter.

VAT Law

Pursuant to the “Notice on Value Added Tax Policy Regarding Comprehensive Utilization of Resources and Other Products” ( ), wind power projects are entitled to a tax rebate equivalent to 50% of the VAT payable by the wind power business.

Under the Interim Regulation of the PRC on Value Added Taxes ( ), effective from January 1, 2009, general VAT payers are allowed to credit against output VAT in respect of input VAT on fixed assets purchased or self-manufactured based on the relevant VAT credit receipts in accordance with the revised VAT regulations and its implementation rules.

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HISTORY AND DEVELOPMENT

We are a leading renewable energy company in the PRC with more than 10 years of operating history. Our Company is a subsidiary of Huaneng Group, the largest power generation company in China in terms of total installed capacity as of December 31, 2010. We are Huaneng Group’s sole renewable energy platform for the ultimate consolidation of its renewable energy businesses such as wind power.

Our Company was established on August 5, 2010 as a joint stock limited company through restructuring of our predecessor HNEIC (previously known as Huaneng New Energy Environment Industrial Co., Ltd.). HNEIC was established by Huaneng Group on November 11, 2002 as a wholly-owned subsidiary, with a view to develop and operate renewable energy projects in the PRC.

As a pioneer of wind power sector in the PRC, we commenced our wind power business in the late 1990s through Huaneng Shantou Nan’ao Wind Power Co., Ltd. which subsequently became our consolidated subsidiary. We began the construction of Nan’ao Project, our first wind power project, in July 1999. Phase I of Nan’ao Project was connected to grid and began operation in July 2000. In 2007, we put our first MW-class wind power project into commercial operation and started our large-scale wind power operations. In 2008, our management team proposed the development plan of six strategically diversified regions. As of December 31, 2010, we operated our wind power business through 39 subsidiaries and had a consolidated installed capacity of 3,522.4 MW.

We used to operate hydropower business through Huaneng Dali Hydro Power Co., Ltd. ( ), a subsidiary of our Group, and Yunhe County Shitang Hydro-Power Plant ( ), a jointly controlled entity. In order to focus our core business on wind power generation, we transferred our entire 60% equity interest in Huaneng Dali Hydro Power Co., Ltd. to Yunnan Huaneng Lancang River Hydropower Co., Ltd.( ) in January 2009. During the years ended December 31, 2008, 2009 and 2010, profit of Huaneng Dali Hydro Power Co., Ltd. amounted to RMB11.1 million in 2008, which is disclosed as profit from discontinued operation in our consolidated statements of comprehensive income. See note 10 to the Accountants’ Report in Appendix I to this document for further details.

In November 2009, we transferred our entire 73.4% equity interest in Yunhe County Shitang Hydro-Power Plant to HCI. During the years ended December 31, 2008, 2009 and 2010, we recorded share of profit of Yunhe County Shitang Hydro-Power Plant, as a jointly controlled entity, in the amount of RMB0.1 million and RMB3.1 million in 2008 and 2009 (for the period prior to the transfer), respectively. See note 14 to the Accountants’ Report in Appendix I to this document for further details.

In August 2009, we transferred our entire 65% equity interest in Qidong Wind Power to HPI. We started the negotiation of this transaction at the end of 2007. Given that this transaction involved the transfer of state- owned assets and HPI is a company listed on the New York Stock Exchange, the Shanghai Stock Exchange and the Stock Exchange, various procedures had to be completed before the completion of this transaction in August 2009, including but not limited to obtaining internal approval within Huaneng Group, preparing asset valuation reports and audit reports of Qidong Wind Power, negotiating the major terms of the transaction agreement with HPI, obtaining approvals from SASAC, holding board meetings of HPI and making announcements regarding this transaction in accordance with the relevant listing rules of the stock exchanges on which HPI is listed. At the time of the negotiation, Huaneng Group had not made its decision as to the positioning of our Company. In early 2010, Huaneng Group came to the decision to position our Company as its sole renewable energy platform for the ultimate consolidation of its renewable energy businesses such as wind power. In furtherance of such decision, Huaneng Group entered into a Non-Competition Agreement with us to ensure that there is a better delineation of business between itself and our Company.

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Our Development Milestones

Set forth below are certain milestones achieved during our development:

• In July 1999, we commenced the construction of Nan’ao Project, our first wind power project, in Guangdong Province. Phase I of Nan’ao Project was connected to grid and began operation in July 2000.

• In November 2002, HNEIC, our predecessor, was established by Huaneng Group with a view to develop and operate renewable energy projects in China.

• In December 2004, Nan’ao Niutouling Project, being the first wind-solar co-located project developed for commercial operation in China, was connected to grid and began operation.

• In August 2006, we successfully registered our first CDM project with the CDM EB.

• In December 2006, Weihai Project, our first MW-scale wind power project using domestic-brand wind turbines, was connected to the grid and began operation.

• In December 2008, we put our Yunnan Dali Dafengba Project into operation. This project was located at altitudes as high as 2,800 meters, demonstrating our ability to develop and operate wind farms in high altitude areas.

• In May 2009, we commenced the construction of Rongcheng Project, our first offshore wind power project, in Shandong Province. In July 2010, Rongcheng Project was connected to grid and began commercial operation.

• In September 2010, we were awarded by the PRC government two solar power concession projects with a total capacity of 50.4 MW. We plan to start the construction of these two solar power concession projects in the second half of 2011 or in 2012.

REORGANIZATION

Our Company was established through Reorganization by converting HNEIC, our predecessor, into a joint stock company with limited liability. Prior to the Reorganization, HNEIC was the holding company of the subsidiaries now comprising the Group. In substance, we replaced HNEIC as the holding company of HNEIC’s subsidiaries.

On August 5, 2010, acting as Promoters, Huaneng Group and Huaneng Capital, a wholly-owned subsidiary of Huaneng Group, established our Company with a registered capital of RMB5,800 million. Pursuant to the Reorganization Agreement dated August 5, 2010, we retained all of the assets, liabilities and equity interests of HNEIC.

Upon establishment, we had a total of 5,800 million issued and outstanding Domestic Shares, with a par value of RMB1.00 each. We issued to Huaneng Group 5,510 million Domestic Shares, or 95% of our total issued and outstanding Shares, in exchange of (i) all the assets, liabilities and equity interests of HNEIC; and (ii) a cash contribution of RMB1,882 million. According to Beijing Pan-china Assets Appraisal Co., Ltd., an Independent Third Party appraiser registered in China, the net assets injected by Huaneng Group to us were valued at RMB3,628 million as of December 31, 2009. We also issued 290 million Domestic Shares, or 5% of our total issued and outstanding Shares, to Huaneng Capital, in exchange of a cash contribution of RMB290 million.

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The following charts set out the corporate structure of our Company before and after the Reorganization:

Before Reorganization:

Huaneng Group

100%

HNEIC

After Reorganization:

Huaneng Group Huaneng Capital

95% 5%

Our Company

Representations and warranties

According to the Reorganization Agreement dated August 5, 2010, Huaneng Group, as our Company’s major Promoter, has provided certain representations and warranties in favor of our Company, which mainly include:

• all relevant government approvals, licenses, authorization, third party consents, confirmations, exemptions and registrations necessary for the Reorganization have been obtained and remain valid;

• all the assets and interests injected by Huaneng Group to us were lawfully owned by Huaneng Group and free from any liens, mortgages, pledges, leases, licenses or third party rights, except for the liens, mortgages or pledges made by Huaneng Group for our loans or for third parties which have been disclosed to us;

• the execution and performance of the Reorganization Agreement by Huaneng Group will not conflict with its articles of association, business licenses and other similar constitutional documents or result in breach of any laws, regulations, court judgments, arbitral awards and administrative rulings;

• all information contained in the Reorganization Agreement is true, accurate, completed and free from omissions in all material aspects;

• there is no litigation, claims, arbitration or other proceedings against HNEIC or any of its subsidiaries which may have a material adverse impact on our operations or the assets or interests injected to us by Huaneng Group; and

• there is no infringement of any third party’s intellectual property rights which may result in serious financial loss of our Company.

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Indemnities

Pursuant to the Reorganization Agreement, Huaneng Group has agreed to indemnify us against, among other things:

• tax liabilities or claims due to increase in value of the assets injected to us as a result of the asset valuation during Reorganization;

• tax liabilities or claims in relation to the injection of the assets and interests to us by Huaneng Group;

• losses incurred as a result of claims in relation to the assets injected to us which arose on or before December 31, 2009, unless estimates of such expenditure have been disclosed and provision (if any) has been made in the accountant’s report; and

• losses incurred as a result of breach of any terms of the Reorganization Agreement by Huaneng Group.

Non-Competition Agreement

We entered into a Non-Competition Agreement with Huaneng Group on August 6, 2010, as amended by a supplemental agreement dated on November 23, 2010. See “Relationship with Controlling Shareholder — Non-competition Agreement — Non-competition Agreement” for details.

Approvals

Our Reorganization requires approvals from relevant PRC governmental authorities, including, among others, SASAC. We obtained SASAC’s approval on April 22, 2010. Our PRC legal advisers confirm that we have obtained all the necessary approvals from the relevant PRC governmental authorities in relation to the Reorganization.

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OUR CORPORATE STRUCTURE We currently have 39 subsidiaries, all of which are engaged in wind power generation and related businesses. The following chart illustrates our corporate structure as of the Latest Practicable Date:

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Notes:

(1) We have entered into a concert party agreement with certain equity owners of this company. See “— Concert Party Agreements” for details of the concert party agreement.

(2) The other shareholder of Huaneng Panjin Wind Power Co., Ltd. is CSR HK holding 25% of the equity interest. To the best of our knowledge, CSR HK’s principal business is in marketing, sales of products, trading, after-sales services and capital management. CSR HK is 100% owned by CSR Corporation Limited ( ). Other than being a shareholder of Huaneng Panjin Wind Power Co., Ltd., Huaneng Tieling Daxing Wind Power Co. Ltd., Huaneng Tieling Wind Power Co., Ltd. and Huaneng Tieling Kaiyuan Wind Power Co., Ltd., CSR HK is not related to the Group. As none of the connected person at the Company’s level can exercise or control the exercise of 10% or more of the voting power at any general meeting of Huaneneg Panjin Wind Power Co., Ltd., Huaneng Panjin Wind Power Co., Ltd. is not a connected person of the Group.

(3) The other shareholder of Huaneng Tieling Daxing Wind Power Co., Ltd. is CSR HK holding 25% of the equity interest. To the best of our knowledge, CSR HK’s principal business is in marketing, sales of products, trading, after-sales services and capital management. CSR HK is 100% owned by CSR Corporation Limited ( ). Other than being a shareholder of Huaneng Panjin Wind Power Co., Ltd., Huaneng Tieling Daxing Wind Power Co. Ltd., Huaneng Tieling Wind Power Co., Ltd. and Huaneng Tieling Kaiyuan Wind Power Co., Ltd., CSR HK is not related to the Group. As none of the connected person at the Company’s level can exercise or control the exercise of 10% or more of the voting power at any general meeting of Huaneneg Tieling Daxing Wind Power Co., Ltd., Huaneng Tieling Daxing Wind Power Co., Ltd. is not a connected person of the Group.

(4) The other shareholder of Huaneng Tieling Wind Power Co., Ltd. is CSR HK holding 25% of the equity interest. To the best of our knowledge, CSR HK’s principal business is in marketing, sales of products, trading, after-sales services and capital management. CSR HK is 100% owned by CSR Corporation Limited ( ). Other than being a shareholder of Huaneng Panjin Wind Power Co., Ltd., Huaneng Tieling Daxing Wind Power Co. Ltd., Huaneng Tieling Wind Power Co., Ltd. and Huaneng Tieling Kaiyuan Wind Power Co., Ltd., CSR HK is not related to the Group. As none of the connected person at the Company’s level can exercise or control the exercise of 10% or more of the voting power at any general meeting of Huaneneg Tieling Wind Power Co., Ltd., Huaneng Tieling Wind Power Co., Ltd. is not a connected person of the Group.

(5) The other shareholder of Huaneng Tieling Kaiyuan Wind Power Co., Ltd. is CSR HK holding 25% of the equity interest. To the best of our knowledge, CSR HK’s principal business is in marketing, sales of products, trading, after-sales services and capital management. CSR HK is 100% owned by CSR Corporation Limited ( ). Other than being a shareholder of Huaneng Panjin Wind Power Co., Ltd., Huaneng Tieling Daxing Wind Power Co., Ltd., Huaneng Tieling Wind Power Co., Ltd. and Huaneng Tieling Kaiyuan Wind Power Co., Ltd., CSR HK is not related to the Group. As none of the connected person at the Company’s level can exercise or control the exercise of 10% or more of the voting power at any general meeting of Huaneneg Tieling Kaiyuan Wind Power Co., Ltd., Huaneng Tieling Kaiyuan Co., Ltd. is not a connected person of the Group.

(6) The other shareholder of HNEEP-CLP Changdao Wind Power Co., Ltd. is China Energy Investment Co., Ltd. ( ) holding 45% of the equity interest. To the best of our knowledge, China Energy Investment Co., Ltd.’s principal business is in making investments in wind power projects and other renewable energy projects. China Energy Investment Co., Ltd. is 100% owned by CLP Holdings Limited ( ). Other than being a shareholder of HNEEP-CLP Changdao Wind Power Co., Ltd. and HNNE-CLP Weihai Wind Power Co., Ltd., China Energy Investment Co., Ltd. is not related to the Group. As none of the connected person at the Company’s level can exercise or control the exercise of 10% or more of the voting power at any general meeting of HNEEP-CLP Changdao Wind Power Co., Ltd., HNEEP-CLP Changdao Wind Power Co., Ltd. is not a connected person of the Group.

(7) The other shareholder of HNNE-CLP Weihai Wind Power Co., Ltd. is China Energy Investment Co., Ltd. ( ) holding 45% of the equity interest. To the best of our knowledge, China Energy Investment Co., Ltd.’s principal business is in making investments in wind power projects and other renewable energy projects. China Energy Investment Co., Ltd. is 100% owned by CLP Holdings Limited ( ). Other than being a shareholder of HNEEP-CLP Changdao Wind Power Co., Ltd. and HNNE- CLP Weihai Wind Power Co., Ltd., China Energy Investment Co., Ltd. is not related to the Group. As none of the connected person at the Company’s level can exercise or control the exercise of 10% or more of the voting power at any general meeting of HNEEP-CLP Weihai Wind Power Co., Ltd., HNNE-CLP Weihai Wind Power Co., Ltd. is not a connected person of the Group.

(8) The other shareholder of Huaneng Laoting Wind Power Co., Ltd. is HEI Leting Limited ( ) holding 45% of the equity interest. To the best of our knowledge, HEL Leting Limited’s principal business is in making investments in wind power projects and other renewable energy projects. HEL Leting Limited is 100% owned by Hong Kong Electrical Holdings Limited ( ). Other than being a shareholder of Huaneng Laoting Wind Power Co., Ltd., HEL Leting Limited is not related to the Group. As none of the connected person at the Company’s level can exercise or control the exercise of 10% or more of the voting power at any general meeting of Huaneneg Laoting Wind Power Co., Ltd., Huaneng Laoting Wind Power Co., Ltd. is not a connected person of the Group.

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(9) The other shareholder of Huaneng Hongkong Electric Dali Wind Power Co., Ltd. is Hongkong Electric Yunnan Dali Wind Power Co., Ltd. ( ) holding 45% of the equity interest. To the best of our knowledge, Hongkong Electric Yunnan Dali Wind Power Co., Ltd.’s principal business is in marking investments in wind power projects and other renewable energy projects. Hongkong Electric Yunnan Dali Wind Power Co., Ltd. is 100% owned by Hong Kong Electrical Holdings Limited ( ). Other than being a shareholder of Huaneng Hongkong Electric Dali Wind Power Co., Ltd., Hongkong Electric Yunnan Dali Wind Power Co., Ltd. is not related to the Group. As none of the connected person at the Company’s level can exercise or control the exercise of 10% or more of the voting power at any general meeting of Huaneneg Hongkong Electric Dali Wind Power Co., Ltd., Huaneng Hongkong Electric Dali Wind Power Co., Ltd. is not a connected person of the Group.

(10) The other shareholder of Huaneng Shouguang Wind Power Co., Ltd. is Bowen Limited ( ) holding 45% of the equity interest. To the best of our knowledge, Bowen Limited’s principal business is in making investments in wind power projects and other renewable energy projects. Bowen Limited is 100% owned by CIAM Group Limited ( ). Other than being a shareholder of Huaneng Shouguang Wing Power Co. Ltd., Bowen Limited is not related to the Group. As none of the connected person at the Company’s level can exercise or control the exercise of 10% or more of the voting power at any general meeting of Huaneneg Shouguang Power Co., Ltd., Huaneng Shouguang Wind Power Co., Ltd. is not a connected person of the Group.

(11) The other shareholders of Huaneng Shantou Nan’ao Wind Power Co., Ltd. are Shantou Electric Industry Co., Ltd. ( ) holding 24% of the equity interest, China Hydropower Construction Consulting Co., Ltd. ( ) holding 16% of the equity interest and HCI holding 8% of the equity interest, respectively. To the best of our knowledge, Shantou Electric Industry Co., Ltd.’s principal business is in installation of wind power generation equipment and power transmission and transformation equipment. Shantou Electric Industry Co., Ltd. is 100% owned by Guangdong State Grid Co., Ltd. Shantou Power Supply Bureau ( ). Other than being a shareholder of Huaneng Shantou Nan’ao Wind Power Co., Ltd., Shantou Electric Industry Co. is not related to the Group. None of the connected person at the Company’s level can exercise or control the exercise of 10% or more of the voting power at any general meeting of Huaneneg Shantou Nan’ao Wind Power Co., Ltd. China Hydropower Construction Consulting Co., Ltd.’s principal business is in preparing reports relating to hydropower projects, projects valuation and technical consultation. China Hydropower Construction Consulting Co., Ltd. is 100% owned by Hydropower Corporation ( ). Other than being a shareholder of Huaneng Shantou Nan’ao Wind Power Co., Ltd., China Hydropower Construction Consulting Co., Ltd. is not related to the Group. None of the connected person at the Company’s level can exercise or control the exercise of 10% or more of the voting power at any general meeting of Huaneneg Shantou Nan’ao Wind Power Co., Ltd. HCI’s principal business is in making investments in road, energy, port projects and assets management. HCI is a connected person of the Group by virtue of being a wholly-owned subsidiary of Huaneng Group. As HCI is not the substantial shareholder of Huaneng Shantou Nan’ao Wind Power Co., Ltd. (holding 8% equity interest), Huaneng Shantou Nan’ao Wind Power Co., Ltd. is not a connected person of the Group.

(12) The other shareholder of Huaneng Hulunbuir Wind Power Co., Ltd. is Huaneng Hulunbuir Energy Co., Ltd. ( ) holding 49% of the equity interest. To the best of our knowledge, Huaneng Hulunbuir Energy Co., Ltd.’s principal business is in making investments in, construction, developing and managing electric power, coal and railway transportation. Huaneng Hulunbuir Energy Co., Ltd. is a connected person of the Group by virtue of being a wholly-owned subsidiary of Huaneng Group. Accordingly, Huaneng Hulunbuir Wind Power Co., Ltd. is a connected person of the Group.

(13) The other shareholders of Huaneng Shantou Wind Power Co., Ltd. are CLP Asia Nan’ao Wind Power Limited ( ) holding 25% of the equity interest and Guangdong Electric Power Development Co., Ltd. ( ) holding 25% of the equity interest. To the best of our knowledge, CLP Asia Nan’ao Wind Power Limited’s principal business is in making investments in wind power projects and other renewable energy projects. CLP Asia Nan’ao Wind Power Limited is 100% owned by CLP Holdings Limited ( ). Other than being a shareholder of Huaneng Shantou Wind Power Co., Ltd., CLP Asia Nan’ao Wind Power Limited is not related to the Group. None of the connected person at the Company’s level can exercise or control the exercise of 10% or more of the voting power at any general meeting of Huaneneg Shantou Wind Power Co., Ltd. Guangdong Electric Power Development Co., Ltd.’s principal business is in making investments in, construction and managing power projects and producing and sales of electricity. Guangdong Electric Power Development Co., Ltd. is a company listed on the Shenzhen Stock Exchange. Guangdong Yudean Group Co., Ltd. ( ) is its controlling shareholder. Other than being a shareholder of Huaneng Shantou Wind Power Co., Ltd., Guangdong Electric Power Development Co., Ltd. is not related to the Group. None of the connected person at the Company’s level can exercise or control the exercise of 10% or more of the voting power at any general meeting of Huaneneg Shantou Wind Power Co., Ltd. Therefore, Huaneng Shantou Wind Power Co., Ltd. is not a connected person of the Group.

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Concert Party Agreements

We have entered into concert party agreements with certain other equity owners (“Other Equity Owners”) of seven non-wholly owned subsidiaries to confirm our effective control over these subsidiaries.

In each of these seven subsidiaries, we hold an equity interest of no less than 50%. Under the respective articles of association of these seven subsidiaries, however, super majority or unanimous vote, as the case maybe, at the board meeting and/or shareholders meeting is required for substantially all of the material operating and financial decisions of the relevant subsidiary. Such voting mechanism prevents us from controlling the seven non-wholly owned subsidiaries. Since the establishment of these subsidiaries, however, we actually had the power to control the operation of these subsidiaries by, among others, appointing senior management, approving annual budget and determining the remuneration of employees. Our power to control these subsidiaries have been accepted by the Other Equity Owners as they lack the necessary experience and expertise to develop and operate wind farms in China.

We entered into concert party agreements with the Other Equity Owners to confirm the agreement and arrangement in respect of our control over these subsidiaries. According to these concert party agreements, the Other Equity Owners confirmed that they have voted or procured, since the date of establishment of each subsidiaries, and will continue to vote or procure the directors appointed by them to vote unanimously with us or the directors appointed by us, as the case maybe, at shareholders meetings and/or board meetings in respect of all operating and financial matters of these subsidiaries, including but not limited to, project development, operation plan, budgeting, financial policies, investment and financing management and property management. The Other Equity Owners have also undertaken that in the event of transferring their equity interests in the respective subsidiary to a third party, they will procure the transferee to assume the obligations under the concert party agreement by entering into such concert party agreement with us in substitution for the relevant Other Equity Owners. These concert party agreements will remain in full force and effect as long as the respective subsidiary legally exists unless we maliciously harmed the interests of the Other Equity Owners utilizing the concert party agreement, in which case the Other Equity Owners may, upon our written confirmation, terminate the concert party agreement in writing.

Our PRC legal advisers have confirmed that each of these concert party agreements is legal, valid and binding on the parties to the agreement. Our PRC legal advisers have further confirmed that none of these concert party agreements conflicts with the respective articles of association of the subsidiary or relevant PRC laws and regulations. As we had power to control these non-wholly owned subsidiaries during the years ended December 31, 2008, 2009 and 2010, we consolidated their financial results into our consolidated financial statements.

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The following table sets forth the details of the concert party agreements:

Date of the concert party Individual Aggregate Subsidiary agreement Parties shareholding shareholding 1. Huaneng Shantou March 12, 2010 HNEIC 50% 100% Wind Power Co., Ltd. CLP Asia Nan’ao Wind Power 25% Limited ( ) 25% Guangdong Electrical Power Development Co., Ltd. ( ) 2. HNEEP-CLP March 12, 2010 HNEIC 55% 100% Changdao Wind Power China Energy Investment Company 45% Co., Ltd. Limited ( ) 3. HNNE-CLP Weihai March 12, 2010 HNEIC 55% 100% Wind Power Co., Ltd. China Energy Investment Company 45% Limited ( ) 4. Huaneng Laoting March 12, 2010 HNEIC 55% 100% Wind Power Co., Ltd. HEI Leting Limited 45% ( ) 5. Huaneng Shantou March 22, 2010 HNEIC 52% 76%(1) Nan’ao Wind Power Shantou Electric Industry Co., Ltd. 24% Co., Ltd. ( ) 6. Huaneng Hongkong March 12, 2010 HNEIC 55% 100% Electric Dali Wind Hongkong Electric Yunnan Dali 45% Power Co., Ltd. Wind Power Co., Ltd. ( ) 7. Huaneng Hulunbuir March 12, 2010 HNEIC 51% 100% Wind Power Co., Ltd. Huaneng Hulunbuir Energy Co., Ltd. 49% ( )

Note: (1) The articles of associations of Huaneng Shantou Nan’ao Wind Power Co., Ltd. require majority vote at board meeting for all material operating and financial decisions. By entering into the concert party agreement with Shantou Electric Industry Co., Ltd., we have confirmed our control over Huaneng Shantou Nan’ao Wind Power Co., Ltd. as the directors appointed by Shantou Electric Industry Co., Ltd., and us constitute majority of the board.

Investment in Certain Companies

During the years ended December 31, 2008, 2009 and 2010, we have invested in three non-listed entities established in the PRC, namely, Huaneng Finance, Jilin Zhanyu Wind Power Assets Management Co., Ltd. (“Jilin Zhanyu Management”) and Neimeng Huhhot Hydro-Power Generation Co., Ltd. (“Huhhot Hydropower”). See Note 15 to the Accountants’ Report included in Appendix I to this document for further details. In July 2010, we, together with Huaneng Capital and other three Independent Third Parties, jointly established Huaneng Carbon Assets Management Company (“Huaneng Carbon Management”).

Investment in Huaneng Finance. Huaneng Finance, being a subsidiary of our controlling shareholder Huaneng Group, is a connected person of our Company. It is a common practice for large Chinese group companies and other subsidiaries within the same parent group to jointly invest in a finance company which focuses on providing intra-group financial services. As one of such practice, Huaneng Finance was established to

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Investment in Jilin Zhanyu Management. We, together with several other wind power companies, established Jilin Zhanyu Management to ensure proper and timely grid connection for our wind power projects. Jilin Zhanyu Management primarily focuses on the construction and management of the grid transmission facilities for local wind power projects including our wind power projects. As of December 31, 2010, we held 12.86% of the equity interest of Jilin Zhanyu Management.

Investment in Huhhot Hydropower. Energy storage technology is an important technology to the development of wind power industry in the long term. In order to improve our capabilities of research and development of energy storage technology, we made our investment in Huhhot Hydropower whose principal activity is hydropower generation utilizing the pumped storage technology. As of December 31, 2010, we held 6.49% of the equity interest of Huhhot Hydropower.

Investment in Huaneng Carbon Management. Huaneng Carbon Management is a company focusing on the management of assets related with the carbon reduction. We invested in this Company in order to enhance our exposure in the area of carbon reduction, and to gain more information and potential opportunities for our wind power projects. As of December 31, 2010, we held 10% of the equity interest of Huaneng Carbon Management.

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OVERVIEW

We are a leading pure-play renewable energy company in the PRC with a primary focus on wind power generation. According to Garrad Hassan, we ranked third in China and eighth in the world in terms of total wind installed capacity as of December 31, 2010. Among the top ten global wind power generation companies, we had the highest CAGR of total installed capacity from 2008 to 2010, based on the year-end capacity data published by these companies. Since our inception in 2002, we have been a pioneer and innovator in the fast-growing PRC wind power sector. From 2008 to 2010, our consolidated installed capacity and revenue from sale of electricity grew rapidly, at a CAGR of 195.9% and 166.2%, respectively, while our adjusted operating profit increased from RMB122.7 million in 2008 to RMB884.5 million in 2010, representing a CAGR of 168.5%. We believe that our execution track record and sizeable pipeline will support our profitable growth in the near future.

As of December 31, 2010, we had a consolidated installed capacity of 3,522.4 MW. We also had 1,202.0 MW capacity under construction and approximately 73,463.5 MW of wind power pipeline projects reserved for future development. Our installed, under-construction and pipeline wind power projects are principally located in six geographically diversified areas and cover 19 provinces and autonomous regions in China. These areas are strategically selected to achieve optimal return based on a combination of key considerations for wind farm development, including quality wind resources, high on-grid tariffs and the conditions of local grid connections and transmission.

In recent years, wind power industry in China has grown rapidly. During the past few years, the Chinese government has promulgated a number of preferential policies to support and encourage the development of renewable energy industries, such as a transparent fixed on-grid tariff regime, mandatory grid connection, mandatory power off-take and favorable tax incentives. In 2010, the country’s total wind installed capacity grew by 18,928 MW, or 73.4%, from that as of the end of 2009 and reached 44,733 MW as of the end of 2010, making China the largest market in terms of total wind installed capacity. Garrad Hassan expects that China will continue to be a global growth leader with an estimated total wind installed capacity CAGR of 21.8% from 2010 to 2015.

During the years ended December 31, 2008, 2009 and 2010, our consolidated installed capacity increased from 402.3 MW as of December 31, 2008 to 3,522.4 MW as of December 31, 2010, representing a CAGR of 195.9%. We generated revenue from the sale of electricity of RMB248.1 million, RMB847.1 million and RMB1,758.6 million and realized profits of RMB95.9 million, RMB281.2 million and RMB609.4 million from our continuing operations for the years ended December 31, 2008, 2009 and 2010, respectively, representing a CAGR of 166.2% and 152.1%. As of December 31, 2010, we also had a portfolio of wind power pipeline projects with an estimated capacity of approximately 73,463.5 MW, including 633.0 MW Advanced-stage Projects, approximately 3,346.7 MW Developing-stage Projects, and approximately 69,483.8 MW Early-stage Projects. See “— Pipeline Projects.” We target to increase our consolidated installed capacity to approximately 5,100 MW by the end of 2011.

We are a subsidiary of Huaneng Group, the largest power generation company in China in terms of total installed capacity as of December 31, 2010. We are Huaneng Group’s sole renewable energy platform for the ultimate consolidation of its renewable energy businesses such as wind power.

We firmly believe in the evolution of renewable energies from alternative to mainstream and ultimately to the primary energy sources of our society. Our mission is to promote economic, social and environmental sustainability through the proactive, conscientious and rational development of wind power and other renewable energies. Our goal is to become a leading renewable energy company in the world with sustainable shareholder return.

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OUR COMPETITIVE STRENGTHS

We believe our rapid growth and strong market position are largely attributable to the following principal competitive strengths, which distinguish us from our competitors.

Strategically selected locations of our wind power projects with quality wind resources, high on-grid tariffs and taking into account the conditions of local grid connections and transmission

Throughout our development, we have been carefully managing our expansion with an equal emphasis on scale versus quality and growth versus profitability. Our wind power projects, including projects in operation, projects under construction and pipeline projects, are strategically located in geographically diversified areas to achieve optimal return based on a combination of key considerations for wind power operations, including quality wind resources, high on-grid tariffs and the conditions of local grid connections and transmission. Our geographical diversification also helps us mitigate part of our exposure to regional risks relating to our operations.

As of December 31, 2010, we had wind power projects located in eight provinces and autonomous regions in China with a consolidated installed capacity of 3,522.4 MW, of which (i) approximately 75% was located on sites with quality wind resources based on the PRC national industry standards, (ii) approximately 51.3% enjoyed on-grid tariffs (including VAT) equal to or higher than RMB0.61/kWh, which is the highest on-grid tariff stipulated by the NDRC since August 2009, and (iii) 100% was connected to the grid. As a result, in 2010 our weighted average utilization hours were 2,265.3 hours and our weighted average on-grid tariff (including VAT) was RMB0.604/kWh. We have reserved a sizable portfolio of wind power pipeline projects and will develop them into operating projects strategically accordingly to our expansion plan. As of December 31, 2010, in addition to 1,202.0 MW of capacity under construction, we had a portfolio of wind power pipeline projects reserved for future development with an estimated capacity of approximately 73,463.5 MW, including 633.0 MW Advanced-stage Projects, approximately 3,346.7 MW Developing-stage Projects and approximately 69,483.8 MW Early-stage Projects. Our under-construction and pipeline projects were located in 19 provinces and autonomous regions in China.

In areas where we have operating, under-construction or pipeline projects, we have strategically identified two tiers and develop our projects in these two tiers in an order which matches the country’s grid development. With this development strategy, we believe we will be able to mitigate the risk of loss from grid congestions. We consider Liaoning Province, eastern Inner Mongolia and Shandong Province as Tier 1 growth areas, and Yunnan, Shanxi, Guangdong and Guizhou provinces as Tier 2 growth areas. Both Tier 1 and Tier 2 growth areas have quality wind resources and relatively high on-grid tariff. Tier 2 growth areas, compared to Tier 1 growth areas, are less developed in terms of wind installed capacity and have no material grid congestions. As of December 31, 2009 and 2010, approximately 80.3% and 75.7% of our consolidated installed capacity are located in Tier 1 growth areas, and approximately 6.9% and 10.2% in Tier 2 growth areas. As of December 31, 2010, approximately 53.7% of the capacity of our under-construction projects are located in Tier 1 growth areas, and approximately 15.8% in Tier 2 growth areas.

The strategically selected locations of our under-construction and pipeline projects, together with our strategic development plan and our proven execution capability, will ensure our profitable growth in the near future and give us an advantage over our competitors.

A track record of profitable growth demonstrating our managerial strength and execution ability

We have grown rapidly during the years ended December 31, 2008, 2009 and 2010. Our consolidated installed capacity increased from 402.3 MW as of December 31, 2008 to 3,522.4 MW as of December 31, 2010,

—82— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. BUSINESS representing a CAGR of 195.9% and outpacing the CAGR of China’s total wind installed capacity of 92.9% from 2008 to 2010, according to Garrad Hassan. For the three years ended December 31, 2008, 2009 and 2010, our revenue from the sale of electricity amounted to RMB248.1 million, RMB847.1 million and RMB1,758.6 million, respectively, representing a CAGR of 166.2%, and our net profits from continuing operations were RMB95.9 million, RMB281.2 million and RMB609.4 million, respectively, representing a CAGR of 152.1%. Our adjusted operating profit increased from RMB122.7 million in 2008 to RMB884.5 million in 2010, at a CAGR of 168.5%. Our track record of rapid growth in both capacity and profit demonstrates our managerial strength and execution ability.

A pioneer and innovator in the fast-growing PRC wind power sector

We have been playing an important leadership role in the development of the fast-growing PRC wind power industry in a number of areas.

• Exploration of new possibilities within wind power and other renewable energies sector. As an industry pioneer, we have been constantly and actively exploring business opportunities in new areas within the wind power and other renewable energies sector. For instance,

• our Yunnan Eryuan Project is the first wind power project in China successfully developed at altitudes exceeding 3,000 meters;

• we are appointed by the NDRC to develop a model tidal-flat wind farm in Jiangsu Province with an estimated capacity of 300 MW;

• we are actively developing offshore wind power projects, and our Rongcheng Project in Shandong Province is one of the first wind power projects using offshore 3 MW turbines in China;

• we have successfully registered with the CDM EB three out of the first ten wind power CDM projects in China. As of December 31, 2010, we are one of the largest holders of registered CDM projects in China in terms of installed capacity;

• our Guangdong Nan’ao Niutouling Project is the first wind-solar co-located project developed for commercial operation in China; and

• we have received support from the State Oceanic Administration of China to develop a demonstrational wave power project.

• Pursuit of wind power technological improvements. We are constantly seeking opportunities to improve and innovate, tailoring to the characteristics of wind resources in China. For instance,

• Wind turbine design. We initiated and participated in designing the 82-meter rotor diameter blade for 1.5 MW wind turbines together with Sinovel and we are one of the first Chinese wind power companies to use the 82-meter rotor diameter blade. Compared to the traditional 77-meter rotor diameter blade, the 82-meter rotor diameter blade has the benefit of a larger swept area and a lower cut-in wind speed, and therefore we believe wind turbine using 82-meter rotor diameter blade has higher operational efficiency and is more suitable for China’s wind resources most of which are of lower wind speed. With the 82-meter rotor diameter blade, we are able to increase the gross power generation by 19.2% in some of our wind farms;

• Ancillary equipment. We developed transformers suitable for our wind farms based on the desirable functional features of both U.S.- and European-style transformers. Our re-designed

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transformer lowers the unit cost while maintaining operational stability. It also saves electricity needed for transformer cooling. As another example, we designed and installed single real-time monitoring systems which work for both wind turbines and substations on the same wind farm, thereby improving efficiency and saving costs relating to on-site monitoring;

• Wind resources assessment. Our successful wind test solutions in the coastal areas of Jiangsu and Shandong provinces provided valuable experience and reference to the formulation of national wind resources assessment standards. Moreover, by use of a combination of fixed and mobile anemometer towers, we also improved wind assessment methodologies and are able to assess wind resources with greater accuracy.

• Close co-operation with China’s wind power equipment manufacturers. We have also played an important role in the development and technological advancement of the wind power equipment manufacturing sector in China. We are the first wind power company to use domestic-brand MW- class turbines, and we were appointed by the NDRC to develop one of the first 500 MW large-scale wind farms designated for the promotion of domestic wind turbines. Through working closely with the Chinese wind power manufacturers, we have developed strong and long-standing relationships with all major domestic wind turbine manufacturers and accumulated valuable experience with and know-how on the operation and maintenance of their turbines. We believe our strong relationships with Chinese wind turbine manufacturers enhance our ability to secure a reliable supply of high quality wind turbines on favorable terms, receive prompt and comprehensive after-sales services and explore equipment and technology improvement and innovation opportunities in a collaborative manner with the major domestic wind turbine manufacturers.

Our position as a pioneer in the wind power industry brings us competitive advantages such as preferential government support, opportunities to participate in government’s planning of wind resources development, strong relationships with suppliers, lower development cost, and access to quality wind resources. In addition, we believe that our continuous focus on technological innovation enables us to better utilize wind resources, enhance production efficiency and reduce operating costs.

Expertise and experience in wind farm development and power generation leading to enhanced efficiency and profitability

We have extensive experience and expertise in each and every aspect of wind farm development and power generation operations, including (i) wind resources assessment and site selection, (ii) wind farm design, (iii) construction management, (iv) operation and maintenance, and (v) post-construction evaluation, and we strive to optimize the operating efficiency and profitability throughout the value chain.

• Wind resources assessment and site selection. We have a professional team with extensive experience in wind farm site selection and wind resources assessment. Leveraging the expertise of our professional team and our improved methodologies of wind assessment, we are able to conduct both macro- and micro-site selection more accurately and achieve high utilization hours.

• Wind farm design. We have an experienced team overseeing the design of all of our wind farms. We implement standardized design specifications for the overall design of our wind farms, and then customize the key elements according to the features of each wind farm to optimize operational performance. In addition to the national and industry standards, we have compiled a set of guidelines and standards for the design and construction of our wind farms, which is the first set of guidelines and standards of such type compiled by an enterprise in China. Our standardized designs, detailed guidelines and standards have helped to speed up the initial design process, reduce construction costs and improve the quality of design of our wind farms.

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• Construction management. We have a specialized construction management team to supervise and control the entire construction process of our wind farms. We have the capability of managing the construction of large-scale wind farms. For instance, our Fuxin Project is one of the first 500 MW large-scale wind farms in China. We also train our key employees at project-level through the construction management process, which not only prepares them for the future operation of the wind farms under construction but also enhances their capability of managing future project construction. As a result, we are able to construct high quality wind farms within a shorter period of time and at lower costs. For example, without incurring additional costs, it generally takes us a period of eight to ten months to complete the construction of a wind farm with an installed capacity of 50 MW, which we believe is shorter than the industry average in China.

• Operation and maintenance. We operate all of the wind power projects by ourselves instead of engaging any third party managers. With the experience and expertise of our operation team, we are able to operate the wind power projects effectively and efficiently. For example, we carefully manage our spare parts inventory and maintenance schedule to minimize interruption to operations and control costs.

• Post-construction evaluation. We conduct post-construction evaluation for our projects to improve our management system and standards. We constantly evaluate our experience in operating projects and apply such experience to the development of other projects, especially projects located in nearby areas or under similar conditions.

As a result of the comprehensive management, we have enhanced operating efficiency and profitability. In 2010, the weighted average utilization hours of approximately 74.6% of our wind power projects in operation, in terms of installed capacity as of December 31, 2010, were higher than their respective provincial averages as provided by the China Electricity Council. During the years ended December 31, 2008, 2009 and 2010, the availability factor of our wind farms reached 98.06%, 98.94%, and 98.90% in 2008, 2009 and 2010, respectively. Attributable to the foregoing, we believe we enjoy a higher profit margin than many of our competitors.

Experienced and professional management team dedicated to the development of renewable energies

Our management team has a broad range of expertise and an in-depth understanding of wind power industry, including its history and future trends. Certain key members of our management team are participants and key contributors to the setting of the national wind power industry policies. Our senior management has an average of approximately seven years of wind power related experience. As we are a pure-play renewable energy company, our management is able to dedicate its time and energy on the development of renewable energies.

Our management is supported by a team of professional and competent employees with rich industry knowledge. Our employees are equipped with high-level qualifications and extensive technical know-how. As of December 31, 2010, we had a total of 777 employees, among whom approximately 98% have college-level or higher education background. We provide our employees with trainings tailored to meet the requirements of various positions. For example, we provide comprehensive wind power related trainings to newly recruited employees, and we cooperate with renowned universities and international equipment suppliers to provide advanced training programs to our key engineers and technicians.

Under the leadership of our senior management and with the support of our employees, we have achieved rapid and profitable growth during the years ended December 31, 2008, 2009 and 2010.

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OUR STRATEGIES

Our goal is to become a leading renewable energy company in the world with sustainable shareholder return. To achieve our goal, we intend to pursue the following strategies.

Expand in areas with attractive returns and continue to increase market share in the wind power sector

With 1,202.0 MW capacity under construction and approximately 73,463.5 MW wind power pipeline projects reserved for future development as of December 31, 2010, we expect to increase our consolidated installed capacity by 44.8% from 3,522.4 MW as of the end of 2010 to approximately 5,100 MW by the end of 2011. According to Garrad Hassan, during the same period, the wind installed capacity in China is projected to be increased by 33.5%. We believe our competitive strengths have well positioned us to implement this strategy. To that end, we also plan to utilize approximately HK$3,607.1 million of the proceeds from certain possible working capital raising activities to construct wind farms as well as purchase equipment to increase our installed capacity.

We plan to focus on expanding in areas with attractive returns. In the six regions where we currently have significant operations or pipelines, we consider Liaoning Province, eastern Inner Mongolia and Shandong Province as Tier 1 growth areas. We believe we can achieve optimal return based on the combination of quality wind resources and high on-grid tariffs in these areas. In addition, the Tier 1 growth areas also have well- established infrastructure which facilitates the construction of wind farms. With our substantial installed capacity as well as capacity under construction, we believe we have first-mover advantages, such as strong relationships with local governmental authorities and opportunities to participate in the planning of the further development of the local wind resources, and advantages in assessment of wind resources and selection of suitable sites for wind power projects. We expect to further increase our presence in the Tier 1 growth areas and enhance the economies of scale. We believe that expansion in Tier 1 growth areas will yield relatively high returns in the next three years. We also plan to expand in certain other areas that we consider as Tier 2 growth areas, such as the provinces of Yunnan, Shanxi, Guangdong and Guizhou. The expansion in Tier 2 growth areas is expected to be complementary in the near future to the expansion in Tier 1 growth areas, and to be the major contributor to our long-term growth. As of December 31, 2010, approximately 53.7% of the capacity of our under-construction projects are located in Tier 1 growth areas, and approximately 15.8% in Tier 2 growth areas. In addition, we also intend to develop wind farms in Xinjiang and Hebei Province in accordance with the pace of construction of the grid infrastructure in these areas.

We are also exploring other opportunities to increase our market share, such as developing nearshore wind farms in areas with quality wind resources. However, the large-scale development of nearshore wind farms still depends on proven economic feasibility. We will also strive to increase income from CERs or VERs to maximize the returns to our Shareholders.

Develop other renewable energies with a focus on solar power

Currently, our business concentrates on wind power operations, and substantially all of our assets are related to wind power business. We plan to develop other renewable energies to expand our power generation capabilities and to diversify our revenue base. We believe the solar power market has viable growth potential, and our in-depth knowledge in China’s power sector, established relationships with the local governments and proven track record will give us a competitive advantage to capture the growth opportunities in the PRC solar power market.

We are in the process of developing our solar power business and acquiring resources. As of December 31, 2010, we had entered into 20 investment and development agreements to develop our solar power projects with an estimated total capacity of 1,740 MW. The capacity is mainly located in Shaanxi Province, Inner Mongolia and Hebei Province. We had also been awarded by the PRC government two solar power concession projects

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We are also exploring opportunities to develop other renewable energies, including tidal, wave and hydrogen power, in order to expand our power generation capabilities. For example, we have received support from the State Oceanic Administration of China to develop a demonstrational wave power project.

Pursue opportunities in the international markets

We plan to pursue opportunities of developing and acquiring wind power projects and solar power projects in certain international markets. We believe that expansion into international markets will help promote our brand and reputation, acquire technologies, diversify revenue base and increase growth potential. Therefore, while we plan to continue to increase our market share in China’s wind power sector, we are evaluating opportunities to expand into certain international markets which have stable geopolitics, quality wind or solar resources and favorable policies that support renewable energies, by leveraging our wind power operational expertise and strong relationships with wind turbine suppliers. We also intend to enter into strategic alliances with international wind power generation companies to identify and exploit development opportunities. As of the Latest Practicable Date, we have not identified any specific target or entered into any agreement for developing and acquiring wind power or solar power projects in the international market, nor have we formed alliances with any international wind power generation companies, but we intend to continue our efforts in this regard.

Continue our efforts to promote technological innovation and industry development

We plan to continue our cooperation with domestic wind turbine suppliers in the advancement of wind power related technologies. For example, we are currently cooperating with domestic equipment manufacturers in the research and development of 89-meter rotor diameter blade for 1.5 MW wind turbine which is tailored for areas with a relatively low wind speed. When successfully implemented, we may benefit from increased utilizable wind resources and in turn higher net power generation. We are also exploring technological innovation in electricity storage and distributed generation to further increase our utilization hours.

We will also continue to actively participate in the process of setting relevant industry standards for the development of wind power and other renewable energies, including solar power. These standards include those related to equipment manufacturing, project design and construction, and grid connection. With our experience, expertise and comprehensive capabilities in the wind power operations, we expect to be an important participant in the standard setting process, which we believe, in turn, will benefit us in terms of the long-term development of our business.

Continue to control costs and improve profitability

We will continue to control costs and improve profitability of our wind power business, through implementing the following measures:

• During the construction stage of our wind power projects, we plan to further reduce procurement costs and manage finance expenses.

• Reduce procurement costs. To further reduce the procurement costs per kW of wind turbines, we will implement a centralized procurement system. We plan to negotiate and enter into long-

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term master agreements with selected suppliers who are able to provide us with high quality equipment at relatively favorable price.

• Manage finance expenses. We plan to actively monitor the financing sources available to us and control our finance expenses. We will strive to maintain our leverage at an optimal level. In particular, we plan to maintain and further enhance our strategic relationships with large state- owned commercial banks in China. We also plan to implement additional internal procedures to better allocate our financial resources.

• During the operation stage of our wind power projects, we plan to further control the operational costs through centralized management system at regional level and selective outsourcing of wind turbine maintenance.

• Centralized management system at regional level. We plan to further strengthen our labor cost control and spare parts management by implementing a centralized management system at regional level. We intend to manage the operations and maintenance of all our wind power projects in a region within certain distance, including the overhaul of wind turbines, through one dedicated team, so that the workforce can be more efficiently utilized and our labor cost per MW can be reduced. With respect to the spare parts management, we are improving our centralized spare parts management, aiming to further streamline the process and reduce the cost and lead time. For instance, we plan to make arrangements with our suppliers that, upon the payment of a small amount of deposit, our suppliers will store one set of large-size spare parts in their warehouse and make immediate delivery to our wind farms once we place a purchase order. Such arrangements, while ensuring the supply of large-size spare parts, will minimize the working capital occupied by large-size spare parts.

• Selective outsourcing based on cost. The wind turbine suppliers are responsible for the maintenance of wind turbines within warranty period. For those wind turbines no longer covered by warranties, we plan to carry out the maintenance by utilizing our internal specialized team or third-party service providers or a combination of both, with an aim to minimize the maintenance costs.

With these measures, we believe we will be able to further improve our efficiency, reduce our costs and increase our profitability, which in turn will increase returns to our investors.

OUR WIND POWER BUSINESS

We are a leading wind power producer focused on the development and operation of wind power projects in the PRC, one of the fastest growing wind power markets in the world. The table below sets forth certain selected operational and financial information relating to our business as of the dates or for the periods indicated:

For the year ended or as of December 31, 2008 2009 2010 Selected Operational Data Consolidated installed capacity (in MW) ...... 402.3 1,549.8 3,522.4 Attributable installed capacity (in MW) ...... 263.8 1,387.1 3,339.8 Consolidated operational capacity (in MW) ...... 303.3 1,146.3 2,239.9 Weighted average consolidated operational capacity (in MW) ...... 184.3 693.1 1,541.5 Consolidated gross power generation (in GWh) ...... 477.5 1,884.5 3,788.9 Consolidated net power generation (in GWh)(1) ...... 427.4 1,606.6 3,404.9 Weighted average on-grid tariff (excluding VAT) (in RMB/kWh) ...... 0.581 0.527 0.516 Weighted average unit cost (in RMB/kWh)(2) ...... 0.303 0.247 0.260 Weighted average utilization hours(3) ...... 2,380.4 2,365.2 2,265.3

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For the year ended December 31, 2008 2009 2010 Selected Financial Data Revenue (RMB in millions) ...... 570.3 918.4 1,768.5 Service concession construction revenue ...... 318.1 66.6 — Revenue excluding service concession construction revenue (RMB in millions) ...... 252.2 851.8 1,768.5 Sales of electricity ...... 248.1 847.1 1,758.6 Others ...... 4.1 4.7 9.9 EBITDA (RMB in millions)(4) ...... 239.1 836.3 1,768.0 Operating profit (RMB in millions) ...... 158.3 539.5 1,134.3 Adjusted operating profit (RMB in millions)(5)(6) ...... 122.7 454.2 884.5 Adjusted operating margin (%)(6) ...... 48.7 53.3 50.0

Notes:

(1) Consolidated net power generation represents the electricity sold to the local grid companies minus the electricity generated and sold during the construction and testing period. It is calculated by deducting from the consolidated gross power generation (i) auxiliary electricity and (ii) the electricity generated during the construction and testing period. Sales of electricity generated during the construction and testing period are not included in the revenue of electricity sales, but are offset against the cost of property, plant and equipment.

(2) Weighted average unit cost is calculated by dividing the operating expenses (excluding service concession construction cost) by consolidated net power generation.

(3) Weighted average utilization hours are calculated by dividing the consolidated gross power generation (excluding power generated during construction and testing period) in a specific period by the weighted average consolidated operational capacity in the same period.

(4) EBITDA represents operating profit plus depreciation and amortization. The depreciation and amortization amounted to RMB80.8 million, RMB296.8 million, and RMB633.7 million in 2008, 2009 and 2010, respectively. EBITDA is not a standard measure under IFRSs. EBITDA is included because it is a widely used financial indicator of a company’s ability to service and incur debt. However, EBITDA should not be considered in isolation or construed as an alternative to cash flows, net income or any other measure of performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities. EBITDA presented herein may not be comparable to similarly titled measures presented by other companies. Prospective investors should not compare our EBITDA to EBITDA presented by other companies because not all companies use the same definition.

(5) Adjusted operating profit is operating profit less other net income. Other net income mainly included net income from sales of CERs and VAT rebate and refund as well as our net gain on disposal of investment in a subsidiary. Other net income amounted to RMB35.6 million, RMB85.3 million and RMB249.8 million in 2008, 2009 and 2010, respectively. Our net gain on disposal of investment in a subsidiary related to the disposal of our entire 65.0% equity interest in Qidong Wind Power in 2009, which contributed a net gain in the amount of RMB18.9 million to other net income in 2009.

(6) Adjusted operating margin is calculated by dividing (i) our adjusted operating profit by (ii) our revenue (excluding service concession construction revenue) for the year. See “Financial Information — Description of Certain Income Statement Components — Operating Profit.” Adjusted operating margin and adjusted operating profit are not standard measurements under IFRSs, but we present them here because our management believes that they provide useful indicators of our profitability. Prospective investors should be aware that adjusted operating profit and adjusted operating margin presented in this document may not be comparable to similarly titled measures reported by other companies due to different calculation methods.

The difference between our gross and net power generation was caused by (i) electricity generated during the construction and testing period; and (ii) auxiliary electricity which comprises electricity consumed by our wind farms in the course of electricity generation and lost during the transmission from the wind farms to the grid meter measuring the net power generation sold to the grid companies. During the years ended December 31, 2008, 2009 and 2010, electricity generated during construction and testing period accounted for approximately 8.1%, 13.0% and 7.8%, respectively, of our gross power generation. During the same periods, auxiliary electricity accounted for approximately 2.5%, 2.0% and 2.5%, respectively, of our gross power generation less electricity generated during the construction and testing period. The relatively high amount of electricity generated during the construction and testing period as a percentage of our gross power generation during the years ended December 31, 2008, 2009 and 2010 was primarily due to our rapid expansion in recent years. During the years ended December 31, 2008, 2009 and 2010, our consolidated installed capacity increased at a CAGR of

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195.9% from December 31, 2008 to December 31, 2010. As a result, we had a large number of new wind power projects in construction and testing period during the years ended December 31, 2008, 2009 and 2010, the electricity generated from which was accounted for in the gross power generation but excluded from the net power generation.

In addition to the operating projects, we also had a consolidated capacity under construction of 1,202.0 MW and a portfolio of wind power pipeline projects reserved for future development with an estimated capacity of approximately 73,463.5 MW as of December 31, 2010. We classify our wind power pipeline projects into three categories based on the stage of development. As of December 31, 2010, we had Advanced-stage Projects, Developing-stage Projects and Early-stage Projects with capacity of approximately 633.0 MW, 3,346.7 MW and 69,483.8 MW, respectively. See “— Pipeline Projects” for detailed discussion.

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According to Garrad Hassan, China is the largest wind market in terms of total wind installed capacity as of the end of 2010, and will continue to be a global growth leader with an estimated total wind installed capacity CAGR of 21.8% from 2010 to 2015. Garrad Hassan ranked us the third largest wind power producer in China in terms of total installed capacity as of December 31, 2010. We plan to leverage our experience and substantial presence in China to further expand our wind power business and increase our installed capacity. We expect to increase our consolidated installed capacity to approximately 5,100 MW by the end of 2011. We also plan to start the construction of two solar power concession projects in the second half of 2011 or in 2012. The table below sets forth the details of our wind power projects which we expect to complete by the end of 2011, and the two aforementioned solar power concession projects.

As of December 31, 2010 Estimated capital expenditure Estimated installed (RMB in Location No. of projects capacity (MW) millions) Wind Power Projects under construction ...... Northeast China 5 298.5 2,783.3 East China 2 68.0 652.8 West Inner Mongolia 0 0.0 0.0 South China 1 42.0 410.9 North China 2 99.0 891.0 Xinjiang 0 0.0 0.0 Other regions(1) 0 0.0 0.0 Advanced-stage projects ...... Northeast China 1 49.5 432.5 East China 1 30.0 288.0 West Inner Mongolia 0 0.0 0.0 South China 7 346.5 3,370.9 North China 0 0.0 0.0 Xinjiang 0 0.0 0.0 Other regions(1) 1 9.0 77.7 Developing-stage projects ...... Northeast China 1 49.5 497.4 East China 4 188.5 1,820.3 West Inner Mongolia 0 0.0 0.0 South China 1 49.5 470.3 North China 1 100.5 886.6 Xinjiang 0 0.0 0.0 Other regions(1) 0 0.0 0.0 Early-stage projects ...... Northeast China 0 0.0 0.0 East China 0 0.0 0.0 West Inner Mongolia 1 49.5 425.7 South China 3 138.0 1,311.0 North China 2 99.0 889.4 Xinjiang 0 0.0 0.0 Other regions(1) 0 0.0 0.0 Subtotal ...... Sixmain regions and other regions in the PRC 33 1,617.0 15,207.7 Solar Power ...... 2 50.4 806.7 Total ...... 35 1,667.4 16,014.5

Note:

(1) Other regions include Shaanxi Province, Gansu Province, Anhui Province and Qinghai Province.

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To achieve our expansion targets, we estimate that the total capital expenditure will be RMB16.0 billion for wind power projects to be installed from January 1, 2011 to December 31, 2011 and for the two solar power concession projects. Of this sum, we have already incurred RMB1.7 billion as of February 28, 2011 and therefore the total outstanding capital expenditure is estimated to be RMB14.3 billion. The sources of funding include bank borrowings, a portion of the proceeds from certain possible working capital raising activities, contributions from minority shareholders of our non-wholly owned subsidiaries, cash at bank and on hand and operating cash flow. We expect that bank borrowings will account for approximately 80% of the above-mentioned total estimated capital expenditure.

Our Project Development Process

We focus on the development and operation of wind power projects. Development of our wind power projects typically involves three key stages: (1) siting, entering into development agreement and wind resource assessment; (2) internal evaluation and governmental approval; and (3) design, construction and commissioning.

Siting, Entering into Development Agreement and Wind Resource Assessment

Selection of suitable locations for our wind power project is the first stage of our development process, which includes six key activities: (i) carrying out general research to identify potential sites as well as on-site exploration, (ii) determining the location of the wind farm within the site, (iii) initially estimating the capacity and the type of wind turbines to be used in the wind farm, (iv) entering into a development agreement with the local government, (v) drafting the development scheme and (vi) conducting wind resource assessment.

We make our initial site selection based on a couple of key considerations, including wind resources and other weather conditions, constructability, transportation, size and location of the site, on-grid tariffs, grid connection, capacity of grid systems and environmental features. Our technicians select a potential site based on their initial review and analysis of accessible information, including meteorological reports published by local meteorological stations, topographical reports and maps. Once a potential site is identified, our technicians conduct on-site exploration to determine the suitability and geographical scope of the site as well as formulate the wind resource assessment scheme.

When a site passes the initial review, we enter into a development agreement with the local government which typically provides that we will enjoy an exclusive right or priority to develop our wind power projects on the selected site within a specified period of time, during which we are required to commence wind test or other preliminary work. The local government usually also agrees in such development agreement to facilitate the construction and development of the wind power projects, including coordinating among various governmental agencies for us to obtain the necessary approvals. During the years ended December 31, 2008, 2009 and 2010, we have commenced wind test or other preliminary work for our wind power projects within the time limit set forth in the development agreements. In the future, we plan to further enhance our communication with the local meteorological observatories to enhance the efficiency in the construction of the anemometer towers or other preliminary work.

Afterwards, we start our wind resource assessment process by establishing meteorological tower to collect wind data on the specific site. Our wind-data collection process typically lasts for at least 12 months in order for us to obtain sufficient data to assess the quality of the wind resources and the suitability of a specific site for the development of our wind power projects.

Internal Evaluation and Governmental Approval

The second stage of our development process is internal evaluation and application for governmental approvals.

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Based on the data collected during the one-year wind test period, our development team assesses and determines the feasibility of constructing and operating a wind farm on a specific site. A feasibility report is prepared at this stage taking into consideration various factors, including the suitability of wind resources for our wind farms, the proposed installed capacity, the potential construction cost (including the cost for land use rights), the estimated financial performance and project return and the potential impact on the environment and local community.

If we are satisfied that the wind resources, together with other conditions, meet our internal requirements for developing a high-quality wind farm, we will seek relevant approvals from various local governmental agencies, including the environmental protection agency, the land and resources agency, construction and planning agency and other governmental authorities responsible for the protection of forest, water, wild life and historical relics and for the mine reservation when applicable. In addition to the governmental approvals, we also need to obtain permits from the local grid companies for grid connection. It generally takes three to six months for us to complete the internal evaluation and prepare the application documents for the NDRC or Provincial DRC approval.

Once we have finished the internal evaluation and obtained all the relevant approvals from local governmental agencies, we file an application for final approval to the Provincial DRC, or if the installed capacity of the proposed project reaches 50 MW or above, to the NDRC. The application package usually consists of the application for a specific project, feasibility report, approvals from local governments and other supporting documents. It generally takes one to three months for Provincial DRC and three to six months for the NDRC to grant the approval.

Design, Construction and Commissioning

With the NDRC or Provincial DRC’s approval, we move on to the design and construction stage. We supervise the overall design and construction of our projects while outsourcing the work to independent third parties that have relevant qualifications. In addition to the national and industry standards, we have compiled a set of guidelines and standards for the design, construction and evaluation of our wind farms, which is the first set of guidelines and standards of such type compiled by an enterprise in China. Before the construction of a wind farm, we engage qualified third party institutions to design the wind farms in accordance with the national, industry and our own standards. During this stage, our technicians, together with third party designers, also conduct micro-site selection within the wind farm to determine the specific locations for the wind turbines.

The construction of a wind farm mainly consists of road paving, infrastructure construction, substation construction and installation, interconnection work and wind turbine installation. We outsource substantially all of the construction work, including the installation of wind turbines, to qualified third-party contractors. Under our overall supervision and management, the contractors provide management, labor, certain materials and engineering services required to construct the project. We oversee and manage all aspects of the construction and use our best efforts to control the construction cost and increase efficiency. For example, we conduct integrated planning for all the wind power projects within a certain region and share roads and facilities such as substations among various wind farms to avoid unnecessary duplicate investments. In addition, certain key members of our operating team for a specific wind power project also participate in the construction of the project, which enhances both the construction quality and operational ability.

Commissioning occurs immediately prior to the commercial operation of a wind power project, which involves testing the operation of each wind turbine and substation, connection to the transmission system and integration within the project. In particular, our wind power projects need to go through off-grid commissioning, on-grid testing and at least 240-hour continuous operation testing prior to commercial operations.

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The time required for design, construction and commissioning depends on the capacity of the project. For a wind power project with an installed capacity of 50 MW, it normally takes us eight to ten months to complete the construction, which we believe is shorter than the industry average in China. We usually begin the construction in April and September, respectively, for projects locating in northern China and southern China after taking into consideration various factors such as the weather.

Pipeline Projects

As part of our strategy to expand our wind power business, we have been actively seeking and reserving sites with good wind resources for future development, which we refer to as pipeline projects. As of December 31, 2010, we had a portfolio of wind power pipeline projects with an estimated capacity of approximately 73,463.5 MW. We have entered into investment and development agreements with local governments in different counties, pursuant to which we acquired the exclusive rights or priority to develop wind power projects within a specific area during a specified period of time.

We classify our wind power pipeline projects into three categories — Advanced-stage Projects, Developing-stage Projects and Early-stage Projects, based on their maturity. We use these categories to manage the pipelines and for planning purposes, including allocating capital and committing resources. Although we believe our classification methodology provides an objective and reasonable indication of the maturity of our wind power pipeline projects, such methodology has never been verified by an independent third party expert. See “Risk Factors — Risks Relating to Our Business and Industry — The standards we use to categorize our projects and the underlying assumptions are internally developed and may not be comparable to classifications used by other companies.” We believe the wind power pipeline projects are of strategic importance to the growth of our business and expect to expand our wind power business by converting these pipeline projects into operating projects at an appropriate pace. However, we may determine not to proceed with certain pipeline projects which are considered to be less profitable after assessment and evaluation and choose to develop some projects which are not included in the current pipeline projects. See “Risk Factors — Risks Relating to Our Business and Industry — If we are not successful in converting our wind power pipeline projects into operating projects in accordance with our development plan and specifications, our expansion plan may be adversely affected and our revenue may fall below our expectations.”

The table below sets forth the milestones we used to categorize our wind power pipeline projects.

Advanced-stage Developing-stage Early-stage Milestones Achieved Projects Projects Projects Development agreement ...... Wind resource assessment, or feasibility study, or internal evaluation ...... NDRC/DRC approvals ...... Estimated capacity as of December 31, 2010 (MW) ...... 633.0 3,346.7 69,483.8

Advanced-stage Projects

Advanced-stage Projects are the wind power pipeline projects that have completed all the key development processes prior to construction and commissioning. As of December 31, 2010, we had 14 Advanced-stage Projects with an estimated capacity of 633.0 MW, representing approximately 0.9% of the total capacity of our wind power pipeline projects. In order for a project to be classified as Advanced-stage Projects, all or substantially all of the following milestones must have been achieved:

• Development Agreement — we have entered into binding development agreements with local governments;

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• Wind Resource Assessment — we have collected sufficient amount of wind meteorological data and completed the wind test, which usually lasts for at least one year;

• Feasibility Study — we have conducted feasibility study and prepared feasibility report for the proposed project;

• Internal Evaluation — we have completed internal evaluation based on the feasibility report and have obtained all the necessary supporting documents; and

• NDRC/DRC Approvals — we have obtained the approvals from the NDRC or Provincial DRC, depending on the size of the project.

Developing-stage Projects

Developing-stage Projects are the wind power pipeline projects which have been included in our annual plan and achieved certain milestones in the development but have not obtained the approvals from the NDRC or Provincial DRC. In order for a project to be included into our annual plan, we usually require that such project have secured the development agreement with the local government and completed the wind test which should last for at least one year.

As of December 31, 2010, we had 53 Developing-stage Projects listed in our annual plan with an estimated capacity of approximately 3,346.7 MW, including 15 projects with an estimated capacity of approximately 1,302.0 MW which have completed internal evaluation and another 11 projects with an estimated capacity of approximately 716.5 MW which have completed feasibility study but yet to obtain the internal approvals. Developing-stage Projects accounted for approximately 4.6% of the total capacity of our wind power pipeline projects as of December 31, 2010.

Early-stage Projects

Early-stage Projects are the wind power pipeline projects in their early stage of development. We add a project into this category once we have identified a site and secured our exclusive rights or priority to develop wind power projects through development agreements with the local governments. We will plan the development schedule of these projects by taking into account the wind resources, local grid connections, on-grid tariff, local transportation network and potential impact on the environment. As of December 31, 2010, our Early-stage Projects had an estimated capacity of 69,483.8 MW, representing approximately 94.6% of the total capacity of our wind power pipeline projects.

Our Wind Farms

Our wind farms are mainly located in six geographic regions in China, namely, the Northeast China Region, the East China Region, West Inner Mongolia, the North China Region, Xinjiang and the South China Region. We categorize these six regions mainly based on geographical proximity, grid connection and wind resources.

—95— THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. BUSINESS s (7 Projects) : 42.0 MW oved on or after August 1, 2009, government nding on the location of the respective projects. truction : 943.5 MW truction truction : 148.5 MW truction truction : 68.0 MW truction 2,070.2 MW (25 Projects) 15,589.0 MW 11,810.2 MW 198.0 MW (4 Projects) 597.2 MW (14 Projects) : 22,333.4 MW : 4,327.0 MW : 261.1 MW : RMB 0.610 to 0.699 apacity : apacity : Installed capacity : cons Capacity under : RMB 0.540 to 0.610 tariff On-grid Pipeline capacity Pipeline Pipeline capacity Pipeline Installed capacity construction Capacity under tariff On-grid Capacity under cons Capacity under Installed capacity : c Pipeline : RMB 0.610 tariff On-grid Installed capacity : cons Capacity under c Pipeline On-grid tariff : RMB 0.610 to 0.700 tariff On-grid Northeast China Region capacity consolidated installed the of (58.8% the Company) of South China Region (7.4% of the consolidated installed capacity of the Company) (5.6% of the consolidated installed capacity consolidated installed the of (5.6% North China Region of the Company) of East China Region capacity installed consolidated the of (17.0% of the Company) : (1) Pipeline capacity : 6,203.0 MW Pipeline : RMB 0.510 tariff On-grid Installed capacity : 297.0 MW (6 Projects) Capacity : N/A construction under (8.4% of the consolidated installed West Inner Mongolia Company) capacity of the Installed Under construction Pipeline 0 MW (2 Projects) 2 2 2 (high) 2 (low) 2 Density 200 w/m 50-100 w/m 50 w/m 150-200 w/m 100-150 w/m Wind Power Installed capacity : 99. : Installed capacity Capacity : N/A construction under MW 10,651.0 capacity : Pipeline : RMB 0.580 tariff On-grid Xinjiang (2.8% of the consolidated installed capacity of the Company) capacity of the The following map sets forth the wind resources of the six strategic regions where our wind power projects are primarily located and the on-grid tariff fixed unified on-grid tariffs (excludingSee supplementary “— on-grid On-grid tariffs Tariffs.” provided by local governments, if any) apply to our wind power projects depe (including VAT and in RMB per kWh) for our operating projects as of December 31, 2010 Note: (1) Information on the on-grid tariffs is based on the approved on-grid tariffs of our wind power projects in each area. For our wind power projects appr

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The table below sets forth the installed capacity of our wind power projects in each of the six geographic regions and their respective percentage of our consolidated installed capacity as of the dates indicated.

As of December 31, 2008 2009 2010 (MW) (%) (MW) (%) (MW) (%) Northeast China Region ...... 100.5 25.0 945.0 61.0 2,070.2 58.8 East China Region ...... 145.7 36.2 300.2 19.4 597.2 17.0 West Inner Mongolia ...... — — 148.5 9.6 297.0 8.4 South China Region ...... 106.6 26.5 106.6 6.9 261.1 7.4 North China Region ...... 49.5 12.3 49.5 3.2 198.0 5.6 Xinjiang ...... — — — — 99.0 2.8 Other regions(1) ...... — — — — — — Total ...... 402.3 100 1,549.8 100 3,522.4 100

Note:

(1) Other regions include Shaanxi Province, Gansu Province, Anhui Province and Qinghai Province. None of our projects in these regions had completed construction as of December 31, 2010.

For details of our wind power projects in operation or under construction, see “Appendix V — Project Portfolio Overview.” As of the Latest Practicable Date, we had 25, 15, 6, 8, 4 and 2 wind power projects with a consolidated installed capacity of 2,170.7 MW, 645.2 MW, 297.0 MW, 303.1 MW, 198.0 MW and 99.0 MW in Northeast China Region, East China Region, West Inner Mongolia, South China Region, North China Region, and Xinjiang, respectively.

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The table below sets forth the details of our projects under construction and wind power pipeline projects categorized as Advanced-stage Projects and Developing-stage Projects as of December 31, 2010.

As of December 31, 2010 Estimated consolidated Project installed Project type Location number capacity (MW) Projects under construction ...... Northeast China Region 15 943.5 East China Region 2 68.0 West Inner Mongolia 0 0.0 South China Region 1 42.0 North China Region 3 148.5 Xinjiang 0 0.0 Other regions(1) 0 0.0 Subtotal ...... Sixmain regions and other regions in the PRC 21 1,202.0 Advanced-stage Projects ...... Northeast China Region 1 49.5 East China Region 2 79.5 West Inner Mongolia 0 0.0 South China Region 10 495.0 North China Region 0 0.0 Xinjiang 0 0.0 Other regions(1) 1 9.0 Subtotal ...... Sixmain regions and other regions in the PRC 14 633.0 Developing-stage Projects ...... Northeast China Region 17 1,052.5 East China Region 13 679.0 West Inner Mongolia 3 449.5 South China Region 6 328.2 North China Region 9 590.0 Xinjiang 3 148.5 Other regions(1) 2 99.0 Subtotal ...... Sixmain regions and other regions in the PRC 53 3,346.7 Total ...... Sixmain regions and other regions in the PRC 88 5,181.7

Note:

(1) Other regions include Shaanxi Province, Gansu Province, Anhui Province and Qinghai Province.

Wind Farms in Northeast China Region

The Northeast China Region includes areas in the three provinces of Heilongjiang, Jilin and Liaoning as well as the eastern part of Inner Mongolia. This region is featured with quality wind resources and stable wind direction. Moreover, as a traditional industrial area, the Northeast China Region has well-established infrastructure and transportation network, which facilitate the construction of wind power projects.

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The table below sets forth the operational data of our wind power projects in the Northeast China Region as of the dates or for the periods indicated:

As of or for the year ended December 31, 2008 2009 2010 Consolidated installed capacity (MW) ...... 100.5 945.0 2,070.2 Consolidated operational capacity (MW) ...... 100.5 795.0 1,422.2 Weighted average consolidated operational capacity (MW) ...... 50.3 358.0 907.1 Consolidated gross power generation (MWh) ...... 123,701.0 1,007,195.0 2,154,445.9 Consolidated net power generation (MWh) ...... 117,728.9 891,375.4 1,969,756.2 Weighted average utilization hours ...... 2,386.7 2,535.6 2,219.6 Weighted average on-grid tariff, including VAT (RMB/kWh) ...... 0.610 0.596 0.578

Projects in operation and under construction

As of December 31, 2010, our projects in the Northeast China Region had an aggregate installed capacity of 2,070.2 MW, representing approximately 58.8% of our consolidated installed capacity. In addition, we had 15 projects under construction with an aggregate capacity of 943.5 MW, representing approximately 78.5% of our consolidated capacity under construction. We target to complete construction of five of these projects by the end of 2011.

Pipeline Projects

As of December 31, 2010, we had approximately 23,333.4 MW of wind power pipeline projects in the Northeast China Region, including one 49.5 MW of Advanced-Stage Project, approximately 1,052.5 MW of Developing-stage Projects and approximately 22,231.4 MW of Early-stage Projects.

Regional Highlights

Our five projects in Fuxin, Liaoning Province had an aggregate installed capacity of 750.0 MW. The utilization hours of Phase I of Fuxin Project, which was in operation for the full year of 2009 and 2010, reached 2,584.7 in 2009 and 2,430.5 in 2010, as compared with the average utilization hours of approximately 2,027 in 2009 and 2,034 in 2010 in Liaoning Province. In order to take advantage of the abundant wind resources and further enhance the economies of scale, we plan to increase our installed capacity in Fuxin to 1,000 MW.

Our 13 projects in Tongliao in east Inner Mongolia had an aggregate installed capacity of 973.7 MW as of December 31, 2010, which provides us with significant economies of scale.

Wind Farms in East China Region

The East China Region includes the three provinces of Shandong, Jiangsu and Zhejiang as well as Shanghai. This region consists of more economically developed areas in China, which provide some advantages, including grid connections which we consider to be satisfactory and high on-grid tariffs.

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The table below sets forth the operational data of our wind power projects in the East China Region as of the dates or for the periods indicated:

As of or for the year ended December 31, 2008 2009 2010 Consolidated installed capacity (MW) ...... 145.7 300.2 597.2 Consolidated operational capacity (MW) ...... 96.2 195.2 349.7 Weighted average consolidated operational capacity (MW) ...... 71.5 187.3 305.5 Consolidated gross power generation (MWh) ...... 169,544.0 494,621.9 761,344.4 Consolidated net power generation (MWh) ...... 145,393.7 391,526.7 681,499.5 Weighted average utilization hours ...... 2,060.3 2,125.7 2,299.4 Weighted average on-grid tariff, including VAT (RMB/kWh) ...... 0.724 0.642 0.700

Projects in operation and under construction

As of December 31, 2010, our projects in the East China Region had an aggregate installed capacity of 597.2 MW, representing approximately 17.0% of our consolidated installed capacity. In addition, we had two projects under construction with an aggregate capacity of 68.0 MW, representing approximately 5.7% of our consolidated capacity under construction. We target to complete construction of both of these projects by the end of 2011.

Pipeline Projects

As of December 31, 2010, we had approximately 11,810.2 MW of wind power pipeline projects in the East China Region, including 79.5 MW of Advanced-stage Projects, approximately 679.0 MW of Developing-stage Projects and approximately 11,051.7 MW of Early-stage Projects.

Regional Highlights

We are the largest wind power generation company in Shandong Province in terms of installed capacity as of December 31, 2010. As of December 31, 2010, all of our wind power projects in operation in the East China Region were located in Shandong Province, where the on-grid tariff is as high as RMB0.700/kWh (including VAT) as a result of beneficial local policy in Shandong Province. The relatively high on-grid tariff, combined with our significant utilization hours, have generated high returns for our operations in this area.

The East China Region is also the first region where we have commenced the development of offshore wind power projects. In July 2010, Rongcheng Project in Shandong Province, our first offshore wind power project, commenced commercial operation. Rongcheng Project currently has an installed capacity of 6 MW and an approved on-grid tariff (including VAT) of RMB0.700/kWh. We plan to further increase its installed capacity, subject to relevant government approvals.

We are also developing tidal-flat wind power projects in Jiangsu Province. We have received preliminary NDRC approval to construct a model tidal-flat wind farm in Yancheng, Jiangsu Province with an estimated installed capacity of 300 MW, which we believe is one of the largest tidal-flat wind farms in Jiangsu Province as of December 31, 2010.

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Wind Farms in West Inner Mongolia

West Inner Mongolia refers to the western part of Inner Mongolia, a region with good wind resources, high wind power density and vast space suitable for large-scale development.

The table below sets forth the operational data of our wind power projects in West Inner Mongolia as of the dates or for the periods indicated:

As of or for the year ended December 31, 2008 2009 2010 Consolidated installed capacity (MW) ...... — 148.5 297.0 Consolidated operational capacity (MW) ...... — — 148.5 Weighted average consolidated operational capacity (MW) ...... — — 119.6 Consolidated gross power generation (MWh) ...... — 37,621.4 367,803.8 Consolidated net power generation (MWh) ...... — — 285,685.6 Weighted average utilization hours ...... NA NA 2,433.6 Weighted average on-grid tariff, including VAT (RMB/kWh) ...... NA NA 0.510

Projects in operation and under construction

As of December 31, 2010, our projects in West Inner Mongolia had an aggregate installed capacity of 297.0 MW, representing approximately 8.4% of our consolidated installed capacity. We had no projects under construction in this region as of December 31, 2010.

Pipeline Projects

As of December 31, 2010, we had approximately 6,203.0 MW of wind power pipeline projects in West Inner Mongolia, including approximately 449.5 MW of Developing-stage Projects and approximately 5,753.5 MW of Early-stage Projects.

Regional Highlights

We have a sizable reserve of pipeline projects in West Inner Mongolia. Our largest pipeline project in this area is located in Urad Middle Banner, with an estimated installed capacity of 1,600 MW, including 49.5 MW Developing-stage Projects, as of December 31, 2010. Inner Mongolia is one of the eight proposed national strategic wind power bases with a minimum capacity of 10 GW in China, with Urad Middle Banner being one of the key areas within the base.

Wind Farms in South China Region

The South China Region includes the four provinces of Guangdong, Yunnan, Guizhou and Guangxi, a region with relatively high on-grid tariffs and grid connections which we consider to be satisfactory. In particular, Guangdong Province is a well developed industrial region with relatively high demand for electricity. Our wind power projects in Guangdong Province approved prior to the establishment of the standard on-grid tariff regime currently have on-grid tariffs of RMB0.699/kWh (including VAT), including a supplementary on- grid tariff in the amount of RMB0.01 per kWh provided by the local government of Guangdong Province.

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The table below sets forth operational data of our wind power projects in the South China Region as of the dates or for the periods indicated:

As of or for the year ended December 31, 2008 2009 2010 Consolidated installed capacity (MW) ...... 106.6 106.6 261.1 Consolidated operational capacity (MW) ...... 106.6 106.6 171.1 Weighted average consolidated operational capacity (MW) ...... 62.6 106.6 122.7 Consolidated gross power generation (MWh) ...... 183,453.2 254,315.7 310,957.2 Consolidated net power generation (MWh) ...... 164,292.5 245,997.9 292,184.6 Weighted average utilization hours ...... 2,740.9 2,386.8 2,450.9 Weighted average on-grid tariff, including VAT (RMB/kWh) ...... 0.689 0.654 0.619

Projects in operation and under construction

As of December 31, 2010, our projects in South China Region had an aggregate installed capacity of 261.1 MW, representing approximately 7.4% of our consolidated installed capacity. In addition, we had one project under construction with a capacity of 42.0 MW, representing approximately 3.5% of our consolidated capacity under construction. We target to complete construction of this project by the end of 2011. Our weighted average on-grid tariff (including VAT) was higher than the highest standard on-grid tariff throughout the years ended December 31, 2008, 2009 and 2010, primarily due to the fact that certain of our early wind power projects enjoyed relatively high on-grid tariffs prior to the establishment of the standard on-grid tariff regime and that the standard on-grid tariffs only apply to wind power projects approved on or after its effectiveness on August 1, 2009.

Pipeline Projects

As of December 31, 2010, we had approximately 4,327.0 MW of wind power pipeline projects in South China Region, including 495.0 MW of Advanced-stage Projects, approximately 328.2 MW of Developing-stage Projects and approximately 3,503.8 MW of Early-stage Projects.

Regional Highlights

Our Yunnan Dali Dafengba Project is the first wind power project at altitude as high as 2,800 meters in China. In 2009 and 2010, the Yunnan Dali Dafengba Project had 2,613.1 and 2,481.5 utilization hours. In September 2010, our Yunnan Eryuan Project commenced operation. Yunnan Eryuan Project is the first wind power project in China successfully developed at altitudes exceeding 3,000 meters.

Wind Farms in North China Region

The North China Region includes Hebei Province, Shanxi Province and the central part of Inner Mongolia. Hebei Province, in particular, has good wind resources and is close to the Beijing-Tianjin-Tangshan metropolitan area with relatively high electricity demand.

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The table below sets forth operational data of our wind power projects in the North China Region as of the dates or for the periods indicated:

As of or for the year ended December 31, 2008 2009 2010 Consolidated installed capacity (MW) ...... 49.5 49.5 198.0 Consolidated operational capacity (MW) ...... — 49.5 49.5 Weighted average consolidated operational capacity (MW) ...... — 41.3 49.5 Consolidated gross power generation (MWh) ...... 790.0 90,775.0 93,859.6 Consolidated net power generation (MWh) ...... — 77,686.5 88,456.9 Weighted average utilization hours ...... NA 1,918.1 1,890.7 Weighted average on-grid tariff, including VAT (RMB/kWh) ...... NA 0.610 0.610

Projects in operation and under construction

As of December 31, 2010, our projects in North China Region had an aggregate installed capacity of 198.0 MW, representing 5.6% of our consolidated installed capacity. We had three projects with an aggregate capacity of 148.5 MW under construction, representing approximately 12.4% of our consolidated capacity under construction. We target to complete construction of two of these projects by the end of 2011.

Pipeline Projects

As of December 31, 2010, we had approximately 15,589.0 MW of wind power pipeline projects in North China Region, including approximately 590.0 MW of Developing-stage Projects and approximately 14,999.0 MW of Early-stage Projects.

Regional Highlights

We had a reserve of 2,238.5 MW wind power pipeline projects in Shanxi Province as of December 31, 2010, among which 1,100 MW had been included in the provincial government’s relevant plans. As a result, we expect to experience minimal difficulty in obtaining government approvals for converting the pipeline projects into operating projects. In addition, the sound grid connections and transmission in Shanxi Province will facilitate the sale of electricity to be generated by our wind power projects. We expect to construct wind farms with over 1,000 MW installed capacity in Shanxi Province.

Hebei Province is one of the eight proposed national strategic wind power bases with a minimum capacity of 10 GW in the PRC, with Chengde and Zhangjiakou areas being two of the key areas within the base. As of December 31, 2010, we had an operating project with an installed capacity of 49.5 MW and pipeline capacity of more than 1,000 MW wind power pipeline projects in aggregate in these two areas. We intend to continue to develop wind power projects in these two areas.

Wind Farms in Xinjiang

Xinjiang refers to Xinjiang Uyghur Autonomous Region, a region with high quality wind resources.

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The table below sets forth operational data of our wind power projects in Xinjiang as of the dates or for the periods indicated:

As of or for the year ended December 31, 2008 2009 2010 Consolidated installed capacity (MW) ...... — — 99.0 Consolidated operational capacity (MW) ...... — — 99.0 Weighted average consolidated operational capacity (MW) ...... — — 37.1 Consolidated gross power generation (MWh) ...... — — 100,464.5 Consolidated net power generation (MWh) ...... — — 87,272.3 Weighted average utilization hours ...... — — 2,443.2 Weighted average on-grid tariff, including VAT (RMB/kWh) ...... — — 0.580

Projects in operation and under construction

As of December 31, 2010, we had two projects in operation in Xinjiang with an aggregate installed capacity of 99.0 MW, representing 2.8% of our consolidated installed capacity. We had no projects under construction in Xinjiang as of December 31, 2010.

Pipeline Projects

As of December 31, 2010, we had approximately 10,651.0 MW of wind power pipeline projects in Xinjiang, including approximately 148.5 MW of Developing-stage Projects and approximately 10,502.5 MW of Early-stage Projects.

Regional Highlights

Xinjiang is one of the eight proposed national strategic wind power bases with a minimum capacity of 10 GW in the PRC, with Kumul area being one of the key areas within the base. Kumul area is featured with abundant wind resources and high wind power density. In November 2010, State Grid completed the construction of a 750 kV extra high voltage transmission line that passes through Kumul area, connecting the grid in Xinjiang to the rest of the country’s grid network via the Northwest Grid. We believe such transmission line will provide what we consider to be satisfactory grid connections for our wind power projects to be developed in Kumul area. As of December 31, 2010, we had approximately 6,401.0 MW of wind power pipeline projects in Kumul area, representing 8.9% of our total wind power pipeline projects. We expect to increase the installed capacity in Kumul area to 1,000 MW within five years.

Wind Farms in Other Regions

In addition to the six regions mentioned above, we also had a reserve of wind power pipeline projects in the provinces of Shaanxi, Gansu, Anhui and Qinghai with an estimated capacity of approximately 1,550.0 MW as of December 31, 2010, including one Advanced-stage project of 9.0 MW, approximately 99.0 MW of Developing- stage Projects and approximately 1,442.0 MW of Early-stage Projects.

Sales and Distribution

Mandatory Connection to the Grid and Purchase of Electricity

Under the current PRC regulatory framework, grid companies are obligated to provide wind power projects within its coverage with grid connection, together with all the related technical support, and to purchase all the

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Despite all these laws and regulations in our favor, the actual sale of the electricity generated by our wind power projects may be limited by a number of factors, including the maximum transmission capacity, the stability of the grid and the local demand for electricity. In certain areas of northern China, the local grid companies may also give priority to steam-electricity cogeneration companies to ensure heat supply in winter. In recent years, the local grid companies in Inner Mongolia and Liaoning Province imposed restrictions on wind power generation companies, especially during winter season, to give priority to heat supply provided by steam- electricity cogeneration companies and to ensure the stability and safety of the local grids. Furthermore, local grid companies in West Inner Mongolia imposed additional restrictions on wind power generation companies due to the fact that the rapid construction of wind farms resulting from high quality wind resources in West Inner Mongolia outpaced the development of local grids during recent years. As a result, a few of our wind farms in Inner Mongolia and Liaoning Province temporarily shut down one or more of their wind turbines in 2009 and 2010. Given that wind power generation is affected by a number of interrelated and concurrent factors such as the wind speed, wind directions and wake effects, we are not able to estimate reliably the financial impact attributable to such output limitations alone. However, such output limitations will negatively affect our net power generation and thus reduce our revenue. In addition, the PPAs we entered into with local grid companies do not specifically provide any compensation or damages from local grid companies for any financial loss caused by grid congestion or grid company’s otherwise failure in purchasing full amount of electricity generated by our wind farms. Based on the transmission capacity of the existing local grids, we expect that some of our wind farms may continue to experience electricity output constraints in the near future. As of December 31, 2010, we had 1,567.7 MW of installed capacity in Inner Mongolia and 799.5 MW of installed capacity in Liaoning Province, which accounted for 44.5% and 22.7% of our consolidated installed capacity. See “Risk Factors — Risks Relating to Our Business and Industry — We rely on local grid companies for grid connection and electricity transmission and dispatch.” However, such negative impact was mitigated by the strategically diversified locations of our wind farms. Given that the electricity output limitations primarily occur in West Inner Mongolia and that only a small portion of our wind farms are located in West Inner Mongolia, we believe grid constraints do not have a material adverse effect on our business or results of operations.

In addition, we believe the grid connection condition will be improved over time with the development of grid both locally and nationwide in China. As part of its policy to support the development of clean energy, the PRC government has increased capital investments in grid construction and upgrade in recent years. In 2010, State Grid and Southern Grid invested approximately RMB264 billion and RMB99 billion respectively for power grid development. According to the National Twelfth Five-Year Plan, the PRC will build transmission lines with rated voltage of 330 kV or above, covering a distance of 200,000 km, during the Twelfth Five-Year plan period, as part of the country’s efforts to strengthen its grid infrastructure and further encourage the development of wind power. According to news release by State Grid on March 3, 2011, State Grid will complete the construction of most of the smart grid network, and reach the target of connecting 100 GW of wind installed capacity and 5 GW of solar installed capacity by 2015. Southern Grid also announced that it will invest over RMB400 billion for grid infrastructure development during the Twelfth Five-Year period. Southern Grid expects the total transmission capacity of West-East power transmission project to reach 43 GW by 2015. In regions with grid congestion issues, including Inner Mongolia, the PRC government has significant investment plan to develop and upgrade the power grid infrastructure in the next five years. In West Inner Mongolia, the power grid transmission capacity will reach 85 GW by 2015. Taking into consideration the government support and our geographically diversified operations, we believe the grid constraints will be mitigated as more grid capacity is developed.

Wind power producers in China are required by laws and regulations to cooperate with grid companies to ensure the safety and stability of grids. In 2009, State Grid published a revised Technical Code for Wind Farm Grid Connection (the “Revised Code”). Pursuant to the Revised Code, certain local grid companies have required wind power generation companies within the coverage of the respective grid to upgrade the wind turbines to meet

— 105 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. BUSINESS certain technical standards in relation to low voltage ride through. As of the Latest Practicable Date, nine of our project companies had been requested by the local grid companies to upgrade the wind turbines. Among these nine project companies, two project companies have completed all the upgrade in 2010, and the remaining project company is liaising with the wind turbine supplier in respect of the upgrade and expects to complete the upgrade by the end of 2011. Other than these three project companies, none of our project companies had been requested by the local grid companies to upgrade the wind turbines as of the Latest Practicable Date. We are liaising with the wind turbine suppliers and formulating upgrade plans for the project companies which have not been requested to upgrade the wind turbines so that the upgrade can be done as soon as so requested by the local grid companies. We do not expect to incur significant costs for these upgrades because (i) all the wind turbines purchased in 2009 and 2010 have satisfied the technical standards relating to low voltage ride through and thus require no upgrade; and (ii) for those wind turbines purchased prior to 2009, we have obtained consent from most of our suppliers to upgrade the wind turbines at no additional cost to us.

On-grid Tariffs

The on-grid tariffs for wind power projects in China are determined by governmental authorities. According to the Circular Regarding the Furtherance of On-grid Pricing Policy of Wind Power ( ) (the “On-grid Tariff Circular”) issued by the NDRC in 2009, for onshore wind power projects approved on or after August 1, 2009, the on-grid tariff is determined based on the location of such wind power projects. The PRC government has categorized the onshore wind resources of China into four wind resource zones and applies a universal on-grid tariff to all the wind power projects in the same wind resource zone. The standard on-grid tariffs (including VAT) for the first, second, third and fourth wind resource zones are RMB0.51/kWh, RMB0.54/kWh, RMB0.58/kWh and RMB0.61/kWh, respectively. For wind power projects approved prior to August 1, 2009 but on or after January 1, 2006, the on-grid tariff was determined by referring to either a “government guided price” or a “government fixed price.” For wind power projects approved on or prior to December 31, 2005, the on-grid tariff was determined by the government on a project-by-project basis.

We believe the on-grid tariff is one of the most important factors affecting the profitability of wind power producers. Through strategic site selection for our wind farms and prioritizing the development in high on-grid tariff areas, we have achieved high weighted average on-grid tariffs during the years ended December 31, 2008, 2009 and 2010. Our weighted average on-grid tariffs (excluding VAT) was RMB0.581/kWh, RMB0.527/kWh and RMB0.516/kWh in 2008, 2009 and 2010, respectively.

We attribute our high on-grid tariffs, in part, to the local governments’ support for developing wind power energy in the respective regions. For instance, our wind power projects in Shandong Province have benefited from local government subsidies. In order to encourage the development of wind power, the provincial government of Shandong Province has granted all the wind power generation companies within Shandong Province a supplementary on-grid tariff, which is RMB0.09/kWh, for an initial period from 2010 to 2012, on top of the standard on-grid tariff, increasing the local on-grid tariff (including VAT) from RMB0.61/kWh to RMB0.70/kWh.

In addition, the local government of Guangdong Province used to apply a RMB0.689/kWh on-grid tariff (including VAT) to all the wind power generation companies within its territory prior to the issuance of the On- grid Tariff Circular. Because two of our wind power projects in operation in Guangdong Province were approved before August 1, 2009 when the On-grid Tariff Circular came into effect, these wind power projects are able to continue to enjoy the high on-grid tariff of RMB0.689/kWh (including VAT). Moreover, the local government of Guangdong Province implements a policy of granting the local wind power projects certain supplementary on-grid tariffs, increasing the on-grid tariffs of these two operating wind power projects in Guangdong Province to RMB0.699/kWh (including VAT).

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Customers and PPA

We sell all of the electricity generated by our wind power projects to local grid companies where the wind farms are located, pursuant to the terms and conditions of the PPAs we enter into with the local grid companies. Other than the grid companies in West Inner Mongolia, which are owned by the government of Inner Mongolia, all the other grid companies which are our customers are ultimately owned by either State Grid or Southern Grid. Currently we do not sell electricity to any corporate or individual end-users.

During the years ended December 31, 2008, 2009 and 2010, we sold all of the electricity generated by our wind farms to four, seven and eight customers in 2008, 2009 and 2010, respectively. The five largest customers of our wind power business accounted for 100%, 90.1% and 90.6% of our total revenue from sales of electricity generated by our wind farms in 2008, 2009 and 2010, respectively. During the same periods, sales to the single largest customer accounted for 36.2%, 44.0% and 31.9% of our total revenue from sales of electricity generated by our wind farms. None of our Directors, Supervisors, executive officers, associates or shareholders holding more than 5% of our issued share capitals had any interest in any of our customers during the years ended December 31, 2008, 2009 and 2010.

As required by the Renewable Energy Law, the PPA typically provides that the local grid company shall purchase all the electricity generated by our wind power projects at a price fixed or approved by the PRC governmental authorities as long as our wind power projects have met all the national and industry technical specifications. However, the PPAs do not specifically provide any compensation for any financial loss caused by grid congestion or grid company’s otherwise failure in purchasing full amount of electricity generated by our wind farms, which we believe is consistent with the industry practice in China. In addition, we are usually required under the PPAs to generate power in accordance with the dispatch orders of the local grid companies, and may be disconnected from the grids should we fail to comply with the dispatch orders. The PPAs also include other standard terms such as on-grid tariffs, dispatch, metering and payment. According to the PPAs, the payments are usually settled in two installments. Generally the PPAs have a term of one year and will renew automatically unless terminated by either party by giving a 30-day written notice.

During the years ended December 31, 2008, 2009 and 2010, we have not experienced any material loss due to local grid company’s breach of their contractual obligations under the PPAs. We intend to further strengthen our business relationships with local grid companies.

Sales of Electricity

As soon as the construction and commissioning are completed, we commence commercial operation and sell electricity in accordance with the terms and conditions of the PPAs we entered into with the local grid companies. During the years ended December 31, 2008, 2009 and 2010, we generated revenues of RMB248.1 million, RMB847.1 million and RMB1,758.6 million in 2008, 2009 and 2010, respectively, from sale of electricity generated by our wind power projects. The payments are calculated based on the net power generation as measured at the grid meter. In calculating the net power generation, we deduct from the gross power generation (i) the auxiliary electricity, which comprises electricity consumed by our power plant during generation and lost during the transmission from the wind farms to the grid meter measuring the net power generation sold to the grid companies, and (ii) the electricity generated during the construction and testing period. Sales of electricity generated during the construction and testing period are not included in our revenues but accounted for as deduction to our construction costs. During the years ended December 31, 2008, 2009 and 2010, the auxiliary electricity accounted for approximately 2.5%, 2.0% and 2.5% of our gross power generation less the electricity generated during the construction and testing period in 2008, 2009 and 2010, respectively.

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Project Financing

We have historically funded the development of our wind power projects primarily through borrowings and finance leases as well as cash flows from operations and capital contributions from our shareholders and the non-controlling equity owners of the non wholly-owned subsidiaries. In the future, we expect to finance our projects with the proceeds of certain possible working capital raising activities and bank borrowings, supplemented by equity financing and other existing financing resources.

Encouraged by the PRC government’s favorable policy of supporting renewable energy industries, an increasing number of domestic banks are willing to provide renewable energy companies with borrowings on favorable terms as long as these companies satisfy certain requirements. As a renewable energy developer with a profitable track record and strong creditability, we are able to obtain both short-term and long-term loans at relatively low interest rates and with favorable terms. We have established long-term cooperation relationships with certain state-owned commercial banks such as China Development Bank Corporation, China Construction Bank Corporation and Industrial and Commercial Bank of China Limited. In order to obtain favorable financing terms, we negotiate and enter into loan agreements with banks and then provide financing to our subsidiaries through intra-group loans on back-to-back terms. In addition to the debt financing, we also manage a portfolio of financial instruments such as discount notes and finance leases for the procurement of our equipment. As of December 31, 2010, our gearing ratio (which is calculated by dividing (i) the long-term and short-term borrowings and obligations under finance leases minus cash and cash equivalents (the “Net Debt”) by (ii) Net Debt plus total equity (including non-controlling interests)) was 75.4%.

Operation and Maintenance

We operate all the wind farms by ourselves and have accumulated extensive operational experience in the wind power sector, which has led to outstanding performance of our wind farms in various aspects. For example, we have achieved high weighted average utilization hours during the years ended December 31, 2008, 2009 and 2010. Our weighted average utilization hours were 2,380.4, 2,365.2 hours and 2,265.3 hours in 2008, 2009 and 2010, respectively. We believe our success in operating wind power projects is attributable to several factors, including our strategy of procuring the majority of our equipment from domestic-brand suppliers, systematic management of the spare parts storage, emphasis on the commissioning period and strong technical support from our professional technicians.

In respect of maintenance, the suppliers provide us with maintenance services at no additional cost for equipments within the warranty period pursuant to the equipment purchase agreements. We maintain all equipments that are no longer covered by warranties at our own cost.

Compared to overseas suppliers, it generally takes shorter lead time for our domestic suppliers to respond to our requests and resolve problems that our wind farms encounter. Furthermore, as a result of our strategy of supporting the development of China’s wind power equipment manufacturing industry, we maintain strong relationships with our domestic-brand equipment suppliers and are able to receive comprehensive services from them on favorable terms. With the joint efforts of our dedicated employees and suppliers, we are able to solve technical problems quickly. For instance, even technical problems with major equipment such as wind turbines can normally be fixed within one or two weeks.

In an effort to maximize utilization of wind resources, we leverage on the low prices of domestic components and store sufficient amount of small-size consumptive spare parts in the warehouse of each individual wind farm. If a system breakdown occurs due to the malfunction of a specific small-size consumptive component, we replace with spare parts rather than trying to fix it. On the other hand, in order to minimize the working capital occupied by large-size spare parts inventory, we integrated the management of large-size spare parts and centralized the storage of such components at our regional headquarters with well-developed transportation linkage to our individual wind farms. If a large-size component malfunctions, we promptly arrange

— 108 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. BUSINESS delivery of such large-size spare parts from our regional headquarters to the respective wind farm and replace the malfunctioning component. Normally such delivery takes three to five days, which ensures the timely restoration of wind farm operation. We then deliver the replaced large-size component to our suppliers for repair and store the repaired component as a back-up spare part. By doing so we ensure the maximum utilization of the non-storable wind resources and increase our profitability.

Another factor contributing to the strong performance of our wind farms is our emphasis on the commissioning of a project. We have established a set of internal standards in this regard which are stricter and more detailed than the national standards. We require all of our wind power projects to satisfy the specifications set out in our internal standards before the commencement of commercial operations. We conduct various detailed tests during the commissioning period, which help us accumulate more accurate wind data as well as operational statistics. We emphasize resolving most of the potential problems during the commissioning period. In addition, the extensive wind data and statistics collected during commissioning enable us to better plan the micro-site selection for wind turbines for the following phases of the same projects or projects in the neighboring areas, which in turn improves our utilization hours.

In addition, our strong technical support team plays an important role in the operation and maintenance of our projects. We have designated three levels of technical support staff: the technical support center, the regional technical support team and the on-site technicians. The technical support center is responsible for overseeing all the technical issues of the Group, conducting research and providing solutions to all of the technical difficulties arising during the operation of our wind power projects. The regional technical support team provides technical support to all the project companies within a certain region and serves as a communication channel for the on-site technicians and the technical support center. The on-site technicians are responsible for the day-to-day operation and maintenance of the wind farms. Generally the on-site technicians are able to resolve the technical issues within 36 hours and when they encounter a difficult problem beyond their capacity, they report such problems to the regional technical support team and cooperate with the regional team to resolve such technical problem. Our operation and maintenance organizational structure guarantees a permanent on-site presence and minimizes the reaction time for small maintenance tasks. The managers of each wind power project in operation submit reports and discuss the operations of each wind power project with our management weekly.

Wind Turbine Suppliers

Wind turbine is the primary equipment of our wind power projects and costs of wind turbines generally constitute approximately 50% to 60% of our construction costs. As part of our business strategies, we have purchased most of our wind turbines from domestic-brand suppliers such as Sinovel. In 2008, 2009 and 2010, capacity of domestic-brand wind turbines accounted for approximately 100.0%, 91.4% and 97.5% of the total capacity installed during the respective period or 78.7%, 88.1%, and 93.3% of the total installed capacity by the end of the year. During the same periods, capacity of wind turbines supplied by Sinovel, our largest wind turbine supplier, accounted for approximately 82.4%, 48.4% and 45.4% of the total capacity installed during the respective period. In limited circumstances, we have also purchased wind turbines from foreign suppliers. For example, we obtained a foreign government loan funded by the Spanish government in November 1999. Pursuant to the terms of the loan agreement, we used the loan to purchase wind turbines and related services from certain Spanish suppliers for our Nan’ao Project. The delivery was completed in three batches within six months from the execution of the agreement in 1999.

Due to our strong relationships with the suppliers, we are able to purchase wind turbines at relatively low prices and on more favorable terms. We purchase wind turbines through a bidding process based on our needs at appropriate time rather than entering into commitments to purchase wind turbines in advance so as to lower our financing costs and storage costs. The bidding process is managed by our bidding committee. When we decide to purchase wind turbines, we invite at least four wind turbine suppliers to submit their bids. The formal bidding

— 109 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. BUSINESS process will not begin until we have received at least three effective bids. Upon receipt of sufficient number of effective bids, the working group under our bidding committee reviews the bids and makes recommendations to the bidding committee. Based on the working group’s recommendations, the bidding committee further reviews the bids and makes the final decision after taking into consideration a variety of factors, including but not limited to the bid price, quality of the wind turbines, technical support and reputation and expertise of the supplier.

According to the current sales and purchase agreements with our suppliers, we are generally required to make advancements in the amount of 10% of the purchase price after the execution of the agreement but no earlier than three months prior to delivery, 50% of the purchase price after receipt of the wind turbine and 30% of the purchase price after inspection and commissioning and being satisfied that all wind turbines supplied under a sales and purchase agreement are in compliance with the agreed specifications. We usually keep 10% of the purchase price as warranty deposit until the expiration of the warranty period. Other than information disclosed in this paragraph, we are not granted any other credit terms by our suppliers.

When we purchase wind turbines, we require the suppliers to provide us with warranties and stipulate such warranties in the sales and purchase agreements. Warranty period ranges from two to six years in duration starting from the completion of the commissioning and inspection. These warranties typically include (i) a power curve warranty, which entitles us to liquidated damages or deductions from warranty deposits if the power output falls below a specified level; and (ii) an availability warranty, which entitles us to liquidated damages or deductions from warranty deposits and sometimes extension of warranty period if the annual availability factor fails to reach a specified rate. In particular, the supplier is obligated to pay us liquidated damages equal to 1% of the total contract price for each 1% below the specified annual availability factor. In the event that the annual availability factor falls below the specified rate by 5% or more, we are entitled to replacement or refund of the defective wind turbine. During the years ended December 31, 2008, 2009 and 2010, none of the annual availability factor of our wind turbines had fallen below the specified rate by 5%. Under the sales and purchase agreements, we also have the right to terminate the agreement by written notice if (i) the supplier delayed delivery for two months; (ii) the supplier failed to perform its contractual obligations and failed to make remedies within 30 days upon our request; or (iii) there are material defects in the wind turbines, which affect the progress of our wind power project development.

Historically we have maintained good relationships with our wind turbine suppliers and have not suffered any substantial loss due to default by suppliers. During the years ended December 31, 2008, 2009 and 2010, we have only experienced one major dispute with one of our suppliers. The dispute was related to two offshore wind turbines with a total capacity of 6 MW used in Rongcheng Project. The performance of these two offshore wind turbines initially failed to meet the design value and caused delay in commissioning. The delay in commissioning did not have a material impact on our operations or financial condition given that the delay only affected two wind turbines with an aggregate capacity of 6 MW. Considering our long-term relationship with the supplier, we have not requested for any compensation for the delay although the purchase agreement included specific provisions providing damage for delays. We completed commissioning of these two wind turbines and put them into operation in July 2010. In addition, we reserve the rights to claim appropriate compensation for the delay from our supplier at any time. We intend to further strengthen our relationships with our wind turbine suppliers to secure a reliable supply of wind turbines on favorable terms.

During the years ended December 31, 2008, 2009 and 2010, purchases from our five largest wind turbine suppliers in aggregate accounted for approximately 100.0%, 83.4% and 95.5%, respectively, of our total purchases of wind turbines in 2008, 2009 and 2010 in terms of contract value. Our largest wind turbine supplier contributed approximately 53.8%, 29.0% and 33.7% to our total purchases of wind turbines during the respective period in terms of contract value. All of our five largest wind turbine suppliers during the years ended December 31, 2008, 2009 and 2010 are independent third party suppliers primarily engaged in the manufacturing of wind turbines in the PRC.

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Other Suppliers

For our wind power generation operations, the raw material is wind which we obtain at no cost. We therefore do not have suppliers of raw materials. Besides the wind turbine suppliers, our other suppliers mainly include (i) third-party contractors that provide us with construction and installation services and (ii) services providers and suppliers of spare parts in relation to our repairs and maintenance. The cost of wind turbines and cost relating to construction and installation are capitalized as property, plant and equipment. During the years ended December 31, 2008, 2009 and 2010, we engaged a total of 48, 90 and 123 third party contractors in 2008, 2009 and 2010, respectively. Fees paid to these third party contractors amounted to approximately RMB620.3 million, RMB943.8 million and RMB1,722.1 million, respectively, during the same periods. During the years ended December 31, 2008, 2009 and 2010, we recorded operating expenses in relation to repairs and maintenance in the amount of RMB3.8 million, RMB15.2 million and RMB27.7 million in 2008, 2009 and 2010, respectively, representing approximately 2.9%, 3.8% and 3.1% of our operating expenses (excluding service concession construction costs) during the respective periods.

Among the suppliers who provided us with goods and services the cost of which are not capitalized, purchases from our five largest suppliers in aggregate accounted for approximately 87.5%, 59.4% and 47.0%, respectively, of our total purchases in 2008, 2009 and 2010. Our largest supplier contributed approximately 39.2%, 23.4% and 14.5% to our total purchases during the respective periods. All of our five largest suppliers during the years ended December 31, 2008, 2009 and 2010 are independent third party suppliers primarily engaged in the manufacturing of components or power supply in the PRC. We normally settle the payments with the electricity suppliers on a monthly or quarterly basis. As for the components, we usually make payments to our suppliers upon delivery of components or within fifteen business days after receipt of invoices.

We have maintained good relationships with our other suppliers and have not suffered any substantial loss due to default by other suppliers.

Competition

We believe our primary competitors are those power generation companies focusing on renewable energies, in particular, those developers and operators of wind power projects. Currently we mainly compete with wind power developers in China, including both national and local wind power generation companies. Along with our expansion into the overseas markets, we may also compete with international wind power generation companies in the future.

Under the current regulatory framework, local grid companies are required to provide mandatory grid connection and purchase all the power generated by wind power projects within its coverage at a price fixed by the PRC government. As a result, there is no substantial competition among wind power projects in operation in China. However, as determined by the nature of the industry, the development of wind power projects is limited by natural conditions, especially the wind resources that are found in limited geographic areas and at particular sites. Accordingly, the competition among wind power operators occurs mainly during the development stage, especially in selecting the suitable sites and obtaining the rights to develop wind power projects on a specific site, rather than during a project’s operation stage.

During the development stage, we compete with other national or local wind power developers in a number of areas, including securing sites with quality wind resources, obtaining relevant government approvals, getting our projected capacity into the local grid planning and obtaining bank borrowings. With our reputable brand and excellent execution capabilities, we compete with other wind power developers for desirable sites through entering into development agreements with local governments which provide us with exclusive rights or priority to develop wind power projects within a specific area during a specified period of time. As of December 31, 2010, we had successfully reserved wind power pipeline projects with an estimated capacity of approximately 73,463.5 MW. We believe the large amount and diversified geographical locations of our pipelines provide us

— 111 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. BUSINESS with competitive advantage over our competitors with less pipelines. However, we cannot assure you that all of these pipelines can be converted into operating projects. See “Risk Factors — Risks Relating to Our Business and Industry — If we are not successful in converting our wind power pipeline projects into operating projects in accordance with our development plan and specifications, our expansion plan will be adversely affected and our revenue will fall below our expectations.” In addition, the preferential government policies, regulations and incentives for wind power industry may attract new entrants into the market despite the relatively high barrier caused by the substantial capital requirement. Some of our existing or future competitors may have better access to local governmental support, financial and other resources than we do, providing them with competitive advantages in certain areas. Our business and results of operations may be adversely affected by the competition. Although currently we do not face intense competition due to the preferential government regulations and policies such as mandatory grid connection and mandatory power off-take, the competition may intensify in the event that such regulations and policies are amended or abolished. See “Risk Factors — Risks Relating to Our Business and Industry — We face competition from other renewable energy companies, in particular, other wind power developers. We may also face competition from non-renewable power developers.”

Carbon Credit Transactions

In addition to the sale of electricity, we also generate income from the sales of CERs. We registered our first CDM project in August 2006. In 2008, 2009 and 2010, sales of CERs contributed RMB16.2 million, RMB28.7 million and RMB164.8 million to our profit before taxation, respectively.

Clean Development Mechanism and Sales of CERs

CDM is an arrangement under the Kyoto Protocol allowing industrialized countries with a greenhouse gas reduction commitment (the “Annex 1 Countries”) to purchase CER credits from developing countries as an alternative to more expensive emission reductions in their own countries. The Kyoto Protocol requires the Annex 1 Countries to ensure that their aggregate emissions of the greenhouse gases do not exceed their assigned amounts, with a view to reducing their overall emissions of such gases by at least 5% below 1990 levels in the commitment period from 2008 to 2012. The aim of the CDM is to stimulate sustainable development and emission reductions while providing industrialized countries with some flexibility in achieving compliance with their quantified emission reduction targets. This mechanism has achieved significant progress since 2001, which was the first year the CDM projects could be registered. According to United Nations Framework Convention on Climate Change (“UNFCCC”), as of the Latest Practicable Date, there were over 3,000 registered CDM projects, producing an average of approximately 475.2 million tons of carbon dioxide equivalent emission reductions every year. The UNFCCC expects that by the end of 2012 when the commitment period expires, the registered CDM projects will lead to over 2 billion tons of carbon dioxide equivalent emission reductions.

Under this mechanism, qualified emission-reduction projects in developing countries may earn CER credits which could be sold to Annex 1 Countries. For a project to be recognized as a qualified project, it must satisfy certain requirements, including establishing that reductions in emissions are additional to any that would occur in the absence of the project activity, a concept known as “additionality.” Moreover, a project can only qualify through a rigorous and public registration process designed to ensure real, measurable and verifiable emission reductions. The mechanism is overseen by the CDM EB. In order to be considered for registration, a project must first be approved by the Designated National Authorities (the “DNA”) and validated by a third party agency, known as a Designated Operational Entity (the “DOE”). The CDM EB then decides whether or not to register the project and issues CER credits based on the monitored emission reductions verified by the DOE. A CDM project activity cycle typically includes the following:

• Identification of a CDM project and potential buyer. CDM project participants shall decide the type of a CDM project and secure a potential buyer of the CERs from the Annex I Countries.

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• CDM project design. CDM project participants shall design their proposed CDM project using the project design documents (“CDM-PDD”) developed by the CDM EB. Once completed, the participants shall submit the CDM-PDD to the DOE.

• Use of an approved methodology or proposal of a new methodology. CDM project participants can either use a methodology previously approved and made publicly available by the CDM EB or propose a new baseline methodology. If the participant elects to propose a new methodology, such new methodology, together with the draft CDM-PDD, shall be submitted by the DOE to the CDM EB for review and approval.

• DNA approval. CDM project participants shall submit the CDM application and CDM-PDD to relevant national CDM authorities for approval. Both the CDM project participant and the potential buyer shall obtain a letter of approval from their respective DNA.

• Validation of the CDM project. Prior to registration of the project, DOE conducts an independent evaluation of the proposed project against the relevant requirements based on the CDM-PDD, a process known as “validation.” If a DOE determines the proposed project to be valid, it shall submit a CDM Project Activity Registration Form, together with the CDM-PDD and the written approval issued by the DNA of the host country, to the CDM EB.

• Registration of the CDM project. Registration is the formal acceptance by the CDM EB of a validated project as a CDM project activity, a prerequisite for the verification, certification and issuance of CERs. If a proposed project is rejected, it may be reconsidered for validation and subsequent registration after appropriate revisions.

• Certification and verification of the CDM project. Verification is the periodic independent review and ex-post determination by the DOE of the monitored reductions in greenhouse gases emissions that have occurred as a result of a registered CDM project activity during the verification period. Certification is the written assurance by the DOE that, during a specified time period, a project activity achieved the reductions in greenhouse gases emissions as verified. Both the monitoring report and the certification report shall be made publicly available by the DOE.

• Issuance and Transfer. Upon successful completion of all of the above procedures, the CDM EB issues CER credits to the CDM participants’ account, after deducting a 2% share of proceeds. The CERs are then transferred by the CDM participants to the buyer from Annex I countries at prices specified in the CER sales agreements.

As a developing country, China ratified the Kyoto Protocol in 2002, with the NDRC designated as the DNA of China. In 2005, the NDRC and other ministries jointly issued the Measures for Operation and Management of Clean Development Mechanism Projects ( , the “CDM Measures”). According to the CDM Measures, only companies wholly-owned or controlled by Chinese parties may carry out CDM projects in the PRC. In addition, for CDM projects approved on or after October 12, 2005, the PRC government imposes a levy on the proceeds from the sale of CERs at various levels depending on the type of the project. For wind power and other renewable energy projects, 2% of the proceeds from the sale of CERs shall be paid to the PRC government.

As a pioneer of the PRC wind power sector, we have successfully registered three out of China’s first 10 registered wind power CDM projects. Once registered with the CDM EB, the registered CDM projects are not subject to annual examination by the relevant authorities. All of our wind power project companies are wholly- owned or controlled by Chinese parties and are thus eligible to carry out CDM projects in China according to the CDM Measures. As of December 31, 2010, we had applied for registration of 65 CDM projects, of which 46 had

— 113 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. BUSINESS obtained NDRC approvals and 23 had been registered with the CDM EB. Among the 23 registered CDM projects, Phase II of our Fuxin Project was the second largest wind power CDM project in China in terms of installed capacity as of December 31, 2010, based on the data available on the website of UNFCCC.

Leveraging on our experience accumulated from previous registrations, we made substantial progress in 2011. From January 1, 2011 to the Latest Practicable Date, we successfully registered 11 CDM projects with the CDM EB and obtained NDRC approvals for another nine CDM projects, increasing our aggregate number of registered CDM projects and projects with NDRC approvals to 34 and 55, respectively.

The first CERs of our registered CDM projects were issued by the CDM EB in 2008. As of the Latest Practicable Date, we had secured buyers for 151 CDM projects by entering into CER sales agreements with seven independent international buyers, including four power companies from Spain, Japan, Belgium and Russia, respectively, a financial institution from France and two professional CDM management companies, one from the United Kingdom and the other one from Switzerland. Pursuant to the CER sales agreements, the international buyers agreed to purchase all of our CER credits issued by the CDM EB from the execution of the agreements until December 31, 2012 at a unit price ranging from EUR7 to EUR17 per ton. The international buyers are required to make payments to us within a certain period of time ranging from 5 to 30 days upon receipt of the invoice after the transfer of the CERs.

Sales of VERs

VERs are carbon credits produced outside the legal framework or compliance regime. Entities or individuals who are not subject to mandate greenhouse gas emission regulations but having a desire to mitigate global warming and climate change may purchase VER credits through an over the counter, voluntary carbon offset market, which operates alongside the regulated markets such as Kyoto Protocol.

As of December 31, 2010, we have accumulated approximately 3,482,238 tons of VERs. Though we had not entered into any binding sales agreements for our VERs, we are actively seeking potential buyers in the VER market.

Service Concession Project

Since 2003, the PRC government has invited domestic and international investors to develop wind farms on government-selected sites through a competitive bidding process. While we have developed most of our wind power projects through entering into development agreements with local governments, we have also been awarded one service concession project in September 2008. During the years ended December 31, 2008, 2009 and 2010, pursuant to our service concession agreement with the provincial DRC of Inner Mongolia, we constructed and operated Phase I of Tongliao Baolongshan Project with an installed capacity of 49.5 MW and a concession period of 25 years. According to the service concession agreement, we are granted by the provincial DRC of Inner Mongolia the exclusive right to develop and operate a wind farm with an installed capacity of 49.5 MW in a designated area of Inner Mongolia and enjoy all the economic benefits derived from the operation of such wind farm during the concession period. Meanwhile, we are responsible for the design, construction, commissioning, operation and maintenance of the service concession project during the concession period. The applicable on-grid tariff for the service concession project is RMB0.54 per kWh (including VAT) during the first 30,000 hours of power generation at full load. Afterwards, the average prevailing market price shall apply. At the end of the concession period, we need to dismantle the wind farms or negotiate with the provincial DRC of Inner Mongolia for an extension of the service concession period. We commenced the construction of the service concession project in 2007 and started to generate profit when we put the project into commercial operation in 2009.

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Because substantially all construction activities of the wind power service concession project are sub- contracted, the total construction costs represented the fair value of the construction services provided. As a result, the service concession revenue is equal to the service concession cost during the construction period, and thus have no net effect on our operating profit or profit for the relevant period. Under the new on-grid tariff regime effective from August 1, 2009, a universal on-grid tariff is applicable to all the wind power projects in the same wind resource zone, which makes the competitive bidding process in a concession project unnecessary. As a result, we expect that fewer onshore wind power concession projects will be awarded by the PRC government in the future. In addition, the PRC government may award wind power generation companies with offshore wind power service concession projects in the future. Although we do not expect more onshore wind power service concession projects will be awarded, we may participate in offshore wind power service concession projects if our management and Directors are of the view that such projects may generate attractive return and are of the best interests of our Shareholders.

Our Other Businesses

In addition to the wind power business, we are also in the process of developing our solar power business and acquiring resources. As of December 31, 2010, we had entered into 20 investment and development agreements with the local governments to develop our solar power projects with an estimated capacity of 1,740 MW. The capacity is mainly located in Inner Mongolia, Shaanxi Province and Hebei Province. Under these investment and development agreements, we are granted with the exclusive right to develop solar power projects within a specific area. The local governments typically agree in such agreements to provide coordination and assistance to include our proposed solar power projects into the provincial or municipal governments’ solar power development plans and to obtain approvals from various governmental authorities. Our obligations under these investment and development agreements normally include collecting and analyzing data, conducting feasibility study, testing solar resources and constructing and operating solar power plants to the extent feasible.

As of December 31, 2010, we had also been awarded by the PRC government two solar power concession projects with a total capacity of 50.4 MW through bidding process. We plan to set up separate project companies to manage the solar power projects, and we are in the process of selecting third-party contractors and equipment suppliers. We believe we are well positioned to commence in large-scale the development of solar power projects as soon as the economic feasibility is established.

ENVIRONMENTAL REGULATION

As a renewable energy generation company, we endeavor to protect the environment and are committed to conduct our operations in full compliance with the applicable environmental laws and regulations. As of the Latest Practicable Date, we had not been subject to any material environmental claims, lawsuits, penalties or disciplinary actions. However, the PRC government may adopt stricter environmental laws, which may have an adverse impact on our results of operations and financial condition. See “Risk Factors — Risks Relating to Our Business and Industry — Our development and operation of wind farms are subject to various environmental, health and safety laws and regulations.”

Due to the nature of our operations, environmental laws and regulations relating to emissions, waste management and hazardous substances do not have material impact on our business. The construction and operations of our wind farms, however, are subject to certain PRC environmental laws and regulations. According to the Interim Administrative Measures on Utilization of Construction Land of Wind Farm and Environmental Protection ( ), our wind farms should be designed and constructed in accordance with the requirements of environmental regulations and subject to the supervision of environmental protection authorities. In particular, we are required to prepare and submit an environmental impact assessment to the relevant environmental protection authorities for approval before we can start the

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HEALTH AND SAFETY COMPLIANCE

We are subject to various PRC laws and regulations in relation to safety and labor protection, including Safe Production Law of the PRC ( ), Measures on Supervision and Administration of the Work Safety of Electric Industry ( ) and implementation rules on safe production issued by various local governments. All of our wind farms have adopted internal procedures to ensure safe production and minimize risks that may lead to personal injury or property damage. As of the Latest Practicable Date, we had not violated in any material aspect of any applicable PRC laws or regulations in respect of health and labor protection.

PROPERTY

Land

Land for Operating Projects

As of February 28, 2011, we owned, held or occupied 1,745 parcels of land with a total site area of 5,828,241.24 m2 for our operating wind power projects, among which 760 parcels of land with a total site area of 2,210,590.23 m2 or 37% of the total site area underlying our wind farms for operating projects, had not obtained land use right certificate. Other than these 760 parcels of land, we have proper land use rights to all the land underlying our operating wind farms.

Land for Projects under Construction

As of February 28, 2011, we owned, held or occupied 219 parcels of land with a total site area of 372,325.22 m2 for our projects under construction, among which 196 parcels of land with a total site area of 189,272.22 m2, or 50.8% of the total site area underlying our wind farms under construction, had not obtained land use right certificates.

Land without Land Use Right Certificates

We owned, held or occupied in aggregate 956 parcels of land with a total site area of 2,399,862.45 m2 which had not obtained land use right certificates as of February 28, 2011, among which 944 parcels of land with a total site area of 2,197,342.8 m2 are used as foundation land for wind turbines and 12 parcels of land with a total site area of 202,519.66 m2 are used for self-constructed buildings. The title defects are primarily caused by the on-going application process for relevant land use right certificates which normally takes six to twelve months as it involves governmental approvals at different levels. Moreover, due to the special characteristics of wind farm construction such as the topographical and geological requirements, we may have to adjust the locations of the wind turbines originally determined in the feasibility study reports based on the actual conditions in order to get access to better wind resources. As a result, we may not be able to initiate the application process

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For 807 out of the 956 parcels of land without land use right certificates, we have obtained written confirmations from relevant governmental authorities confirming that (i) the governmental authorities will not impose any penalties or initiate any administrative actions on us for lack of land use right certificates; (ii) we may continue to occupy and use the land and (iii) there is no legal obstacle for us to obtain the land use right certificates once the relevant procedures have been completed. Based on such confirmations, our PRC legal advisers are of the view that we may continue to use the land without being subject to any penalties and that we will not encounter legal obstacles in obtaining the land use right certificates. For the other 149 parcels of land with an aggregate site area of 344,202.79 m2, we have been advised by our PRC legal advisers that the maximum penalty we may be subject to is approximately RMB10.3 million. Our PRC legal advisers have also confirmed that there is no legal obstacle for us to obtain the land use right certificates for these 149 parcels of land once the relevant procedures have been completed. The maximum potential losses we may be exposed to is approximately RMB65 million, including approximately RMB19 million relocation cost, in the event that we are forced to relocate due to title defects of land and buildings. Generally such relocation could be completed within two months. We expect to obtain land use right certificates for these 956 parcels of land by December 31, 2011. For details of our owned land for projects and risks involved in these title defects, see “Appendix IV — Property Valuation Report,” and “Risk Factors — Risks Relating to Our Business and Industry — Title defects in relation to certain lands and buildings may adversely affect our operations.”

According to the Reorganization Agreement we entered into with Huaneng Group on August 5, 2010, Huaneng Group, as our controlling shareholder, has undertaken that it will indemnify us against all losses, claims, charges or expenses arising from our failure to obtain the outstanding land use right certificates. Our PRC legal advisers have confirmed that the above undertakings given by Huaneng Group are legal, valid and enforceable. For further details of the Reorganization Agreement, see “History, Reorganization and Corporate Structure — Reorganization.” Given the immaterial amount of potential penalties and the indemnities undertaken by Huaneng Group, our Directors are of the view that the lack of proper land use right certificates will not have a material adverse impact on our business and results of operations.

Buildings

Owned Buildings

As of February 28, 2011, we owned, held or occupied 220 buildings with a total gross floor area of 98,215.78 m2, among which 33 units of office buildings with an aggregate gross floor area of 5,925.06 m2 and 30 units of industrial and ancillary buildings with an aggregate gross floor area of 20,562.92 m2,, or 6.1% and 20.9% of the total gross floor area, had title defects. Other than these 33 units of office buildings and 30 units of industrial and ancillary buildings, we have proper title certificates to all the building and units currently owned, held or occupied by us. As for the 33 units of office buildings with title defects, our PRC legal advisers have advised us that we may continue to occupy and use these properties and will not be subject to any penalties under relevant PRC laws and regulations given that all these 33 units were commercial properties purchased from independent property developers with considerations fully paid. As for the 30 units of industrial and ancillary buildings, we are in the process of applying for title certificates as the construction of these buildings were completed recently. Our PRC legal advisers have confirmed that there is no legal obstacle for us to obtain the title certificates for the building once the relevant procedures have been completed. We expect to obtain title certificates to the 63 units by December 31, 2011. For details of our owned buildings and risks involved in these title defects, see “Appendix IV — Property Valuation Report,” and “Risk Factors — Risks Relating to Our Business and Industry — Title defects in relation to certain lands and buildings may adversely affect our operations.” In addition, our controlling shareholder Huaneng Group has undertaken in the Reorganization

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Agreement dated August 5, 2010 that it will assist us in obtaining property ownership certificates and will indemnify us against any losses, claims, charges or expenses arising from such title defects. Given our PRC legal advisers’ opinion and Huaneng Group’s undertakings, our Directors are of the view that the title defects in relation to these 63 units will not have a material adverse impact on our results of operations.

Leased Buildings

As of February 28, 2011, we leased 43 buildings in the PRC with a total gross floor area of 13,464.01 m2. Among the 43 buildings in the PRC, the landlords of 13 buildings, with a total gross floor area of 2,596.7 m2,had not obtained building ownership certificates. Our Directors are of the view that the lack of building ownership certificates will not have a material adverse impact on our results of operations given that these leased properties are primarily used as office buildings and we may easily find replacements at insignificant costs.

INTELLECTUAL PROPERTY

Our intellectual property consists primarily of industry know-how and trade secrets. We do not have any registered patents. We have registered one trademark in the PRC and entered into a trademark license agreement with Huaneng Group, pursuant to which Huaneng Group granted us with the rights to use its trademarks, including the name of “Huaneng”. See “Connected Transactions — Continuing Connected Transactions” for further details.

We have not engaged in any litigation or legal proceedings for violation of intellectual property rights of third parties, nor have we suffered from any infringement of our intellectual property. For further details of our intellectual property, see “Appendix X — Statutory and General Information.”

INSURANCE

We purchased insurance policies covering substantially all of our operating assets. We purchase erection all risks insurance for our projects under construction as well as property all risks insurance and machinery breakdown insurance for our operating projects.

We believe our insurance coverage is adequate and consistent with and on terms generally carried by companies engaged in similar businesses and owing similar properties in the PRC. We do not maintain insurance for disruption of operations or environmental contamination, which we believe to be the customary practice in the PRC wind power sector.

LEGAL COMPLIANCE AND PROCEEDINGS

As of the Latest Practicable Date, there were no material actual, pending or threatened litigation or other proceedings against us or any of our Directors or Supervisors. Moreover, as of the Latest Practicable Date, our Directors confirmed that we had complied with all applicable PRC laws and regulations in all material aspects.

According to relevant laws and regulations, development of wind power projects is subject to various governmental approvals and permits. Some application process of such approvals and permits may be prolonged due to various reasons. We had experienced delays in the approval process during the years ended December 31, 2008, 2009 and 2010 but had not been subject to any administrative penalties or compulsory measures. As of the Latest Practicable Date, we had obtained all material permits, certificates and licenses necessary for our wind power operations in accordance with relevant laws and regulations.

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We have adopted a number of internal control measures to ensure full compliance with relevant laws and regulations, including, among others:

• setting up specialized departments responsible for liaising with regulatory authorities with respect to obtaining necessary government approvals, permits, licenses and property certificates prior to the commencement of construction;

• setting up commercial departments to organize bidding processes and procurement for wind power equipment and selection of contractors for project construction;

• setting up safety departments to periodically monitor safety in our subsidiaries’ project construction and operations; and

• setting up auditing departments which report their findings directly to our management based on their periodical review of our financial management and the development, construction and operations of wind farms.

We also plan to further enhance our training programs in order to help our employees better understand the development of regulations, to strengthen our human resources for a better communication with relevant regulatory authorities and to reduce the potential negative impact caused by non-compliance during our operations.

Our PRC legal advisers confirm that during the years ended December 31, 2008, 2009 and 2010 and up to the Latest Practicable Date, we had complied with all relevant laws and regulations in all material aspects.

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OVERVIEW

Our Company was established through Reorganization by converting HNEIC, our predecessor, into a joint stock company with limited liability. On August 5, 2010, acting as Promoters, Huaneng Group and Huaneng Capital, a wholly-owned subsidiary of Huaneng Group, established our Company with a registered capital of RMB5,800 million. Upon establishment, we had a total of 5,800 million issued and outstanding Domestic Shares, with a par value of RMB1.00 each. We issued to Huaneng Group 5,510 million Domestic Shares, or 95% of our total issued and outstanding Shares and issued 290 million Domestic Shares, or 5% of our total issued and outstanding Shares, to Huaneng Capital. Immediately after the relevant event, Huaneng Group will own, directly and indirectly, approximately 67.00% of our issued share capital. Huaneng Group will continue to be our Controlling Shareholder after the relevant event.

DELINEATION OF BUSINESS AND COMPETITION

Our core business

We are a leading pure-play renewable energy company in the PRC with a primary focus on wind power generation.

Business Retained by Huaneng Group

We underwent the Reorganization by converting HNEIC, our predecessor, from a one person limited liability company into a joint stock company with limited liability. After the Reorganization, we are the holding company of HNEIC’s subsidiaries and retained all the business carried out by HNEIC. See the section headed “History, Reorganization and Corporate Structure — Reorganization” for further details on the Reorganization.

Huaneng Group, through its listed or unlisted subsidiaries, has retained certain businesses in sectors which we also operate in. These businesses will continue to be retained or operated by Huaneng Group after the completion of certain possible working capital raising activities. Save for the retained business referred to below, there is no other business retained or operated by Huaneng Group which will compete or is likely to compete with our core business. The retained business include:

• 31 operating wind power projects with a total installed capacity of 1,647.4 MW; 6 wind power projects currently under construction with a total installed capacity of 270.5 MW, which are owned by Huaneng Group’s unlisted subsidiaries (“Retained Business by Huaneng Group’s Unlisted Subsidiaries”) as of December 31, 2010;

• equity interest in three listed companies with part of their businesses relating to wind power generation (“Retained Business by Huaneng Group’s Listed Subsidiaries”), including:

• controlling approximately 51.0% equity interest in HPI through itself, its wholly owned subsidiary China Huaneng Hong Kong Co., Ltd. ( ) and HIPDC (owned as to approximately 57.0% by Huaneng Group). HPI is listed on the New York Stock Exchange (“NYSE”), the Shanghai Stock Exchange and the Stock Exchange as of the Latest Practicable Date;

• controlling approximately 71.1% equity interest in Inner Mongolia Mengdian Huaneng Thermal Power Corporation Limited ( ) (“NMHD”) through North United Power Co., Ltd. ( ) (“NUP”) (owned as to 51.0% by Huaneng Group). NMHD is an A-share company listed on the Shanghai Stock Exchange as of the Latest Practicable Date; and

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• controlling approximately 18.5% equity interest in Shandong Xinneng Taishan Power Generation Co., Ltd. ( ) (“Nengshan”) through Huaneng Taishan Electric Power Co., Ltd. ( ) (“HTEP”) (owned as to 56.5% through Huaneng Shandong Electric Power Generation Co., Ltd. ( ), a wholly- owned subsidiary of Huaneng Group). Nengshan is an A-share company listed on the Shenzhen Stock Exchange as of the Latest Practicable Date.

(collectively, the “Retained Business”)

HPI, NMHD and Nengshan are collectively referred to as the “Huaneng Group’s Listed Subsidiaries.”

Huaneng Group

Huaneng Group is a state-owned enterprise managed by SASAC. It is an incorporated business entity primarily focusing on power generation with a diversified business portfolio. Huaneng Group is the largest power company in China in terms of total installed capacity in 2010. As of December 31, 2010, the total installed capacity of Huaneng Group’s unlisted subsidiaries (other than that of our Group) was approximately 48,651 MW, consisting of coal power (including natural gas), hydropower, wind power and photovoltaic energy and biomass energy businesses. For the year ended December 31, 2009 and 2010, the total revenue of Huaneng Group was approximately RMB177.7 billion and RMB227.0 billion and the net profit was approximately RMB5.0 billion and RMB4.2 billion, respectively. The net assets were approximately RMB94.9 billion and RMB101.6 billion as of December 31, 2009 and 2010.

As of December 31, 2010, Huaneng Group’s unlisted subsidiaries’ coal power (including natural gas) business and hydropower business had a total installed capacity of approximately 33,190 MW and 10,821 MW, respectively. For the year ended December 31, 2009 and 2010, based on the unaudited accounts of Huaneng Group’s unlisted subsidiaries’ coal power (including natural gas) and hydropower businesses, the total revenue generated from the coal power business was approximately RMB38.2 billion and RMB53.8 billion, respectively, and the total revenue generated from the hydropower business was approximately RMB4.6 billion and RMB9.1 billion, respectively. The coal power plants of Huaneng Group’s unlisted subsidiaries are principally located in Anhui, Jiangxi, Shaanxi, Inner Mongolia, Shandong, Hubei, Jilin, Hainan, Heilongjiang, Hebei, Henan and Jiangsu and the hydropower plants are principally located in Yunnan, Sichuan, Hubei, Gansu, Jilin, Zhejiang and Hainan.

To strengthen the delineation of business between us and Huaneng Group, we and Huaneng Group entered into the Non-Competition Agreement under which we were granted the option for new wind power business opportunities (the “Option for New Business Opportunities”), as well as the option (the “Option for Acquisitions”) and pre-emptive rights (the “Pre-Emptive Rights”) to acquire Retained Business by Huaneng Group’s Unlisted Subsidiaries. Huaneng Group confirms that we are Huaneng Group’s sole renewable energy platform for the ultimate consolidation of its renewable energy businesses such as wind power. Huaneng Group has confirmed that it will facilitate such consolidation on an arm’s length basis within five years commencing from November 1, 2010. Huaneng Group is facilitating the Retained Business by its unlisted subsidiaries in obtaining relevant permits and approvals from regulatory authorities for wind power development and generation. See the subsection headed “Non-Competition Agreement” in this section for further details.

Under the above arrangements and undertakings and given that Huaneng Group will continue to focus on coal power business as one of its main businesses while our core business is wind power business, the Directors consider that there is clear delineation between the business of us and that of the Huaneng Group.

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Retained Business by Huaneng Group’s Unlisted Subsidiaries

Wind Power Business

Huaneng Group holds, and will continue to hold after the certain possible capital raising activities, interest in various wind power businesses, through its unlisted subsidiaries. The financials (other than the estimated revenue) in relation to the wind power businesses of Huaneng Jilin Power Co., Ltd. ( ), Huaneng Hainan Power Inc. ( ) and two wind farms of Huaneng Shandong Power Co., Ltd. ( ) are not available as the financials (other than the estimated revenue) relating to such wind power businesses cannot be readily segregated from their respective accounts. Excluding the above mentioned wind power businesses and Jinneng Dashentang Wind Farm ( ), a 10%-owned wind farm of HIPDC, based on the unaudited accounts of the Retained Business by Huaneng Group’s Unlisted Subsidiaries, the net income from the wind power generation business was approximately RMB51.1 million and RMB257.8 million, respectively for the year ended December 31, 2009 and 2010. The net asset was approximately RMB2.0 billion and RMB4.2 billion as of the end of 2009 and 2010, respectively. The estimated total revenue of the Retained Business by Huaneng Group’s Unlisted Subsidiaries, with the estimated revenue of Huaneng Jilin Power Co., Ltd. ( ), Huaneng Hainan Power Inc. ( ) and two wind farms of Huaneng Shandong Power Co., Ltd. ( ) included, was approximately RMB459.9 million and RMB903.6 million, respectively, for the year ended December 31, 2009 and 2010.

Set out below is a table summarizing Huaneng Group’s wind power projects operated by its unlisted subsidiaries in the PRC as of December 31, 2010:

Operating wind power projects:

Huaneng Group’s Total equity interest in Installed Capacity the project Project Company (in MW) company (%) Location Huaneng Heilongjiang Power Co., Ltd.(1) ( ) ...... 99.0 100.0 Heilongjiang Huaneng Jilin Power Co., Ltd.(2) ( )...... 246.0 100.0 Jilin Huaneng Hainan Power Inc.(3) ( )...... 49.5 89.9 Hainan Huaneng International Power Development Corporation(4) ( ) ...... 300.1 57.0 Jilin 99.0 57.0 Xinjiang North United Power Co., Ltd. ( )(5) ...... 654.8 51.0 Inner Mongolia Huaneng Shandong Power Co., Ltd.(6) ( ) ...... 199.0 100.0 Shandong Total ...... 1,647.4

Notes:

(1) Huaneng Heilongjiang Power Co., Ltd. through its subsidiary owns two operating wind farms, namely Tongjiang Jiejinshan Wind Farm ( ) and Tongjiang Sanjiangkou Wind Farm ( ).

(2) Huaneng Jilin Power Co., Ltd. owns five operating wind farms, namely Mali Wind Farm I ( ) and Siping Wind Farms I, II, III and IV ( ).

(3) Huaneng Hainan Power Inc. owns one operating wind farm, namely Wenchang Wind Farm I ( ).

(4) Huaneng International Power Development Corporation owns six operating wind farms, namely Tongyu Wind Farms I and II ( ), Taobei Wind Farms I and II ( ) and Baiyanghe Wind Farms I and II ( ).

(5) North United Power Co., Ltd. through its subsidiaries owns 11 operating wind farms, namely Huitengxile Wind Farm ( ), Shangdu Wind Farm ( ), Xilin Wind Farm ( ), Zhurihe Wind Farm ( ),

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Huitengxile 40MW Extension Wind Farm ( ), Zhurihe 7.5MW Extension Wind Farm ( ), Huitengliang Wind Farm ( ), Saihan Wind Farm ( ), Huitengxile 24MW Wind Farm ( ), Huitengliang 300MW Wind Farm ( ) and Huitengxile 100MW Wind Farm ( ).

(6) Huaneng Shandong Power Co., Ltd. through its subsidiaries owns four operating wind farms, namely Shandong Changdao Wind Farm ( ), Dongyinghekou Wind Farm I ( ), Rongcheng 15MW Wind Farm ( ) and Laizhou Wind Farm II ( ). It directly owns two operating wind farms, namely Huaneng Muping Wind Farm ( ) and Rushan Wind Farm I ( ).

Wind power projects under construction:

Total Huaneng Group’s Capacity equity interest in the Project Company (in MW)(1) project company (%) Location Huaneng Heilongjiang Power Co., Ltd.(2) ( ) ...... 96.0 100.0 Heilongjiang Huaneng Jilin Power Co., Ltd.(3) ( )...... 99.0 100.0 Jilin Huaneng International Power Development Corporation(4) ( ) ...... 26.0 57.0 Tianjin Huaneng Shaanxi Power Co., Ltd.(5) ( ) ...... 49.5 100.0 Shaunxi Total ...... 270.5

Notes:

(1) Total capacity refers to the aggregate capacity under construction of the project company, which is calculated by including 100% of the capacity under construction of the project company, regardless of the level of Huaneng Group’s equity interest in such companies.

(2) Huaneng Heilongjiang Power Co., Ltd. through its subsidiary owns two wind farms under construction, namely Daqing Aobao Wind Farm ( ) and Daqing Heping Wind Farm ( ).

(3) Huaneng Jilin Power Co., Ltd. owns two wind farms under construction, namely Mali Wind Farm II ( ) and Tongyutuanjie Wind Farm A ( ).

(4) Huaneng International Power Development Corporation through its subsidiary holds 10% equity interest in Jinneng Dashentang Wind Farm ( ).

(5) Huaneng Shaanxi Power Co., Ltd. owns one wind farm under construction, namely Jingbian Wind Farm I ( ).

Our core business has been wind power generation since our inception. The Reorganization is to convert HNEIC from a one person limited liability company into a joint stock company with substantially all of the original wind power business owned and operated by HNEIC. As such, we are able to continue to focus on our lines of business without having to deal with the distractions that may arise from a typical business reorganization. The unlisted subsidiaries of Huaneng Group will continue to operate the Retained Business by Huaneng Group’s Unlisted Subsidiaries after the completion of certain possible working capital raising activities.

Notwithstanding the plan for the unlisted subsidiaries of Huaneng Group to continue to operate the Retained Business by Huaneng Group’s Unlisted Subsidiaries, we have been closely monitoring the development of such businesses. The Directors were of the view that these businesses did not fit the acquisition criteria because of a wide range of reasons, including but not limited to, the power plants’ wind resource condition, geological characteristics, construction and grid connection condition, estimated profitability, investment value and permits and approval requirements. In particular, it is noted that the Retained Business by Huaneng Group’s Unlisted Subsidiaries is still in the process of obtaining relevant permits and approvals from regulatory authorities for wind power development and generation. In some cases, we are not in a position to assess the

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In light of the reasons stated above, the Directors are of the view that the inclusion of Retained Business by Huaneng Group’s Unlisted Subsidiaries prior to the completion of certain possible working capital raising activities is not in our best interest or our shareholders. However, we will continue to monitor the development of these wind power projects and consider acquiring them when appropriate.

Due to the similar business nature, the Directors consider that there may be potential competition between Huaneng Group and us as far as the Retained Business by Huaneng Group’s Unlisted Subsidiaries and conventional power business are concerned. See the sub-section headed “Risk Factors — Risks Relating to Our Business and Industry — We face competition from other renewable energy companies, in particular, other wind power developers. We may also face competition from non-renewable power developers.” in this document for further details. However, the competition is not extreme for the following reasons:

• according to the Renewable Energy Law and relevant regulations, grid companies are required to provide grid connection services and related technical support, and purchase the full amount of electricity generated from renewable energy projects that are located in the areas covered by the grid company. In addition, the PRC government regulates the on-grid tariffs for wind farms. However, in practice, the sale of electricity generated by our wind power projects may be limited by the transmission capacity of the local power grids. See the sub-section headed “Risk Factors — Risks Relating to Our Business and Industry — We reply on local grid companies for grid connection and electricity transmission and dispatch.” for more details. The Directors are of the view that the competition between renewable energy projects in operation in the PRC is not extreme even if they are located in the same province in terms of grid connection, electricity sales and on-grid tariff due to the aforementioned legal requirements and after considering other factors affecting the transmission capacity of the local power grids. In respect of any possible change in the applicable laws, regulations and policies relating to wind power business in the PRC, we will keep track of those changes with the relevant PRC regulators and professional bodies, which allows us to familiarize ourselves with the same, and keep abreast with the development of the wind power business in the PRC; and

• wind power business is not the business focus of Huaneng Group’s unlisted subsidiaries. We have been granted the Option for New Business Opportunities, the Option for Acquisitions and the Pre-Emptive Rights under the Non-Competition Agreement. As such, we retain the flexibility to acquire the wind power projects from Huaneng Group in the future if the Directors believe that such acquisition would be in the interest of our business and our Shareholders and to venture into other new wind power business. See the subsection headed “Non-Competition Agreement” in this section for details of Non-Competition Agreement.

Retained Business by Huaneng Group’s Listed Subsidiaries

Huaneng Group currently holds equity interest in three listed companies, each of which operates wind power and/or other renewable energy business as part of their business. The three listed companies are HPI, NMHD and Nengshan.

HPI

HPI is a company listed on the NYSE, the Shanghai Stock Exchange and the Stock Exchange. HPI is principally engaged in developing, constructing, operating and managing large-scale power plants in the PRC.

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As of December 31, 2010, Huaneng Group controlled approximately 51.0% equity interest and its corresponding voting rights in HPI through itself, its wholly owned subsidiary China Huaneng Hong Kong Co., Ltd. ( ) and HIPDC (owned as to approximately 57.0% by the Huaneng Group).

According to the 2010 annual report of HPI filed with the Stock Exchange, the board of directors of HPI consisted of 15 directors, four of which held positions in Huaneng Group. The coal power plants of HPI were principally located in Chongqing, Liaoning, Fujian, Hebei, Henan, Jiangsu, Gansu, Guangdong, Shanghai, Shandong and Zhejiang and the wind farms were located in Jiangsu, Inner Mongolia, Hebei and Gansu. For the year ended December 31, 2010, the revenue of HPI was approximately RMB104.3 billion (including the revenue from the sales of power and heat of approximately RMB102.5 billion, the sales of coal of approximately RMB861.9 million, the port service business of approximately RMB229.7 million and the transportation service business of approximately RMB10.9 million) and the net profit was approximately RMB3.3 billion. As of December 31, 2010, the net asset was approximately RMB62.4 billion. According to the 2010 annual report of HPI filed with the U.S. Securities and Exchange Commission (“2010 HPI Annual Report”), by the end of March 31, 2011, the total installed capacity of HPI was 55,361.5 MW, consisting of the installed capacity of 51,281 MW for coal power projects, 240.5 MW for wind power projects, 1,170 MW for the combined cycle gas turbine project, 1,200 MW for the oil-fired steam generation project and 1,470 MW for the natural gas project. The total installed capacity of HPI’s operating coal power business and renewable energy business (including wind power business) accounted for approximately 92.6% and 0.4% of HPI’s total installed capacity, respectively.

According to the 2010 HPI Annual Report, we set out below a table summarizing HPI’s wind power businesses as of March 31, 2011:

Operating wind power projects:

Total Installed Capacity HPI’s equity Project (in MW) interest (%) Location Huaneng Qidong Wind Farm (operating) ( ) ...... 141.5 65.0 Jiangsu Huaneng Huade Wind Farm (operating) ( )...... 49.5 100.0 Inner Mongolia Huaneng Kangbao Wind Farm (operating) ( )...... 49.5 100.0 Hebei Total ...... 240.5

Wind power projects under construction:

Total Capacity HPI’s equity Project (in MW)(1) interest (%) Location Huaneng Gansu Ganhekou Wind Farm II (under construction) ( ) ...... 199.5 100.0 Gansu Huaneng Gansu Qiaowan Wind Farm II (under construction) ( ) ...... 201.0 100.0 Gansu Huaneng Gansu Qiaowan Wind Farm III (under construction) ( ) ...... 101.0 100.0 Gansu Wafangdian Wind Power Farm (under construction) ( ) ...... 48.0 100.0 Liaoning Changtu Taiping Wind Farm (under construction) ( ) ...... 49.5 100.0 Liaoning Total ...... 599.0

Note: (1) Total capacity refers to the aggregate capacity under construction of the project company, which is calculated by including 100% of the capacity under construction of the project company, regardless of the level of Huaneng Group’s equity interest in such companies.

NMHD

NMHD is an A-share company listed on the Shanghai Stock Exchange. The business scope of NMHD includes, among others, coal power generation, the generation, supply, sales, maintenance and administration of

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As of December 31, 2010, Huaneng Group controlled approximately 71.1% equity interest and its corresponding voting rights in NMHD through NUP (owned as to 51.0% by Huaneng Group).

According to the 2010 annual report of NMHD, the board of directors of NMHD consisted of 12 directors, two of which held positions in Huaneng Group. As of December 31, 2010, the total installed capacity of NMHD was 4,920.0 MW. The coal power plants and wind farms of NMHD were all located in Inner Mongolia. For the year ended December 31, 2010, the revenue of NMHD was approximately RMB6.7 billion (including the revenue from the sales of power of approximately RMB6.4 billion and the sales of steam of approximately RMB47.8 million) and the net profit was approximately RMB1.2 billion. As of December 31, 2010, the net asset was approximately RMB6.5 billion. NMHD has three wind farms under construction, namely, Wulijimuren Wind Farm I ( ), Baiyunebo Wind Farm I ( ) and Eregetu Wind Farm ( ).

According to NMHD’s announcements published on the Shanghai Stock Exchange dated October 27, 2008, August 24, 2009 and its 2010 annual report, we set out below a table summarizing NMHD’s wind power businesses as of December 31, 2010:

Total Capacity NMHD’s equity Project (in MW)(1) interest (%) Location Wulijimuren Wind Farm I (under construction) ( )...... 49.5 100.0 Inner Mongolia Baiyunebo Wind Farm I (under construction) ( ) ...... 49.0 100.0 Inner Mongolia Eregetu Wind Farm (under construction) ( ) ...... 49.5 100.0 Inner Mongolia Total ...... 148.0

Note:

(1) Total capacity refers to the aggregate capacity under construction of the project company, which is calculated by including 100% of the capacity under construction of the project company, regardless of the level of Huaneng Group’s equity interest in such companies.

Nengshan

Nengshan is an A-share company listed on the Shenzhen Stock Exchange. The business scope of Nengshan includes, among others, the production and sale of electric power, the production and sale of wires, cable, electrical appliances, electrical machinery and equipment, adaptors, rubber and plastic products, the processing of metal materials, the manufacturing, sale and installation of highway fencing.

As of December 31, 2010, Huaneng Group controlled approximately 18.5% equity interest and its corresponding voting rights in Nengshan through HTEP (owned as to approximately 56.5% through Huaneng Shandong Electric Power Generation Co., Ltd. ( ), a wholly-owned subsidiary of Huaneng Group).

According to the 2010 annual report of Nengshan, the board of directors of Nengshan consisted of 11 directors, none of which held any position in Huaneng Group. The coal power plants and wind farms of Nengshan were all located in Shandong province. According to the 2010 annual report of Nengshan, the revenue of Nengshan was approximately RMB2.8 billion (including the revenue from the sales of power of approximately RMB1.9 billion, the cable business of approximately RMB557.9 million and the sales of the coal

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According to Nengshan’s announcement published on the Shenzhen Stock Exchange dated October 20, 2010 and the 2010 annual report of Nengshan, we set out below a table summarizing Nengshan’s wind power businesses as of December 31, 2010:

Total Installed Capacity Nengshan’s equity Project (in MW) interest (%) Location Laizhou Wind Farm I (operating) ( ) ...... 49.5 80.0 Shandong Total ...... 49.5

Immediately after certain possible working capital raising activities, Huaneng Group’s Listed Subsidiaries will continue to own and operate various wind power projects in the PRC as set out above. The inclusion of the Retained Business of Huaneng Group’s Listed Subsidiaries is practically unattainable because HPI, NMHD and Nengshan are listed companies. The operational and investment decisions of these listed companies are decided by their respective board of directors and management teams, which are independent of their respective controlling shareholders.

Due to the similar business nature, the Directors consider that there may be potential competition between Huaneng Group and us as far as the Retained Business by Huaneng Group’s Listed Subsidiaries and conventional power business are concerned. See the sub-section headed “Risk Factors — Risks Relating to Our Business and Industry — We face competition from other renewable energy companies, in particular, other wind power developers. We may also face competition from non-renewable power developers.” in this document for further details. However, the competition is not extreme for the following reasons:

• according to the Renewable Energy Law and relevant regulations, grid companies are required to provide grid-connection services and related technical support, and purchase the full amount of electricity generated from renewable energy projects that are located in the areas covered by the grid company. In addition, the PRC government regulates the on-grid tariffs for wind farms. However, in practice, the sales of electricity generated by our wind power projects may be limited by the transmission capacity of the local power grids. See the sub-section headed “Risk Factors — Risks Relating to Our Business and Industry — We reply on local grid companies for grid connection and electricity transmission and dispatch.” for more details. As a result of these legal requirements, the Directors are of the view that the competition between renewable energy projects in operation in the PRC is not extreme even if they are located in the same province in terms of grid connection, electricity sales and on-grid tariff due to the aforementioned legal requirements and after considering other factors affecting the transmission capacity of the local power grids. In respect of any possible change in the applicable laws, regulations and policies relating to renewable energy business in the PRC, we will keep track of those changes with the relevant PRC regulators and professional bodies, which allows us to familiarize ourselves with the same, and keep abreast with the development of the renewable energy business in the PRC; and

• wind power business is not the principal business of each of the Huaneng Group’s Listed Subsidiaries. Compared to our wind power business, the wind power businesses of each of HPI, NMHD and Nengshan is much smaller in scale. The existing total installed capacity of the wind power business of HPI, NMHD and Nengshan after becoming fully operational will be 839.5 MW, 148.0 MW and 49.5 MW, respectively. By comparison, the consolidated installed capacity of the Company’s wind power business as of December 31, 2010 was 3,522.4 MW and is expected to increase to approximately 5,100 MW by the end of 2011. Accordingly, the Directors do not consider that wind power business of each of Huaneng Group’s Listed Subsidiaries would pose significant competition to us.

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The Directors believe that Huaneng Group does not compete with us through Huaneng Group’s Listed Subsidiaries for the following reasons:

• as HPI, NMHD and Nengshan are all listed companies, business decisions are decided by their respective senior management and the boards of directors. The directors of such listed companies shall act in the best interest of the respective shareholders with respect to the affairs of the company and shall comply with the requirements of the respective rules of stock exchanges and shall seek independent shareholders’ approval, if required; and

• as HPI, NMHD and Nengshan are all listed companies, business decisions are independent of the controlling shareholder. Furthermore, Huaneng Group is not able to control all business decisions of its listed subsidiaries simply by virtue of its shareholding in such listed subsidiaries, including decisions on whether or not to compete with us.

HUANENG GROUP’S NON-COMPETITION UNDERTAKINGS TO ITS LISTED SUBSIDIARIES

We understand that Huaneng Group and its subsidiaries had granted certain non-competition undertakings to HPI, NMHD and Nengshan respectively in the past (the “Huaneng Group’s Non-competition Undertakings to its Listed Subsidiaries”).

Huaneng Group confirms that the undertakings granted under Huaneng Group’s Non- Competition Undertakings to its Listed Subsidiaries only refer to the conventional energy business and our Company is Huaneng Group’s sole renewable energy platform for the ultimate consolidation of its renewable energy businesses such as wind power. Huaneng Group has confirmed that it will facilitate such consolidation on an arm’s length basis within five years. As such, the Directors are of the view that there is no conflict between the undertakings granted under the Huaneng Group’s Non-competition Undertakings to its Listed Subsidiaries and the non- competition undertakings granted to the Company under the Non-Competition Agreement.

In addition, after reviewing publicly available information relating to the Huaneng Group’s Non- competition Undertakings to its Listed Subsidiaries and the relevant documentation, our PRC legal advisers, DeHeng Law Offices, confirm that the undertakings granted under the Huaneng Group’s Non-competition Undertakings to its Listed Subsidiaries do not contradict with the non-competition undertakings granted to the Company under the Non-Competition Agreement.

NON-COMPETITION AGREEMENT

We entered into the Non-Competition Agreement with Huaneng Group on August 6, 2010, as amended by a supplemental agreement dated November 23, 2010, under which Huaneng Group agreed not to compete with us in our core businesses and granted us the Option for New Business Opportunities, the Option for Acquisitions and the Pre-Emptive Rights.

Non-Competition Agreement

To further delineate the business between Huaneng Group and the Group, we entered into the Non-competition Agreement, under which Huaneng Group agreed not to, and to procure its subsidiaries (other than Huaneng Group’s Listed Subsidiaries) not to, compete with us in our wind power business and granted to us the Option for New Business Opportunities, the Option for Acquisitions and the Pre-Emptive Rights.

Huaneng Group has confirmed that we are Huaneng Group’s sole renewable energy platform for the ultimate consolidation of its renewable energy businesses such as wind power and that it will facilitate such

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The foregoing restrictions do not apply to (i) the purchase or holding by Huaneng Group or its subsidiaries for investment purpose of not more than 10% equity interest in other listed company whose business competes or potentially competes with our core business; or (ii) the holding by Huaneng group or its subsidiaries of not more than 10% equity interest in another company whose business competes or potentially competes with our core business, as a result of such company’s debt restructuring (“Investment Companies”). For the avoidance of doubt, the exemptions do not apply to Investment Companies which Huaneng Group or its subsidiaries are able to control their respective board of directors notwithstanding the fact that Huaneng Group’s or its subsidiaries’ interests in such Investment Companies are not more than 10%.

Option for New Business Opportunities

Huaneng Group has undertaken in the Non-Competition Agreement that:

(i) if Huaneng Group becomes aware of a new business opportunity which directly or indirectly competes, or may compete, with our core business, Huaneng Group shall notify us in writing and provide us all information which is reasonably necessary for us to consider whether or not to engage in such business opportunity (“Offer Notice”). Huaneng Group is also obliged to use its best efforts to procure that such opportunity is first offered to us on terms that are fair and reasonable. We are entitled to decide whether or not to take up such business opportunity within 30 days from receiving the Offer Notice. If we decide to take up such business opportunity, Huaneng Group is obliged to transfer the new business opportunity to us upon terms that are fair and reasonable. If we decide not to take up the new business opportunity or do not respond to Huaneng Group within 30 days from receiving the Offer Notice, Huaneng Group or its subsidiaries may operate such new business opportunity at its discretion.

(ii) Huaneng Group undertakes that it will procure all of its subsidiaries (other than the Huaneng Group’s Listed Subsidiaries) to offer a right of first refusal to us over any business opportunity which they encounter that competes, or may compete, directly or indirectly, with our core business.

The independent non-executive Directors will be responsible for reviewing the Options for New Business Opportunities and considering whether or not to take up a new business opportunity referred to by Huaneng Group and such decision will be made by the independent non-executive Directors. When considering whether or not to exercise the Options for New Business Opportunities, the independent non-executive Directors will form their views based on a range of factors, including but not limited to, the power plants’ wind resource condition, geological characteristics, construction and grid connection condition, estimated profitability, investment value and permits and approval requirements.

Option for Acquisitions

In relation to:

(i) the Retained Business by Huaneng Group’s Unlisted Subsidiaries; and/or

(ii) any new business opportunity referred to in the Non-Competition Agreement, which has been offered to, but has not been taken up by, the Company and has been retained by Huaneng Group or any of its

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unlisted subsidiaries, which competes, or may lead to competition, directly or indirectly, with our core business.

Huaneng Group has undertaken to grant us the option which is exercisable at any time during the term of the Non-Competition Agreement, pursuant to relevant laws and regulations, to purchase any equity interest, assets or other interests which form part of the Retained Business by Huaneng Group’s Unlisted Subsidiaries or new businesses as described above, or to operate the Retained Business by Huaneng Group’s Unlisted Subsidiaries or new businesses as described above by way of, including but not limited to, management outsourcing, lease or subcontracting. However, if a third party has the pre-emptive rights in accordance with applicable PRC laws and regulations or the Articles of Association, the third party may purchase the equity interest, assets or other interests under the same terms. In this case, Huaneng Group will try its best to procure the third party to waive its statutory pre-emptive rights.

Huaneng Group shall procure each of its subsidiaries (other than the Huaneng Group’s Listed Subsidiaries) to grant us the above option.

According to applicable PRC laws and regulations, an asset valuation report has to be prepared by an independent valuer and the parties must obtain the relevant approval or file with the relevant authority in accordance with the applicable laws if the subject matter of the transaction involves state-owned assets.

The consideration shall be determined with reference to the valuation conducted by an independent valuer and the transaction mechanism and procedure shall be determined after the negotiation between the parties in accordance with the applicable laws and regulations.

The independent non-executive Directors will perform a periodic review on the Retained Business by Huaneng Group’s Unlisted Subsidiaries and make recommendations to the Board as to whether to exercise the option to acquire any of the Retained Business by Huaneng Group’s Unlisted Subsidiaries. When considering whether or not to exercise the Option for Acquisitions, the independent non-executive Directors will form their views based on a range of factors, including but not limited to, the power plants’ wind resource condition, geological characteristics, construction and grid connection condition, estimated profitability, investment value and permits and approval requirements.

Pre-Emptive Rights

Huaneng Group has undertaken that, if it intends to transfer, sell, lease, license or grant to use any of the following interests to a third party:

(i) the Retained Business by Huaneng Group’s Unlisted Subsidiaries; and/or

(ii) any new business opportunity of Huaneng Group referred to in the Non-Competition Agreement, which has been offered to, but has not been taken up by, the Company and has been retained by Huaneng Group or any of its unlisted subsidiaries, which competes, or may lead to competition, directly or indirectly with our core business, the Company shall have pre-emptive right over these interests. Huaneng Group shall notify us by written notice (“Selling Notice”) in advance. The Selling Notice shall attach the terms of the transfer, sale, lease or license and any information which may be reasonably required by the Company to make a decision. We shall reply to the Huaneng Group in writing within 30 days from receiving the Selling Notice.

Huaneng Group has undertaken that until it receives the reply from the Company, it shall not notify any third party of the intention to transfer, sell, lease or license the business, (regardless of whether it

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has legal binding effect or not). If the Company decides not to exercise the pre-emptive rights or if the Company does not reply to Huaneng Group within the agreed time period, Huaneng Group is entitled to transfer, sell, lease or license the business to a third party pursuant to the terms stipulated in the Selling Notice.

Huaneng Group shall procure each of its subsidiaries (other than the Huaneng Group’s Listed Subsidiaries) to grant us the pre-emptive rights over the above interests.

In addition, pursuant to applicable PRC laws and regulations, an asset valuation report has to be prepared by an independent valuer and the parties must obtain the relevant approval or file with the relevant authority in accordance with the applicable laws if the subject matter of the transaction involves state-owned assets.

When Huaneng Group delivers to the Company the Selling Notice, the Company will report to the independent non-executive Directors within one week of receipt for their consideration before reverting to Huaneng Group within the 30-day period from the date of receiving the Selling Notice. The independent non- executive Directors will be responsible for reviewing and considering whether or not to exercise the pre-emptive rights and such decision will be made by the independent non-executive Directors. When considering whether or not to exercise the Pre-Emptive Rights, the independent non-executive Directors will form their views based on a range of factors, including but not limited to, the power plants’ wind resource condition, geological characteristics, construction and grid connection condition, estimated profitability, investment value and permits and approval requirements.

Huaneng Group has further undertaken that:

(i) it will provide all information necessary for the independent non-executive Directors to review Huaneng Group’s compliance with and enforcement of the Non-Competition Agreement;

(ii) it agrees that we disclose the decision made by the above-mentioned independent non-executive Directors committee related to the compliance with and enforcement of the non-competition agreement in our annual report, or by way of announcement; and

(iii) it will make a declaration regarding its compliance with the undertakings provided in the Non-Competition Agreement to enable us to disclose such declaration in our annual report.

The Company will also adopt the following procedures to monitor that the undertakings under the Non-Competition Agreement are being observed:

(i) we will provide to the independent non-executive Directors the Offer Notice and Selling Notice (as the case may be) on the new business opportunity referred to us by Huaneng Group or pre-emptive rights within one week of receipt;

(ii) the independent non-executive Directors will report their findings on the compliance by Huaneng Group of the Non-Competition Agreement in our annual report;

(iii) if the independent non-executive Directors deem necessary or in any event when the proposed acquisition requires independent shareholders approval in accordance with certain applicable rules and regulations, we will engage independent financial advisers at our own costs to advise the independent non-executive Directors as to whether or not to exercise the Options for New Business Opportunities, the Options for Acquisitions or the Pre-Emptive Rights; and

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(iv) the Directors consider that the independent non-executive Directors have sufficient experience in assessing whether or not to take up the new business opportunities or exercise the pre-emptive rights. In any event, the committee formed by the independent non-executive Directors may appoint financial advisors or professional experts to provide advice, at the cost of the Company, in connection with the exercise or non-exercise of the option or right of first refusal under the Non-Competition Agreement.

The Non-Competition Agreement will remain in full force and be terminated upon the earlier of:

(i) Huaneng Group and its subsidiaries, directly or indirectly, holding less than 30% of our total share capital.

Our PRC legal advisers are of the view that the Non-Competition Agreement and Huaneng Group’s undertakings pursuant to the Non-Competition Agreement are valid and binding obligations of Huaneng Group under the PRC law and may be enforced by us in the courts of the PRC.

Based on: (a) the undertaking by Huaneng Group that it will give a priority support to our development of the wind power business, (b) the legally binding obligations of Huaneng Group as set out in the Non-Competition Agreement and related grant of the Options for New Business Opportunities, the Option for Acquisitions and the Pre-emptive Rights, and (c) the information-sharing and other mechanisms in place as described above to monitor compliance by Huaneng Group, the Directors are of the view that the Company has taken all appropriate and practicable steps to ensure compliance by Huaneng Group with its obligations under the Non-Competition Agreement.

INDEPENDENCE FROM HUANENG GROUP

Having considered the following factors, we are satisfied that we can conduct our business independently from Huaneng Group and its associates.

Independence of Board and Management

The board of Directors consists of 11 directors, eight of whom do not hold any position in Huaneng Group. Of these eight Directors, four are independent non-executive Directors and four are executive Directors.

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Set out below is a table summarizing the positions held by the Directors at the Company, Huaneng Group and its subsidiaries:

Position with Huaneng Position with Group as of Huaneng Group’s subsidiaries Position with the the Latest Practicable as of the Latest Name of Directors Company Date Practicable Date Cao Peixi ( ) ...... Non-executive Director and President Chairman of HIPDC Chairman Chairman and an executive director of HPI Huang Long ( ) ...... Non-executive Director and Vice President Director of HIPDC Vice Chairman Vice Chairman and a non- executive director of HPI Zhao Keyu ( )...... Non-executive Director Chief of the N/A Planning Department Zhao Shiming ( ) .... Executive Director and N/A N/A President Niu Dongchun ( ) .... Executive Director and Vice N/A N/A President Yang Qing ( )...... Executive Director, Vice N/A N/A President and CFO He Yan ( ) ...... Executive Director and Vice N/A N/A President Qin Haiyan ( ) ...... Independent non-executive N/A N/A Director Dai Huizhu ( ) ...... Independent non-executive N/A N/A Director Zhou Shaopeng ( ) . . . Independent non-executive N/A N/A Director Wan Kam To ( ) ..... Independent non-executive N/A N/A Director

Apart from the above, none of the Directors or senior management holds any position or has any roles or responsibility in Huaneng Group or its subsidiaries or Nengshan. The Company and Huaneng Group are managed by different management personnel.

None of the independent non-executive Directors has any relationship with Huaneng Group. Mr. Qin Haiyan and Ms. Dai Huizhu possess in-depth knowledge and experience in the wind power industry while Mr. Wan Kam To possesses in-depth knowledge and experience in financial and accounting matters. On this basis, there are sufficient non-overlapping directors who are independent from Huaneng Group and have relevant experience to ensure the proper functioning of the Board.

Other than certain directorships and/or positions held by some of the Directors in Huaneng Group mentioned above, the Directors have confirmed that they do not have any interests in any business which directly or indirectly competes or is likely to compete with our business as of the Latest Practicable Date.

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We believe that the Directors and senior management are able to perform their roles in the Company independently and the Company is capable of managing its business independently of Huaneng Group for the following reasons:

• the decision-making mechanism of the Board set out in the Articles of Association includes provisions to avoid conflicts of interest by providing, among other things, that in the event of conflict of interest, such as consideration of resolutions in relation to transactions with Huaneng Group, the relevant Director(s) who are connected with Huaneng Group will abstain from attending the meeting in respect of such resolution, abstain from voting and not be counted in the quorum. Further, when considering connected transactions, the independent non-executive Directors will review the relevant transactions;

• the directors holding positions in Huaneng Group are non-executive Directors of the Company. They are not involved in running the day-to-day business of the Company, but rather primarily responsible for strategy and planning matters as members of the Board. The day-to-day operation of the Company is managed by our senior management who do not hold any position in Huaneng Group and are our full-time employees;

• none of the Directors or the senior management has any shareholding interest in Huaneng Group; and

• we have appointed four independent non-executive Directors, comprising more than one-third of our Board, to provide a balance between the number of interested and independent Directors with a view to promoting the interests of the Company and our Shareholders as a whole.

Based on the above, the Directors are of the view that the Company operates independently of Huaneng Group from the management perspective.

Independence of Business Operations

We are in possession of all production and operating facilities and technology relating to our businesses. Currently, we engage in our core businesses independently, with the independent right to make operational decisions and implement such decisions. We have independent access to customers and suppliers and are not dependent on Huaneng Group in that regard.

We and Huaneng Group entered into the Trademark License Agreement, under which Huaneng Group has granted us a non-exclusive right to use its “HUANENG” and “ ” trademarks for nil consideration.

Apart from the above licensed trademarks, we registered our own trademarks both in the PRC and Hong Kong. See the section headed “Appendix X — Statutory and General Information — Our intellectual property rights” for further details. We plan to use our own trademarks in our daily business operations except in the circumstances that we need to identify ourselves as being a member of Huaneng Group by using the licensed trademarks. Therefore, the Directors are of the view that the Trademark License Agreement does not affect our independence of business operations. Also, the Directors are of the view that this agreement is entered into on normal commercial terms, and is fair and reasonable and in the interests of our Shareholders as a whole. See the section headed “Connected Transactions — Exempt Continuing Connected Transactions” in this document for further details.

We have our own organizational structure with independent departments, each with specific areas of responsibility. In addition to maintaining a set of comprehensive internal control procedures to facilitate the effective operation of our business, we have protective measures to avoid conflicts or potential conflicts of

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Based on the above, the Directors are of the view that the Company operates independently of Huaneng Group from the business operation perspective.

Financial independence

Our own finance department is responsible for discharging the treasury, accounting, reporting, group credit and internal control functions of the Company, independent from Huaneng Group.

Our subsidiary Huaneng Shantou Nan’ao Wind Power Co., Ltd. ( ) (“Shantou Nan’ao”) and China Construction Bank Guangdong Branch (“CCBGB”) entered into a loan agreement, under which Huaneng Group acted as the guarantor with respect to the Shaotou Nan’ao’s loan obligation (the “Guarantee by Huaneng Group”). The loan consists of an export credit loan and a long-term loan. The export credit loan was fully settled and repaid. With respect to the long-term loan, our Company is obligated to make semi-annual installment repayments which commenced on June 15, 2001 and ending on December 15, 2029 and pay no more than approximately US$127,608 for each installment repayment starting from December 15, 2010. We do not propose to effect premature release of the Guarantee by Huaneng Group prior to the Listing, which would give rise to renegotiation with the Spanish government through CCBGB. Given that the outstanding long-term loan is approximately US$4.1 million, which is less than 1% of our long-term borrowings as of December 31, 2010, the Directors are of the view that the Guarantee by Huaneng Group does not affect our financial independence. See the section headed “Connected Transactions — Exempt Continuing Connected Transactions” in this document for further details.

Other than the transaction as described in the paragraph immediately above, we have settled all amounts due to Huaneng Group of a non-trading nature and the guarantees provided to us by Huaneng Group have been released.

The Directors are of the view that we are capable of obtaining financing from third parties without relying on any guarantee or security provided by Huaneng Group or other connected persons and the PRC lenders are independent third parties. Therefore, the Directors are of the view that the Company operates independently of Huaneng Group from the financial perspective.

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OVERVIEW

AGREEMENTS RELATING TO THE REORGANIZATION

1. Reorganization Agreement

In connection with the Reorganization, we entered into the Reorganization Agreement with Huaneng Group and Huaneng Capital on August 5, 2010. Pursuant to the Reorganization Agreement, Huaneng Group has provided various representations and warranties in relation to assets, liabilities and interests transferred to us under the Reorganization. Further, Huaneng Group has agreed to be responsible for tax liabilities or claims due to increase in value of the assets injected to us as a result of the asset valuation during Reorganization. Huaneng Group has undertaken in the Reorganization Agreement to indemnify us against losses incurred as a result of breach of any terms of the Reorganization Agreement. For further details regarding the terms of the Reorganization Agreement, please refer to the section headed “History, Reorganization and Corporate Structure — Reorganization.”

2. Non-Competition Agreement

As part of the Reorganization, we entered into the Non-Competition Agreement with Huaneng Group. Under this agreement, we were granted the Option for New Business Opportunities, the Option for Acquisitions and the Pre-Emptive Rights. Further details of the Non-Competition Agreement are set out in the section headed “Relationship with Controlling Shareholder — Non-Competition Agreement.”

CONTINUING CONNECTED TRANSACTIONS

Exempt Continuing Connected Transactions

After the relevant event, the following transactions will be regarded as continuing connected transaction exempt from the reporting, annual review, announcement and independent shareholders’ approval requirements under certain applicable rules and regulations.

Trademark License Agreement

Background: We entered into a trademark license agreement with Huaneng Group on August 6, 2010, pursuant to which we were granted a non-exclusive right to use Huaneng Group’s “HUANENG” and “ ” trademarks (the “Trademark License Agreement”). The term of this agreement is ten years commencing from the date of this agreement. It may be extended for a further term of three years upon service of a written notice by us and written confirmation by Huaneng Group one month before the expiry date. See “Appendix X — Statutory and General Information — Our intellectual property rights” for details of such trademarks. Huaneng Group cannot terminate the Trademark License Agreement without our written consent. The Trademark License Agreement was entered into because we believe that this arrangement will help us identify ourselves as a member of Huaneng Group.

Connected Person: Huaneng Group is the controlling shareholder of our Company and is a connected person of our Company by virtue of certain applicable rules and regulations.

Connected Transaction: The trademark license arrangement under the Trademark License Agreement is a connected transaction under certain applicable rules and regulations, and any continuing trademark licensing after the completion of the relevant event will constitute continuing connected transaction under certain applicable rules and regulations.

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Pricing: The trademark license is granted for nil consideration.

Further License: Since we are not required to pay any license fee to Huaneng Group, each of the percentage ratios under certain applicable rules and regulations for the above continuing connected transaction is less than 0.1%. Accordingly, the Trademark License Agreement constitutes a de minimis continuing connected transaction exempt from reporting, annual review, announcement and independent shareholders’ approval requirements under certain applicable rules and regulations.

Guarantee by Huaneng Group

Background: Huaneng Shantou Nan’ao Wind Power Co., Ltd. ( ) (“Huaneng Shantou Nan’ao”), a 52%-owned subsidiary of our Company, entered into a loan agreement (the “Loan Agreement”) with China Construction Bank Guangdong Branch (“CCBGB”) on November 29, 1999. The purpose of this loan was to provide funding for the construction of Phase I of the Shantou Nan’ao Project. As part of this arrangement, CCBGB obtained the source of funding from the Spanish government. Huaneng Group acted as the guarantor with respect to Huaneng Shantou Nan’ao’s obligations under the agreement as borrower (the “Guarantee by Huaneng Group”).

The loan amount is US$8,586,809 comprising (A) US$4,317,319 export credit loan for a term of seven years ended on January 22, 2008 which was fully settled and repaid in 2008, and (B) US$4,269,490 long-term loan ( the “Long-Term Loan”).

With respect to the Long-Term Loan, our Company is obligated to make semi-annual installment repayments which commenced on June 15, 2001 and ending on December 15, 2029. For each installment repayment for the period between June 15, 2001 and December 15, 2009, our Company was obligated to repay interest to service the Long-Term Loan, while the principal amount of the Long-term Loan would set to be reduced gradually with each installment repayment made on and after June 15, 2010. For the years ended December 31, 2008, 2009 and 2010, Huaneng Shantou Nan’ao paid US$42,811.9, US$42,649.9 and US$255,634.3, respectively.

Connected Person: Huaneng Group is the controlling shareholder of our Company and is a connected person of our Company by virtue of certain applicable rules and regulations.

Connected Transaction: The Guarantee by Huaneng Group under the Loan Agreement constitutes financial assistance provided by connected persons of our Company for the benefit of the Group.

Pricing: The guarantee is granted for nil consideration.

According to the Loan Agreement, we pay no more than approximately US$127,608 for each installment repayment starting from December 15, 2010 until December 15, 2029 to service the Long-Term Loan. The outstanding Long-Term Loan is approximately US$4.1 million, which is less than 1% of our Company’s long- term borrowings as of December 31, 2010.

We do not propose to discharge the Guarantee by Huaneng Group with respect to this agreement prior to the Listing and we intend to keep the Long-Term Loan until the expiration of the Loan Agreement. The early discharge of the Guarantee by Huaneng Group would require renegotiation with the Spanish government through CCBGB, which would be an unduly burdensome and cost-ineffective exercise for our Company. We were informed by CCBGB that such discharge of guarantee would also require us to obtain various approvals from the PRC governmental authorities. Given that our Company has the ability to obtain financing independent of Huaneng Group and that the size of the loan is insignificant from our perspective, we are of the view that we are

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The Guarantee by Huaneng Group under the Loan Agreement constitutes financial assistance provided by connected person of our Company for the benefit of the Group under certain applicable rules and regulations. The Loan Agreement will be exempt from reporting, announcement and independent shareholders’ approval requirements under certain applicable rules and regulations because (i) this financial assistance arrangement is on normal commercial terms; and (ii) no security over our assets is granted in respect of this financial assistance arrangement.

Non-Exempt Continuing Connected Transactions Subject to Reporting and Announcement Requirements

After the relevant event, the following transactions will be regarded as continuing connected transactions exempt from independent shareholders’ approval requirements under certain applicable rules and regulations, but are subject to reporting, annual review and announcement requirements under the certain applicable rules and regulations.

1. Framework Property Lease Agreement

Background: During the years ended December 31, 2008, 2009 and 2010, we entered into property lease agreements with Xinsheng Property Management Co., Ltd. ( ) (“Xinsheng”) (previously named Huaneng Property Management Co., Ltd.) to lease our headquarters in Beijing (“Xinsheng Leases”). The principal business of Xinsheng is property management.

The Xinsheng Leases were entered into because compared with other third party property service providers, Xinsheng has a better understanding of our requirements in terms of office premises usage as we began renting office premises from Xinsheng since our inception. Also, relocating to different office premises will cause unnecessary disruptions to our operation and incur unnecessary costs.

Furthermore, during the years ended December 31, 2008, 2009 and 2010, Huaneng Hongkong Electric Dali Wind Power Co., Ltd. ( ) (“Huaneng Hongkong Dali”), a 55%-owned subsidiary of our Company entered into lease agreements with Huaneng Dali Hydro Power Co., Ltd. ( ) (“Huaneng Dali”) for office premises use (“Huaneng Hongkong Dali Leases”). The principal business of Huaneng Dali is hydropower generation.

The Huaneng Hongkong Dali Leases were entered into because Huaneng Hongkong Dali maintains a good relationship with Huaneng Dali as it began renting office premises from Huaneng Dali since its inception and relocating to different office premises will cause unnecessary disruption to Huaneng Hongkong Dali’s operation and incur unnecessary costs.

Huanneng Eryuan Wind Power Co., Ltd. ( ) (“Huaneng Eryuan”), a wholly- owned subsidiary of our Company entered into a lease agreement dated July 21, 2010 with Huaneng Dali for office premises use (“Huaneng Eryuan Lease”).

The Huaneng Eryuan Lease was entered into because Huaneng Eryuan maintains a good relationship with Huaneng Dali as they are within the Huaneng Group. Also, as Huaneng Hongkong Dali’s office premises are in the same building, it would improve the communication between Huaneng Eryuan and Huaneng Hongkong Dali.

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For the years ended December 31, 2008, 2009 and 2010, the rental expenses incurred for Xinsheng Leases, were RMB2.2 million, RMB2.3 million and RMB5.0 million.

For the years ended December 31, 2009 and 2010, the rental expenses incurred for Huaneng Hongkong Dali Leases were RMB108,000 and RMB100,000.

For the year ended December 31, 2010, the rental expenses incurred for Huaneng Eryuan Lease was RMB37,500.

Connected Persons:

• Xinsheng (as the lessor). Xinsheng is a wholly-owned subsidiary of HCI, in which Huaneng Group directly holds 100% of its equity interest. As Huaneng Group is our Controlling Shareholder, Xinsheng is an associate and, therefore, a connected person of our Company by virtue of certain applicable rules and regulations.

• Huaneng Dali (as the lessor). Huaneng Dali is a 60%-owned subsidiary of Yunnan Huaneng Lancang River Hydropower Co., Ltd. ( ), in which Huaneng Group directly holds 56% of its equity interest. Hence, Huaneng Dali is an associate and also a connected person of the Company under certain applicable rules and regulations.

Connected Transactions: Any property leases entered into with Xinsheng and Huaneng Dali are connected transactions under certain applicable rules and regulations, and any continuing leases entered into between Huaneng Group or its associates and us after the completion of the relevant event will constitute continuing connected transactions under certain applicable rules and regulations.

Pricing: The rental expenses incurred during the years ended December 31, 2008, 2009 and 2010 under the lease agreements mentioned above were agreed at after arm’s length negotiation with reference to the prevailing local market rates.

Future services: In order to regulate the business relationship between us and Huaneng Group, we entered into a framework property lease agreement on September 13, 2010 with Huaneng Group, as amended by a supplement agreement dated April 29, 2011 (collectively referred to as the “Framework Property Lease Agreement”), for a term of three years commencing on the Listing Date, subject to renewal provided that it is in compliance with the relevant provisions on connected transactions under the certain applicable rules and regulations. Under the Framework Property Lease Agreement, the rental will be agreed following arm’s length negotiations between the relevant parties with reference to the prevailing market rates. We have entered into separate property lease agreements with Xinsheng and Huaneng Dali under the current arrangement, and each of the agreements will sustain for no more than three years after the Listing. Our Directors are of the view that the Framework Property Lease Agreement will provide us with a secured office premises on which we can continue to grow and also minimize the effect of any significant fluctuations in rental rates in the PRC.

The Jones Lang LaSalle Sallmanns, an independent property valuer, has confirmed that the proposed aggregate rental expenses mentioned below is comparable to the prevailing market rate for similar premises in the vicinity of the relevant property and is fair and reasonable.

With reference to the terms of the valid leases and the continuing growth of our business, we estimate that the annual caps of the aggregate rental expenses will be approximately RMB8.6 million, RMB8.6 million and RMB8.6 million for the years ending December 31, 2011, 2012 and 2013.

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In arriving at the above annual caps, the Directors have considered the terms of the currently valid leases and the property market conditions in the PRC going forward.

2. CDM Services Agreements

Background: During the years ended December 31, 2008, 2009 and 2010, we entered into CDM services agreements with HIPDC’s branches, Qidong Wind Power and HPI, respectively. The CDM services agreements included:

(1) the CDM services agreements respectively entered into between us and HIPDC Jilin Tongyu Wind Power Branch ( ) (“Jilin Tongyu”) and HIPDC Jilin Baicheng Wind Power Branch ( ) (“Jilin Baicheng”) dated December 2, 2009 regarding providing CDM services to the wind farms owned by Jilin Tongyu and Jilin Baicheng (“Jilin Wind Farms”);

(2) the CDM services agreement entered into between us and Qidong Wind Power dated December 2, 2009 regarding providing CDM services to Jiangsu Qidong 91.5 MW Wind Farm (the “Qidong Wind Farm”); and

(3) the CDM services agreements entered into between us and HPI in January 2010 regarding providing CDM services to Gansu Ganhekou Wind Farm II, Gansu Qiaowan Wind Farm II and III (the “Gansu Wind Farms”).

The CDM services agreements set out above are collectively referred to as the “CDM Services Agreements.” These agreements will expire on December 31, 2012. Pursuant to the CDM Services Agreements, we provide various management services to the Jilin Wind Farms, Qidong Wind Farm and Gansu Wind Farms (collectively, the “Managed CDM Projects”), including but not limited to, the registration of the Managed CDM Projects as CDM projects. The CDM Services Agreements were entered into because we have an experienced team that is familiar with the CDM projects registration process. For the year ended December 31, 2010, we received approximately RMB4.1 million pursuant to the CDM Services Agreements.

Connected Persons: Jilin Tongyu and Jilin Baicheng are 100%-owned by HIPDC, which is controlled by Huaneng Group; as such, Jilin Tongyu and Jilin Baicheng are the connected persons of our Company by virtue of certain applicable rules and regulations.

Qidong Wind Power is a 65%-owned subsidiary of HPI, which is controlled by Huaneng Group; as such, Qidong Wind Power and HPI are the connected persons of our Company by virtue of certain applicable rules and regulations.

Connected Transactions: The services provided by us under the CDM Services Agreements are connected transactions under certain applicable rules and regulations, and any such services after the completion of the relevant event will constitute continuing connected transactions under certain applicable rules and regulations.

Pricing: Pursuant to the CDM Services Agreements, which were agreed on an arm’s length basis, the fees consist of the following:

• RMB500,000 aggregate registration fee per each CDM registered wind farm, which is paid by installments, including RMB150,000 shall be paid within 10 days after obtaining NDRC’s initial

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approval and making the formal application to CDM EB, respectively, and RMB200,000 shall be paid within 10 days after the successful registration of the Managed CDM projects as CDM projects; and

• RMB200,000 aggregate monitoring fee for performing testings on each CDM registered wind farm, which is paid by installments, including RMB100,000 shall be paid within 10 days after the publicity of the monitoring reports and the certification reports and the issuing of the CER credits, respectively.

Annual Caps: We estimate that the annual caps of the aggregate services fees received from HIPDC and HPI will be approximately RMB2.2 million and RMB2.2 million for the years ending December 31, 2011 and 2012.

In arriving at the above annual caps, the Directors have considered the terms of the currently valid CDM Services Agreements, the various stages of application for each of the Managed CDM Projects and the frequency of performing testings.

Non-Exempt Continuing Connected Transaction Subject to Reporting, Annual Review, Announcement and Independent Shareholders’ Approval Requirements

After the relevant event, the following transaction will be regarded as continuing connected transaction subject to reporting, annual review, announcement and independent shareholders’ approval requirements under certain applicable rules and regulations.

Framework Insurance Agreement

Background: Alltrust Insurance Company of China Limited ( ) (“Alltrust Insurance”) sells insurance products to members of our Group in the ordinary and usual course of our business. Alltrust Insurance is an insurance company established in the PRC with a focus on providing insurance services to power companies in the PRC. Members of our Group purchased a range of insurance products from Alltrust Insurance and its Beijing Branch during the years ended December 31, 2008, 2009 and 2010, including property all-risk insurance, business interruption insurance, machinery breakdown insurance, public liability insurance, project construction and installation all-risk insurance and group life accident insurance.

For each of the years ended December 31, 2008, 2009 and 2010, insurance premium paid by us to Alltrust Insurance were RMB5.2 million, RMB8.7 million and RMB17.8 million, respectively.

Connected Person: Alltrust Insurance (the insurer) is a subsidiary of Huaneng Group. As such, Alltrust Insurance is a connected person of our Company pursuant to certain applicable rules and regulations.

Connected Transactions: The purchases of various insurance products by us from Alltrust Insurance are connected transactions under certain applicable rules and regulations, and any such purchases after the relevant event will constitute continuing connected transactions under certain applicable rules and regulations.

Pricing: The premium rates provided by Alltrust Insurance to us are determined by making reference to the guidelines promulgated by China Insurance Regulatory Commission (“CIRC”) and are no less favorable than those offered by any other third parties for similar services in the PRC.

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Future insurance services: We intend to continue to obtain insurance products from Alltrust Insurance after the completion of the relevant event because we believe that Alltrust Insurance is able to provide better insurance services and possesses technical competence in underwriting insurance policies as compared to other insurance companies because of their expertise in the power industry in the PRC.

In order to regulate the business relationship between the Group and Alltrust Insurance, we entered into a framework insurance agreement with Alltrust Insurance Beijing Branch on August 6, 2010, as amended by a supplement agreement dated April 29, 2011 (collectively referred to as the “Framework Insurance Agreement), for a term of three years, subject to renewal provided that it is in compliance with the relevant provisions on connected transactions under the certain applicable rules and regulations. Under the Framework Insurance Agreement, our subsidiaries will enter into separate insurance agreements with Alltrust Insurance Beijing Branch according to the principal terms.

The Directors are of the view that the Framework Insurance Agreement is entered into on normal commercial terms and is fair and reasonable since the insurance rates are determined in accordance with the guidelines promulgated by CIRC, which are no less favorable than those offered by any other third parties for similar services in the PRC.

Annual Caps: We estimate that the annual caps of the aggregate insurance premium paid to Alltrust Insurance would be approximately RMB40 million, RMB60 million and RMB80 million for the years ending December 31, 2011, 2012 and 2013.

In arriving the above annual caps, the Directors have considered the premium rates guidelines promulgated by CIRC and the estimated average value of the projects under construction and in operation multiplied by premium rates. Average value of projects under construction is estimated based on capital expenditure plan and average value of projects in operation is estimated based on the current operational asset scale and capital expenditure plan. All projects under construction are subject to one premium rate while all projects in operation are subject to another premium rate due to the difference in the nature of projects. In particular, the Directors have also considered the increase of our consolidated installed capacity from 3,522.4 MW as of the end of 2010 to approximately 5,100 MW by the end of 2011. For the annual cap of 2012 and 2013, the Directors have considered our historical and estimated future growth rates and our future capital expenditure plans.

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BOARD OF DIRECTORS

Our business and corporate affairs are managed by our Board of Directors, which consists of four executive Directors, three non-executive Directors and four independent non-executive Directors. Our Directors are elected and appointed by shareholders at shareholders’ meeting for a term of three years, which is renewable upon re-election and re-appointment. Except for independent non-executive Directors who are limited to a maximum term of nine years, all the other Directors may be re-elected and re-appointed for an unlimited number of years.

The functions and authorities of the Board include, among other things:

• convening shareholders’ meetings and reporting its work to shareholders at such meetings;

• executing shareholders resolutions;

• determining our business plans, investment schedule, performance targets and financing plans;

• formulating our annual budget and final accounts;

• formulating our profit distribution plans and plans for loss recovery;

• formulating proposals to increase or decrease our registered capital;

• formulating proposals for issuance of bonds or other marketable securities and listing plans;

• formulating proposals for material acquisition, merger or dissolution of the Company;

• exercising other powers and performing other functions and duties as conferred by applicable laws and regulations and our Articles of Association.

The following table sets forth information regarding our Directors. Our existing non-executive Directors and executive Directors were elected to their current term on the Board on August 4, 2010, and our existing independent non-executive Directors were elected on August 6, 2010. The term of all of our Directors is three years.

Name Age Position Mr. CAO Peixi ...... 55 Chairman of the Board and Non-executive Director Mr. HUANG Long ...... 57 Vice Chairman of the Board and Non-executive Director Mr. ZHAO Keyu ...... 45 Non-executive Director Mr. ZHAO Shiming ...... 59 Executive Director and President Mr. NIU Dongchun ...... 58 Executive Director Ms. YANG Qing ...... 42 Executive Director Mr.HEYan ...... 46 Executive Director Mr. QIN Haiyan ...... 40 Independent Non-executive Director Ms. DAI Huizhu ...... 72 Independent Non-executive Director Mr. ZHOU Shaopeng ...... 64 Independent Non-executive Director Mr.WANKamTo...... 58 Independent Non-executive Director

Except as disclosed otherwise, the business address of each non-executive Director is No. 4, Fuxingmennei Dajie, Xicheng District, Beijing, the PRC, and the business address of each of our executive Directors and independent non-executive Directors is 10-11th Floor, No.23A Fuxing Road, Haidian District, Beijing, the PRC. A description of the business experience and present position of each Director is provided below.

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DIRECTORS

Non-executive Directors

Mr. CAO Peixi ( ), aged 55, is a non-executive Director and Chairman of the Board of our Company. Mr. Cao joined our Group on August 4, 2010 when he was appointed as a non-executive Director of our Company. He has been the President of Huaneng Group since June 2008. Mr. Cao has over 37 years of experience in power industry. Prior to joining Huaneng Group, Mr. Cao served as President of China Huadian Corporation ( ) from October 2006 to June 2008 and Vice President of China Huadian Corporation ( ) from December 2002 to October 2006. Mr. Cao also served as Chairman and President of Shandong Power Group Corporation ( ) from January 2001 to December 2002, deputy chief of Shandong Power Bureau ( ), the predecessor of Shandong Power Group Corporation ( ), from May 1996 to January 2001 and assistant chief of Shandong Power Bureau from December 1995 to May 1996. Mr. Cao graduated in 1979 from Shangdong Institute of Technology. He also graduated in 2002 from Shandong University with a master’s degree in engineering. Mr. Cao is a senior engineer.

Mr. HUANG Long ( ), aged 57, is a non-executive Director and Vice Chairman of the Board of our Company. Mr. Huang joined our Group on August 4, 2010 when he was appointed as a non-executive Director of our Company. He has been the Vice President of Huaneng Group since April 2006. Mr. Huang has nearly 40 years of experience in power industry. He served as Vice President of HPI ( ) from January 2000 to March 2006, sub-manager of Engineering Department and head of Project Management Division, deputy manager and manager of the International Cooperation Department of Huaneng International Power Development Corporation ( ) from October 1988 to January 2000. Prior to joining Huaneng Group, Mr. Huang worked as assistant engineer at Science Facility of Wuhan Changjiang River Basin Planning Office ( ) from January 1976 to September 1982, and as an operator at Guizhou Cable Power Plant ( ) from September 1970 to September 1972. Mr. Huang graduated in 1976 from Guangdong Institute of Technology. He also graduated from North Carolina State University with a master’s degree in communications and auto-control in 1985 Mr. Huang is a senior engineer.

Mr. ZHAO Keyu ( ), aged 45, is a non-executive Director of the Board of our Company. Mr. Zhao joined our Group on August 4, 2010 when he was appointed as a non-executive Director of our Company. He has been the chief of Planning Department of Huaneng Group since December 2009. Mr. Zhao has over 20 years of experience in power industry. Mr. Zhao served as deputy general manager of Huaneng Shandong Power Generation Co., Ltd. ( ) from February 2009 to November 2009. Prior to joining Huaneng Group, Mr. Zhao served as secretary to the Communist Party Committee of Shandong Luneng Development Group Co., Ltd. ( ) from July 2007 to December 2008, general manager and chairman of the board of Beijing Deyuan Investment Co., Ltd. ( ) from February 2006 to July 2007, HR manager of Shandong Luneng Group Co., Ltd. ( ) from January 2005 to February 2006, deputy secretary and secretary to the Communist Party Committee of ULTRA-HV Transmission & Distribution Branch Company of Shandong Power Group Corporation ( ) from October 2001 to January 2005, deputy secretary to the Youth League Committee of Shandong Power Bureau ( ) from September 1997 to October 2001, secretary to the Youth League Committee, secretary to the Communist Party Branch and deputy chief engineer of Fangzi Power Plant ( ) from October 1990 to September 1997 and technician in Weifang Power Plant ( ) from July 1988 to October 1990. Mr. Zhao graduated in 1988 from Shangdong University of Technology with a bachelor’s degree in engineering. He also graduated from Wuhan University with a master’s degree in software engineering in 2005. He is a senior political work specialist.

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Executive Directors

Mr. ZHAO Shiming ( ), aged 59, is an executive Director of the Board and our President. He was appointed as our executive Director on August 4, 2010. Mr. Zhao joined our Group in July 2002 and served as the general manager of HNEIC, our predecessor, from July 2002 to August 2010. He also served as the general manager of HCI from August 2001 to July 2002, and the deputy general manager and manager of Huaneng Finance Corporation Ltd. ( ) from April 1997 to August 2001. Mr. Zhao has extensive management experience and has held various positions at different governmental authorities. He was secretary to the Communist Party Committee of Hailar City from August 1995 to April 1997, mayor and deputy secretary to the Communist Party Committee of Hailar City from November 1993 to August 1995, deputy mayor of Hailar City from March 1990 to November 1993, head of the Planning Commission of Hailar City from May 1986 to March 1990, head of Hailar City Food Manufacturing Plant ( ) from November 1984 to May 1986, deputy head of Economic Commission of Hailar City from July 1984 to November 1984, office secretary to the People’s Government of Hailar City from April 1978 to September 1982 and head of the Business Division of Hailar City Agricultural Machinery Company ( ) from April 1976 to April 1978. He was with the PRC army from January 1971 to April 1976 and worked at Inner Mongolia Eyouqi Suqin Pasture ( ) from May 1969 to January 1971. Mr. Zhao graduated from College of Economics and Management of Jilin University in 1995. He also graduated from Business School of Jilin University with a master’s degree in management in 1999. He is a senior economist.

Mr. NIU Dongchun ( ), aged 58, is an executive Director of the Board and our Vice President. He was appointed as our executive Director on August 4, 2010. Mr. Niu is primarily responsible for the development and operation of our wind power projects and our personnel. Mr. Niu joined our Group in October 2007 and served as deputy general manager of HNEIC from October 2007 to August 2010. Prior to joining our Group, Mr. Niu served as director of Eastern Economic Revitalization Office of Inner Mongolia Autonomous Region ( ) from May 2007 to October 2007, deputy head of Development and Reform Commission of Inner Mongolia Autonomous Region from September 2002 to May 2007, division head of Metallurgy and Building Materials Division, Economic Projection Department of State Planning Commission ( ) from July 1998 to September 2002, deputy division chief and division chief of the Steel and Iron Division, Raw Material Department of State Planning Commission ( ) from August 1991 to July 1998, chief staff member of First Industry Department of State Planning Commission ( ) from June 1988 to March 1990, chief staff member of Heavy Industry Bureau of State Economic and Trade Commission ( ) from December 1986 to June 1988 and deputy workshop head of Beijing Special Iron Plant ( ) from September 1975 to December 1986. Mr. Niu graduated from Beijing Iron and Steel Institute in 1975. He is a senior engineer.

Ms. YANG Qing ( ), aged 42, is an executive Director of the Board, Vice President and Chief Financial Officer of our Company. She was appointed as our executive Director on August 4, 2010. Ms. Yang joined our Group in May 2002. Ms. Yang was the deputy general manager and chief accountant of HNEIC from November 2008 to August 2010, and the deputy chief accountant and manager of the Financial Department of HNEIC from March 2002 to November 2008. Ms. Yang joined Huaneng Group in 1990 and has over 20 years of financial experience. She has served various financial related positions at Huaneng Group, including, among others, division chief of the First Financial Department from July 2000 to April 2002, deputy division chief of the Financial Department from April 1995 to July 2000, assistant accountant and accountant from August 1992 to September 1995. Ms. Yang graduated from Central University of Finance & Economics (previously known as Central Institute of Finance and Banking) with a bachelor’s degree in economics in 1990. She also graduated from the School of Finance of Renmin University of China with a master’s degree in economics in 2002. She is a senior accountant.

Mr. HE Yan ( ), aged 46, is an executive Director of the Board and Vice President of our Company. He was appointed as our executive Director on August 4, 2010. Mr. He is primarily responsible for our strategic

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Independent Non-Executive Directors

Mr. QIN Haiyan ( ), aged 40, is an independent non-executive Director of the Board. Mr. Qin joined our Group on August 6, 2010 when he was appointed as an independent non-executive Director of our Company. He is currently the director of China General Certification Center ( ) and the secretary-general of the Wind Power Committee of China Renewable Energy Society ( ). He is also the standing director of China Renewable Energy Society, deputy head of the Climatic Resources Application Research Committee of China Meteorological Society ( ), deputy secretary-general of the Renewable Energy Committee of China Association of Resources Comprehensive Utilization ( ) and member of the Technical Committee of National Wind Power Machinery Standardization ( ). Mr. Qin has led over 20 research projects in the area of renewable energies. For example, he was the person-in-charge for the “Analysis of the Development Potential of China’s Offshore Wind Power”, a project sponsored by World Wildlife Fund from 2009 to 2010, and the person-in-charge for the “Establishment of Certification for Wind Turbines”, a project sponsored by the PRC government, World Bank and the Global Environment Facility from 2008 to 2009. Mr. Qin graduated from Shanghai Jiao Tong University with a bachelor’s degree in engineering in 1994. He also obtained a master’s degree in MBA from Renmin University of China in 2002.

Ms. DAI Huizhu ( ), aged 72, is an independent non-executive Director of the Board. Ms. Dai joined our Group on August 6, 2010 when she was appointed as an independent non-executive Director of our Company. She is currently the senior consultant, professor and Supervisor of Doctorate Students of Renewable Energy Department of China Electric Power Research Institute ( ). Ms. Dai has over 47 years of experience in the research of electric power in China. She joined China Electric Power Research Institute in 1992 and has served at various positions, including, among others, head of New Energy Power Generation Laboratory, head of Graduate Department and chief engineer of Rural Electrification Research Department. Prior to joining China Electric Power Research Institute, Ms. Dai held various positions at Northeast Institute of Electric Power Engineering ( ) from 1963 to 1992, including assistant lecturer, lecturer, associate professor, professor, head of Research Section of Electrical Engineering Fundamentals and deputy head of Electric Power Research Institute. As a researcher, Ms. Dai has conducted in-depth studies in the renewable energy and directed many research projects. She was the person-in-charge and participated in the drafting of “Research Report on Electric Power System” as part of the Evaluation of Renewable Energies, a project sponsored by the PRC government, World Bank and Global Environment Facility. In particular, Ms. Dai has led many award-winning research projects in wind power area. Ms. Dai has published a number of research papers within and outside China. Ms. Dai graduated from Tsinghua University majored in electrical engineering in 1963.

Dr. ZHOU Shaopeng ( ), aged 64, is an independent non-executive Director of the Board. Mr. Zhou joined our Group on August 6, 2010 when he was appointed as an independent non-executive Director of our

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Company. He is currently the head of Economics Department of Chinese Academy of Governance ( ). He is also holding various positions in academic institutions and industrial associations and organizations in China. He is currently the vice chairman of Public Economic Research Association ( ), member of the Expert Committee of China Development Bank Corporation, council member of China Federation of Industrial Economics ( ) and standing director of China Enterprise Confederation ( ). He also serves as part-time professor and Supervisor of Doctorate Students at Graduate School of Chinese Academy of Social Sciences ( ) and Renmin University of China ( ). Prior to joining Chinese Academy of Governance in 1995, Dr. Zhou was a deputy county head of Hulunbuir of Inner Mongolia Autonomous Region from 1994 to 1995, and assistant researcher, associate researcher, researcher, Supervisor of Doctorate Students and head of Enterprise Governance Research Department of Industrial Economics Institute of Chinese Academy of Social Sciences ( ) from 1981 to 1993. Dr. Zhou was the author or co-author of over 30 academic books and research reports. He has also published over 200 research papers. Dr. Zhou graduated from Beijing Mechanical Institute ( ) majored in Industrial Economics in 1970 and graduated from Chinese Academy of Social Sciences with a master’s degree in economics in 1982. He also obtained a doctorate degree in economics from the Chinese Academy of Social Sciences in 1989.

Mr. WAN Kam To ( ), aged 58, is an independent non-executive Director of the Board. Mr. Wan joined our Group on August 6, 2010 when he was appointed as an independent non-executive Director of our Company. He currently serves as an independent director and chairman of the audit committee of Mindray Medical International Limited (NYSE: MR) and RDA Mircoelectronics, Inc. (NASDAQ: RDA). Also, he serves as an independent non-executive director and chairman of the audit committee of China Resources Land Limited (1109. HK) and Fairwood Holdings Limited (0052. HK). Mr. Wan has over 30 years of experience in auditing and advisory services. He joined PricewaterhouseCoopers in 1975 and served as a partner of PricewaterhouseCoopers from 1992 to 2008. He is a member of the Council of The Open University of Hong Kong. Mr. Wan is a Hong Kong Certified Public Accountant and is a fellow of the Hong Kong Institute of Certified Public Accountants, the Association of Chartered Certified Accountants and the Hong Kong Institute of Directors. Mr. Wan graduated from Hong Kong Polytechnic University (previously known as Hong Kong Polytechnic) in 1975 with a Higher Diploma in accountancy.

BOARD OF SUPERVISORS

Our board of Supervisors currently consists of three members, among whom at least one member must be employee representative supervisor elected by employees. Except for the employee representative supervisor, the other Supervisors are elected by our shareholders at shareholders’ meeting. All the Supervisors shall have a term of three years, which is renewable upon re-election and re-appointment. The functions and authorities of the board of Supervisors include, among other things:

• monitoring the financial activities of the Company;

• supervising the conduct of our Directors and senior management officers in carrying out their duties and proposing to remove the Director or senior management officer who has violated applicable laws, regulations, our Articles of Association or shareholders resolutions; • demanding Directors, President and other senior management officers to rectify any action that is prejudicial to the interest of the Company;

• reviewing and verifying financial reports, operation reports and profit distribution proposals prepared by the Board, and in case of doubt, appointing certified public accountants and practicing auditors to re-examine the financial information of the Company;

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• bringing actions on behalf of the Company against our Directors or senior management officers; and

• exercising other powers and performing other functions and duties as conferred by our Articles of Association.

The following table sets forth the information regarding our Supervisors. All of our existing Supervisors were elected to their current term to the board of Supervisors on August 4, 2010. The business address of Mr. Xu and Mr. Wang is No. 4, Fuxingmennei Dajie, Xicheng District, Beijing, the PRC and the business address of Mr. Liang is 10-11th Floor, No.23A Fuxing Road, Haidian District, Beijing, the PRC.

SUPERVISORS

Name Age Position Mr. XU Ping ...... 47 Chief Supervisor Mr. WANG Huanliang ...... 52 Supervisor Mr. LIANG Zongxin ...... 57 Supervisor

Mr. XU Ping ( ), aged 47, is a Supervisor of our Company and was appointed on August 4, 2010. He has been the head of Asset Operation and Management Department of Huaneng Group since August 2005. Mr. Xu has extensive managerial and financial experience. He joined HIPDC in September 1985 and has served at various positions at Huaneng Group and its subsidiaries, including, among others, deputy general manager and general manager of Great Wall Securities Co., Ltd. ( ) from May 2002 to August 2005, manager of the Financial Department of HPI from July 2000 to May 2002, deputy manager of the Financial Department of Huaneng International Power Development Corporation from December 1997 to July 2000, chief accountant of Huaneng Shijiazhuang Branch Company ( ) and chief accountant of Huaneng Shang’an Power Plant ( ) from July 1996 to December 1997, deputy division head and division head of Financial Division of the Financial Department of Huaneng International Power Development Corporation from January 1994 to July 1996 and assistant accountant and accountant of Huaneng International Power Development Corporation from September 1985 to January 1994. Mr. Xu graduated from Xiamen University with a bachelor’s degree in economics in July 1985. He also graduated from Xiamen University with a master’s degree in management in December 1999. He is a senior accountant.

Mr. WANG Huanliang ( ), aged 52, is a Supervisor of our Company and was appointed on August 4, 2010. He has been the head of Audit Department of Huaneng Group since March 2006. Mr. Wang served as deputy general manager and chief accountant of Huaneng Energy & Communications Holding Co., Ltd. ( ) from August 2001 to March 2006. He was the head of Beihai Port Management Bureau ( ) from November 1999 to July 2002 and vice president and general manager of Beihai Xinli Industrial Co., Ltd. ( ) from March 1999 to July 2002. Mr. Wang joined Huaneng Group in August 1990 and served at various positions at Huaneng Group, including, among others, deputy manager of the Financial Department from April 1994 to March 1999, deputy division head and division head of the Financial Division of the Financial Department from March 1992 to April 1994. Prior to joining Huaneng Group, Mr. Wang was deputy division head, section chief and accountant of Financial Section of Power Planning and Design Institute of Ministry of Water Resources and Electrical Power ( ) from August 1980 to August 1990 and a teacher at a middle school from February 1975 to September 1978. Mr. Wang graduated from Correspondence School of Renmin University of China in June 1986. He also graduated from Chinese Academy of Social Sciences with a master’s degree in currency and banking in April 1998. He is a senior accountant.

Mr. LIANG Zongxin ( ), aged 57, is a Supervisor of our Company and was appointed on August 4, 2010. He has been the head of the Discipline Inspection Commission of HNEIC since November 2008.

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Mr. Liang joined Huaneng Group in December 1990 and served at various positions at Huaneng Group, including, among others, division head of Documentation Division of the Office of Huaneng Group from April 2006 to November 2008, division head of Documentation Division of General Manager Service Department from April 1998 to April 2006, division head of Documentation Division of General Manager Department from April 1995 to April 1998, deputy division head of Office Secretariat from April 1993 to April 1995, deputy head of Discipline Inspection Office from January 1992 to April 1993 and discipline inspection officer of Communist Party Committee Office from November 1990 to January 1992. Prior to joining Huaneng Group, Mr. Liang was an army man from November 1972 to August 1986. Mr. Wang graduated from Renmin University of China with college-level degree in 1984. He is an economist.

SENIOR MANAGEMENT

The following table sets forth the information regarding our senior management members. The business address of each of our senior management members is 10-11th Floor, No. 23A Fuxing Road, Haidian District, Beijing, the PRC.

Name Age Position Mr. ZHAO Shiming ...... 59 President Mr. NIU Dongchun ...... 58 Vice President Ms. YANG Qing ...... 42 Vice President and Chief Financial Officer Mr.HEYan...... 45 Vice President Mr. DING Kun ...... 39 Vice President Mr. HU Ying ...... 37 Vice President Ms. SONG Yuhong ...... 44 Secretary to the Board of Directors

Mr. ZHAO Shiming ( ) serves as an executive Director and our President. Please refer to his biography under the sub-section headed “— Directors.”

Mr. NIU Dongchun ( ) serves as an executive Director and Vice President. Please refer to his biography under the sub-section headed “— Directors.”

Ms. YANG Qing ( ) serves as an executive Director, Vice President and Chief Financial Officer. Please refer to her biography under the sub-section headed “— Directors.”

Mr. HE Yan ( ) serves as an executive Director and Vice President. Please refer to his biography under the sub-section headed “— Directors.”

Mr. DING Kun ( ), aged 39, has served as a Vice President of our Company since January 2011. Mr. Ding joined our Group in October 1998 as the deputy manager of the Manufacturing Department of one of our subsidiaries, and has served as the chief engineer of the subsidiary from February 2002 to April 2006. From May 2006 to December 2007, Mr. Ding served as the general manager of one of the subsidiaries of HPI. Mr. Ding worked as the director of preparatory bureau of a wind farm of our Company from December 2007 to December 2008, and served as the assistant to the general manager of our Company from December 2008 to January 2011. Prior to joining our Group, Mr. Ding worked in power plants in Yunnan Province from July 1994 to September 1998. Mr. Ding obtained a bachelor’s degree in engineering from Beijing University of Agricultural Engineering in 1994 and a master’s degree in engineering from Kunming University of Science and Technology in 2009. Mr. Ding is a senior engineer.

Mr. HU Ying ( ), aged 37, has served as a Vice President of our Company since January 2011. Mr. Hu joined our Group in October 1998 as an engineer of one of our subsidiaries, and has served at various positions at

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Ms. SONG Yuhong ( ), aged 44, serves as secretary to the Board. Ms. Song was the manager of the Commerce Department of HNEIC from November 2007 to August 2010, the deputy manager of the Second Project Department of HNEIC from May 2004 to October 2007 and the deputy manager of New Energy Department of HNEIC from April 2002 to April 2004. Ms. Song joined Huaneng Group in July 1990. She was responsible for information management and computer network management of Huaneng Group from July 1992 to March 2002. She was also responsible for technology development of Huaneng South Company ( ) from July 1990 to June 1992. Ms. Song graduated from Beijing University of Technology with a bachelor’s degree in engineering in July 1990. She also graduated from North China Electric Power University with a master’s degree in management in June 2001. She is a senior engineer.

BOARD OF DIRECTORS COMMITTEES

Audit Committee

The audit committee of the Company consists of three non-executive Directors, namely, Mr. Zhou Shaopeng (independent non-executive Director), Mr. Zhao Keyu (non-executive Director) and Mr. Wan Kam To (independent non-executive Director). Mr. Zhou Shaopeng currently serves as the chairman of the audit committee. The primary responsibilities of the audit committee are to review and supervise our internal control and financial reporting process and to maintain an appropriate relationship with our independent auditors, which include, among other things:

• advising the Board in respect of the appointment, re-appointment and removal of independent auditors, reviewing and approving the compensation of independent auditors, supervising the work of independent auditors and formulating policies in terms of all non-audit services to be provided by independent auditors;

• reviewing our annual and interim financial statements, our financial control, internal control and risk management system and our financial and accounting policies and supervising the implementation of such policies;

• reviewing the procedures for the treatment of complaints received by us regarding our financial reporting process, internal control and other violation of laws and regulations; and

• reviewing our continuing connected transactions and ensuring that the terms of such transactions are consistent with those approved by our shareholders.

Remuneration Committee

The remuneration committee of the Company consists of three Directors, namely, Mr. Niu Dongchun (executive Director), Ms. Dai Huizhu (independent non-executive Director) and Mr. Qin Haiyan (independent non-executive Director). Mr. Niu Dongchun currently serves as the chairman of the remuneration committee. The primary responsibilities of the remuneration committee are to formulate the remuneration policies and schemes for our executive Directors, to evaluate the performance of our executive Directors and senior management, to

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Nomination Committee

The nomination committee of the Company consists of three Directors, namely, Mr. Zhao Shiming (executive Director), Mr. Zhou Shaopeng (independent non-executive Director) and Mr. Qin Haiyan (independent non-executive Director). Mr. Zhao Shiming currently serves as the chairman of the nomination committee. The primary responsibilities of the nomination committee are to identify and recommend to the Board candidates suitable to serve on the Board, to review the evaluation procedure of the performance of the Board, and to formulate and recommend to the Board nomination procedures and standards.

JOINT COMPANY SECRETARIES

Ms. Song Yuhong, serves as secretary to the Board and one of the joint company secretaries. Please refer to her biography under the sub-section headed “— Senior Management.”

Ms. MOK Ming Wai ( ), aged 39, was appointed as the joint company secretary of the Company on March 28, 2011. Ms. Mok is an associate director of KCS Hong Kong Limited, a corporate secretarial and accounting services provider in Hong Kong. She has over 15 years of professional and in-house experience in company secretarial field. Prior to joining KCS Hong Kong Limited, she worked at KPMG Hong Kong. She is an associate member of the Hong Kong Institute of Chartered Secretaries and the Institute of Chartered Secretaries and Administrators in United Kingdom. Ms. Mok currently serves as a joint company secretary of Shanghai Pharmaceuticals Holding Co., Ltd. (Stock Code: 2607).

EMPLOYEES

As of December 31, 2010, our Company had a total of 777 full time employees. Set out below is a breakdown of the number of our employees by function:

Number of Function Employees Management ...... 60 Finance, accounting ...... 81 Technicians ...... 236 Operations and Maintenance ...... 303 Human Resource ...... 29 Administration ...... 68

COMPENSATION OF DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Our executive Directors, Supervisors and senior management receive compensation in the form of salaries, bonuses, allowances and other benefits-in-kind. Our independent non-executive Directors receive fees based on their responsibilities. Total compensation paid to the Directors, Supervisors and senior management for the years ended December 31, 2008, 2009 and 2010 amounted to approximately RMB2.2 million, RMB3.3 million and RMB4.5 million, respectively. Under the existing arrangements currently in force, the aggregate remuneration payable to and benefits-in-kind receivable by the Directors (including four independent non-executive Directors) and Supervisors for the year ending December 31, 2011 are estimated to be approximately RMB3.7 million (including approximately RMB0.6 million to be received by the independent non-executive Directors) and RMB0.7 million, respectively.

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As required by the PRC regulations, we participate in various defined pension schemes for our employees, including those organized by provincial or municipal governments as well as supplemental pension schemes. The employees covered by such schemes include our Directors, Supervisors and senior management personnel. We contributed RMB0.3 million, RMB0.3 million and RMB0.3 million to the pension schemes for our Directors, Supervisors and senior management for the years ended December 31, 2008, 2009 and 2010, respectively.

The aggregate fees and compensation we paid to the five individuals with highest emoluments during the years ended December 31, 2008, 2009 and 2010 amounted to approximately RMB2.3 million, RMB2.9 million and RMB3.6 million, respectively.

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As of the date of this document, the registered share capital of the Company is RMB5,800 million, divided into 5,800,000,000 Domestic Shares with a nominal value of RMB1.00 each.

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The following discussion is based upon and should be read in conjunction with our consolidated financial statements and the related notes set out in Appendix I to this document. Our consolidated financial statements set out in Appendix I to this document were prepared in accordance with IFRSs.

OVERVIEW

We are a leading pure-play renewable energy company in the PRC with a primary focus on wind power generation. According to Garrad Hassan, we ranked third in China and eighth in the world in terms of total wind installed capacity as of December 31, 2010. Among the top ten global wind power generation companies, we had the highest CAGR of total installed capacity from 2008 to 2010, based on the year-end capacity data published by these companies. Since our inception in 2002, we have been a pioneer and innovator in the fast-growing PRC wind power sector. From 2008 to 2010, our consolidated installed capacity and revenue from sale of electricity grew rapidly, at a CAGR of 195.9% and 166.2%, respectively, while our adjusted operating profit increased from RMB122.7 million in 2008 to RMB884.5 million in 2010, representing a CAGR of 168.5%. We believe that our execution track record and sizeable pipeline will support our profitable growth in the near future.

As of December 31, 2010, we had a consolidated installed capacity of 3,522.4 MW. We also had 1,202.0 MW capacity under construction and approximately 73,463.5 MW of wind power pipeline projects reserved for future development. Our installed, under-construction and pipeline wind power projects are principally located in six geographically diversified areas and cover 19 provinces and autonomous regions in China. These areas are strategically selected to achieve optimal return based on a combination of key considerations for wind farm development, including quality wind resources, high on-grid tariffs and the conditions of local grid connections and transmission.

During the years ended December 31, 2008, 2009 and 2010, our consolidated installed capacity increased from 402.3 MW as of December 31, 2008 to 3,522.4 MW as of December 31, 2010, representing a CAGR of 195.9%. We generated revenue from the sale of electricity of RMB248.1 million, RMB847.1 million and RMB1,758.6 million and realized profits of RMB95.9 million, RMB281.2 million and RMB609.4 million from our continuing operations for the years ended December 31, 2008, 2009 and 2010, respectively, representing a CAGR of 166.2% and 152.1%. As of December 31, 2010, we also had a portfolio of wind power pipeline projects with an estimated capacity of approximately 73,463.5 MW, including 633.0 MW Advanced-stage Projects, approximately 3,346.7 MW Developing-stage Projects, and approximately 69,483.8 MW Early-stage Projects. See “Business — Pipeline Projects.” We target to increase our consolidated installed capacity to approximately 5,100 MW by the end of 2011.

FACTORS AFFECTING OUR RESULTS OF OPERATIONS

We believe the most significant factors that affect our business, results of operations and financial condition include:

Installed capacity of our wind power projects

Our results of operations and financial condition are significantly affected by the consolidated installed capacity of our wind power projects. Since the local grid companies have the obligation to purchase in full amount the electricity generated by our wind power projects within their respective grid coverage, our revenue from the sale of electricity is substantially determined by the net power generation of our wind farms which in turn is materially affected by our consolidated installed capacity. The consolidated installed capacity of our wind power projects increased from 402.3 MW as of December 31, 2008 to 3,522.4 MW as of December 31, 2010,

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The table below sets forth the consolidated and attributable installed capacity and consolidated and weighted average consolidated operational capacity of our wind power projects as of the dates indicated, and the revenue from sales of electricity, EBITDA, operating profit, adjusted operating profit and adjusted operating margin of our wind power business for the periods indicated:

As of or for the year ended December 31, 2008 2009 2010 Consolidated installed capacity (MW) ...... 402.3 1,549.8 3,522.4 Attributable installed capacity (MW) ...... 263.8 1,387.1 3,339.8 Consolidated operational capacity (MW) ...... 303.3 1,146.3 2,239.9 Weighted average consolidated operational capacity (MW) ...... 184.3 693.1 1,541.5 Revenue from sales of electricity (RMB in millions) ...... 248.1 847.1 1,758.6 EBITDA (RMB in millions)(1) ...... 239.1 836.3 1,768.0 Operating profit (RMB in millions) ...... 158.3 539.5 1,134.3 Adjusted operating profit(2)(3) (RMB in millions) ...... 122.7 454.2 884.5 Adjusted operating margin (%)(3) ...... 48.7 53.3 50.0

Notes:

(1) EBITDA represents operating profit plus depreciation and amortization. The depreciation and amortization amounted to RMB80.8 million, RMB296.8 million and RMB633.7 million in 2008, 2009 and 2010, respectively. EBITDA is not a standard measure under IFRSs. EBITDA is included because it is a widely used financial indicator of a company’s ability to service and incur debt. However, EBITDA should not be considered in isolation or construed as an alternative to cash flows, net income or any other measure of performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities. EBITDA presented herein may not be comparable to similarly titled measures presented by other companies. Prospective investors should not compare our EBITDA to EBITDA presented by other companies because not all companies use the same definitions.

(2) Adjusted operating profit is operating profit less other net income. Other net income mainly included net income from sales of CERs and VAT rebate and refund as well as our net gain on disposal of investment in a subsidiary. Other net income amounted to RMB35.6 million, RMB85.3 million and RMB249.8 million in 2008, 2009 and 2010, respectively. Our net gain on disposal of investment in a subsidiary related to the disposal of our entire 65.0% equity interest in Qidong Wind Power in 2009, which contributed a net gain in the amount of RMB18.9 million to other net income in 2009.

(3) Adjusted operating margin is calculated by dividing (i) our adjusted operating profit by (ii) our revenue (excluding service concession construction revenue) for the year. See “Financial Information — Description of Certain Income Statement Components — Operating Profit.” Adjusted operating margin and adjusted operating profit are not standard measurements under IFRSs, but we present them here because our management believes that they provide useful indicators of our profitability. Prospective investors should be aware that adjusted operating profit and adjusted operating margin presented in this document may not be comparable to similarly titled measures reported by other companies due to different calculation methods.

Our consolidated installed capacity and revenue from sales of electricity have increased significantly during the years ended December 31, 2008, 2009 and 2010 as a result of the expansion of our wind power business. We expect to further increase our consolidated installed capacity by completing the wind power projects under construction and converting the pipeline projects into operating projects. As of December 31, 2010, we had 1,202.0 MW wind power projects under construction and approximately 73,463.5 MW wind power pipeline projects, including 633.0 MW of Advanced-stage Projects and approximately 3,346.7 MW of Developing-stage Projects. According to our current plans, we expect to increase our consolidated installed capacity to approximately 5,100 MW by the end of 2011. We also plan to start the construction of two solar power concession projects in the second half of 2011 or in 2012. The table below sets forth the total capital

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As of December 31, 2010 Estimated capital expenditure Estimated installed (RMB in Location No. of projects capacity (MW) millions) Wind Power Projects under construction ...... Northeast China 5 298.5 2,783.3 East China 2 68.0 652.8 West Inner Mongolia 0 0.0 0.0 South China 1 42.0 410.9 North China 2 99.0 891.0 Xinjiang 0 0.0 0.0 Other regions(1) 0 0.0 0.0 Advanced-stage projects ...... Northeast China 1 49.5 432.5 East China 1 30.0 288.0 West Inner Mongolia 0 0.0 0.0 South China 7 346.5 3,370.9 North China 0 0.0 0.0 Xinjiang 0 0.0 0.0 Other regions(1) 1 9.0 77.7 Developing-stage projects ...... Northeast China 1 49.5 497.4 East China 4 188.6 1,820.3 West Inner Mongolia 0 0.0 0.0 South China 1 49.5 470.3 North China 1 100.5 886.6 Xinjiang 0 0.0 0.0 Other regions(1) 0 0.0 0.0 Early-stage projects ...... Northeast China 0 0.0 0.0 East China 0 0.0 0.0 West Inner Mongolia 1 49.5 425.7 South China 3 138.0 1,311.0 North China 2 99.0 889.4 Xinjiang 0 0.0 0.0 Other regions(1) 0 0.0 0.0 Subtotal ...... Sixmain regions and other regions in the PRC 33 1,617.0 15,207.7 Solar Power ...... 2 50.4 806.7 Total ...... 35 1,667.4 16,014.5

Note:

(1) Other regions include Shaanxi Province, Gansu Province, Anhui Province and Qinghai Province.

To achieve our expansion targets, we estimate that the total capital expenditure will be RMB16.0 billion for wind power projects to be installed from January 1, 2011 to December 31, 2011 and for the two solar power concession projects. Of this sum, we have already incurred RMB1.7 billion as of February 28, 2011 and therefore the total outstanding capital expenditure is estimated to be RMB14.3 billion. The sources of funding include bank borrowings, a portion of the proceeds from certain possible working capital raising activities, contributions from minority shareholders of our non-wholly owned subsidiaries, cash at bank and on hand and operating cash flow.

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On-grid tariffs

Our results of operations and financial condition are directly and significantly affected by the on-grid tariffs at which we sell the electricity generated by our wind power projects to the local grid companies.

The on-grid tariffs for wind power projects in China are determined by governmental authorities. According to the Circular Regarding the Furtherance of On-grid Pricing Policy of Wind Power ( ) (the “On-grid Tariff Circular”) issued by the NDRC in 2009, for onshore wind power projects approved on or after August 1, 2009, the on-grid tariff is determined based on the location of such wind power projects. The PRC government has categorized China’s onshore wind resources into four wind resource zones and applies a universal on-grid tariff to all the wind power projects in the same wind resource zone. The benchmark on-grid tariffs (including VAT) for the four wind resource zones are RMB0.51/kWh, RMB0.54/kWh, RMB0.58/kWh and RMB0.61/kWh, respectively.

For wind power projects approved prior to August 1, 2009 but on or after January 1, 2006, the on-grid tariff was determined by referring to either a “government guided price” or a “government fixed price.” For wind power projects approved on or prior to December 31, 2005, the on-grid tariff was determined by the government on a project-by-project basis after considering various factors such as the wind resources, construction conditions and the on-grid tariffs of other wind power projects in the same or neighboring areas with similar conditions.

In addition to the national benchmark on-grid tariffs, certain of our wind power projects also benefit from supplementary on-grid tariffs provided by local governments as part of the governmental incentives for wind power industry.

The table below sets forth our weighted average on-grid tariff for electricity generated by our wind power projects for the periods indicated.

For the year ended December 31, 2008 2009 2010 (RMB per kWh) Weighted average on-grid tariff (excluding VAT)(1) ...... 0.581 0.527 0.516 Weighted average on-grid tariff (including VAT)(2) ...... 0.679 0.617 0.604

Notes:

(1) Weighted average on-grid tariff (excluding VAT) is calculated by dividing our revenue from sales of electricity by our net power generation of wind power projects.

(2) Our weighted average on-grid tariffs (including VAT) in 2008 and 2009 were higher than the current highest standard on-grid tariff, primarily due to the facts that certain of our early wind power projects enjoyed relatively high on-grid tariffs prior to the establishment of the standard on-grid tariff regime on August 1, 2009 and that the standard on-grid tariffs only apply to wind power projects approved on or after August 1, 2009.

Other things being equal, a decrease or increase in weighted average on-grid tariff will lead to proportionate decrease or increase in revenue, and less than proportionate decrease or increase in profit after taxation due to the offsetting effect of lower or higher income tax. The management estimates that, for every RMB 0.01/kWh (excluding VAT) decrease or increase in weighted average on-grid tariff, operating profit would have decreased or increased by approximately RMB4.3 million, RMB16.1 million and RMB34.0 million, respectively, and profit after taxation would have decreased or increased by approximately RMB4.3 million, RMB14.9 million and RMB32.4 million for the years ended December 31, 2008, 2009 and 2010, respectively, assuming other factors remaining unchanged.

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Consistent with the industry trend in the wind power sector of the PRC, the decrease in the weighted average on-grid tariff of our wind power projects during the years ended December 31, 2008, 2009 and 2010 reflected the fact that some of our early wind power projects enjoyed higher on-grid tariffs as approved by relevant governmental authorities on a project-by-project basis. Over time, our weighted average on-grid tariff decreased due to change in the PRC government’s policy in relation to wind power on-grid tariff and our expansion into areas with quality wind resources but lower on-grid tariffs as compared to earlier projects.

Net power generation and utilization hours

Our revenue from sales of electricity is determined by the on-grid tariffs and our net power generation. In calculating the net power generation, we deduct from the gross power generation (i) the auxiliary electricity, which comprises electricity consumed by our wind farms during generation and lost during the transmission from the wind farms to the grid meter measuring the net power generation sold to the grid companies, and (ii) the electricity generated during the construction and testing period. Sales of electricity generated during the construction and testing period are not included in our revenue but accounted for as deduction to our construction costs. During the years ended December 31, 2008, 2009 and 2010, the auxiliary electricity accounted for 2.5%, 2.0% and 2.5% of the gross power generation less the electricity generated during the construction and testing period in 2008, 2009 and 2010, respectively. The electricity generated during construction and testing period accounted for approximately 8.1%, 13.0% and 7.8%, respectively, of the gross power generation in the same periods.

The gross power generation is determined by the consolidated operational capacity and the utilization hours. We calculate our weighted average utilization hours by dividing the gross power generation less the electricity generated during the construction and testing period in a specific period by the weighted average consolidated operational capacity in the same period. The utilization hours of a specific wind power project are affected by a number of factors, including (i) climatic and wind conditions at the specific wind farm site, in particular, wind speed and density, seasonal and other fluctuations as well as wind direction, wind pattern and wake effects; (ii) repairs and maintenance; (iii) performance of wind turbines and (iv) grid constraints. In particular, our wind power business is affected by seasonality. Utilization of wind farms and in turn revenue from wind power operations depend heavily on wind conditions such as wind speed and wind power density throughout the year. Historical data suggest that our wind farms generally experience lower level of wind speed and wind power density and therefore less utilization hours and sales volume during June to September each year. The weighted average utilization hours of our wind farms are also affected by technological advancement in wind power and wind turbine sector. Attributable to our expertise in wind resource assessment, site selection and wind farm operations, the weighted average utilization hours of our wind farms reached 2,380.4, 2,365.2 and 2,265.3 in 2008, 2009 and 2010, respectively, as compared to the estimated average utilization hours of 2,046, 2,077 and 2,097 in 2008, 2009 and 2010, respectively, for wind farms with installed capacity of 6 MW or greater in the PRC, according to the China Electricity Council.

The table below sets forth certain operating statistics of our wind farms for the periods indicated:

For the year ended December 31, 2008 2009 2010 Gross power generation (GWh) ...... 477.5 1,884.5 3,788.9 Auxiliary electricity (GWh) ...... 11.2 32.8 87.0 Electricity generated during the construction and testing period (GWh) ...... 38.9 245.2 297.0 Net power generation (GWh) ...... 427.4 1,606.6 3,404.9 Weighted average consolidated operational capacity (in MW) ...... 184.3 693.1 1,541.5 Weighted average utilization hours ...... 2,380.4 2,365.2 2,265.3

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Prices of wind turbines

Approximately 50% to 60% of our construction costs of a wind power project is attributable to the purchase price of wind turbines. Depreciation is calculated to write off the cost of property, plant and equipment, less their estimated residual value, if any, using the straight line method over their estimated useful lives. Therefore, the prices of wind turbines have a direct impact on our results of operations and financial condition through depreciation expenses. However, due to the rapid expansion of the wind turbine sector, the advancement of wind turbine technology, the increasing competition and the significant decrease in the cost resulting from increased economies of scale and decreasing raw material cost, wind turbine prices have declined since 2009. For example, the average selling price (excluding VAT) for the 1.5 MW wind turbines of Sinovel, one of the leading PRC wind turbine manufacturers and our largest wind turbine supplier during the years ended December 31, 2008, 2009 and 2010, decreased from RMB4,970 per kW in 2009 to RMB4,814 per kW for the first six months of 2010. During the years ended December 31, 2008, 2009 and 2010, our depreciation and amortization expenses amounted to RMB80.8 million, RMB296.8 million and RMB633.7 million, respectively, in 2008, 2009 and 2010.

Finance expenses

We have historically financed primarily through bank borrowings and finance leases as well as cash flows from operations and capital contributions from our shareholders and the non-controlling equity owners of our subsidiaries. In the years ended December 31, 2008, 2009 and 2010, our finance expenses were RMB72.2 million, RMB251.4 million and RMB515.1 million, respectively, representing approximately 28.6%, 29.5% and 29.1% of our revenue (excluding service concession construction revenue) for the same periods, respectively. Our total outstanding borrowings amounted to RMB18,018.9 million as of December 31, 2010. As a renewable energy developer with profitable track record and strong creditability, we are generally able to obtain bank loans at relatively low interest rates and on favorable terms. See “— Indebtedness” for more details. The management estimates that, as of December 31, 2008, 2009 and 2010, a general increase or decrease of 100 basis points in interest rates of net floating borrowings, with all other variables held constant, would have decreased or increased our profit after tax by approximately RMB11.7 million, RMB37.3 million and RMB103.5 million, respectively, assuming that the change in interest rates had occurred at the balance sheet dates and had been applied to the exposure to interest rate risk for non-derivative financial instruments in existence at the balance sheet dates. The interest rate fluctuation and the balance of our borrowings have and will continue to materially affect our finance expenses and consequently our profitability, results of operations and financial condition.

Sales of CERs

We began to generate income from our sales of CERs since 2007. During the years ended December 31, 2008, 2009 and 2010, net income generated from sales of CERs amounted to RMB16.2 million, RMB28.7 million and RMB164.8 million in 2008, 2009 and 2010, respectively, representing 45.5%, 33.6% and 66.0% of our other net income, and 17.0%, 9.5% and 25.7% of our profit before taxation. During the years ended December 31, 2008, 2009 and 2010, we sold 249,855.2, 408,826.7 and 1,639,643 tons of CERs in 2008, 2009 and 2010, respectively. As of December 31, 2010, we had successfully registered 23 CDM projects with the CDM EB. As of the Latest Practicable Date, we had 34 registered CDM projects. We expect that the sales of CERs will increasingly contribute to our other net income and net profit.

Our sale of CERs depends on the continuing effectiveness of the CDM arrangements under the Kyoto Protocol, the first commitment period of which will expire on December 31, 2012. If the Kyoto Protocol is not renewed upon its expiration, we will not be able to generate income from sale of CERs. See “Risk Factors — Risks Relating to Our Business and Industry — Our sale of CERs depends on the continuing effectiveness of CDM arrangements under the Kyoto Protocol.” In addition, our income from the sale of CERs is also affected by our ability to successfully register CDM projects with the CDM EB and to procure buyers for the CERs and negotiate a favorable sales price with such buyers. As of December 31, 2010, we had secured buyers for 64 CDM

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PRC tax incentives

Enterprise income tax

Prior to January 1, 2008, PRC entities were generally subject to the statutory income tax rate of 33% on their taxable income. A number of our subsidiaries, however, were taxed at various preferential income tax rates due to their engagement in state encouraged industries located in the western regions, their status as production- type foreign investment enterprises (“FIEs”) or their location in the designated coastal open areas. In addition, certain of our subsidiaries, being production-type FIEs with an operating period of 10 years or more, were entitled to a tax holiday of a two-year full exemption followed by a three-year 50% exemption commencing from their respective first profit-making year after offsetting accumulated tax losses, if any.

On January 1, 2008, the New EIT Law came into effect, which sets a unified 25% income tax rate for both foreign-invested and domestic enterprises. The New EIT Law, together with its implementation rules, provides a five-year transition period for PRC entities established prior to March 16, 2007 that enjoyed preferential tax rates of less than 25% to gradually increase the applicable income tax rates to 25%. Accordingly, certain of our subsidiaries which were taxed at a preferential income tax rates of less than 25% are now subject to the transitional rates and will eventually apply the statutory rate of 25% by the end of 2012. Meanwhile, certain of our subsidiaries which enjoyed tax holidays for fixed terms may continue to benefit from their tax holidays until they expire.

Furthermore, pursuant to the Notice on the Execution of the Catalogue of Public Infrastructure Projects Entitled for Preferential Tax Treatment (“Circular 46”) ( ), an enterprise which is established after January 1, 2008 and is engaged in public infrastructure projects is entitled to a tax holiday of a three-year full exemption followed by a three-year 50% exemption commencing from the first year it generates operating income. Because wind power projects are listed in the Catalogue of Public Infrastructure Projects Eligible for Enterprise Income Tax Preferential Treatment (2008) ( ), each of our wind power projects which have obtained government approval on or after January 1, 2008 is entitled to such tax holiday.

We recorded income tax benefits of RMB0.5 million in 2008. In the years ended December 31, 2009 and 2010, our effective tax rate was 7.3% and 5.0%. We are advised by our PRC legal advisers that the preferential tax treatments we enjoyed were granted by appropriate competent authorities. Any discontinuation or reduction of the preferential tax treatments may adversely affect our financial condition and results of operations. See “Regulatory Environment — Taxation — Enterprise Income Tax Law.”

VAT

In the PRC, the sale of electricity is subject to a 17% value added tax (“VAT”). Since 2004, the PRC government has adopted a series of reform measures upon the VAT scheme. In November 2008, the PRC government issued the Interim Regulation on Value Added Taxes (the “New VAT Rule”) ( ), which came into effect on January 1, 2009. Prior to the effectiveness of the New VAT Rule, as a general VAT payer, we are not allowed to credit the input VAT in relation to the purchase of fixed assets against our output VAT, and had to record such input VAT as part of the cost of the related fixed assets. The New VAT Rule, however, allows all the general VAT payers to deduct from output VAT the input VAT relating to the purchase of fixed assets. As a result, we recorded deductible VAT in the amount of RMB979.6 million as of December 31, 2009 and RMB2,433.6 million as of December 31, 2010 as part of our other non-current assets.

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Prior to January 1, 2009, certain of our FIE subsidiaries are entitled to VAT refund in relation to their purchases of domestic equipment such as wind turbines. However, such VAT refund policy was phased out over a six-month transition period starting from January 1, 2009 when the New VAT Rule came into effect. During the six-month transition period, FIEs were allowed to claim VAT refunds provided that certain conditions were satisfied. Afterwards, our FIE subsidiaries can only recover the input VAT in relation to the purchase of fixed assets by offsetting them against the output VAT at the time they sell electricity.

In addition, we are entitled to a tax rebate equivalent to 50% of the VAT payable by our wind power business. See “Regulatory Environment — Taxation — VAT Law.”

In addition to the foregoing, our results of operations are also affected by other general factors, including, among others, government policies on wind power industry, wind resources and weather conditions in the regions we operate and grid connections and transmission.

Government Policies. The favorable government policies, regulations and incentives, including the on-grid tariff premium (as compared with coal-fired power plants operating in the same region), mandatory grid connection and mandatory power off-take all have a material impact on our business, results of operations and financial condition. In addition, we also recorded government grants in the amount of RMB35.5 million, RMB65.9 million and RMB248.3 million in 2008, 2009 and 2010, primarily consisting of income from sale of CERs and VAT rebate and refund from government authorities. See “Risk Factors — Risks Relating to Our Business and Industry — We depend heavily on government support and incentives for renewable energies which may be changed or abolished” and “Regulatory Environment.”

Wind Resources and Weather Conditions. Our business, results of operations and financial condition are directly affected by the wind resources where our wind power projects locate. Our wind farms can only generate power when the wind speed is between 3 meters per second and 25 meters per second. Moreover, if the wind speed falls within the range but is below the rated wind speed at or above which wind turbines are able to operate at full load, the power generation of our wind power projects may also be adversely affected. See “Risk Factors — Risks Relating to Our Business and Industry — We rely on suitable climatic conditions for the generation of electricity. If there are unforeseen climatic condition changes or if we fail to make correct assessment when selecting sites for wind farms, our electricity production, revenue and results of operations may be materially and adversely affected.”

Grid Connections and Transmission. Grid connections and transmission provided by local grid companies have a direct and material impact on our business, results of operations and financial condition. In the event of grid constraints, electricity generated by our wind power projects may not be dispatched, which will result in reduced net power generation and decreased revenues and profits. See “Risk Factors — Risks Relating to Our Business and Industry — We rely on local grid companies for grid connections and electricity transmission and dispatch.”

BASIS OF PREPARATION

Our Company was established in the PRC on August 5, 2010 as a joint stock company with limited liability as part of the Reorganization of our predecessor HNEIC. Prior to the establishment of the Company, HNEIC, a wholly-owned subsidiary of Huaneng Group, was the holding company of the subsidiaries now comprising the Group. In substance, the Company replaced HNEIC as the holding company of HNEIC’s subsidiaries.

As there was no change of controlling shareholder before and after the Reorganization, the Financial Information has been prepared as a reorganization of business under common control. Accordingly, the relevant assets and liabilities of the companies comprising the Group have been recognized at historical cost.

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Our consolidated statements of comprehensive income, the consolidated statements of changes in equity and the consolidated cash flow statements as set out in section B(1), B(3) and B(4) of Appendix I to this document, respectively include the results of operations of the companies comprising the Group for the years ended December 31, 2008, 2009 and 2010 (or where the companies were established on a date later than January 1, 2008, for the period from the date of its establishment to December 31, 2010), as if the group structure has been in existence throughout the years ended December 31, 2008, 2009 and 2010. The consolidated balance sheets as of December 31, 2008, 2009 and 2010, as set out in Section B(2) of Appendix I to this document, have been prepared to present the state of affairs of the companies comprising the Group as of the respective dates.

Our Directors have prepared the consolidated financial statements and the underlying financials in accordance with our accounting policies as set out in section C of Appendix I to this document which are in accordance with the IFRSs. All material intra-group transactions and balances have been eliminated in our consolidated financial statements.

SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING JUDGMENTS AND ESTIMATES IN APPLYING THE ACCOUNTING POLICIES

We have identified certain accounting policies that are significant to the preparation of our consolidated financial statements in accordance with IFRSs. These significant accounting policies are important for an understanding of our financial condition and results of operation and are set forth in the Accountants’ Report in Appendix I to this document. Some of our accounting policies involve subjective assumptions and estimates, as well as complex judgment related to accounting items such as assets, liabilities, income and expenses. We base our estimates on historical experience and other assumptions which our management believes to be reasonable under the circumstances. Results may differ under different assumptions and conditions. Our management has identified below the accounting policies, estimates and judgments that are most critical to the preparation of our consolidated financial statements.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will flow to us and the revenue and costs, if applicable, can be measured reliably, revenue is recognized in profit or loss as follows:

Sale of electricity

Electricity revenue is recognized when electricity is supplied to the local grid companies. Revenue excludes VAT or other sales taxes and is after deduction of any trade discounts.

Service concession construction revenue

Revenue relating to construction services under a service concession arrangement is recognized based on the stage of completion of the work performed in the period in which the services are provided by us. When we provide more than one service in a service concession arrangement, the consideration received is allocated by reference to the relative fair value of the services provided.

Rendering of services

Revenue from the rendering of services is recognized by reference to the stage of completion of the transaction based on the progress of work performed.

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Dividends

Dividend income from unlisted investments is recognized when the shareholder’s right to receive payment is established.

Government grants

Government grants are recognized in the balance sheet initially when there is reasonable assurance that they will be received and that we will comply with the conditions attaching to them. Grants that compensate us for expenses incurred are recognized as revenue in profit or loss on a systematic basis during the same periods in which the expenses are incurred. Grants that compensate us for the cost of an asset are recognized initially as deferred income and consequently are recognized in profit or loss on a systematic basis over the useful life of the asset by way of reduced depreciation expense.

We sell CERs generated from the wind farms which have been registered as CDM projects with the CDM EB. Income from the sale of CERs is recognized when following conditions are met:

• the counterparties have committed to purchase the CERs;

• the selling prices of CERs have been agreed; and

• relevant electricity has been generated.

The income from sale of CERs is recorded as trade receivables to the extent the volume of CERs is verified by the independent supervisors assigned by the CDM EB. The remaining recognized income from sale of CERs is recorded as other receivables.

Property, plant and equipment

Property, plant and equipment are stated in the balance sheet at cost less accumulated depreciation and impairment losses.

The cost of self-constructed items of property, plant and equipment includes the cost of materials, direct labor, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of production overheads and borrowing costs.

Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognized in profit or loss on the date of retirement or disposal.

Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual value, if any, using the straight line method over their estimated useful lives as follows:

Buildings and structures ...... 8-55 years Wind turbines ...... 20years Other machinery and equipment ...... 12-20 years Motor vehicles ...... 6-14 years Furniture, fixtures and others ...... 4-10years

We review the estimated useful lives of the assets regularly. The useful lives are based on our historical experience with similar assets and taking into account anticipated technological changes. The depreciation expense for future periods is adjusted if there are significant changes from previous estimates.

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Intangible assets

We recognize intangible assets arising from a service concession arrangement under our wind concession project when we have the right to charge a fee for the usage of the concession infrastructure. Intangible assets received as consideration for providing construction services in a service concession arrangement are measured at fair value upon initial recognition. Subsequent to initial recognition, the intangible asset is measured at cost less accumulated amortization and impairment losses.

Other intangible assets that we acquire are stated in the balance sheet at cost less accumulated amortization (where the estimated useful life is finite) and impairment losses. Expenditure on internally generated goodwill and brands is recognized as an expense in the period in which it is incurred.

Amortization of intangible assets with finite useful lives is charged to profit or loss on a straight-line basis over the assets’ estimated useful lives. The following intangible assets with finite useful lives are amortized from the date they are available for use and their estimated useful lives are as follows:

Concession assets ...... 25years Software and others ...... 3-5years

Both the period and method of amortization are reviewed annually.

Income tax

Income tax for the year or period comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognized in profit or loss except to the extent that they relate to business combinations, or items recognized in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognized in other comprehensive income or directly in equity, respectively.

Current tax is the expected tax payable on the taxable income for the year or period, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.

Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilized, are recognized. Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary differences include those that will arise from the reversal of existing taxable temporary differences, provided those differences relate to the same taxation authority and the same taxable entity, and are expected to reverse either in the same period as the expected reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when determining whether existing taxable temporary differences support the recognition of deferred tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are expected to reverse in a period, or periods, in which the tax loss or credit can be utilized.

The limited exceptions to recognition of deferred tax assets and liabilities are those temporary differences arising from goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit (provided they are not part of a business combination), and temporary

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The amount of deferred tax recognized is measured based on the expected manner of realization or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax assets and liabilities are not discounted.

The carrying amount of a deferred tax asset is reviewed at each balance sheet date and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax benefit to be utilized. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available.

Current tax balances and deferred tax balances, and movements therein, are presented separately from each other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax liabilities, if we have the legally enforceable right to set off current tax assets against current tax liabilities and the following additional conditions are met:

— in the case of current tax assets and liabilities, we intend either to settle on a net basis, or to realize the asset and settle the liability simultaneously; or

— in the case of deferred tax assets and liabilities, if they relate to income tax levied by the same taxation authority on either:

— the same taxable entity; or

— different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered, intend to realize the current tax assets and settle the current tax liabilities on a net basis or realize and settle simultaneously.

Deferred tax assets in respect of unused tax losses and tax credit carried forward and deductible temporary differences are recognized and measured based on the expected manner of realization or settlement of the carrying amount of the assets, using tax rates enacted or substantively enacted at the balance sheet date. In determining the carrying amounts of deferred tax assets, expected taxable profits are estimated which involves a number of assumptions relating to our operating environment and require a significant level of judgment exercised by the directors. Any change in such assumptions and judgment would affect the carrying amounts of deferred tax assets to be recognized and hence the net profit in future years.

We file income taxes with a number of tax authorities. Judgment is required in determining the provision for taxation. There are many transactions and calculations for which the ultimate tax determinations are uncertain during the ordinary course of business. Where the final tax outcomes of these matters are different from the amounts originally recorded, the differences may impact the current income tax and deferred income tax provisions in the periods in which the final tax outcomes became available.

Impairment losses for bad and doubtful debts

We estimate impairment losses for bad and doubtful debts resulting from the inability of the customers and other debtors to make the required payments. We base the estimates on the aging of the receivable balance, debtors’ credit-worthiness, and historical write-off experience. If the financial condition of the customers and debtors were to deteriorate, actual write-offs would be higher than estimated.

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Impairment losses of non-current assets

In considering the impairment losses that may be required for certain of our assets which include property, plant and equipment, lease prepayments and intangible assets, recoverable amount of the asset needs to be determined. The recoverable amount is the greater of the fair value less costs to sell and the value in use. It is difficult to precisely estimate selling price because quoted market prices for these assets may not be readily available. In determining the value in use, expected cash flow generated by the asset are discounted to their present value, which requires significant judgment relating to items such as level of sale volume, selling price and amount of operating costs. We use all readily available information in determining an amount that is reasonable approximation of recoverable amount, including estimates based on reasonable and supportable assumptions and projections of items such as sale volume, selling price and amount of operating costs.

DESCRIPTION OF CERTAIN INCOME STATEMENT COMPONENTS

Revenue

Our revenue consists of sales of electricity generated by our wind farms, service concession construction revenue and others. Revenue from sales of electricity excludes VAT or other sales taxes.

The following table sets forth the amount of each major items of our revenue and each item as a percentage of our total revenue (excluding service concession construction revenue) from wind power business for the periods indicated.

For the year ended December 31, 2008 2009 2010 (RMB in (RMB in (RMB in millions) (%) millions) (%) millions) (%)

Sales of electricity ...... 248.1 98.4 847.1 99.4 1,758.6 99.4 Others ...... 4.1 1.6 4.7 0.6 9.9 0.6 Total revenue (excluding service concession construction revenue) ...... 252.2 100.0 851.8 100.0 1,768.5 100.0

Service concession construction revenue ...... 318.1 66.6 — Total revenue from continuing operations ...... 570.3 918.4 1,768.5

We generate revenue primarily from the net power generation of our wind power projects. During the years ended December 31, 2008, 2009, 2010, revenue from sales of electricity increased from RMB248.1 million in 2008 to RMB1,758.6 million in 2010, representing a CAGR of 166.2%. We expect revenue from sales of electricity to continue to increase in the future as we continue to expand our wind power business by completing projects under construction and converting pipeline projects into operating projects.

Our other revenue is primarily derived from our provision of management services to certain wind power projects and CDM projects. During the years ended December 31, 2008, 2009 and 2010, we provided management services to four wind power projects and eight CDM projects owned by other subsidiaries of Huaneng Group.

During the years ended December 31, 2008, 2009 and 2010, pursuant to our service concession agreement with local government, we constructed and operated Phase I of Tongliao Baolongshan Project with an installed capacity of 49.5 MW and a concession period of 25 years. Because substantially all construction activities of our wind power concession projects are sub-contracted, the total construction costs represented the fair value of the construction services provided. As a result, the service concession revenue is equal to the service concession cost during the construction period, and thus have no net effect on our operating profit or profit for the relevant period. Under the new on-grid tariff regime effective from August 1, 2009, a universal on-grid tariff is applicable

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Other Net Income

Other net income primarily consists of government grants which mainly include income from sale of CERs and VAT rebate and refund from local governments. In addition, in 2009, we disposed our 65.0% equity interest in Qidong Wind Power and recognized a net gain in the amount of RMB18.9 million.

The following table sets forth the principal components of our other net income and their relative percentage of our total other net income for the periods indicated.

For the year ended December 31, 2008 2009 2010 (RMB in (RMB in (RMB in millions) (%) millions) (%) millions) (%)

Government grants — CERs income ...... 16.2 45.5 28.7 33.6 164.8 66.0 — VAT rebate and refund ...... 19.3 54.2 36.9 43.3 42.5 17.0 — Others ...... — — 0.3 0.3 41.0 16.4 Net gain on disposal of investment in a subsidiary ...... — — 18.9 22.2 — — Net loss on disposal of property, plant and equipment ...... (0.0) (0.0) — — (0.0) (0.0) Others ...... 0.1 0.3 0.5 0.6 1.5 0.6 Total other net income ...... 35.6 100.0 85.3 100.0 249.8 100.0

Operating Expenses

The following table sets forth the principal components of our operating expenses and their respective percentages of our total operating expenses (excluding service concession construction costs) for the periods indicated.

For the year ended December 31, 2008 2009 2010 (RMB in (RMB in (RMB in millions) (%) millions) (%) millions) (%)

Depreciation and amortization ...... 80.8 62.4 296.8 74.6 633.7 71.7 Personnel costs ...... 25.7 19.8 45.2 11.4 79.2 8.9 Repairs and maintenance ...... 3.8 2.9 15.2 3.8 27.7 3.1 Administration expenses ...... 11.2 8.7 20.0 5.0 96.0 10.9 Other operating expenses ...... 8.0 6.2 20.4 5.2 47.4 5.4 Total operating expenses (excluding service concession construction costs) ...... 129.5 100.0 397.6 100.0 884.0 100.0

Service concession construction costs ...... 318.1 66.6 — Total operating expenses ...... 447.6 464.2 884.0

Service concession construction costs. Service concession construction costs are recorded in respect of the construction work of our wind power concession projects, based on the stage of completion of the construction work. However, service concession construction costs do not affect our operating profit or profit because the same amount of service concession construction revenue is recognized given the fact that we sub-contracted

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Depreciation and amortization. Depreciation relates primarily to our property, plant and equipment and is calculated on a straight-line basis. Amortization relates primarily to the concession rights granted to us under concession agreements of our wind power concession projects, as well as other intangible assets.

Personnel costs. Personnel costs primarily include salaries, benefits and contributions to the statutory employee retirement fund for our employees.

Repairs and maintenance. Repairs and maintenance include repairs and maintenance costs of our wind farms.

Administration expenses. Administration expenses primarily include office expenses, conference expenses, travel expenses, various tax and fee expenses (such as stamp duties, property taxes, vehicle and vessel usage tax) and entertainment expenses.

Other operating expenses. Other operating expenses include miscellaneous expenses related to our operation, such as insurance premiums, transportation fees and utilities expenses.

Operating Profit

Our operating profit includes revenue and other net income after deducting operating expenses. During the years ended December 31, 2008, 2009 and 2010, our operating profit amounted to RMB158.3 million, RMB539.5 million and RMB1,134.3 million in 2008, 2009 and 2010, respectively.

The adjusted operating margin is calculated by dividing (i) our adjusted operating profit by (ii) our revenue (excluding service concession construction revenue) for the year. Adjusted operating profit is calculated by the operating profit less other net income. Adjusted operating margin and adjusted operating profit are not standard measurements under IFRSs, but we present them here because our management believes that they provide useful indicators of our profitability. Prospective investors should be aware that adjusted operating profit and adjusted operating margin presented in this document may not be comparable to similarly titled measures reported by other companies, due to different calculation methods. In the years ended December 31, 2008, 2009 and 2010, our adjusted operating profit amounted to RMB122.7 million, RMB454.2 million and RMB884.5 million, respectively, and our adjusted operating margins were 48.7%, 53.3% and 50.0%.

Finance Income

Our finance income primarily consists of interest income on bank deposits and other financial assets, and dividend income derived from our equity interest in Huaneng Finance. In addition, because certain amount of borrowings were denominated in foreign currencies, we recognized foreign exchange gains during the years ended December 31, 2008, 2009 and 2010 attributable to the appreciation of Renminbi.

Finance Expenses

Finance expenses primarily consist of interest expenses on bank borrowings and other loans recognized in profit or loss, impairment losses on trade and other receivables, foreign exchange losses, bank charges and others. For detailed information, see “— Indebtedness.”

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Share of Profit of a Jointly Controlled Entity

Share of profit of a jointly controlled entity is derived from our 73.4% equity interest in Yunhe County Shitang Hydro-Power Plant (“Shitang Hydro-Power”). In November 2009, we transferred such investment at no consideration to a subsidiary of Huaneng Group, our Controlling Shareholder, and such transfer was accounted for as a distribution to Huaneng Group.

Income Tax

Our income tax consists of current tax and deferred tax. Our Company and our subsidiaries were incorporated in the PRC and are subject to PRC enterprise income tax. Our income tax in the PRC primarily includes provisions made for the PRC enterprise income tax.

In accordance with the relevant income tax laws and regulations, a number of our subsidiaries were and are entitled to preferential tax treatments. For details about the PRC tax incentives enjoyed by our PRC subsidiaries and the effect of the New EIT Law, see “— Factors Affecting Our Results of Operations — PRC tax incentives” and “Risk Factors — Risks Relating to our Business and Industry — Discontinuance of preferential tax treatments may have an adverse impact on our results of operations and financial condition.”

Profit from Discontinued Operation (Net of Income Tax)

Profit from discontinued operation is derived from our hydropower business. Through a subsidiary in which we held a 60.0% equity interest, we used to construct and operate a hydropower project and derived profit from sale of electricity generated by the hydropower plant. In January 2009, we sold our interest in such subsidiary to a fellow subsidiary controlled by Huaneng Group. See Note 10 in Section C to the Accountants’ Report included in Appendix I to this document for details of the discontinued operation.

Profit Attributable to Non-controlling Interests

Profit attributable to non-controlling interests represent the portion of the operating results of our subsidiaries attributable to interests not owned by us.

Accumulated Loss/Retained Earnings

We recorded accumulated loss in the amount of RMB30.2 million as of January 1, 2008, primarily reflecting the facts that (i) we only had four operating wind power projects at that time and (ii) the operating expenses, including the administrative expenses, exceeded the revenue generated by the then operating projects. Due to the profit attributable to equity owner of the Company of RMB53.2 million, we recorded retained earnings in the amount of RMB23.0 million as of January 1, 2009. Our retained earnings increased to RMB287.1 million as of January 1, 2010 due to the profit attributable to equity owner of the Company in the amount of RMB264.4 million in 2009.

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RESULTS OF OPERATIONS

The following table sets forth selected items in our consolidated statements of comprehensive income and each of these items as a percentage of our total revenue for the periods indicated. This information should be read together with our audited consolidated financial statements and related notes included in the Accountants’ Report set out in Appendix I to this document. The results of operations in any period are not necessarily indicative of the results that may be expected for any future period.

For the year ended December 31, 2008 2009 2010 (RMB in (RMB in (RMB in millions) (%) millions) (%) millions) (%) Continuing operations Revenue ...... 570.3 100.0 918.4 100.0 1,768.5 100.0 Other net income ...... 35.6 6.2 85.3 9.3 249.8 14.1 Operating expenses ...... (447.6) (78.4) (464.2) (50.5) (884.0) (50.0) Operating profit ...... 158.3 27.8 539.5 58.8 1,134.3 64.1 Finance income ...... 9.2 1.6 12.2 1.3 22.2 1.3 Finance expenses ...... (72.2) (12.7) (251.4) (27.4) (515.1) (29.1) Share of profit of a jointly controlled entity ...... 0.1 0.0 3.1 0.3 — — Profit before taxation ...... 95.4 16.7 303.4 33.0 641.4 36.3 Income tax ...... 0.5 0.1 (22.2) (2.4) (32.0) (1.8) Profit from continuing operations ...... 95.9 16.8 281.2 30.6 609.4 34.5

Discontinued operation Profit from discontinued operation (net of income tax) ...... 11.1 1.9 39.4 4.3 — — Profit for the year ...... 107.0 18.7 320.6 34.9 609.4 34.5

Profit attributable to: Equity owner/shareholders of the Company ...... 53.2 9.3 264.4 28.8 528.3 29.9 Non-controlling interests ...... 53.8 9.4 56.2 6.1 81.1 4.6

Year Ended December 31, 2010 Compared to Year Ended December 31, 2009

Revenue

Our revenue increased by 92.6% from RMB918.4 million in 2009 to RMB1,768.5 million in 2010, primarily attributable to a significant increase in sales of electricity from RMB847.1 million in 2009 to RMB1,758.6 million in 2010.

The significant increase in sales of electricity was primarily due to an increase of 111.9% in net power generation as a result of the increased weighted average consolidated operational capacity of our wind power projects, even though the weighted average on-grid tariff (excluding VAT) decreased by 2.1% and the weighted average utilization hours decreased by 4.2%. See “— Factors Affecting Our Results of Operations — On-grid tariffs.” Such increase was partially offset by a decrease in service concession construction revenue from RMB66.6 million in 2009 to nil in 2010, due to the fact that no service concession project was constructed in 2010. Revenue from other business increased by 110.6% from RMB4.7 million to RMB9.9 million during the same period, primarily due to the additional management services provided by us to two subsidiaries of Huaneng Group for their CDM projects in 2010.

Other Net Income

Other net income increased by 192.8% from RMB85.3 million in 2009 to RMB249.8 million in 2010, primarily due to an increase of 474.2% in our CERs income from RMB28.7 million in 2009 to RMB164.8

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Operating Expenses

Our operating expenses increased by 90.4% from RMB464.2 million in 2009 to RMB884.0 million in 2010, primarily due to the expansion of our wind power business, while partially offset by a decrease in the service concession construction costs.

Depreciation and amortization expenses increased by RMB336.9 million, or 113.5%, from RMB296.8 million in 2009 to RMB633.7 million in 2010, primarily due to the increase in property, plant and equipment in line with the expansion of our wind power business.

Repairs and maintenance expenses increased by RMB12.5 million, or 82.2%, from RMB15.2 million in 2009 to RMB27.7 million in 2010, primarily due to (i) the increase in the number of wind turbines in line with the expansion of our wind power business and (ii) the expense incurred for the maintenance of infrastructure for one of our projects in 2010.

Personnel costs increased by RMB34.0 million, or 75.2%, from RMB45.2 million in 2009 to RMB79.2 million in 2010, primarily due to the increase in the number of employees in line with our expanded wind power business. Administration expenses and other operating expenses also increased by RMB76.0 million, or 380.0%, and RMB27.0 million, or 132.4%, during the same period primarily as a result of the expansion of our wind power business.

The above increases in the operating expenses were partially offset by a decrease in the service concession construction costs from RMB66.6 million in 2009 to nil in 2010 as we did not construct any service concession projects in 2010.

Operating Profit

Our total operating profit increased by 110.3% from RMB539.5 million in 2009 to RMB1,134.3 million in 2010. Our adjusted operating profit increased by 94.7% from RMB454.2 million in 2009 to RMB884.5 million in 2010, while our adjusted operating margin decreased slightly from 53.3% in 2009 to 50.0% in 2010. The significant increase in the operating profit was primarily attributable to the increased scale of our wind power operations. The decrease in the adjusted operating margin was primarily due to the decreases by 4.2% in the weighted average utilization hours and the decrease by 2.1% in the weighted average on-grid tariff.

Finance Income

Finance income increased by 82.0% from RMB12.2 million in 2009 to RMB22.2 million in 2010, primarily due to the increase in interest income on bank deposits and foreign exchange gains arising from the CER receivables denominated in Euros.

Finance Expenses

Finance expenses increased by 104.9% from RMB251.4 million in 2009 to RMB515.1 million in 2010, primarily due to (i) an increase of RMB237.3 million, or 64.5%, in interest on other loans which were not wholly repayable within five years as a result of an increase in the amount of long-term borrowings and (ii) an increase of RMB68.3 million, or 56.6%, in interest on bank and other borrowings wholly repayable within five years as a result of an increase in the amount of short-term borrowings. The increase in finance expenses was partially

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Share of Profit of a Jointly Controlled Entity

Share of profit of a jointly controlled entity decreased from RMB3.1 million in 2009 to nil in 2010 because we transferred our entire equity interests in Shitang Hydro-Power to a wholly-owned subsidiary of Huaneng Group in November 2009.

Profit before Taxation

Profit before taxation increased significantly from RMB303.4 million in 2009 to RMB641.4 million in 2010, primarily as a result of the significant increase in operating profit while partially offset by the increase in finance expenses as discussed above.

Income Tax

Income tax increased from RMB22.2 million in 2009 to RMB32.0 million in 2010, primarily due to the significant increase in our operating profit. Our effective tax rate decreased from 7.3% in 2009 to 5.0% in 2010. The decrease in the effective tax rate was primarily attributable to the fact that our wind power projects with an aggregate operational capacity of 1,093.6 MW started to enjoy tax exemption after commencing commercial operation in 2010. See “— Factors Affecting Our Results of Operations — PRC tax incentives — Enterprise income tax.”

Profit from Continuing Operations

Profit from continuing operations increased by 116.7% from RMB281.2 million in 2009 to RMB609.4 million in 2010, primarily attributable to the significant increase in the operating profit from our wind power business. As a percentage of our total revenue (excluding service concession construction revenue), profit from continuing operations increased from 33.0% in 2009 to 34.5% in 2010. The increase was primarily attributable to our increased economies of scale.

Profit from Discontinued Operation (Net of Income Tax)

Profit from discontinued operation (net of income tax) decreased from RMB39.4 million in 2009 to nil in 2010 because we transferred our entire equity interests in the subsidiary which operated the hydropower business to another subsidiary of Huaneng Group in January 2009.

Profit for the Year

As a result of the foregoing, our profit for the period increased by 90.1% from RMB320.6 million in 2009 to RMB609.4 million in 2010.

Profit Attributable to Equity Owner/Shareholders of the Company and Non-controlling Interests

Profit attributable to equity owner/shareholders of the Company increased by 99.8% from RMB264.4 million in 2009 to RMB528.3 million in 2010, primarily due to the increased profit contribution from our wind power projects, all of which are wholly owned or controlled by us. Profit attributable to non-controlling interests increased by 44.3% from RMB56.2 million in 2009 to RMB81.1 million in 2010.

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Year Ended December 31, 2009 Compared to Year Ended December 31, 2008

Revenue

Our revenue increased by 61.0% to RMB918.4 million in 2009 from RMB570.3 million in 2008. The increase was primarily due to a significant increase in the sales of electricity while partially offset by a decrease in the service concession construction revenue.

Revenue from sales of electricity generated by wind power projects increased by 241.4% from RMB248.1 million in 2008 to RMB847.1 million in 2009. This increase was primarily attributable to a 275.9% increase in our net power generation from 427.4 GWh in 2008 to 1,606.6 GWh in 2009, even though our weighted average on-grid tariff (excluding VAT) decreased from RMB0.581 per kWh in 2008 to RMB0.527 per kWh in 2009. See “— Factors affecting our results of operations — On-grid tariffs.” The increase in our net power generation was primarily attributable to a 276.1% increase in the weighted average consolidated operational capacity from 184.3 MW in 2008 to 693.1 MW in 2009. Sales of electricity as a percentage of our total revenue (excluding service concession construction revenue) increased from 98.4% in 2008 to 99.4% in 2009.

Service concession construction revenue decreased by 79.1% from RMB318.1 million in 2008 to RMB66.6 million in 2009. The decrease in service concession construction revenue was due to the fact that most of the construction work was completed in 2008.

Revenue from other business increased by 14.6% from RMB4.1 million in 2008 to RMB4.7 million in 2009.

Other Net Income

Other net income increased by 139.6% from RMB35.6 million in 2008 to RMB85.3 million in 2009. This increase was primarily due to (i) an increase of RMB17.6 million, or 91.2%, in VAT rebate and refund and (ii) a significant increase in our CERs income, which grew from RMB16.2 million in 2008 to RMB28.7 million in 2009. The increase in CERs income was due to the increase in the amount of CER credits sold from 249,855.2 tons in 2008 to 408,826.7 tons in 2009.

Operating Expenses

Our operating expenses increased by 3.7% from RMB447.6 million in 2008 to RMB464.2 million in 2009, primarily due to the expansion of our wind power business while partially offset by a significant decrease in the service concession construction costs. Excluding the service concession construction costs, our operating expenses increased by 207.0% from RMB129.5 million to RMB397.6 million.

Depreciation and amortization expenses increased by RMB216.0 million, or 267.3%, from RMB80.8 million in 2008 to RMB296.8 million in 2009, primarily due to the increase in property, plant and equipment in line with the expansion of our wind power business.

Repairs and maintenance expenses increased by RMB11.4 million, or 300.0%, from RMB3.8 million in 2008 to RMB15.2 million in 2009, primarily due to the increase in the number of wind turbines as a result of the expansion of our wind power business. In addition, the warranty period of three of our wind power projects expired in 2008 (one expired in May and the other two in December). The maintenance of these three wind power projects used to be carried out by our suppliers during the warranty period.

Personnel costs increased by RMB19.5 million, or 75.9%, from RMB25.7 million in 2008 to RMB45.2 million in 2009, primarily due to the increase in the number of employees from 372 in 2008 to 475 in 2009, resulting from the expansion of our wind power business. Administration expenses and other operating expenses

— 173 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. FINANCIAL INFORMATION also increased by RMB8.8 million, or 78.6%, and RMB12.4 million, or 155.0%, respectively, from 2008 to 2009 in line with the expansion of our wind power business.

The increase in the operating expenses was partially offset by a significant decrease of RMB251.5 million, or 79.1%, in the service concession construction costs, primarily due to the decrease in the construction costs for the service concession construction projects as most of the construction work was completed in 2008.

Operating Profit

Our operating profit increased by RMB381.2 million, or 240.8% from RMB158.3 million in 2008 to RMB539.5 million in 2009. Our adjusted operating profit increased by 270.2% from RMB122.7 million in 2008 to RMB454.2 million in 2009 and our adjusted operating margin increased from 48.7% to 53.3%, primarily due to the increased economies of scale and enhanced operating efficiency as evidenced by the significant decrease in the personnel and administrative expenses as a percentage of our total revenue. We enhanced our cost efficiency by implementing centralized systems for wind turbine procurement, spare parts management and workforce coordination.

Finance Income

Finance income increased by 32.6% from RMB9.2 million in 2008 to RMB12.2 million in 2009. This increase was primarily due to a combined effect of (i) an increase of RMB3.0 million, or 63.2%, in interest income on financial assets mainly related to the interest income on bank deposits and (ii) an increase of RMB2.1 million, or 86.6%, in dividend income related to our equity investment in Huaneng Finance. The increase was partially offset by a decrease of RMB2.0 million, or 98.9%, in foreign exchange gains.

Finance Expenses

Finance expenses increased by 248.2% from RMB72.2 million in 2008 to RMB251.4 million in 2009 in line with the expansion of our wind power business. This increase was primarily due to an increase of RMB3,650.6 million, or 82.3%, in long-term bank borrowings and an increase of RMB600.0 million, or 75%, in loans from fellow subsidiaries controlled by Huaneng Group. The increase in finance expenses was partially offset by an increase of RMB116.3 million in interest expenses capitalized into property, plant and equipment and intangible assets which is deducted from the total interest expenses.

Share of Profit of a Jointly Controlled Entity

Share of profit of a jointly controlled entity increased significantly from RMB0.1 million in 2008 to RMB3.1 million in 2009, primarily due to the increase in the profit of Shitang Hydro-Power in 2009 before we transferred our equity interest to another subsidiary of Huaneng Group.

Profit before Taxation

Profit before taxation increased significantly by RMB208.0 million, or 218.0%, from RMB95.4 million in 2008 to RMB303.4 million in 2009. This increase was primarily due to the significant increase in operating profit while partially offset by the increase in finance expenses discussed above.

Income Tax

Our income tax expense in 2009 amounted to RMB22.2 million, as compared to an income tax benefit of RMB0.5 million in 2008. Our effective tax rate in 2009 was 7.3%. The increase in our income tax was primarily

— 174 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. FINANCIAL INFORMATION attributable to (i) a significant increase of RMB208.0 million in profit before taxation and (ii) the expiry of or change to certain preferential tax treatments which our wind power project companies previously enjoyed.

Profit from Continuing Operations

Profit from continuing operations increased by RMB185.3 million, or 193.2%, from RMB95.9 million in 2008 to RMB281.2 million in 2009. The increase was primarily attributable to the significant increase in the operating profit from our wind power business. As a percentage of our total revenue (excluding service concession construction revenue), profit from continuing operations decreased from 38.0% in 2008 to 33.0% in 2009, primarily due to the increase of income tax expenses.

Profit from Discontinued Operation (Net of Income Tax)

Profit from discontinued operation (net of income tax) increased by RMB28.3 million, or 255.0%, from RMB11.1 million in 2008 to RMB39.4 million in 2009. Profit from discontinued operation consists of profit from hydropower business which was transferred to another subsidiary of Huaneng Group in January 2009 and our gains derived from such transfer.

Profit for the Year

As a result of the foregoing, our profit for the year increased by 199.6% to RMB320.6 million in 2009 from RMB107.0 million in 2008.

Profit Attributable to Equity Owner of the Company and Non-controlling Interests

Profit attributable to equity owner of the Company increased by 397.0% from RMB53.2 million in 2008 to RMB264.4 million in 2009. This increase was primarily due to the increase in profit contribution attributable to our wind power business.

Profit attributable to non-controlling interests increased by 4.5% from RMB53.8 million in 2008 to RMB56.2 million in 2009.

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CERTAIN BALANCE SHEET ITEMS

Net Current Liabilities

The following table sets forth our current assets, current liabilities and net current assets or liabilities as of the dates indicated.

As of As of December 31, March 31, 2008 2009 2010 2011 (RMB in millions) (unaudited) Current assets Inventories ...... 1.8 0.2 0.8 0.8 Trade debtors and bills receivable ...... 116.8 390.9 959.7 1,205.4 Prepayments and other current assets ...... 120.9 596.7 207.7 319.0 Tax recoverable ...... 0.0 6.9 0.5 0.0 Restricted deposits ...... 28.7 15.8 0.8 7.5 Cash at bank and on hand ...... 1,643.8 819.2 1,309.5 2,882.5 1,912.0 1,829.7 2,479.0 4,415.2 Current liabilities Borrowings ...... 2,396.2 2,798.5 4,817.6 5,112.8 Obligations under finance leases ...... — 119.2 232.2 238.8 Other payables ...... 1,573.5 2,081.6 6,255.2 6,417.5 Tax payable ...... 4.5 12.6 6.3 11.8 3,974.2 5,011.9 11,311.3 11,780.9 Net current liabilities ...... (2,062.2) (3,182.2) (8,832.3) (7,365.7)

We recorded net current liabilities of RMB2,062.2 million, RMB3,182.2 million and RMB8,832.3 million as of December 31, 2008 and 2009 and 2010, respectively. As of March 31, 2011, which is the latest practicable date such information is available to us, our net current liabilities were RMB7,365.7 million. Our net current liabilities position during the years ended December 31, 2008, 2009 and 2010 mainly reflected the high levels of (i) our short-term bank borrowings to meet part of the increased demands for prepayments in the purchases of wind turbines and to finance our long-term capital requirement through short-term borrowings with a view to taking advantage of the lower financing costs in the PRC of short-term borrowings compared to the financing costs of long-term borrowings; and (ii) payables for acquisition of property, plant and equipment and intangible assets in connection with the rapid growth of our wind power business. In addition, similar to other wind power generation companies, we have relatively small amount of current assets due to (i) our nominal amount of inventories, and (ii) the prepayments of 10% to 20% of the total purchase prices of wind turbines are recorded as non-current assets. See “— Indebtedness — Short term borrowings” and “Risk Factors — Risks Relating to Our Business and Industry — Our significant net current liabilities and borrowing levels may limit our ability to obtain additional funding for our operations.” for more details.

Our net current liabilities increased from RMB3,182.2 million as of December 31, 2009 to RMB8,832.3 million as of December 31, 2010, primarily reflecting a RMB4,173.6 million increase in other payables and a RMB2,019.1 million increase in short-term borrowings. The increases in other payables and in short-term borrowings were primarily attributable to the continuous expansion of our operations and were in line with the increases in our installed capacity as well as capacity under construction. The increase in other payables was primarily due to the increase in payables for acquisition of property, plant and equipment and intangible assets as well as increased retention payable as a result of the construction and expansion of our wind farms. The increase in short-term borrowings was primarily used to meet part of the increased demands for prepayments in the purchases of wind turbines and to finance our long-term capital requirement through short-term borrowings with

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We expect that we may continue to record net current liabilities in the future for the expansion of our wind power business. We intend to finance our future capital expenditure requirements mainly with borrowings, proceeds from certain possible working capital raising activities, cash from operating activities and other existing cash resources. As of December 31, 2010, we had unutilized banking facilities in the amount of RMB7.4 billion. Due to our strong track record and creditability, we have never experienced any difficulty in obtaining financings or repaying the short-term borrowings. As of March 31, 2011, being the latest practicable date such information is available to us, we had unutilized banking facilities and credit lines in the amount of RMB8.8 billion and RMB20 billion, respectively.

Our Directors plan to further improve our financial position by adopting the following measures: (i) increasing cash from operations when more wind power projects start to generate revenue; (ii) continuing to strengthen our business relationships with suppliers of wind turbines and other equipments to reduce the prepayments; and (iii) continuing to improve the finance management.

Given our strong track record and established credit history and long-term cooperation relationships with the PRC banks, our Directors are of the view that we will be able to obtain financings at competitive terms to finance our business growth.

Inventories

As of December 31, 2008, 2009 and 2010, our inventories were RMB1.8 million, RMB0.2 million and RMB0.8 million, respectively. Our inventories as of December 31, 2008 were mainly related to our hydropower business, and they decreased significantly after we disposed of the hydropower business in January 2009. Currently, our inventories mainly consist of spare parts for our wind power projects.

Trade Debtors and Bills Receivable

The table below sets forth a summary of our trade debtors and bills receivable as of the dates indicated:

As of December 31, 2008 2009 2010 (RMB in millions) Amounts due from third parties ...... 116.5 386.1 949.6 Amounts due from fellow subsidiaries ...... 0.3 4.8 10.1 116.8 390.9 959.7 Less: allowance for doubtful accounts ...... — — — 116.8 390.9 959.7

The continuous increase in our trade debtors and bills receivable during the years ended December 31, 2008, 2009 and 2010 was primarily due to the increases in amounts due from local grid companies as a result of the increased sales of electricity generated by our wind power projects and to a lesser extent, to the increase in our turnover days. The amounts due from fellow subsidiaries were primarily derived from our provision of management services to the wind power projects owned by another subsidiary of Huaneng Group.

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The trade debtors and bills receivable include receivables that were past due with a carrying amount of approximately RMB7.8 million as of December 31, 2010. These past due receivables represented management service receivable due from another subsidiary controlled by Huaneng Group which has been settled in March 2011. During the years ended December 31, 2008, 2009 and 2010, we did not make any allowance for doubtful trade debtors and bills receivable. In determining the recoverability of a trade receivable, we consider the creditworthiness of our customers on an individual basis and any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. As of December 31, 2010, receivables from grid companies accounted for a substantial majority of the total balance of trade receivables due from third parties. Our management believes that there is no material credit risk associated with receivables from these grid companies which are government controlled or owned entities with strong credit quality and with which we have maintained long-term and stable business relationships. In addition, our management continuously monitors the levels of risk exposure to ensure that proper actions are promptly taken to lower the risk exposure.

The following table sets forth an aging analysis of trade debtors and bills receivable as of the dates indicated:

As of December 31, 2008 2009 2010 (RMB in millions) Current ...... 116.8 387.3 951.9 Past due within 1 year ...... — 3.6 4.8 Past due between 1 to 2 years ...... — — 3.0 116.8 390.9 959.7 Less: allowance for doubtful accounts ...... — — — 116.8 390.9 959.7

The following table shows our trade debtors and bills receivable turnover days during the periods indicated:

For the year ended December 31, 2008 2009 2010 Trade debtors and bills receivable turnover days(1) ...... 103 109 139

Note: (1) Turnover days of trade debtors and bills receivable are calculated by dividing the average of the opening and closing balances of trade debtors and bills receivable for the relevant year by revenue (excluding service concession construction revenue) and then multiplying this figure by the number of days in the relevant year.

Sale of electricity is recognized when electricity is supplied to the local grid companies, and we normally bill the local grid companies in the following month. After receiving the bills, the local grid companies typically pay in two installments. The first installment, representing 40% to 70% of total electricity sales, is generally settled within 15 to 30 days from the date of billing, and the remaining amount is normally settled in 2 to 12 months from the date of recognition of sales because such payment is subject to the allocation of additional funds by the relevant governmental authorities to local grid companies from the tariff surcharge payable by end-users. However, in Guangdong Province, the local grid company pay in one installment normally within 5 to 30 days from the date of billing.

Our trade debtors and bills receivable turnover days increased from 103 days in 2008 to 109 days in 2009 and further to 139 days in 2010, primarily due to our expansion in areas with relatively longer settlement period of the second installment payment. For example, in Inner Mongolia and Shandong Province, the local grid companies usually settle the second installment payment within 2 to 8 months and 5 to 12 months, respectively.

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Our aggregated installed capacity in Inner Mongolia and Shandong Province, as a percentage of our consolidated operational capacity, increased from approximately 51.4% as of December 31, 2009 to approximately 63.4% as of December 31, 2010. As of December 31, 2010, our trade debtors and bills receivable amounted to RMB959.7 million, among which approximately RMB191.2 million had been collected as of February 28, 2011.

Prepayments and Other Current Assets

The table below sets forth the components of our prepayments and other current assets as of the dates indicated:

As of December 31, 2008 2009 2010 (RMB in millions) CERs receivable ...... 18.0 6.5 167.3 Staff advance ...... 1.7 4.0 4.0 Deposits ...... 2.1 4.0 8.5 Amounts due from fellow subsidiaries ...... 3.3 563.5 — VAT refund receivables ...... 93.6 12.1 0.5 Prepayments ...... 0.2 0.1 1.1 Other debtors ...... 2.8 7.3 27.1 121.7 597.5 208.5 Less: allowance for doubtful debts ...... (0.8) (0.8) (0.8) 120.9 596.7 207.7

The amounts due from fellow subsidiaries represented our advances to and payments for expenditures on behalf of other subsidiaries of Huaneng Group. As of December 31, 2009, we recorded amounts due from fellow subsidiaries of RMB563.5 million, which mainly consisted of (i) our advance of approximately RMB343.0 million to Qidong Wind Power which was one of our subsidiaries but sold to HPI in August 2009 and (ii) payment of approximately RMB220.5 million on behalf of HPI for its projects. All the amounts due from fellow subsidiaries had been settled in 2010.

VAT refund receivables are granted by the PRC government for the purchases of domestic-brand wind turbines and other equipment by FIEs. We recognize the VAT refund receivables after we fulfill certain requirements and receive the approval from the PRC government confirming such grant. In anticipation of the change to the VAT refund policy effective on January 1, 2009, we filed a large number of applications for such VAT refunds in 2008, and in turn recorded a large amount of VAT refund receivables in 2008 after the applications were approved by the government and before we actually receive the funds. The VAT refund receivables in the amount of RMB12.1 million as of December 31, 2009 and RMB0.5 million as of December 31, 2010 mainly represent the outstanding balances of the VAT refund granted by the government in 2008.

Our prepayments and other current assets decreased significantly from RMB596.7 million as of December 31, 2009 to RMB207.7 million as of December 31, 2010, primarily due to the repayment of amounts due from fellow subsidiaries in the amount of RMB563.5 million, while partially offset by an increase of RMB160.8 million in CERs receivable. CERs receivable represents receivable from the sale of CERs which have not been verified by the DOE. Our prepayments and other current assets increased by RMB475.8 million, or 393.5%, from December 31, 2008 to December 31, 2009, primarily attributable to a significant increase of RMB560.2 million in amounts due from fellow subsidiaries while partially offset by a decrease of RMB81.5 million in VAT refund receivables.

Allowance for doubtful accounts in respect of our prepayments and other current assets amounted to RMB0.8 million, RMB0.8 million and RMB0.8 million as of December 31, 2008, 2009 and 2010, respectively.

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We conducted aging analysis and evaluation of collectability on an individual basis in determining the allowance for impairment losses. The allowance for doubtful accounts was mainly relating to the receivables due from counterparties that were in financial difficulties. Our management assessed that the receivables are not expected to be recovered and recognized the allowance accordingly. We do not hold any collateral over these balances. Other than these impaired receivables, our management is of the opinion that the rest of prepayments and other current assets are all fully recoverable.

Restricted Deposits

Restricted deposits mainly represent cash pledged as tender bonds for our wind power projects. Restricted deposits amounted to RMB28.7 million, RMB15.8 million and RMB0.8 million as of December 31, 2008, 2009 and 2010, respectively. The decrease in restricted deposits was primarily due to the completion of relevant projects and the expiry of the tender bonds.

Obligations under Finance Leases

Obligations under finance leases mainly relate to (i) the sales and leaseback transactions of certain properties and equipment with an aggregate net book value of RMB1,183.0 million as of December 31, 2010 and (ii) a finance lease transaction of certain wind turbines in the amount of RMB814.8 million for our wind power projects. Certain finance lease transactions were pledged by the future electricity revenue of relevant projects. At inception, the lease periods of the finance lease obligation is approximately 7 to 10 years. The principal obligations and interest expenses are to be paid at least annually within the lease period. We commenced our finance lease transactions in 2009. As of December 31, 2009 and 2010, the current portion of our obligations under finance leases were RMB119.2 million and RMB232.2 million.

Other Payables

The table below sets forth the components of our other payables as of the dates indicated:

As of December 31, 2008 2009 2010 (RMB in millions) Payables for acquisition of property, plant and equipment and intangible assets ...... 1,327.3 1,472.9 5,083.4 Retention payable ...... 177.0 524.3 1,045.7 Dividends payable ...... 0.6 5.4 — Payables for staff related costs ...... 15.9 24.1 36.6 Amounts due to related parties ...... 19.9 21.5 18.1 Payables for other taxes ...... 11.3 14.5 28.7 Interest payable ...... 3.9 8.8 19.7 Payables for repairs and maintenance ...... — 2.8 — Other accruals and payables ...... 17.6 7.3 23.0 1,573.5 2,081.6 6,255.2

Our other payables increased by RMB4,681.7 million from RMB1,573.5 million as of December 31, 2008 to RMB6,255.2 million as of December 31, 2010, primarily due to the increase in payables for acquisition of property, plant and equipment and intangible assets as well as increased retention payable as a result of the construction and expansion of our wind farms. During the years ended December 31, 2008, 2009 and 2010, our consolidated installed capacity increased from 402.3 MW as of December 31, 2008 to 1,549.8 MW as of December 31, 2009 and further to 3,522.4 MW as of December 31, 2010. All of the other payables are expected to be settled within one year or are repayable on demand.

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Amounts due to related parties included in other payables mainly represent advances from or amounts collected on behalf of the wind power projects to which we provided management services.

INDEBTEDNESS

Borrowings

The majority of our borrowings are denominated in RMB. The table below sets forth our loans and borrowings as of the dates indicated.

As of As of December 31, March 31 2008 2009 2010 2011 (RMB in millions) (unaudited) Short-term borrowings Bank and other financial institution loans — Secured ...... 15.0 — — — — Unsecured ...... 1,517.0 736.7 3,969.8 4,209.8 Loans from fellow subsidiaries (unsecured) ...... 800.0 1,400.0 — — Current portion of long-term borrowings — Bank and other loans ...... 64.2 661.8 847.8 903.0 2,396.2 2,798.5 4,817.6 5,112.8 Long-term borrowings Bank and other loans — Secured ...... 397.0 285.1 2,355.6 2,346.3 — Unsecured ...... 4,103.8 8,463.9 11,693.5 14,116.7 4,500.8 8,749.0 14,049.1 16,463.0 Less: Current portion of long-term borrowings — Bank and other loans ...... (64.2) (661.8) (847.8) (903.0) 4,436.6 8,087.2 13,201.3 15,560.0

During the years ended December 31, 2008, 2009 and 2010, we have relied in part on both long-term and short-term bank borrowings as well as short-term loans from fellow subsidiaries to fund the expansion of our business. Our long-term and short-term borrowings increased from RMB6,832.8 million as of December 31, 2008 to RMB18,018.9 million as of December 31, 2010. As a result, our gearing ratio (which is calculated by dividing (i) the long-term and short-term borrowings and finance lease minus cash and cash equivalents (the “Net Debt”) by (ii) Net Debt plus total equity (including non-controlling interests)) increased from 69.5% as of December 31, 2008 to 75.4% as of December 31, 2010, primarily due to the increase in borrowings outpacing the increase in equity.

The increase in our short-term borrowings was primarily due to temporary demands for prepayments in the purchases of wind turbines. The increase in our long-term borrowings was primarily due to the increased capital requirements for the expansion of our wind power business.

Loans from fellow subsidiaries represent short-term loans borrowed from Huaneng Finance and Huaneng Guicheng Trust Limited, subsidiaries of Huaneng Group.

As of March 31, 2011, being the latest practicable date for determining our indebtedness, our total long- term and short-term borrowings were RMB20,672.8 million. As of March 31, 2011, being the latest practicable date such information is available to us, we had unutilized banking facilities and credit lines in the amount of RMB8.8 billion and RMB20 billion, respectively. We expect to continue to rely on bank loans to fund a portion of our capital requirements in relation to the expansion of wind power business in the future. As a result, we

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Short-term borrowings

Our short-term borrowings totaled RMB2,396.2 million, RMB2,798.5 million and RMB4,817.6 million as of December 31, 2008, 2009 and 2010, respectively. The significant increase in short-term borrowings during the years ended December 31, 2008, 2009 and 2010 was primarily used to meet part of the increased demands for prepayments in the purchases of wind turbines and to finance our long-term capital requirement through short- term borrowings with a view to taking advantage of the lower-financing costs in the PRC of short-term borrowings as compared to the financing costs of long-term borrowings.

A portion of our short-term borrowings were loans from Huaneng Finance and Huaneng Guicheng Trust Limited, two subsidiaries of Huaneng Group. As of December 31, 2008 and 2009, our loans from fellow subsidiaries amounted to RMB800.0 million and RMB1,400.0 million, respectively. These loans have been fully repaid as of December 31, 2010.

Long-term borrowings

Our long-term borrowings totaled RMB4,436.6 million, RMB8,087.2 million and RMB13,201.3 million as of December 31, 2008, 2009 and 2010, respectively. The increase in long-term borrowings was primarily due to the increased capital needs in relation to the wind power business expansion.

The table below sets forth the maturity analysis of our long term borrowings as of the dates indicated:

As of As of December 31, March 31, 2008 2009 2010 2011 (RMB in millions) (unaudited) Within 1 year or on demand ...... 64.2 661.8 847.8 903.0 More than 1 year, but within 2 years ...... 548.6 708.5 1,654.3 2,117.6 More than 2 years, but within 5 years ...... 1,173.1 2,813.7 4,407.9 5,176.8 More than 5 years ...... 2,714.9 4,565.0 7,139.1 8,265.6 4,500.8 8,749.0 14,049.1 16,463.0

Save as disclosed in sections headed “Summary,” “Risk Factors,” and “Financial Information” of this document, as of March 31, 2011, being the latest practicable date for determining our indebtedness, we did not have any outstanding loan capital issued or agreed to be issued, bank overdrafts, loans, debt securities, borrowings or other similar indebtedness, liabilities under acceptance (other than normal trade bills) or acceptance credits, debentures, mortgages, charges, finance leases, hire purchase commitments, guarantees or other material contingent liabilities. As of the Latest Practicable Date, there were no restrictive covenants under our indebtedness. In the contract of our finance lease with CCB Financial Leasing Corporation Limited, a subsidiary of China Construction Bank Corporation, or CCBC, in the amount of RMB270 million, there is a provision of cross default which states that any default under any of our loans from CCBC shall cause cross default under such finance lease. As of December 31, 2010, our loans from CCBC (including the finance lease) in aggregate amounted to approximately RMB636.4 million, representing approximately 3.2% of our total indebtedness as of that date. During the years ended December 31, 2008, 2009 and 2010, we have never experienced any default in repaying bank borrowings or received request for early repayment of bank borrowings.

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Financial Ratios

The following table sets forth our current ratios and gearing ratios as of the dates indicated.

As of December 31, 2008 2009 2010 Current ratio(1) ...... 0.48 0.37 0.22 Gearing ratio(2) ...... 69.5% 77.0% 75.4%

Notes:

(1) Current ratio is the ratio of total current assets to total current liabilities.

(2) Gearing ratio is calculated by dividing (i) the long-term and short-term borrowings and obligations under finance leases minus cash and cash equivalents (the “Net Debt”) by (ii) Net Debt plus total equity (including non-controlling interests).

Our current ratio decreased from 0.48 as of December 31, 2008 to 0.37 as of December 31, 2009 and further to 0.22 as of December 31, 2010, primarily because that the rapid expansion of our wind installed capacity had resulted in large increases in short term borrowings and payables during the years ended December 31, 2008, 2009 and 2010, while at the same time, our inventory was nominal. We use short term borrowings as temporary sources of funding for the preparatory work of new wind power projects before we begin construction. In line with industry practice, we typically pay our equipment suppliers in installments upon the achievement of certain milestones such as delivery and the completion of installation and testing, and as a result, we record sizeable short term payables to these suppliers. Our low level of inventory is in line with industry norm as wind power generation does not require fuel or other raw materials.

Our gearing ratio increased from 69.5% as of December 31, 2008 to 77.0% as of December 31, 2009, primarily due to large increases in our total borrowings as a result of the rapid expansion of our wind installed capacity, which requires large amounts of capital expenditures. We typically fund 70% to 80% of the capital expenditure of a wind power project with bank loans and other borrowings. Our gearing ratio decreased to 75.4% as of December 31, 2010, primarily due to a capital injection of RMB2,172.4 million from our Controlling Shareholder in 2010, while partially offset by the increase in the total borrowings in connection with the expansion of our wind installed capacity.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows and Working Capital

We have historically met our working capital needs primarily by cash generated from operations, bank loans and capital contributions from our shareholders and the non-controlling equity owners of our subsidiaries. As of December 31, 2010, we had RMB1,297.8 million in cash and cash equivalents, compared to RMB789.2 million as of December 31, 2009. The increase in our cash and cash equivalents from December 31, 2009 to December 31, 2010 was primarily due to (i) proceeds from borrowings in the amount of RMB11,805.2 million; (ii) capital contributions from our shareholders in the amount of RMB2,172.4 million; and (iii) cash generated from operations in the amount of RMB1,260.0 million, while partially offset by payments for acquisition of property, plant and equipment, lease prepayments and intangible assets in the amount of RMB10,418.5 million and repayment of borrowings in the amount of RMB4,671.1 million.

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The following table sets forth a summary of our cash flows for the periods indicated.

For the year ended December 31, 2008 2009 2010 (RMB in millions) Net cash from operating activities ...... 196.8 674.3 1,260.0 Net cash used in investing activities ...... (4,883.1) (7,156.3) (9,719.5) Net cash from financing activities ...... 5,734.7 5,627.4 8,968.2 Net increase/(decrease) in cash and cash equivalents ...... 1,048.4 (854.6) 508.7 Effect of foreign exchange rate changes ...... (0.1) 0.0 (0.1) Cash and cash equivalents at beginning of year ...... 595.5 1,643.8 789.2 Cash and cash equivalents at end of year ...... 1,643.8 789.2 1,297.8

We have adopted internal policies to ensure that our working capital is sufficient for our operations. Our policies in managing our working capital mainly include: (i) monitoring current assets and current liabilities, (ii) ensuring repayments of indebtedness due and (iii) controlling finance expenses and minimizing unutilized capital.

Operating Activities

Our cash inflow from operating activities is mainly from the receipt of payments for our sale of electricity. Our cash outflow from operating activities is used primarily for personnel costs, purchase of small-size consumptive spare parts and other materials used in daily operation of wind farms and other operating and administration expenses.

Net cash provided by operating activities in 2010 was RMB1,260.0 million, primarily as a result of profit for the period of RMB609.4 million, as adjusted mainly by depreciation of RMB614.3 million, interest expenses on financial liabilities of RMB514.0 million and the effects of changes in working capital. Changes in working capital mainly included (i) an increase of RMB585.4 million in trade debtors and bills receivable; (ii) an increase of RMB276.8 million in other payables; and (iii) an increase of RMB176.1 million in prepayments and other current assets. The increase in trade debtors and bills receivable was primarily due to the increase in receivables from grid companies as a result of the increased electricity sales of our wind farms. The increase in other payables was primarily due to the increase in output VAT arising from increasing sales of electricity. The increase in prepayments and other current assets was primarily due to the increase in receivables as a result of our increase of CER sales.

Net cash provided by operating activities in 2009 was RMB674.3 million, primarily as a result of profit for the year of RMB320.6 million, as adjusted mainly by depreciation of RMB282.6 million, interest expenses on financial liabilities of RMB251.1 million and the effects of changes in working capital. Changes in working capital mainly included an increase of RMB219.2 million in trade debtors and bills receivable and an increase of RMB111.4 million in other payables. The increase in trade debtors and bills receivable was primarily due to the combination of (i) the increase in receivables from grid companies as a result of the increased electricity sales of our wind farms and (ii) the increase in receivables as a result of our increased CER sales. The increase in other payables was primarily due to the increase in VAT payables.

Net cash provided by operating activities in 2008 was RMB196.8 million, primarily as a result of profit for the year of RMB107.0 million, as adjusted mainly by depreciation of RMB101.3 million, interest expenses on financial liabilities of RMB95.1 million and the effects of changes in working capital. Changes in working capital mainly included an increase of RMB86.6 million in trade debtors and bills receivable which was primarily attributable to the increased electricity sales of our wind power business.

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Investing Activities

Our cash inflow from investing activities primarily consists of government grants received, disposal of discontinued operation, disposal of subsidiary, proceeds from repayments of advances, dividends received and interests received. Our cash outflow from investing activities primarily consists of payments for acquisition of property, plant and equipment, lease prepayments (primarily payments for land use rights) and construction costs for service concession projects and payments for acquisition of financial assets.

Net cash used in investing activities in 2010 was RMB9,719.5 million, primarily as a result of (i) payments for acquisition of property, plant and equipment, lease prepayments and intangible assets in the amount of RMB10,418.5 million, mainly related to the construction and expansion of our wind farms; and (ii) payments for acquisition of financial assets in the amount of RMB32.7 million, mainly related to the unquoted investments in non-listed companies which were recorded at cost. These were partially offset by proceeds from repayments of advances in the amount of RMB563.5 million.

Net cash used in investing activities in 2009 was RMB7,156.3 million, primarily as a result of (i) payments for acquisition of property, plant and equipment, lease prepayments and intangible assets in the amount of RMB7,164.1 million, mainly related to the construction and expansion of our wind farms, and (ii) payments for acquisition of financial assets in the amount of RMB357.0 million, mainly related to the advances we provided to or payments made on behalf of fellow subsidiaries controlled by Huaneng Group and unquoted investments in non-listed companies which are recorded at cost. These were partially offset by (i) the receipt of a government grant of RMB120.7 million which primarily related to the VAT refund in connection with purchases of domestic equipment by our foreign invested wind power project companies, (ii) the proceeds from disposal of discontinued operation (net of cash disposed of) of RMB137.5 million which related to our disposal of the hydropower business in January 2009, and (iii) the proceeds from disposal of subsidiary (net of cash disposed of) of RMB71.3 million which related to the transfer of our equity interests in Qidong Wind Power to a fellow subsidiary controlled by Huaneng Group.

Net cash used in investing activities in 2008 was RMB4,883.1 million, primarily as a result of payments for acquisition of property, plant and equipment, lease prepayments and intangible assets of RMB4,988.0 million, which was partially offset by the receipt of a government grant of RMB76.9 million.

Financing Activities

Our cash inflow from financing activities primarily consists of proceeds from borrowings and capital contributions from the equity owner/shareholders and the non-controlling equity owners of our subsidiaries. Our cash outflow from financing activities primarily consists of repayment of borrowings, payment of interests and payment of dividends to non-controlling equity owners.

Net cash from financing activities in 2010 was RMB8,968.2 million, primarily as a result of (i) proceeds from borrowings in the amount of RMB11,805.2 million; (ii) capital contributions from the equity owner/ shareholders in the amount of RMB2,172.4 million; and (iii) capital contributions from the non-controlling equity owners of our subsidiaries in the amount of RMB86.5 million. These were partially offset by (i) repayment of borrowings of RMB4,671.1 million; (ii) interest paid of RMB704.7 million; and (iii) payment of finance lease obligations of RMB209.8 million.

Net cash from financing activities in 2009 was RMB5,627.4 million, primarily as a result of proceeds from borrowings of RMB8,187.4 million, capital contributions from our parent company of RMB700.0 million, capital contributions from our non-controlling equity owners of RMB206.9 million and proceeds of RMB658.3 million from sales and leaseback transaction classified as finance lease. These were partially offset by (i) the repayment

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Net cash from financing activities in 2008 was RMB5,734.7 million, primarily as a result of proceeds from borrowings of RMB5,914.2 million and capital contributions from our parent company of RMB780.0 million and capital contributions from our non-controlling interests of RMB223.1 million, which were partially offset by the repayment of borrowings of RMB961.1 million and the interest paid of RMB212.5 million.

CAPITAL EXPENDITURE

Our capital expenditures amounted to RMB6,526.1 million, RMB7,469.3 million and RMB14,135.3 million in 2008, 2009 and 2010, respectively. Historically, our capital expenditures consisted principally of expenditures for the construction of wind power projects and purchase of related property, plant and equipment such as wind turbines. We expect our capital expenditures in 2011 to consist principally of similar types of items.

We financed our capital expenditure requirements mainly through a combination of bank borrowings, cash from operations and capital contributions from our shareholders and the non-controlling equity owners of our subsidiaries. In the future, we expect to finance our projects with the proceeds from certain possible working capital raising activities and bank borrowings, supplemented by equity financings and other existing financing resources.

We have adopted internal policies to manage our capital expenditure, including (i) utilizing short-term financings for short-term purposes and long-term financings for long-term purposes, and (ii) funding at least 20% of project investments with capital and the remaining with borrowings.

CONTRACTUAL OBLIGATIONS

The following table sets forth our contractual obligations as of the dates indicated:

As of December 31, 2008 2009 2010 (RMB in millions) Capital commitments Contracted for ...... 7,736.6 10,251.2 8,066.4 Authorized but not contracted for ...... 4,189.5 8,811.3 18,322.5 11,926.1 19,062.5 26,388.9 Operating lease commitments Within 1 year ...... 0.3 0.8 5.3 After 1 year but within 5 years ...... 0.4 0.6 4.9 0.7 1.4 10.2

Our capital commitments are primarily in connection with our purchase of wind turbines and engagement of third party contractors for the construction of our wind power projects. Our operating lease obligations primarily consist of leases for properties. The significant increases in our capital commitments from 2008 to 2010 reflected the rapid expansion of wind installed capacity during those periods. As of December 31, 2010, we had capital commitments of approximately RMB26.4 billion, of which RMB12.8 billion was expected to be paid within the year of 2011 and RMB9.4 billion within the year of 2012. We expect to fund these payments with our internal funds generated from operations, bank borrowings and proceeds from certain possible working capital raising activities.

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CONTINGENT LIABILITIES As of December 31, 2010, no rules or regulations have been issued on whether the revenue from sales of CERs is subject to any VAT or business tax in the PRC. Based on discussions with local tax authorities, our Directors are of the view that no such taxes will be applicable to the revenue from our sales of CERs. Therefore, we have not made any provision for such contingent tax liabilities.

OFF-BALANCE SHEET ARRANGEMENTS

We had no off-balance sheet arrangements as of December 31, 2010.

PROPERTY INTEREST AND PROPERTY VALUATION

Details relating to the Group’s property interests are set out in Appendix IV to this document. Jones Lang LaSalle Sallmanns Limited has valued the property interests of the Group as of February 28, 2011. A summary of values and valuation certificates issued by Jones Lang LaSalle Sallmanns Limited are included in Appendix IV to this document.

The table below sets forth the reconciliation of aggregate amounts of buildings and structures from the Group’s audited combined financial statements as of December 31, 2010 to the unaudited net book value of the Group’s property interests as of February 28, 2011:

RMB in millions Net book value of buildings and structures of the Group as of December 31, 2010 ...... 1,133.6 Additions ...... 159.3 Depreciation Disposals ...... (10.0) Reclassification(1) ...... (704.4) Net book value as of February 28, 2011 ...... 578.5 Valuation surplus as of February 28, 2011 ...... 8.7 Valuation on land use rights and buildings and structures under construction as of February 28, 2011 per “Appendix IV — Property Valuation Report”(2) ...... 302.0 Valuation as of February 28, 2011 per “Appendix IV — Property Valuation Report” ...... 889.2

Notes:

(1) Reclassification mainly represents the net book value of the foundations on which wind turbines are installed and is classified as part of the relevant buildings and structures when compiling the Financial Information. However, the foundations do not fall into the scope of property valuation in accordance with normal valuation practices.

(2) RMB302.0 million comprises the valuation of granted land use rights and buildings and structures under construction, which comes from the relevant portions of the values of properties of Groups I & II in “Appendix IV — Property Valuation Report.”

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We are exposed to credit, liquidity, interest rate and currency risks in the ordinary course of business. Set forth below is a description of our exposure to these risks and the financial risk management policies and practices used by us to manage these risks.

Credit Risk

Our credit risk is primarily attributable to cash and cash equivalents, trade debtors and bills receivable, prepayments and other current assets, and other financial assets. Substantially all of our cash and cash equivalents are deposited in the stated owned/controlled PRC banks and Huaneng Finance whose credit risk is assessed to be insignificant by our Directors.

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The receivables from sales of electricity mainly represent receivables from the provincial power grid companies. We have no significant credit risk with any of these power grid companies given our long-term and stable business relationships with them. The receivables from the provincial power grid companies accounted for 98.3%, 94.1% and 97.8% of total trade debtors as at December 31, 2008, 2009 and 2010, respectively. For other trade and other receivables, we perform an ongoing individual credit evaluation of our customers’ and counterparties’ financial conditions. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet after deducting any impairment allowance. We do not provide any guarantees which would expose us to credit risk.

Liquidity Risk

In managing our liquidity risks, our objective is to ensure continuity of sufficient funding and flexibility by utilizing a variety of bank and other borrowings with debt maturities spreading over a range of periods, thereby ensuring that our outstanding borrowing obligation is not exposed to excessive repayment risk in any one year. Our policy is to regularly monitor current and expected liquidity requirements to ensure that we maintain sufficient reserves of cash and adequate committed lines of funding from major financial institutions to meet our liquidity requirements in the short and longer term. In order to repay the borrowings due within one year, we negotiate banking facilities and utilize operating cash inflows from our subsidiaries.

We manage the proportion of our current liabilities with respect to the total liabilities to mitigate the liquidity risk. We had net current liabilities of RMB2,062.2 million, RMB3,182.2 million and RMB8,832.3 million as of December 31, 2008, 2009 and 2010 respectively. We expect to finance our future capital expenditure requirements mainly with bank borrowings, proceeds from certain possible working capital raising activities, cash from operating activities and other existing cash resources. As of December 31, 2010, we had unutilized banking facilities in the amount of RMB7.4 billion.

Interest Rate Risk

Our interest rate risk arises primarily from borrowings. Borrowings issued at variable rates expose us to cash flow interest rate risk. As of December 31, 2008, 2009 and 2010, it was estimated that a general increase or decrease of 100 basis points in interest rates of net floating borrowings, with all other variables held constant, would have decreased or increased our profit after tax and retained profits by approximately RMB11.7 million, RMB37.3 million, and RMB103.5 million, respectively.

The sensitivity analysis above has been determined assuming that the change in interest rates had occurred at the balance sheet date and had been applied to the exposure to interest rate risk for non-derivative financial instruments in existence at the balance sheet date.

The estimated 100 basis points increase or decrease represents management’s assessment of a reasonably possible change in interest rates over the period until the next annual balance sheet date. The sensitivity analysis is performed on the same basis for the entire years ended December 31, 2008, 2009 and 2010.

Our management regularly reviews and monitors the mix of fixed and variable rate borrowings in order to manage our interest rate risks. During the years ended December 31, 2008, 2009 and 2010, however, our management did not consider it necessary to use interest rate swaps to hedge our exposure to interest rate risks.

Currency Risk

We are exposed to currency risk primarily through sales and purchases which give rise to receivables, borrowings and cash balances that are denominated in a foreign currency, other than RMB. The currencies giving

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Our currency risk arises primarily from sales of CERs which are denominated in foreign currencies and certain borrowings that are denominated in United States dollars. Given the small portion of income from the sale of CER with respect to our total revenue and the insignificant amount of the borrowings denominated in United States dollars, our management considers our exposure to foreign currency risk to be insignificant. On the other hand, however, RMB is not a freely convertible currency and the PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future. Changes in the foreign exchange control system may prevent us from satisfying sufficient foreign currency demands and we may not be able to pay dividends in foreign currencies to our shareholders.

RECENT ACCOUNTING PRONOUNCEMENTS

As of the date of this document, the IASB has issued a number of amendments, new standards and interpretations which are not yet effective for the period ended December 31, 2010 and which have not been adopted in preparing the Financial Information. These amendments, new standards and interpretations include (i) amendment to IAS 32, Financial instruments: Presentation — Classification of rights issues; (ii) amendment to IFRS 1, First-time adoption of International Financial Reporting Standards — limited exemption from comparative IFRS 7 disclosures for first-time adopters; (iii) IFRIC 19, extinguishing financial liabilities with equity instruments; (iv) improvements to IFRSs 2010; (v) amendment to IFRIC 14, prepayments of a minimum funding requirement; (vi) IAS 24 (revised), related party disclosures, (vii) amendment to IFRS 7, Financial instruments: Disclosure—Transfer of financial assets; (viii) amendment to IAS 12, income taxes and (ix) IFRS 9, financial instruments; (x) IFRS 10, consolidated financial statements; (xi) IFRS 11, joint arrangements; (xii) IFRS 12, disclosure of interests in other entities; (xiii) IFRS 13, fair value measurement; (xiv) IAS 27, separate financial statements (2011); and (xv) IAS 28, investments in associates and joint ventures (2011).

Our Directors are in the process of making an assessment of what impact these amendments, new standards and interpretations might have on our results of operations and financial condition once they become applicable. As of the date of this document, our Directors are of the view that the adoption of these amendments, new standards and interpretations is unlikely to have a significant impact on our results of operations and financial condition.

WORKING CAPITAL CONFIRMATION

Taking into account our current cash and cash equivalents available on hand, our anticipated cash flows from operating and financing activities, present available banking facilities and the estimated proceeds from certain possible working capital raising activities, the Directors confirm that we have sufficient working capital for the present requirements and anticipated capital expenditures for the next 12 months from the date of this document.

PROFIT FORECAST

Our Directors forecast that, in the absence of unforeseeable circumstances and on the bases and assumptions set out in Appendix III to this document, the forecast of our consolidated profit attributable to our equity holders for the year ending December 31, 2011 will not be less than RMB1,070.1 million (approximately HK$1,280.2 million). The profit forecast is mainly based on our estimate on capacity growth, utilization hours, approved on-grid tariff, unit cost, CDM registration schedule and interest rate. See “Appendix III — Profit Forecast.”

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DIVIDEND POLICY

We may declare and pay dividends by way of cash or shares in the future. Distribution of dividends shall be formulated by our Board of Directors and subject to shareholders’ approval. The amount of any dividends to be declared or paid in the future will depend on, among other things, our results of operations, cash flows and financial condition, operating and capital requirements, the amount of distributable profits based on our articles of association, the laws of the PRC, other applicable laws and regulations and other relevant factors. In particular, under applicable PRC laws and our Articles of Association, we can only distribute dividends out of our after-tax profit after the following allocations have been made: (i) recovery of accumulated losses, if any; (ii) mandatory allocations to the statutory common reserve fund equivalent to 10% of our after-tax profit, unless the common reserve fund reaches 50% of our registered capital or above; and (iii) allocations to discretionary common reserve fund, subject to our shareholders’ approval at shareholders meeting.

In the future, we expect to distribute no less than 15% of our annual distributable earnings as dividends. We cannot assure you, however, that we will be able to distribute dividends in any amount each year or in any year. In addition, the declaration and payment of dividends may be limited by legal restrictions or financial instruments that we may enter into in the future. Under the current PRC tax laws and regulations, dividends paid by us to a non-PRC resident enterprise shareholder are subject to a 10% withholding tax. The dividends paid to an individual holder of H Shares outside the PRC are currently exempted from the PRC income tax.

SPECIAL DISTRIBUTION

We have agreed to declare a special distribution to Huaneng Group in an amount of RMB316.2 million, which is equal to our audited consolidated net profits attributable to equity owner/shareholders of the Company for the year ended December 31, 2010, prorated according to the number of days from January 1, 2010, the date immediately after the date on which our assets were valued for the establishment of our Company as a joint stock limited company, to August 5, 2010, the date of our establishment (the “Special Distribution”). We expect to pay such Special Distribution to Huaneng Group within six months commencing from the certain date with cash generated from operating activities. After taking into account our current cash balance and our anticipated cash flows from operating activities, we believe we will have sufficient working capital to pay the Special Distribution at that time.

RESERVES AND DISTRIBUTABLE RESERVES

As of December 31, 2008 and 2009, our Group recorded, on a consolidated basis, reserves of RMB1,222.8 million and RMB2,131.7 million, respectively. As of December 31, 2010, our Group recorded, on a consolidated basis, negative reserves of RMB516.1 million. The negative reserves as of December 31, 2010 was primarily attributable to the difference between (i) the appraised value of all the assets and liabilities of HNEIC which were contributed to us during Reorganization as part of our share capital and (ii) the historical cost of such assets and liabilities that was recognized in our financial statements. See “Financial Information — Basis of Preparation” for details.

As of December 31, 2010, the Company had distributable reserves of RMB25.5 million.

RELATED PARTY TRANSACTIONS

With respect to the related parties transactions as set out in Note 29 of the Accountants’ Report attached as Appendix I to this document, the Directors confirm that these transactions were conducted on normal commercial terms and/or on terms that are not less favorable than terms available from Independent Third Parties which are considered fair and reasonable and in the interest of our Shareholders.

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NO MATERIAL ADVERSE CHANGE

Our Directors confirm that there has been no material adverse change in our financial or trading position or prospects since December 31, 2010. Our Directors confirm that they had performed sufficient due diligence on us to ensure that, as of the date of this document, there has been no material adverse change in our financial or trading position or prospects since December 31, 2010 and there is no event since December 31, 2010 which would materially affect the information shown in the Accountants’ Report set out in Appendix I to this document.

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FUTURE PLANS

Our goal is to become a leading renewable energy company in the world with sustainable shareholder return. To achieve our goal, we intend to pursue the following strategies:

• Expand in areas with attractive returns and continue to increase market share in the wind power sector

• Develop other renewable energies with a focus on solar power

• Pursue opportunities in the international markets

• Continue our efforts to promote technological innovation and industry development

• Continue to control costs and improve profitability

For detailed discussion of our future plans and strategies, see “Business — Our Strategies.”

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The following is the text of a report, prepared for the purpose of incorporation in this document, received from the independent reporting accountants, KPMG, Certified Public Accountants, Hong Kong.

8th Floor Prince’s Building 10 Chater Road Central Hong Kong

, 2011 The Directors Huaneng Renewables Corporation Limited

Dear Sirs,

INTRODUCTION

We set out below our report on the financial information relating to Huaneng Renewables Corporation Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”), including the consolidated statements of comprehensive income, the consolidated statements of changes in equity and the consolidated cash flow statements of the Group, for each of the years ended December 31, 2008, 2009 and 2010 (the “Record Period”), and the consolidated balance sheets of the Group as at December 31, 2008, 2009 and 2010, together with the notes thereto (the “Financial Information”), for inclusion in this document.

The Company was established as a joint stock company with limited liability in the People’s Republic of China (the “PRC”) on August 5, 2010 as part of the reorganization (the “Reorganization”) of Huaneng New Energy Industrial Co., Ltd. (“HNEIC”), a state-owned enterprise with limited liability, as described in Section A below. HNEIC was the holding company of the subsidiaries now comprising the Group prior to the Reorganization. Pursuant to the Reorganization, HNEIC was converted into a joint stock company, namely Huaneng Renewables Corporation Limited, i.e. the Company, the details of which are set out in Section A below. The registered office of the Company is located at 10-11th Floor, No. 23A Fuxing Road, Haidian District, Beijing, the PRC.

All companies now comprising the Group have adopted December 31 as their financial year end date. Details of the companies comprising the Group that are subject to audit during the Record Period are set out in Section A below. The statutory financial statements of HNEIC and its subsidiaries now comprising the Group were prepared in accordance with the relevant accounting rules and regulations applicable to entities established in the PRC and were audited by Beijing Broadtrust Certified Public Accountants Co., Ltd. ( ), a certified public accounting firm registered in the PRC.

The directors of the Company have prepared the consolidated financial statements of the Group for the Record Period in accordance with the basis of preparation set out in Section A below and the accounting policies set out in Section C below which are in accordance with International Financial Reporting Standards (“IFRSs”) promulgated by the International Accounting Standards Board (the “IASB”) (the “Underlying Financial Statements”). The Underlying Financial Statements for each of the years ended December 31, 2008, 2009 and 2010 were audited by us in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

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The Financial Information has been prepared by the directors of the Company based on the Underlying Financial Statements, with no adjustments made thereon and in accordance with the applicable disclosure provisions of the Hong Kong Companies Ordinance and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND REPORTING ACCOUNTANTS

The directors of the Company are responsible for the preparation and the true and fair presentation of the Financial Information in accordance with IFRSs promulgated by the IASB, the disclosure requirements of the Hong Kong Companies Ordinance and the applicable disclosure provisions of the Listing Rules. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and the true and fair presentation of the Financial Information that is free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Our responsibility is to form an opinion on the Financial Information based on our procedures.

BASIS OF OPINION

As a basis for forming an opinion on the Financial Information, for the purpose of this report, we have examined the Underlying Financial Statements and have carried out such appropriate audit procedures as we considered necessary in accordance with the Auditing Guideline “Prospectuses and the Reporting Accountant” (Statement 3.340) issued by the HKICPA.

We have not audited any financial statements of the Company, its subsidiaries or the Group in respect of any period subsequent to December 31, 2010.

OPINION

In our opinion, for the purpose of this report, the Financial Information, on the basis of preparation set out in Section A below and in accordance with the accounting policies set out in Section C below, gives a true and fair view of the Group’s consolidated results and cash flows for the Record Period, and the state of affairs of the Group as at December 31, 2008, 2009 and 2010.

A BASIS OF PREPARATION

The Company was established in the PRC on August 5, 2010 as a joint stock company with limited liability and with a registered capital of RMB5,800 million as part of the Reorganization of HNEIC in preparation for the listing of the Company’s shares on the Main Board of the Stock Exchange of Hong Kong Limited (the “HKSE”). The Company and its subsidiaries (the “Group”) are mainly engaged in wind power generation and sale. Prior to the establishment of the Company, HNEIC was the holding company of the subsidiaries now comprising the Group, and was wholly owned by China Huaneng Group Corporation (“Huaneng Group”). In substance, the Company replaced HNEIC as the holding company of HNEIC’s subsidiaries.

Pursuant to the Reorganization, the Company retained all of the assets and liabilities of HNEIC. Upon establishment, the Company had a total of 5,800 million issued ordinary shares, with a par value of RMB1.00 each. The Company issued to Huaneng Group 5,510 million shares, or 95% of the total issued shares, in exchange for (a) all the assets and liabilities of HNEIC; and (b) cash of RMB1,882,396,455. The Company also issued 290 million shares, or 5% of the total issued shares, to Huaneng Capital Services Corporation Ltd.

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(“Huaneng Capital”, ), a wholly owned subsidiary of Huaneng Group, in exchange for cash of RMB290 million.

As there was no change in controlling shareholder before and after the Reorganization, the Financial Information has been prepared as a reorganization of business under common control. Accordingly, the relevant assets and liabilities of the companies comprising the Group have been recognized at historical cost. Hereinafter, the term “Company” also refers to HNEIC for the period prior to the Reorganization, unless otherwise indicated or as the context may otherwise require.

The consolidated statements of comprehensive income, the consolidated statements of changes in equity and the consolidated cash flow statements of the Group as set out in section B(1), B(3) and B(4), respectively include the results of operations of the companies comprising the Group for the Record Period (or where the companies were established at a date later than January 1, 2008, for the period from the date of establishment to December 31, 2010), as if the group structure has been in existence throughout the Record Period. The consolidated balance sheets as at December 31, 2008, 2009 and 2010 as set out in Section B(2) have been prepared to present the state of affairs of the companies comprising the Group as at the respective dates.

All material intra-group transactions and balances have been eliminated on consolidation.

As at December 31, 2010, the Company has direct interest in the following entities, all of which the Company has the power to govern, which are set out below:

Percentage of attributable Place and date Registered equity interest Name of the Company of establishment capital held directly Principal activities

1 Huaneng Shantou Nan’ao Wind the PRC RMB 52% Wind power generation Power Company Limited July 30, 1998 23,000,000 (note ii) 2 Huaneng Shantou Wind Power the PRC RMB 50% Wind power generation Company Limited December 28, 2005 194,190,000 (note ii) 3 HNEEP-CLP Changdao Wind the PRC RMB 55% Wind power generation Power Co., Ltd December 2, 2004 99,072,000 (note ii) 4 HNNE-CLP Weihai Wind Power the PRC RMB 55% Wind power generation Company Limited September 28, 2005 253,240,000 (note ii) 5 Huaneng Rongcheng Wind Power the PRC RMB 100% Wind power generation Company Limited December 31, 2008 60,000,000

6 Huaneng Shouguang Wind Power the PRC RMB 55% Wind power generation Company Limited October 21, 2008 186,730,000

7 Huaneng Changyi Wind Power the PRC RMB 100% Wind power generation Company Limited November 20, 2008 110,000,000

8 Huaneng Weifang Binhai Wind the PRC RMB 100% Wind power generation Power Company Limited November 18, 2009 90,000,000

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Percentage of attributable Place and date Registered equity interest Name of the Company of establishment capital held directly Principal activities

9 Huaneng Lijin Wind Power the PRC RMB 100% Wind power generation Company Limited November 19, 2009 30,000,000

10 Huaneng Dongying Hekou Wind the PRC RMB 100% Wind power generation Power Company Limited November 27, 2009 250,000,000

11 Huaneng Laoting Wind Power the PRC RMB 55% Wind power generation Company Limited June 13, 2008 185,280,000 (note ii) 12 Huaneng Chengde Wind Power the PRC RMB 100% Wind power generation Company Limited May 13, 2009 80,000,000

13 Huaneng Hong Kong Electric Dali the PRC RMB 55% Wind power generation Wind Power Company Limited December 25, 2007 150,690,000 (note ii) 14 Huaneng Eryuan Wind Power the PRC RMB 100% Wind power generation Company Limited July 24, 2009 120,000,000

15 Huaneng Fuxin Wind the PRC RMB 100% Wind power generation Power Company Limited October 27, 2006 450,000,000

16 Huaneng Panjin Wind Power the PRC RMB 75% Wind power generation Company Limited September 17, 2009 541,080,000

17 Huaneng Jinzhou Wind Power the PRC RMB 100% Wind power generation Company Limited December 4, 2009 10,000,000

18 Huaneng Tongliao Wind Power the PRC RMB 100% Wind power generation Company Limited December 10, 2007 1,140,864,000

19 Huaneng Hulunbuir Wind Power the PRC RMB 51% Wind power generation Company Limited December 18, 2008 100,000,000 (note ii) 20 Huaneng Baotou Wind Power the PRC RMB 100% Wind power generation Company Limited June 26, 2008 132,940,700

21 Huaneng Huhhot Wind Power the PRC RMB 100% Wind power generation Company Limited December 19, 2008 228,241,300

22 Huaneng Keyouzhongqi Wind Power the PRC RMB 100% Wind power generation Co., Ltd December 17, 2008 230,000,000

23 Huaneng Tongyu Xinhua Wind the PRC RMB 100% Wind power generation Power Company Limited November 17, 2009 40,000,000

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Percentage of attributable Place and date Registered equity interest Name of the Company of establishment capital held directly Principal activities

24 Huaneng Xinjiang Santanghu Wind the PRC RMB 100% Wind power generation Power Company Limited May 27, 2009 130,000,000

25 Huaneng Ningwu Wind Power the PRC RMB 100% Wind power generation Company Limited August 6, 2009 80,000,000

26 Huaneng New Energy Shanghai the PRC RMB 100% Wind power generation Power Company Limited September 27, 2009 44,000,000

27 Huaneng Tieling Wind Power the PRC RMB 75% Wind power generation Company Limited December 21, 2009 155,500,000

28 Huaneng Yuanping Wind Power the PRC RMB 100% Wind power generation Company Limited April 9, 2010 20,000,000

29 Huaneng Tianzhen Wind Power the PRC RMB 100% Wind power generation Company Limited April 12, 2010 20,000,000

30 Huaneng Pianguan Wind Power the PRC RMB 100% Wind power generation Company Limited May 14, 2010 20,000,000

31 Huaneng Hezhang Wind Power the PRC RMB 100% Wind power generation Company Limited April 29, 2010 60,000,000

32 Huaneng Tieling Daxing Wind Power the PRC RMB 75% Wind power generation Company Limited June 28, 2010 163,960,000

33 Huaneng Baicheng Wind Power the PRC RMB 100% Wind power generation Company Limited August 11, 2010 40,000,000

34 Huaneng Yantai Wind Power the PRC RMB 100% Wind power generation Company Limited August 20, 2010 20,000,000

35 Huaneng Dali Wind Power the PRC RMB 100% Wind power generation Company Limited August 2, 2010 20,000,000

36 Huaneng Weifang Wind Power the PRC RMB 100% Wind power generation Company Limited August 18, 2010 120,000,000

37 Huaneng Gaizhou Wind Power the PRC RMB 100% Wind power generation Company Limited July 1, 2010 20,000,000

38 Huaneng Raoping Wind Power the PRC RMB 100% Wind power generation Company Limited December 6, 2010 20,000,000

39 Huaneng Tieling Kaiyuan Wind the PRC RMB 75% Wind power generation Power Company Limited December 21, 2010 159,400,000

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Notes:

(i) The English translation of the names is for reference only. The official names of these entities are in Chinese.

(ii) The Company directly owns half or more than half of equity interests in these companies but the voting power attached to the equity interests does not allow the Company to have the power to govern the financial and operating activities of these companies according to the articles of association of these companies. The Company is the biggest equity owner of these companies and no other equity owners individually or in aggregate had the power to control these companies according to the articles of association. Historically, the Company controlled the operation of these entities by appointing senior management, approving annual budget and determining the remuneration of employees etc. During the Record Period, the Company had signed the concert party agreements with certain equity owners of these companies, whereby such equity owners have agreed to vote the same as the Company. Such equity owners have also confirmed that the voting in unison with the Company existed since the establishment of these entities. The PRC lawyer of the Company confirmed that the concert party agreements are valid under relevant PRC laws. Considering above mentioned factors, the directors are of the opinion that the Company controlled these entities during the Record Period. Therefore the financial statements of these companies are consolidated by the Company during the Record Period (or where the companies were established at a date later than January 1, 2008, for the period from the date of establishment to December 31, 2010).

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B FINANCIAL INFORMATION

1 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Section C Years ended December 31, Note 2008 2009 2010 RMB’000 RMB’000 RMB’000 Continuing operations Revenue ...... 2 570,341 918,452 1,768,526 Other net income ...... 3 35,613 85,317 249,832 Operating expenses Service concession construction costs ...... (318,063) (66,634) — Depreciation and amortization ...... (80,834) (296,787) (633,698) Personnel costs ...... (25,685) (45,168) (79,238) Repairs and maintenance ...... (3,756) (15,159) (27,724) Administration expenses ...... (11,247) (20,014) (96,037) Other operating expenses ...... (8,038) (20,463) (47,320) (447,623) (464,225) (884,017) Operating profit ...... 158,331 539,544 1,134,341 Finance income ...... 9,179 12,204 22,227 Finance expenses ...... (72,212) (251,420) (515,170) Net finance expenses ...... 4 (63,033) (239,216) (492,943) Share of profit of a jointly controlled entity ...... 99 3,129 — Profit before taxation ...... 5 95,397 303,457 641,398 Income tax ...... 6 549 (22,208) (31,982) Profit from continuing operations ...... 95,946 281,249 609,416 Discontinued operation Profit from discontinued operation (net of income tax) ...... 10 11,089 39,398 — Profit for the year ...... 107,035 320,647 609,416 Other comprehensive income for the year, net of tax ...... — — — Total comprehensive income for the year ...... 107,035 320,647 609,416 Profit attributable to: Equity owner/shareholders of the Company ...... 53,188 264,433 528,275 Non-controlling interests ...... 53,847 56,214 81,141 Profit for the year ...... 107,035 320,647 609,416 Total comprehensive income attributable to: Equity owner/shareholders of the Company ...... 53,188 264,433 528,275 Non-controlling interests ...... 53,847 56,214 81,141 Total comprehensive income for the year ...... 107,035 320,647 609,416 Basic and diluted earnings per share (RMB cents) ...... 9 0.91 4.56 9.11 — Continuing operations ...... 0.80 3.88 9.11 — Discontinued operation ...... 0.11 0.68 —

The accompanying notes form part of the Financial Information.

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2 CONSOLIDATED BALANCE SHEETS

At December 31, Section C Note 2008 2009 2010 RMB’000 RMB’000 RMB’000 Non-current assets Property, plant and equipment ...... 11 8,544,098 14,335,881 27,802,930 Lease prepayments ...... 12 14,683 22,667 65,056 Intangible assets ...... 13 358,346 411,566 394,817 Investment in a jointly controlled entity ...... 14 52,403 — — Other non-current assets ...... 15 21,225 1,164,538 2,690,141 Deferred tax assets ...... 23(b) 21,336 16,325 12,709 Total non-current assets ...... 9,012,091 15,950,977 30,965,653 Current assets Inventories ...... 1,809 140 692 Trade debtors and bills receivable ...... 16 116,844 390,864 959,723 Prepayments and other current assets ...... 17 120,887 596,741 207,711 Tax recoverable ...... 23(a) 34 6,887 539 Restricted deposits ...... 18 28,721 15,839 842 Cash at bank and on hand ...... 19 1,643,773 819,226 1,309,466 Total current assets ...... 1,912,068 1,829,697 2,478,973 Current liabilities Borrowings ...... 20 2,396,240 2,798,513 4,817,600 Obligations under finance leases ...... 21 — 119,156 232,215 Other payables ...... 22 1,573,506 2,081,583 6,255,181 Tax payable ...... 23(a) 4,478 12,659 6,277 Total current liabilities ...... 3,974,224 5,011,911 11,311,273 Net current liabilities ...... (2,062,156) (3,182,214) (8,832,300) Total assets less current liabilities ...... 6,949,935 12,768,763 22,133,353 Non-current liabilities Borrowings ...... 20 4,436,556 8,087,179 13,201,335 Obligations under finance leases ...... 21 — 805,766 1,768,411 Retention payables ...... 48,738 324,396 761,768 Deferred income ...... 24 176,062 234,062 248,746 Deferred tax liabilities ...... 23(b) 8,891 20,848 34,274 Total non-current liabilities ...... 4,670,247 9,472,251 16,014,534 NET ASSETS ...... 2,279,688 3,296,512 6,118,819 CAPITAL AND RESERVES ...... 25 Paid-in capital/share capital ...... 451,500 451,500 5,800,000 Reserves ...... 1,222,815 2,131,715 (516,114) Total equity attributable to the equity owner/ shareholders of the Company ...... 1,674,315 2,583,215 5,283,886 Non-controlling interests ...... 605,373 713,297 834,933 TOTAL EQUITY ...... 2,279,688 3,296,512 6,118,819

The accompanying notes form part of the Financial Information.

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3 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Attributable to the equity owner/shareholders of the Company (Accumulated loss)/ Non- Share Paid-in Capital Reserve Retained controlling Total capital capital reserve fund earnings Subtotal interests equity RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 At January 1, 2008 ...... — 451,500 407,263 12,547 (30,183) 841,127 337,999 1,179,126 Changes in equity: Capital contributions ...... — — 780,000 — — 780,000 223,085 1,003,085 Dividends by subsidiaries to non-controlling equity owners ...... — — — — — — (9,558) (9,558) Total comprehensive income for the year ...... — — — — 53,188 53,188 53,847 107,035 At December 31, 2008 ...... — 451,500 1,187,263 12,547 23,005 1,674,315 605,373 2,279,688

At January 1, 2009 ...... — 451,500 1,187,263 12,547 23,005 1,674,315 605,373 2,279,688 Changes in equity: Capital contributions ...... — — 700,000 — — 700,000 206,887 906,887 Distribution to Huaneng Group (Section C note 14) ...... — — (55,533) — — (55,533) — (55,533) Disposal of discontinued operation (Section C note 10(c)) ...... — — — — — — (62,588) (62,588) Disposal of a subsidiary (Section C note 30(a)) ...... — — — — — — (73,301) (73,301) Transfer to reserve fund ...... — — — 361 (361) — — — Dividends by subsidiaries to non-controlling equity owners ...... — — — — — — (19,288) (19,288) Total comprehensive income for the year ...... — — — — 264,433 264,433 56,214 320,647 At December 31, 2009 ...... — 451,500 1,831,730 12,908 287,077 2,583,215 713,297 3,296,512

At January 1, 2010 ...... — 451,500 1,831,730 12,908 287,077 2,583,215 713,297 3,296,512 Changes in equity: Capitalization upon establishment of the Company (Section C note 33) ...... 3,627,604 (451,500) (3,159,946) (12,908) (3,250) — — — Capital contributions (Section C note 33) ...... 2,172,396 — — — — 2,172,396 86,465 2,258,861 Transfer to reserve fund ...... — — — 2,830 (2,830) — — — Dividends by subsidiaries to non-controlling equity owners ...... — — — — — — (45,970) (45,970) Total comprehensive income for the year ...... — — — — 528,275 528,275 81,141 609,416 At December 31, 2010 ...... 5,800,000 — (1,328,216) 2,830 809,272 5,283,886 834,933 6,118,819

The accompanying notes form part of the Financial Information.

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4 CONSOLIDATED CASH FLOW STATEMENTS

Years ended December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Cash flows from operating activities Profit for the year ...... 107,035 320,647 609,416 Adjustments for: Depreciation ...... 101,257 282,571 614,293 Amortization ...... 650 14,216 19,405 Amortization of deferred income ...... (2,132) (9,207) (11,299) Loss on disposal of property, plant and equipment ...... 7 — 16 Impairment loss on other financial assets ...... 357 — — Gain on disposal of discontinued operation ...... — (56,119) — Gain on disposal of a subsidiary ...... — (18,869) — Interest expenses on financial liabilities ...... 95,072 251,088 514,007 Foreign exchange differences, net ...... (2,006) (22) (719) Interest income on financial assets ...... (4,797) (7,710) (13,274) Dividend income ...... (2,396) (4,472) (3,550) Share of profit of a jointly controlled entity ...... (99) (3,129) — Income tax ...... 997 38,929 31,982 Changes in working capital: Decrease/(increase) in inventories ...... 202 (140) (552) Increase in trade debtors and bills receivable ...... (86,581) (219,171) (585,447) Increase in prepayments and other current assets ...... (18,437) (6,126) (176,129) Increase in other payables ...... 9,068 111,360 276,830 Cash generated from operations ...... 198,197 693,846 1,274,979 Income tax paid ...... (1,382) (19,569) (14,974) Net cash from operating activities ...... 196,815 674,277 1,260,005

The accompanying notes form part of the Financial Information.

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4 CONSOLIDATED CASH FLOW STATEMENTS (CONTINUED)

Years ended December 31, Section C Note 2008 2009 2010 RMB’000 RMB’000 RMB’000 Cash flows from investing activities Payments for acquisition of property, plant and equipment, lease prepayments and intangible assets ...... (4,988,025) (7,164,054) (10,418,464) Payments for acquisition of financial assets ...... (3,008) (357,044) (32,650) Government grant received ...... 76,856 120,663 39,571 Proceeds from disposal of property, plant and equipment ...... 283 6 1,345 Proceeds from disposal of discontinued operation, net of cash disposed of (Section C note 10(c)) ...... — 137,547 — Proceeds from disposal of a subsidiary, net of cash disposed of (Section C note 30(a)) ...... — 71,263 — Proceeds from repayments of advances ...... — — 563,499 Dividends received ...... 4,183 4,472 3,550 Interest received ...... 4,797 7,710 13,274 Time deposits ...... — (30,000) 18,305 Others ...... 21,786 53,148 92,063 Net cash used in investing activities ...... (4,883,128) (7,156,289) (9,719,507) Cash flows from financing activities Capital contributions from the equity owner/ shareholders of the Company ...... 780,000 700,000 2,172,396 Capital contributions from the non-controlling equity owners ...... 223,085 206,887 86,465 Proceeds from borrowings ...... 5,914,180 8,187,412 11,805,206 Repayment of borrowings ...... (961,060) (3,572,521) (4,671,107) Dividends paid by subsidiaries to non-controlling equity owners ...... (8,958) (14,538) (51,320) Interest paid ...... (212,510) (484,328) (704,689) Payment of finance lease obligations ...... — (53,753) (209,766) Proceeds from sales and leaseback transaction classified as finance lease ...... — 658,279 541,000 Net cash from financing activities ...... 5,734,737 5,627,438 8,968,185 Net increase/(decrease) in cash and cash equivalents . . . 1,048,424 (854,574) 508,683 Cash and cash equivalents at beginning of year ...... 595,526 1,643,773 789,226 Effect of foreign exchange rate changes ...... (177) 27 (138) Cash and cash equivalents at end of year ...... 19 1,643,773 789,226 1,297,771

Note:

(i) For major non-cash transactions, please refer to note 30(b) in Section C.

The accompanying notes form part of the Financial Information.

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C NOTES TO THE FINANCIAL INFORMATION

1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of compliance

The Financial Information set out in this report has been prepared in accordance with IFRSs, which collective term includes International Financial Reporting Standards, International Accounting Standards and related interpretations promulgated by the IASB. Further details of the significant accounting policies adopted are set out in the remainder of this Section C.

The IASB has issued a number of new and revised IFRSs. For the purpose of preparing this Financial Information, the Group has adopted all these new and revised IFRSs to the Record Period, except for any new standards or interpretations that are not yet effective for the accounting period ended December 31, 2010. The revised and new accounting standards and interpretations issued but not yet effective for the accounting period ended December 31, 2010 are set out in note 34.

The Financial Information also complies with the disclosure requirements of the Hong Kong Companies Ordinance and the applicable disclosure provisions of the certain applicable rules and regulations.

The accounting policies set out below have been applied consistently to all periods presented in the Financial Information.

(b) Basis of measurement

The Financial Information is presented in Renminbi (“RMB”), rounded to the nearest thousand, which is the Group’s presentation currency and the functional currency of the Company and its subsidiaries.

The measurement basis used in the preparation of the Financial Information is the historical cost basis.

Non-current assets held for sale (or disposal groups held for sale) are stated at the lower of carrying amount and fair value less costs to sell (see note 1(w)(i)).

(c) Going concern

The Financial Information has been prepared assuming the Group will continue as a going concern notwithstanding the net current liabilities of the Group at December 31, 2008, 2009 and 2010. The directors are of the opinion that, based on a detailed review of the working capital forecast of the Group for the period ending June 30, 2012, the Group will have necessary liquid funds to finance its working capital and capital expenditure requirements for a reasonable period of time (see note 26(b)).

(d) Use of estimates and judgments

The preparation of the Financial Information in conformity with IFRSs requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

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The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgments made by management in the application of IFRSs that have significant effect on the Financial Information and major sources of estimation uncertainty are discussed in note 31.

(e) Subsidiaries and non-controlling interests

Subsidiaries are entities controlled by the Company. Control exists when the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account.

An investment in a subsidiary is consolidated into the consolidated financial statements from the date that control commences until the date that control ceases. Intra-group balances and transactions and any unrealized profits arising from intra-group transactions are eliminated in full in preparing the consolidated financial statements. Unrealized losses resulting from intra-group transactions are eliminated in the same way as unrealized gains but only to the extent that there is no evidence of impairment.

Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to the Company, and in respect of which the Group has not agreed any additional terms with the owners of those interests which would result in the Group as a whole having a contractual obligation in respect of those interests that meets the definition of a financial liability. Non-controlling interests are presented in the consolidated balance sheet within equity, separately from equity attributable to the equity owner/ shareholders of the Company. Non-controlling interests in the results of the Group are presented on the face of the consolidated statement of comprehensive income as an allocation of the total profit or loss and total comprehensive income for the year between non-controlling interests and the equity owner/ shareholders of the Company.

Loans from owners of non-controlling interests and other contractual obligations towards these owners are presented as financial liabilities in accordance with notes 1(n) or (o) depending on the nature of the liability.

Changes in the Group’s interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions, whereby adjustments are made to the amounts of controlling and non-controlling interests within consolidated equity to reflect the change in relative interests, but no adjustments are made to goodwill and no gain or loss is recognized.

When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary, with a result gain or loss being recognized in profit or loss. Any interest retained in that former subsidiary at the date when control is lost is recognized at fair value and this amount is regarded as the fair value on initial recognition of a financial asset or, when appropriate, the cost on initial recognition of an investment in an associate or jointly controlled entity.

(f) Jointly controlled entities

A jointly controlled entity is an entity which operates under a contractual arrangement between the Group or Company and other parties, where the contractual arrangement establishes that the Group or Company and one or more of the other parties share joint control over the economic activity of the entity.

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An investment in a jointly controlled entity is accounted for in the consolidated financial statements under the equity method, unless it is classified as held for sale (or included in a disposal group that is classified as held for sale) (see note 1(w)(i)). Under the equity method, the investment is initially recorded at cost, adjusted for any excess of the Group’s share of the acquisition-date fair values of the investee’s identifiable net assets over the cost of the investment (if any). Thereafter, the investment is adjusted for the post acquisition change in the Group’s share of the investee’s net assets and any impairment loss relating to the investment (see note 1(k)). Any acquisition-date excess over cost, the Group’s share of the post- acquisition, post-tax results of the investees and any impairment losses for the year are recognized in profit or loss whereas the Group’s share of the post-acquisition post-tax items of the investees’ other comprehensive income is recognized in the consolidated statement of comprehensive income.

When the Group’s share of losses exceeds its interest in the jointly controlled entity, the Group’s interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the investee. For this purpose, the Group’s interest is the carrying amount of the investment under the equity method together with the Group’s long-term interests that in substance form part of the Group’s net investment in the jointly controlled entity.

Unrealized profits and losses resulting from transactions between the Group and its jointly controlled entity are eliminated to the extent of the Group’s interest in the investee, except where unrealized losses provide evidence of an impairment of the asset transferred, in which case they are recognized immediately in profit or loss.

When the Group ceases to have joint control over a jointly controlled entity, it is accounted for as a disposal of the entire interest in that investee, with a resulting gain or loss being recognized in profit or loss. Any interest retained in that former investee at the date when joint control is lost is recognized at fair value and this amount is regarded as the fair value on initial recognition of a financial asset or, when appropriate, the cost on initial recognition of an investment in an associate.

(g) Other investments in unquoted equity securities

The Group’s policies for investments in unquoted equity securities, other than investments in subsidiaries and jointly controlled entity, are as follows:

Investments in unquoted equity securities are initially stated at fair value, which is their transaction price unless fair value can be more reliably estimated using valuation techniques whose variables include only data from observable markets. Cost includes attributable transaction costs, except where indicated otherwise below. These investments are subsequently accounted for in the balance sheet at cost less impairment losses (see note 1(k)).

Investments are recognized/derecognized on the date the Group commits to purchase/sell the investments or they expire.

(h) Property, plant and equipment

Property, plant and equipment are stated in the balance sheet at cost less accumulated depreciation and impairment losses (see note 1(k)).

The cost of self-constructed items of property, plant and equipment includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of production overheads and borrowing costs (see note 1(v)).

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Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognized in profit or loss on the date of retirement or disposal.

Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual value, if any, using the straight line method over their estimated useful lives as follows:

— Buildings and structures ...... 8-55 years — Wind turbines ...... 20years — Other machinery and equipment ...... 12-20 years — Motor vehicles ...... 6-14 years — Furniture, fixtures and others ...... 4-10 years

Where parts of an item of property, plant and equipment have different useful lives, the cost of the item is allocated on a reasonable basis between the parts and each part is depreciated separately. Both the useful life of an asset and its residual value, if any, are reviewed annually.

(i) Intangible assets

The Group recognizes an intangible asset arising from a service concession arrangement when it has a right to charge for usage of the concession infrastructure. Intangible assets received as consideration for providing construction services in a service concession arrangement are measured at fair value upon initial recognition. Subsequent to initial recognition the intangible asset is measured at cost less accumulated amortization and impairment losses (see note 1(k)).

Other intangible assets that are acquired by the Group are stated in the balance sheet at cost less accumulated amortization (where the estimated useful life is finite) and impairment losses (see note 1(k)). Expenditure on internally generated goodwill and brands is recognized as an expense in the period in which it is incurred.

Amortization of intangible assets with finite useful lives is charged to profit or loss on a straight-line basis over the assets’ estimated useful lives. The following intangible assets with finite useful lives are amortized from the date they are available for use and their estimated useful lives are as follows:

— Concession assets ...... 25years — Software and others ...... 3-5years

Both the period and method of amortization are reviewed annually.

(j) Leased assets

An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Group determines that the arrangement conveys a right to use a specific asset or assets for an agreed period of time in return for a payment or a series of payments. Such a determination is made based on an evaluation of the substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease.

(i) Classification of assets leased to the Group

Assets that are held by Group under leases which transfer to the Group substantially all the risks and rewards of ownership are classified as being held under finance leases. Leases which do not transfer substantially all the risks and rewards of ownership to the Group are classified as operating leases.

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(ii) Assets acquired under finance leases

Where the Group acquires the use of assets under finance leases, the amounts representing the fair value of the leased asset, or, if lower, the present value of the minimum lease payments, of such assets are included in property, plant and equipment and the corresponding liabilities, net of finance charges, are recorded as obligations under finance leases. Depreciation is provided at rates which write off the cost or valuation of the assets over the term of the relevant lease or, where it is likely the Group will obtain ownership of the asset, the life of the asset, as set out in note 1(h). Impairment losses are accounted for in accordance with the accounting policy as set out in note 1(k). Finance charges implicit in the lease payments are charged to profit or loss over the period of the leases so as to produce an approximately constant periodic rate of charge on the remaining balance of the obligations for each accounting period. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred.

(iii) Operating lease charges

Where the Group has the use of assets held under operating leases, payments made under the leases are charged to profit or loss in equal installments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. Lease incentives received are recognized in profit or loss as an integral part of the aggregate net lease payments made. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred.

The cost of acquiring land held under an operating lease is amortized on a straight-line basis over the period of the lease term.

(k) Impairment of assets

(i) Impairment of investments in unquoted equity securities and other receivables

Investments in unquoted equity securities and other current and non-current receivables that are stated at cost or amortized cost are reviewed at each balance sheet date to determine whether there is objective evidence of impairment. Objective evidence of impairment includes observable data that comes to the attention of the Group about one or more of the following loss events:

— significant financial difficulty of the debtor;

— a breach of contract, such as a default or delinquency in interest or principal payments;

— it becoming probable that the debtor will enter bankruptcy or other financial reorganization;

— significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor; and

— a significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.

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If any such evidence exists, any impairment loss is determined and recognized as follows:

— For investment in subsidiaries and jointly controlled entities (including those recognized using the equity method (see note 1(f))), the impairment loss is measured by comparing the recoverable amount of the investment with its carrying amount in accordance with note 1(k)(ii). The impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount in accordance with note 1(k)(ii).

— For unquoted equity securities carried at cost, the impairment loss is measured as the difference between the carrying amount of the financial asset and the estimated future cash flows, discounted at the current market rate of return for a similar financial asset where the effect of discounting is material. Impairment losses for equity securities carried at cost are not reversed.

— For trade and other current receivables and other financial assets carried at amortized cost, the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition of these assets), where the effect of discounting is material. This assessment is made collectively where financial assets carried at amortized cost share similar risk characteristics, such as similar past due status, and have not been individually assessed as impaired. Future cash flows for financial assets which are assessed for impairment collectively are based on historical loss experience for assets with credit risk characteristics similar to the collective group.

If in a subsequent period the amount of an impairment loss decreases and the decrease can be linked objectively to an event occurring after the impairment loss was recognized, the impairment loss is reversed through profit or loss. A reversal of an impairment loss shall not result in the asset’s carrying amount exceeding that which would have been determined had no impairment loss been recognized in prior years.

Impairment losses are written off against the corresponding assets directly, except for impairment losses recognized in respect of trade debtors and bills receivable included within trade and other receivables, whose recovery is considered doubtful but not remote. In this case, the impairment losses for doubtful debts are recorded using an allowance account. When the Group is satisfied that recovery is remote, the amount considered irrecoverable is written off against trade debtors and bills receivable directly and any amounts held in the allowance account relating to that debt are reversed. Subsequent recoveries of amounts previously charged to the allowance account are reversed against the allowance account. Other changes in the allowance account and subsequent recoveries of amounts previously written off directly are recognized in profit or loss.

(ii) Impairment of other assets

Internal and external sources of information are reviewed at each balance sheet date to identify indications that the following assets may be impaired or an impairment loss previously recognized no longer exists or may have decreased:

— property, plant and equipment;

— pre-paid interests in leasehold land classified as being held under an operating lease; and

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— intangible assets.

If any such indication exists, the asset’s recoverable amount is estimated.

— Calculation of recoverable amount

The recoverable amount of an asset is the greater of its fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash- generating unit).

— Recognition of impairment losses

An impairment loss is recognized in profit or loss if the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognized in respect of cash-generating units are allocated to reduce the carrying amount of the assets in the unit (or group of units) on a pro rata basis, except that the carrying value of an asset will not be reduced below its individual fair value less costs to sell, or value in use, if determinable.

— Reversals of impairment losses

An impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount.

A reversal of an impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognized in prior years. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognized.

(l) Inventories

Inventories are carried at the lower of cost and net realizable value.

Cost is calculated using the weighted average cost formula and comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

When inventories are sold, the carrying amount of those inventories is recognized as an expense in the period in which the related revenue is recognized. The amount of any write-down of inventories to net realizable value and all losses of inventories are recognized as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories is recognized as a reduction in the amount of inventories recognized as an expense in the period in which the reversal occurs.

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(m) Trade and other receivables

Trade and other receivables are initially recognized at fair value and thereafter stated at amortized cost less allowance for impairment of doubtful debts (see note 1(k)), except where the receivables are interest-free loans made to related parties without any fixed repayment terms or the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less allowance for impairment of doubtful debts.

(n) Interest-bearing borrowings

Interest-bearing borrowings are recognized initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortized cost with any difference between the amount initially recognized and redemption value being recognized in profit or loss over the period of the borrowings, together with any interest and fees payable, using the effective interest method.

(o) Trade and other payables

Trade and other payables are initially recognized at fair value. Except for financial guarantee liabilities measured in accordance with note 1(s)(i), trade and other payables are subsequently stated at amortized cost unless the effect of discounting would be immaterial, in which case they are stated at cost.

(p) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition.

(q) Short term employee benefits and contributions to defined contribution retirement plans

Salaries, annual bonuses, contributions to defined contribution retirement plans and the cost of non-monetary benefits are accrued in the year in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values.

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for the statutory defined contribution pension plans are recognized as an expense in profit or loss when they are due.

(r) Income tax

Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognized in profit or loss except to the extent that they relate to business combinations, or items recognized in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognized in other comprehensive income or directly in equity, respectively.

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Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.

Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilized, are recognized. Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary differences include those that will arise from the reversal of existing taxable temporary differences, provided those differences relate to the same taxation authority and the same taxable entity, and are expected to reverse either in the same period as the expected reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when determining whether existing taxable temporary differences support the recognition of deferred tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are expected to reverse in a period, or periods, in which the tax loss or credit can be utilized.

The limited exceptions to recognition of deferred tax assets and liabilities are those temporary differences arising from goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit (provided they are not part of a business combination), and temporary differences relating to investments in subsidiaries to the extent that, in the case of taxable differences, the Group controls the timing of the reversal and it is probable that the differences will not reverse in the foreseeable future, or in the case of deductible differences, unless it is probable that they will reverse in the future.

The amount of deferred tax recognized is measured based on the expected manner of realization or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax assets and liabilities are not discounted.

The carrying amount of a deferred tax asset is reviewed at each balance sheet date and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax benefit to be utilized. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available.

Current tax balances and deferred tax balances, and movements therein, are presented separately from each other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax liabilities, if the Company or the Group has the legally enforceable right to set off current tax assets against current tax liabilities and the following additional conditions are met:

— in the case of current tax assets and liabilities, the Company or the Group intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously; or

— in the case of deferred tax assets and liabilities, if they relate to income tax levied by the same taxation authority on either:

— the same taxable entity; or

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— different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered, intend to realize the current tax assets and settle the current tax liabilities on a net basis or realize and settle simultaneously.

(s) Financial guarantees issued, provisions and contingent liabilities

(i) Financial guarantees issued

Financial guarantees are contracts that require the issuer (i.e. the guarantor) to make specified payments to reimburse the beneficiary of the guarantee (the “holder”) for a loss the holder incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument.

Where the Group issues a financial guarantee, the fair value of the guarantee (being the transaction price, unless the fair value can otherwise be reliably estimated) is initially recognized as deferred income within trade and other payables. Where consideration is received or receivable for the issuance of the guarantee, the consideration is recognized in accordance with the Group’s policies applicable to that category of asset. Where no such consideration is received or receivable, an immediate expense is recognized in profit or loss on initial recognition of any deferred income.

The amount of the guarantee initially recognized as deferred income is amortized in profit or loss over the term of the guarantee as income from financial guarantees issued. In addition, provisions are recognized in accordance with note 1(s)(ii) if and when (i) it becomes probable that the holder of the guarantee will call upon the Group under the guarantee, and (ii) the amount of that claim on the Group is expected to exceed the amount currently carried in trade and other payables in respect of that guarantee i.e. the amount initially recognized, less accumulated amortization.

(ii) Provisions and contingent liabilities

Provisions are recognized for other liabilities of uncertain timing or amount when the Group or the Company has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

(t) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognized in profit or loss as follows:

(i) Sale of electricity

Electricity revenue is recognized when electricity is supplied to the provincial grid companies. Revenue excludes value added tax (“VAT”) or other sales taxes and is after deduction of any trade discounts.

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(ii) Service concession construction revenue

Revenue relating to construction services under a service concession arrangement is recognized based on the stage of completion of the work performed in the period in which the services are provided by the Group. When the Group provides more than one service in a service concession arrangement the consideration received is allocated by reference to the relative fair values of the services delivered.

(iii) Rendering of services

Revenue from the rendering of services is recognized in the statement of comprehensive income by reference to the stage of completion of the transaction based on the progress of work performed.

(iv) Dividends

Dividend income from unlisted investments is recognized when the shareholder’s right to receive payment is established.

(v) Interest income

Interest income is recognized as it accrues using the effective interest method.

(vi) Government grants

Government grants are recognized in the balance sheet initially when there is reasonable assurance that they will be received and that the Group will comply with the conditions attaching to them. Grants that compensate the Group for expenses incurred are recognized as revenue in profit or loss on a systematic basis in the same periods in which the expenses are incurred. Grants that compensate the Group for the cost of an asset are recognized initially as deferred income and consequently are recognized in profit or loss on a systematic basis over the useful life of the asset by way of reduced depreciation expense.

The Group sells carbon credits known as Certified Emission Reductions (“CERs”), generated from the wind farms which have been registered as Clean Development Mechanism (“CDM”) projects with CDM Executive Board (“CDM EB”) of the United Nations under the Kyoto Protocol. Revenue in relation to the CERs is recognized when following conditions are met:

— the counterparties have committed to purchase the CERs;

— the sales prices have been agreed; and

— relevant electricity has been generated.

The revenue related to CERs are recognized and recorded in trade receivables for the volume verified by the independent supervisors assigned by CDM EB and in other receivables for the remaining volume.

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(u) Translation of foreign currencies

Foreign currency transactions during the year are translated at the foreign exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at the balance sheet date. Exchange gains and losses are recognized in profit or loss.

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the foreign exchange rates ruling at the transaction dates.

(v) Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of that asset. Other borrowing costs are expensed in the period in which they are incurred.

The capitalization of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalization of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or complete.

(w) Non-current assets held for sale and discontinued operations

(i) Non-current assets held for sale

A non-current asset (or disposal group) is classified as held for sale if it is highly probable that its carrying amount will be recovered through a sale transaction rather than through continuing use and the asset (or disposal group) is available for sale in its present condition. A disposal group is a group of assets to be disposed of together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction.

When the Group is committed to a sale plan involving loss of control of a subsidiary, all the assets and liabilities of that subsidiary are classified as held for sale when the above criteria for classification as held for sale are met, regardless of whether the Group will retain a non-controlling interest in the subsidiary after the sale.

Immediately before classification as held for sale, the measurement of the non-current assets (and all individual assets and liabilities in a disposal group) is brought up-to-date in accordance with the accounting policies before the classification. Then, on initial classification as held for sale and until disposal, the non-current assets (except for certain assets as explained below), or disposal groups, are recognized at the lower of their carrying amount and fair value less costs to sell. The principal exceptions to this measurement policy so far as the financial statements of the Group and the Company are concerned are deferred tax assets, assets arising from employee benefits and financial assets (other than investments in subsidiaries and joint ventures). These assets, even if held for sale, would continue to be measured in accordance with the policies set out elsewhere in note 1.

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Impairment losses on initial classification as held for sale, and on subsequent remeasurement while held for sale, are recognized in profit or loss. As long as a non-current asset is classified as held for sale, or is included in a disposal group that is classified as held for sale, the non-current asset is not depreciated or amortized.

(ii) Discontinued operations

A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which represents a separate major line of business or geographical area of operations, or is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, or is a subsidiary acquired exclusively with a view to resale.

Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale (see (i) above), if earlier. It also occurs if the operation is abandoned.

Where an operation is classified as discontinued, a single amount is presented on the face of the statement of comprehensive income, which comprises:

— the post-tax profit or loss of the discontinued operation; and

— the post-tax gain or loss recognized on the measurement to fair value less costs to sell, or on the disposal, of the assets or disposal groups constituting the discontinued operation.

(x) Related parties

For the purposes of the Financial Information, a party is considered to be related to the Group if:

(i) the party has the ability, directly or indirectly through one or more intermediaries, to control the Group or exercise significant influence over the Group in making financial and operating policy decisions, or has joint control over the Group;

(ii) the Group and the party are subject to common control;

(iii) the party is an associate of the Group or a joint venture in which the Group is a venturer;

(iv) the party is a member of key management personnel of the Group or the Group’s parent, or a close family member of such an individual, or is an entity under the control, joint control or significant influence of such individuals;

(v) the party is a close family member of a party referred to in (i) or is an entity under the control, joint control or significant influence of such individuals; or

(vi) the party is a post-employment benefit plan which is for the benefit of employees of the Group or of any entity that is a related party of the Group.

Close family members of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity.

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(y) Segment reporting

Operating segments, and the amounts of each segment item reported in the Financial Information, are identified from the financial information provided regularly to the Group’s most senior executive management for the purposes of allocating resources to, and assessing the performance of, the Group’s various lines of business and geographical locations.

Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria.

2 REVENUE

The amount of each significant category of revenue recognized during the Record Period is as follows:

Years ended December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Continuing operations Sales of electricity ...... 248,130 847,068 1,758,556 Service concession construction revenue (note (i)) ...... 318,063 66,634 — Others ...... 4,148 4,750 9,970 Revenue from continuing operation ...... 570,341 918,452 1,768,526 Discontinued operation Sales of electricity (note 10) ...... 72,647 — — 642,988 918,452 1,768,526

Note:

(i) During the Record Period, the Group entered into a service concession agreement with local government (the “Grantor”) to construct and operate wind power plant during the concession period of 25 years. The Group is responsible for construction and maintenance of the wind power plant during the concession period. At the end of the concession period, the Group needs to dismantle the wind power plant or negotiate with the Grantor for a renewal of the service concession agreement. Service concession construction revenue recorded during the Record Period represents the revenue recognized during the construction stage of the service concession period.

The Group has recognized intangible assets related to the service concession arrangement (see note 13) representing the right the Group receives to charge a fee for sales of electricity. The Group has not recognized service concession receivables as the Grantor will not provide the Group any guaranteed minimum payment for the operating period of the wind power plant.

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3 OTHER NET INCOME

Years ended December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Government grants — CERs income ...... 16,249 28,749 164,821 — VAT rebate (note (i)) ...... 17,193 28,479 33,398 — VAT refund (note (ii)) ...... 2,132 8,462 9,098 — Others ...... — 299 40,947 Net gain on disposal of investment in a subsidiary (note 30(a)) ...... — 18,869 — Net loss on disposal of property, plant and equipment ...... (7) — (16) Others ...... 46 459 1,584 35,613 85,317 249,832

Notes:

(i) VAT rebate represents the tax rebate equivalent to 50% of the VAT payable entitled by wind power projects pursuant to Caishui [2008] No. 156 Notice on VAT Policy Regarding Comprehensive Utilization of Resources and Other Products ( ) jointly issued by Ministry of Finance and State Administration of Taxation (“SAT”).

(ii) VAT refund represents the refund of 17% input VAT in respect of purchased domestically-manufactured equipment entitled to foreign investment enterprises as approved by the National Development and Reform Commission and local tax bureau pursuant to Guoshuifa [1999] No. 171 Administration of VAT Refund on the Purchase of Domestically-Manufactured Equipment by Foreign Investment Enterprises ( ) issued by SAT.

4 FINANCE INCOME AND EXPENSES

Years ended December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Interest income on financial assets ...... 4,725 7,710 13,274 Foreign exchange gains ...... 2,058 22 5,403 Dividend income from other investments ...... 2,396 4,472 3,550 Finance income ...... 9,179 12,204 22,227

Interest on bank and other borrowings wholly repayable within five years .... 54,468 120,596 188,870 Interest on other loans ...... 138,264 368,128 605,477 Less: interest expenses capitalized into property, plant and equipment and intangible assets ...... 121,287 237,636 280,340 71,445 251,088 514,007 Foreign exchange losses ...... 52 — 740 Impairment losses on trade and other receivables ...... 357 — — Bank charges and others ...... 358 332 423 Finance expenses ...... 72,212 251,420 515,170 Net finance expenses recognized in profit or loss ...... (63,033) (239,216) (492,943)

The borrowing costs have been capitalized at rates of 5.02% to 7.06%, 4.86% to 7.05% and 4.77% to 5.45% per annum for the years ended December 31, 2008, 2009 and 2010 respectively.

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5 PROFIT BEFORE TAXATION

Profit before taxation is arrived at after charging:

(a) Personnel costs

Years ended December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Salaries, wages and other benefits ...... 24,045 41,588 74,143 Contributions to defined contribution retirement plan ...... 1,640 3,580 5,095 25,685 45,168 79,238

(b) Other items

Years ended December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Amortization — lease prepayments ...... 214 380 1,715 — intangible assets ...... 54 13,836 17,690 Depreciation — property, plant and equipment ...... 80,566 282,571 614,293 Auditors’ remuneration — audit services ...... 304 579 740 — other services ...... 18 42 — Operating lease charges — hire of properties ...... 2,245 2,596 5,431 Cost of inventories ...... 1,259 11,870 26,362

6 INCOME TAX IN THE CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(a) Income tax in the consolidated statement of comprehensive income represents:

Years ended December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Current tax Provision for the year ...... 5,845 5,240 14,940 Deferred tax (note 23(b)) Origination and reversal of temporary differences ...... (4,848) 16,968 17,042 Income tax excluding tax on disposal of discontinued operation ...... 997 22,208 31,982

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Years ended December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Income tax from continuing operations ...... (549) 22,208 31,982 Income tax from discontinued operation (excluding gain on disposal) (note 10) ...... 1,546 — — 997 22,208 31,982 Income tax on gain on disposal of discontinued operation (note 10) ..... — 16,721 — Total income tax ...... 997 38,929 31,982

Notes:

(i) Provision for income tax represents the PRC income tax.

(ii) Prior to January 1, 2008, the PRC entities were, in general, subject to the statutory income tax rate of 33%, consisting of 30% state tax and 3% local tax, on their assessable profits.

Certain subsidiaries of the Group, being enterprises engaged in state encouraged industries located in the Western Regions; being production-type foreign investment enterprises (“FIEs”) that were engaged in energy projects, were taxed at a preferential income tax rate of 15%. Certain subsidiaries of the Group, being an enterprise located in the designated Coastal Open Area, were taxed at a preferential income tax rate of 24%.

Certain subsidiaries of the Group, being production-type FIEs with an operating period of 10 years or more were entitled to a tax holiday of a 2-year full exemption followed by a 3-year 50% exemption commencing from their respective first profit- making year after offsetting accumulated tax losses, if any (“2+3 tax holiday”).

On March 16, 2007, the Fifth Plenary Session of the Tenth National People’s Congress passed the Corporate Income Tax Law of the People’s Republic of China (“New Tax Law”) which took effect on January 1, 2008. As a result of the New Tax Law, the statutory income tax rate in the PRC was reduced from 33% to 25%. The Implementation Rules of the New Tax Law (“Implementation Rules”) ( ) and GuoFa [2007] No. 39 Notice on the Implementation of the Transitional Preferential Tax Policies (“Circular 39”) ( ) were promulgated by the State Council on December 6, 2007 and December 26, 2007, respectively. Pursuant to Circular 39, certain subsidiaries of the Group are entitled to apply the transitional rates of 18%, 20%, 22%, 24% and 25% for 2008, 2009, 2010, 2011 and 2012 onwards, respectively. Further, Circular 39 grandfathers the 2+3 tax holidays. Accordingly, certain subsidiaries of the Group can continue to enjoy the 2+3 tax holidays until they expire.

In addition, pursuant to CaiShui [2008] No. 46 Notice on the Execution of the Catalogue of Public Infrastructure Projects Entitled for Preferential Tax Treatment (“Circular 46”) ( ), certain subsidiaries of the Group, which are set up after January 1, 2008 and are engaged in public infrastructure projects, are entitled to a tax holiday of a 3-year full exemption followed by a 3-year 50% exemption commencing from their respective years in which their first operating income was derived.

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(b) Reconciliation between tax expense and accounting profit at applicable tax rates:

Years ended December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Profit for the year ...... 107,035 320,647 609,416 Total income tax (note 6(a)) ...... 997 38,929 31,982 Profit before taxation ...... 108,032 359,576 641,398 Applicable tax rate ...... 25% 25% 25% Notional tax on profit before taxation ...... 27,008 89,894 160,350 Tax effect of non-deductible expenses ...... 1,675 5,215 973 Tax effect of share of profits of a jointly controlled entity ...... (25) (782) — Tax effect of non-taxable income ...... (599) (1,118) (887) Effect of differential tax rate of certain subsidiaries of the Group ...... (22,594) (55,386) (155,622) Tax effect of unused tax losses not recognized ...... 4,016 — 29,826 Tax credits for purchase of domestic equipment ...... (9,860) — (4,970) Others ...... 1,376 1,106 2,312 Income tax ...... 997 38,929 31,982

7 DIRECTORS’ AND SUPERVISORS’ EMOLUMENTS

Details of directors’ and supervisors’ emoluments are as follows:

For the year ended December 31, 2008

Salaries Directors’ allowances and and Retirement Supervisors’ benefits in Discretionary scheme fees kind bonuses contributions Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Directors Mr. Cao Peixi (Chairman) ...... — — — — — Mr. Huang Long ...... — — — — — Mr. Zhao Keyu ...... — — — — — Mr. Zhao Shiming ...... — 291 190 90 571 Mr. Niu Dongchun ...... — 291 90 56 437 Ms. Yang Qing ...... — 211 120 62 393 Mr.HeYan...... — 212 111 61 384 Independent non-executive directors Mr. Qin Haiyan ...... — — — — — Ms. Dai Huizhu ...... — — — — — Mr. Zhou Shaopeng ...... — — — — — Mr.WanKamTo ...... — — — — — Supervisors Mr. Xu Ping ...... — — — — — Mr. Wang Huanliang ...... — — — — — Mr. Liang Zongxin ...... — — — — — — 1,005 511 269 1,785

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For the year ended December 31, 2009

Salaries Directors’ allowances and and Retirement Supervisors’ benefits in Discretionary scheme fees kind bonuses contributions Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Directors Mr. Cao Peixi (Chairman) ...... — — — — — Mr. Huang Long ...... — — — — — Mr. Zhao Keyu ...... — — — — — Mr. Zhao Shiming ...... — 427 180 59 666 Mr. Niu Dongchun ...... — 427 180 52 659 Ms. Yang Qing ...... — 373 83 48 504 Mr.HeYan...... — 373 77 47 497 Independent non-executive directors Mr. Qin Haiyan ...... — — — — — Ms. Dai Huizhu ...... — — — — — Mr. Zhou Shaopeng ...... — — — — — Mr.WanKamTo ...... — — — — — Supervisors Mr. Xu Ping ...... — — — — — Mr. Wang Huanliang ...... — — — — — Mr. Liang Zongxin ...... — 367 145 54 566 — 1,967 665 260 2,892

For the year ended December 31, 2010

Salaries Directors’ allowances and and Retirement Supervisors’ benefits in Discretionary scheme fees kind bonuses contributions Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Directors Mr. Cao Peixi (Chairman) ...... — — — — — Mr. Huang Long ...... — — — — — Mr. Zhao Keyu ...... — — — — — Mr. Zhao Shiming ...... — 564 162 57 783 Mr. Niu Dongchun ...... — 564 162 57 783 Ms. Yang Qing ...... — 484 137 50 671 Mr.HeYan...... — 484 137 49 670 Independent non-executive directors Mr. Qin Haiyan ...... 58 — — — 58 Ms. Dai Huizhu ...... 58 — — — 58 Mr. Zhou Shaopeng ...... 58 — — — 58 Mr.WanKamTo ...... 58 — — — 58

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Salaries Directors’ allowances and and Retirement Supervisors’ benefits in Discretionary scheme fees kind bonuses contributions Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Supervisors Mr. Xu Ping ...... — — — — — Mr. Wang Huanliang ...... — — — — — Mr. Liang Zongxin ...... — 484 137 53 674 232 2,580 735 266 3,813

During the Record Period, no emoluments were paid by the Group to the directors as an inducement to join or upon joining the Group or as compensation for loss of office. No director has waived or agreed to waive any emoluments during the Record Period. No remuneration was paid to independent non-executive directors during the Record Period as the independent non-executive directors were appointed subsequent to the Record Period.

8 INDIVIDUALS WITH HIGHEST EMOLUMENTS

The number of directors and non-directors included in the five highest paid individuals for the years ended December 31, 2008, 2009 and 2010 are set forth below:

Years ended December 31, 2008 2009 2010 Directors ...... 2 5 5 Non-directors ...... 3 — — 555

The emoluments of the directors are disclosed in note 7. The aggregate of the emoluments in respect of the remaining highest paid individuals are as follows:

Years ended December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Salaries and other emoluments ...... 683 — — Discretionary bonuses ...... 399 — — Retirement scheme contributions ...... 211 — — 1,293 — —

The emoluments of the individuals with the highest emoluments are within the following bands:

Years ended December 31, 2008 2009 2010 Nil to HKD 500,000 ...... 2 — — HKD 500,001 to HKD 1,000,000 ...... 1 — —

During the Record Period, no emoluments were paid by the Group to the five highest paid individuals as an inducement to join or upon joining the Group or as compensation for loss of office.

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9 EARNINGS PER SHARE

The calculation of basic earnings per share is based on the profit attributable to equity owner/shareholders of the Company of RMB53,188,000, RMB264,433,000 and RMB528,275,000 during the Record Period and the 5,800 million ordinary shares in issue as at the date of the document as if the share were outstanding throughout the entire Record Period.

The Company did not have any potential dilutive shares throughout the entire Record Period. Accordingly, diluted earnings per share is the same as basic earnings per share.

Profit attributable to equity owner/shareholders of the Company is as below:

Years ended December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Continuing operations ...... 46,535 225,035 528,275 Discontinued operation (note 10(c)) ...... 6,653 39,398 — Total ...... 53,188 264,433 528,275

10 SEGMENT REPORTING

The Group manages its businesses by divisions, which are organized by types of business. Consistent with the way in which information is reported internally to the Group’s most senior executive management for the purposes of resource allocation and performance assessment, the Group has presented the following two reportable segments.

— Wind power: this segment constructs, manages and operates wind power plants and generates electric power for sale to power grid companies.

— Hydro power: this segment constructs, manages and operates hydro power plant and generates electric power for sale to power grid company. Huaneng Dali Hydro Power Co., Ltd. (“Dali Hydro Power”, “ ”) was the only subsidiary included in the segment during the Record Period. Following the strategic decision of the Company, in January 2009, the Company sold its 60% equity interests in Dali Hydro Power, to a fellow subsidiary controlled by Huaneng Group. The consideration received by the Company was RMB150,000,000, which was determined with reference to an independent valuation report issued by Beijing Pan-China Assets Appraisal Co., Ltd., an independent appraiser in the PRC. The transaction was approved by State-owned Assets Supervision and Administration Commission of the State Council (“SASAC”) in January 2009. The transaction was consummated upon obtaining the approval from SASAC. Accordingly, the segment has been presented and accounted for as a discontinued operation in January 2009. The comparative statements of comprehensive income have been presented to show the discontinued operation separately from continuing operations (see note 10(c) for more details). From then on, all the subsidiaries comprising the Group are engaged in wind power generation and sale.

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(a) Segment results, assets and liabilities

Before the discontinuance of hydro power operations, for the purposes of assessing segment performance and allocating resources between segments, the Group’s senior executive management monitors the results, assets and liabilities attributable to each reportable segment on the following bases:

Segment assets include all tangible, intangible assets and current assets with the exception of investment in jointly controlled entity, investments in financial assets, deferred tax assets and other corporate assets. Segment liabilities include trade and other payables and bank borrowings managed directly by the segments. Segment liabilities do not include deferred tax liabilities and other corporate liabilities.

Revenue and expenses are allocated to the reportable segments with reference to sales generated by those segments and the expenses incurred by those segments or which otherwise arise from the depreciation or amortization of assets attributable to those segments. Segment revenue and expenses do not include share of profits of jointly controlled entity, net finance expenses, service concession construction revenue and cost and unallocated corporate expenses.

The measure used for reporting segment profit is the operating profit. Information regarding the Group’s reportable segments as provided to the Group’s most senior executive management for the purposes of resource allocation and assessment of segment performance for the years ended December 31, 2008 and 2009 is set out below.

For the year ended December 31, 2008

Hydro power Wind power (Discontinued) Total RMB’000 RMB’000 RMB’000 Revenue from external customers — Sales of electricity ...... 248,061 72,647 320,708 Inter-segment revenue ...... — — — Reportable segment revenue ...... 248,061 72,647 320,708 Reportable segment profit (operating profit) ...... 181,768 36,351 218,119 Depreciation and amortization ...... (79,787) (21,073) (100,860) Impairment of other receivables ...... (357) — (357) Interest income ...... 926 72 998 Interest expenses ...... (71,296) (23,628) (94,924) Reportable segment assets ...... 10,065,112 466,008 10,531,120 Expenditures for reportable segment non-current assets during the year ...... 6,521,671 2,254 6,523,925 Reportable segment liabilities ...... 8,008,211 309,539 8,317,750

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For the year ended December 31, 2009

Hydro power Wind power (Discontinued) Total RMB’000 RMB’000 RMB’000 Revenue from external customers — Sales of electricity ...... 846,997 — 846,997 Inter-segment revenue ...... — — — Reportable segment revenue ...... 846,997 — 846,997 Reportable segment profit (operating profit) ...... 551,736 — 551,736 Depreciation and amortization ...... (295,625) — (295,625) Interest income ...... 3,852 — 3,852 Interest expenses ...... (251,088) — (251,088) Reportable segment assets ...... 16,753,162 — 16,753,162 Expenditures for reportable segment non-current assets during the year ...... 7,469,144 — 7,469,144 Reportable segment liabilities ...... 13,141,507 — 13,141,507

For the year ended December 31, 2010

Since the equity interests in Dali Hydro Power were disposed of in January 2009, the Group has one reportable segment which is wind power generation and sale.

Hydro power Wind power (Discontinued) Total RMB’000 RMB’000 RMB’000 Revenue from external customers — Sales of electricity ...... 1,758,511 — 1,758,511 Inter-segment revenue ...... — — — Reportable segment revenue ...... 1,758,511 — 1,758,511 Reportable segment profit (operating profit) ...... 1,218,906 — 1,218,906 Depreciation and amortization ...... (632,357) — (632,357) Interest income ...... 8,870 — 8,870 Interest expenses ...... (514,007) — (514,007) Reportable segment assets ...... 32,839,773 — 32,839,773 Expenditures for reportable segment non-current assets during the year ...... 14,132,037 — 14,132,037 Reportable segment liabilities ...... 25,861,491 — 25,861,491

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(b) Reconciliations of reportable segment revenues, profit or loss, assets and liabilities

Years ended December 31 2008 2009 2010 RMB’000 RMB’000 RMB’000 Revenue Reportable segment revenue ...... 320,708 846,997 1,758,511 Service concession construction revenue ...... 318,063 66,634 — Sale of electricity from solar power trial business ...... 69 71 45 Other revenue ...... 4,148 4,750 9,970 Elimination of discontinued operation ...... (72,647) — — Consolidated revenue ...... 570,341 918,452 1,768,526 Profit Reportable segment profit ...... 218,119 551,736 1,218,906 Adjustments on reportable segment profit ...... (1,392) (4,354) (11,130) Elimination of discontinued operation ...... (36,351) — — 180,376 547,382 1,207,776 Share of profits of a jointly controlled entity ...... 99 3,129 — Net finance expenses ...... (63,033) (239,216) (492,943) Net gain on disposal of investment in a subsidiary ...... — 18,869 — Unallocated head office and corporate expenses ...... (22,045) (26,707) (73,435) Consolidated profit before taxation ...... 95,397 303,457 641,398

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Assets Reportable segment assets ...... 10,531,120 16,753,162 32,839,773 Adjustments on reportable segment assets ...... 34 6,887 539 10,531,154 16,760,049 32,840,312 Investment in a jointly controlled entity ...... 52,403 — — Other financial assets ...... 21,225 136,977 169,627 Deferred tax assets ...... 21,336 16,325 12,709 Unallocated head office and corporate assets ...... 298,041 867,323 421,978 Consolidated total assets ...... 10,924,159 17,780,674 33,444,626 Liabilities Reportable segment liabilities ...... 8,317,750 13,141,507 25,861,491 Adjustments on reportable segment liabilities ...... 34 6,887 539 8,317,784 13,148,394 25,862,030 Deferred tax liabilities ...... 8,891 20,848 34,274 Unallocated head office and corporate liabilities ...... 317,796 1,314,920 1,429,503 Consolidated total liabilities ...... 8,644,471 14,484,162 27,325,807

Since the equity interests in Dali Hydro Power were disposed of in January 2009, the Group has one reportable segment which is wind power generation and sale.

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(c) Discontinued operation

Years ended December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Results of discontinued operation Revenue ...... 72,647 — — Expenses ...... (60,012) — — Profit before taxation ...... 12,635 — — Income tax (note 6(a)) ...... (1,546) — — Results from operating activities, net of income tax ...... 11,089 — — Gain on disposal of discontinued operation (note (i)) ...... — 56,119 — Income tax on gain on disposal of discontinued operation (note 6(a)) .... — (16,721) — Profit for the year ...... 11,089 39,398 —

Note:

(i) The consideration received by the Company for the disposal of Dali Hydro Power was determined with reference to independent valuation report. The disposal transaction required approval by the non-controlling interests owner of the acquirer, which was obtained in 2009.

Years ended December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Cash flows from discontinued operation Net cash from operating activities ...... 57,929 — — Net cash (used in)/from investing activities ...... (1,581) 137,547 — Net cash used in financing activities ...... (54,788) — — Net cash from discontinued operation ...... 1,560 137,547 —

Effect of disposal on the financial position of the Group

At date of disposal RMB’000 Property, plant and equipment ...... 441,421 Lease prepayments ...... 4,836 Inventories ...... 1,809 Trade debtors and other receivables ...... 5,365 Cash and cash equivalents ...... 12,453 Borrowings ...... (305,000) Trade and other payables ...... (3,351) Tax payable ...... (1,064) Net assets ...... 156,469 Consideration received, satisfied in cash ...... (150,000) Cash and cash equivalents disposed of ...... 12,453 Net cash inflow ...... (137,547)

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(d) Geographical information

All of the Group’s operations are located in the PRC, therefore no geographic segment information is presented.

(e) Major customers

Revenue from the PRC government controlled power grid companies amounted to RMB320,777,000, RMB847,068,000 and RMB1,758,556,000 for the years ended December 31, 2008, 2009 and 2010, respectively. Service concession construction revenue is all from the PRC government.

11 ROPERTY, PLANT AND EQUIPMENT

Generators Furniture, Buildings and and related Motor fixtures Construction Structures Equipment Vehicles and others in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Cost: At January 1, 2008 ...... 479,069 1,363,636 18,013 7,494 808,809 2,677,021 Additions ...... 11,502 2,181 21,568 4,310 6,168,127 6,207,688 Transfer from construction in progress ...... 80,072 1,580,435 — 409 (1,660,916) — Disposals ...... — (32) (1,039) (366) — (1,437) Transfer to lease prepayments ...... — — — — (8,590) (8,590) At December 31, 2008 ...... 570,643 2,946,220 38,542 11,847 5,307,430 8,874,682

At January 1, 2009 ...... 570,643 2,946,220 38,542 11,847 5,307,430 8,874,682 Net additions arising from sales and leaseback transaction . . . — 9,205 — — — 9,205 Other additions ...... — 871 14,645 3,563 7,372,577 7,391,656 Transfer from construction in progress ...... 318,942 7,123,633 1,278 5,683 (7,449,536) — Disposal of a subsidiary (note 30(a)) ...... (28,942) (885,591) (1,434) (6,387) (969) (923,323) Disposal of discontinued operation (note 10(c)) ...... (390,043) (205,950) (3,214) (1,096) — (600,303) Disposals ...... — — — (1,857) — (1,857) Transfer to lease prepayments ...... — — — — (9,291) (9,291) At December 31, 2009 ...... 470,600 8,988,388 49,817 11,753 5,220,211 14,740,769

At January 1, 2010 ...... 470,600 8,988,388 49,817 11,753 5,220,211 14,740,769 Net additions arising from sales and leaseback transaction . . . — (5,885) — — — (5,885) Other additions ...... 28 263 39,684 13,820 14,051,791 14,105,586 Transfer from construction in progress ...... 627,310 7,533,574 1,866 5,912 (8,168,662) — Disposals ...... — (2) (2,948) (511) — (3,461) Reclassification ...... 102,458 (102,532) — 74 — — Transfer to lease prepayments ...... (15,300) — — — — (15,300) At December 31, 2010 ...... 1,185,096 16,413,806 88,419 31,048 11,103,340 28,821,709

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Generators Furniture, Buildings and and related Motor fixtures Construction Structures Equipment Vehicles and others in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Accumulated depreciation and impairment losses: At January 1, 2008 ...... 62,705 154,364 6,608 3,850 — 227,527 Depreciation charge for the year ...... 11,449 87,835 3,425 1,496 — 104,205 Written back on disposal ...... — (31) (754) (363) — (1,148) At December 31, 2008 ...... 74,154 242,168 9,279 4,983 — 330,584

At January 1, 2009 ...... 74,154 242,168 9,279 4,983 — 330,584 Depreciation charge for the year 9,436 269,126 6,431 2,008 — 287,001 Disposal of a subsidiary (note 30(a)) ...... (461) (21,480) (649) (1,000) — (23,590) Disposal of discontinued operation (note 10(c)) ...... (60,924) (95,099) (2,240) (619) — (158,882) Transfer out arising from sales and leaseback transaction . . . — (28,374) — — — (28,374) Written back on disposal ...... — — — (1,851) — (1,851) At December 31, 2009 ...... 22,205 366,341 12,821 3,521 — 404,888

At January 1, 2010 ...... 22,205 366,341 12,821 3,521 — 404,888 Depreciation charge for the year ...... 25,934 581,846 10,557 3,066 — 621,403 Transfer out arising from sales and leaseback transaction . . . — (5,412) — — — (5,412) Written back on disposal ...... — (2) (1,605) (493) — (2,100) Reclassification ...... 3,377 (3,377) — — — — At December 31, 2010 ...... 51,516 939,396 21,773 6,094 — 1,018,779 Net book value: At December 31, 2008 ...... 496,489 2,704,052 29,263 6,864 5,307,430 8,544,098 At December 31, 2009 ...... 448,395 8,622,047 36,996 8,232 5,220,211 14,335,881 At December 31, 2010 ...... 1,133,580 15,474,410 66,646 24,954 11,103,340 27,802,930

Notes:

(i) The Group’s property, plants and buildings are all located in the PRC.

(ii) Certain of the Group’s interest-bearing bank borrowings were secured by certain of the Group’s buildings and machinery (see note 20), which had an aggregate net book value of RMB368,133,000 and RMB356,675,000 as at December 31, 2007 and 2008 respectively.

(iii) Property, plant and equipment held under finance leases

Certain properties and equipment of the Group with an aggregate net book value of RMB949,759,000 and RMB1,997,820,000 as at December 31, 2009 and December 31, 2010, are accounted for as finance leases (of which RMB676,929,000 and RMB1,183,032,000 are finance leases pursuant to sales and leaseback transactions), with maturity periods of 81 to 120 months.

Certain properties and equipment held under finance leases were pledged by the future electricity revenue of relevant wind power projects of the Group, with an aggregate net book value of RMB949,759,000 and RMB1,099,645,000 as at December 31, 2009 and December 31, 2010.

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(iv) As at December 31, 2010, the Group is in the process of applying for or changing registration of the ownership certificates for certain of its properties. The aggregate carrying value of such properties of the Group was approximately RMB9.5 million. The directors are of the opinion that the Group is entitled to lawfully occupy or use these properties.

12 LEASE PREPAYMENTS

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Cost: At January 1 ...... 9,273 17,863 24,441 Additions ...... 8,590 19,853 44,104 Disposal of a subsidiary (note 30(a)) ...... — (6,681) — Disposal of discontinued operation (note 10(c)) ...... — (6,594) — At the end of the year ...... 17,863 24,441 68,545 Accumulated amortization: At January 1 ...... 2,602 3,180 1,774 Amortization for the year ...... 578 435 1,715 Disposal of a subsidiary (note 30(a)) ...... — (83) — Disposal of discontinued operation (note 10(c)) ...... — (1,758) — At the end of the year ...... 3,180 1,774 3,489 Net book value: ...... 14,683 22,667 65,056

Lease prepayments mainly represent prepayments for acquiring rights to use land, which is all located in the PRC, for own use properties with lease period of 50 years.

13 INTANGIBLE ASSETS

Concession Software assets and others Total RMB’000 RMB’000 RMB’000 Cost: At January 1, 2008 ...... 40,120 190 40,310 Additions ...... 318,063 306 318,369 At December 31, 2008 ...... 358,183 496 358,679 Additions ...... 66,634 426 67,060 Disposal of discontinued operation (note 10(c)) ...... — (163) (163) At December 31, 2009 ...... 424,817 759 425,576 Additions ...... — 941 941 At December 31, 2010 ...... 424,817 1,700 426,517

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Concession Software assets and others Total RMB’000 RMB’000 RMB’000 Accumulated amortization: At January 1, 2008 ...... — 101 101 Charge for the year ...... — 232 232 At December 31, 2008 ...... — 333 333 Charge for the year ...... 13,749 91 13,840 Disposal of discontinued operation (note 10(c)) ...... — (163) (163) At December 31, 2009 ...... 13,749 261 14,010 Charge for the year ...... 17,483 207 17,690 At December 31, 2010 ...... 31,232 468 31,700 Net book value: At December 31, 2008 ...... 358,183 163 358,346 At December 31, 2009 ...... 411,068 498 411,566 At December 31, 2010 ...... 393,585 1,232 394,817

Concession assets represent the rights the Group received for the usage of the concession wind power plants for the generation of electricity. The concession assets are amortized over the operating period of the service concession projects.

14 INVESTMENT IN A JOINTLY CONTROLLED ENTITY

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Share of net assets ...... 52,403 — —

The Company’s investment in a jointly controlled entity represented the 73.4% equity interests in Yunhe County Shitang Hydro-Power Plant (“Shitang Plant”, ) which has a registered capital of RMB 50,515,660, is unlisted, was established in the PRC and is engaged in hydro-power generation. As the voting rights attached to the equity interests do not allow either the Company or the other equity owner of Shitang Plant to have the power to govern its financial and operating activities according to its articles of association, the Directors of the Company are of the opinion that the Company and the other equity owner shared joint control over the economic activity of Shitang Plant during the Record Period before the investment was derecognized in 2009.

The Company’s equity interests in Shitang Plant were originally transferred from Huaneng Group for nil consideration on January 1, 2003, which was accounted for as a contribution from Huaneng Group based on net assets value of Shitang Plant. Following the strategic decision of Huaneng Group, on November 30, 2009, the Company transferred its 73.4% equity interests in Shitang Plant, with the net assets value amounting to RMB 55,533,000 at the date of transfer, for nil consideration to Huaneng Comprehensive Industrial Co., Ltd. ( ), a wholly owned subsidiary of Huaneng Group, which was accounted for as a distribution to Huaneng Group.

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Summary financial information on the jointly controlled entity:

At December 31, 2008 2009 2010 Group’s Group’s Group’s 100 effective 100 effective 100 effective per cent interest per cent interest per cent interest RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Current assets ...... 5,639 4,139 ———— Non-current assets ...... 116,527 85,531 ———— Current liabilities ...... 14,772 10,843 ———— Non-current liabilities ...... 36,000 26,424 ———— Equity ...... 71,394 52,403 ————

Years ended December 31, 2009 2008 (before the transfer) 2010 Group’s Group’s Group’s 100 effective 100 effective 100 effective per cent interest per cent interest per cent interest RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Revenue ...... 43,290 31,775 45,065 33,078 — — Expenses ...... 43,155 31,676 40,802 29,949 — — Profit ...... 135 99 4,263 3,129 — —

15 OTHER NON-CURRENT ASSETS

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Deductible VAT (note (i)) ...... — 979,598 2,433,559 Unquoted equity investments in non-listed companies, at cost (note (ii)) . . . 21,225 136,977 169,627 Deposits and advances to third parties (note (iii)) ...... — 47,963 86,955 21,225 1,164,538 2,690,141

Notes:

(i) Deductible VAT mainly represents the input VAT relating to acquisition of property, plant and equipment and intangible assets, which is deductible from output VAT for period after January 1, 2009. Before January 1, 2009, input VAT was recorded as part of the costs of the related assets.

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(ii) The following list contains the unquoted equity investments in non-listed entities as of December 31, 2010, all of which are corporate entities and established in the PRC:

Particulars of Attributable Name of the Company registered capital equity interest Principal activities RMB’000 1 China Huaneng Finance Corporation Ltd. (“Huaneng Finance”, )...... 2,000,000 1% Financial services

2 Jilin Zhanyu Wind Power Assets Management Co., Ltd. Management of wind power ( ) ...... 499,600 12.86% equipment

3 Neimeng Huhhot Hydro-Power Hydro-power generation Generation Co., Ltd utilizing pumped storage ( ) .... 1,404,626 6.49% technology

4 Huaneng Carbon Asset Management Co., Ltd Management and investment ( )...... 50,000 10% of carbon assets

(iii) The deposits and advances to third parties are unsecured and interest free. The balance mainly represented deposits with third parties in connection with the finance lease arrangement in the amount of RMB24,163,000 and RMB40,173,000 as at December 31, 2009 and December 31, 2010 which are expected to be repaid at the end of the lease period, and funding support to a local grid company in order to facilitate the construction of the grid network, amounting to RMB23,800,000 and RMB43,800,000 as at December 31, 2009 and December 31, 2010, which the Directors of the Company expect it will be recovered in three years.

16 TRADE DEBTORS AND BILLS RECEIVABLE

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Amounts due from third parties ...... 116,536 386,114 949,574 Amounts due from fellow subsidiaries ...... 308 4,750 10,149 116,844 390,864 959,723 Less: allowance for doubtful accounts ...... — — — 116,844 390,864 959,723

The ageing analysis of trade debtors and bills receivable of the Group is as follows:

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Current ...... 116,844 387,301 951,931 Past due within 1 year ...... — 3,563 4,750 Past due between 1 to 2 years ...... — — 3,042 116,844 390,864 959,723 Less: allowance for doubtful accounts ...... — — — 116,844 390,864 959,723

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The Group’s trade debtors are mainly wind power electricity sales receivable from local grid companies. Generally, the debtors are due within 15 – 30 days from the date of billing. Certain wind power projects collect part of receivables tariff premium, representing 30% to 60% of total electricity sales, in 2 to 12 months from the date of recognition of sales, as agreed with local grid companies.

Trade receivables that were neither past due nor impaired mainly represented the electricity sales receivable from local grid companies for whom there was no recent history of default.

Trade receivables that were past due as at December 31, 2009 and December 31, 2010 represented management service receivable due from a fellow subsidiary controlled by Huaneng Group, which has been settled in March 2011.

All trade debtors and bills receivable are expected to be recovered within one year.

17 PREPAYMENTS AND OTHER CURRENT ASSETS

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 CERs receivable ...... 18,025 6,452 167,253 Staff advance ...... 1,732 3,952 3,982 Deposits ...... 2,067 4,000 8,538 Amounts due from fellow subsidiaries (note (i)) ...... 3,327 563,499 — VAT refund receivables (note (ii)) ...... 93,613 12,122 461 Prepayments ...... 158 112 1,126 Other debtors ...... 2,783 7,422 27,169 121,705 597,559 208,529 Less: allowance for doubtful debts ...... 818 818 818 120,887 596,741 207,711

Notes:

(i) The amounts due from fellow subsidiaries at December 31, 2009 mainly represented advances made to fellow subsidiaries and payments for expenditures on behalf of fellow subsidiaries, which are unsecured and interest fee. These balances were all subsequently settled during 2010.

(ii) VAT refund receivables represented the VAT refund relating to acquisition of domestic equipments for foreign invested companies, approved by the National Development and Reform Commission and local tax bureau.

Impairment losses in respect of prepayments and other current asset are recorded using an allowance account. The movement in the allowance for bad and doubtful accounts during the Record Period is as follows:

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 At the beginning of the year ...... 461 818 818 Impairment losses recognized ...... 357 — — At the end of the year ...... 818 818 818

The Group’s prepayments and other current assets of RMB818,000, RMB818,000 and RMB818,000 as at December 31, 2008, 2009 and 2010 were individually determined to be impaired. The individually impaired

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For the other balances of prepayments and other current assets, the management is of the opinion that the counterparties are with good credit quality and the balances are considered fully recoverable.

18 RESTRICTED DEPOSITS

Restricted deposits mainly represent cash pledged as tender bonds for wind power projects.

19 CASH AT BANK AND ON HAND

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Cash on hand ...... 262 322 576 Cash at bank and other financial institutions ...... 1,643,511 818,904 1,308,890 1,643,773 819,226 1,309,466 Representing: — Cash and cash equivalents ...... 1,643,773 789,226 1,297,771 — Time deposits with original maturity over three months ...... — 30,000 11,695 1,643,773 819,226 1,309,466

20 BORROWINGS

(a) The Group’s long-term interest-bearing borrowings comprise:

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Bank and other loans — Secured ...... 397,000 285,076 2,355,656 — Unsecured ...... 4,103,796 8,463,928 11,693,483 4,500,796 8,749,004 14,049,139 Less: Current portion of long-term borrowings — Bank and other loans ...... 64,240 661,825 847,804 4,436,556 8,087,179 13,201,335

As at December 31, 2008, 2009 and 2010, bank loans guaranteed by Huaneng Group amounted to RMB3,753,796,000, RMB6,613,928,000 and RMB26,863,000 respectively.

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(b) The Group’s short-term interest-bearing borrowings comprise:

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Bank and other financial institution loans — Secured ...... 15,000 — — — Unsecured ...... 1,517,000 736,688 3,969,796 Loans from fellow subsidiaries (unsecured) ...... 800,000 1,400,000 — Current portion of long-term borrowings — Bank and other loans ...... 64,240 661,825 847,804 2,396,240 2,798,513 4,817,600

As of December 31, 2008, 2009 and 2010, bank loans guaranteed by Huaneng Group amounted to RMB757,000,000, RMB200,000,000 and nil, respectively.

(c) The Group’s interest rates on borrowings are as follows:

At December 31, 2008 2009 2010 Long-term Bank and other loans ...... 1%(note (i)), 1%(note (i)), 1%(note (i)), 5.51~7.05% 4.86~5.35% 4.86~5.63% Short-term Bank and other financial institution loans ...... 4.78%~7.47% 4.78% 4.59%~5.00% Loans from fellow subsidiaries ...... 5.02%~6.72% 4.01%~4.78% n/a

Note:

(i) A subsidiary of the Company, Huaneng Shantou Nan’ao Wind Power Company Limited (“Nan’ao Power”), obtained a foreign government loan through China Construction Bank Guangdong Branch on November 29, 1999. This loan is funded by Spanish government via China Construction Bank Guangdong Branch. According to the terms of the loan, Nan’ao Power is obligated to use the loan proceeds to purchase goods and services only from entities in Spain. The total loan amount was US$8,586,809, of which US$4,317,319 was export credit loan with annual interest rate of 5.78% and a loan term of seven years due on January 22, 2008. The export credit loan was fully settled and repaid in 2008. The remaining US$4,269,490 has an annual interest rate of 1%. Nan’ao Power is required to make semi-annual installment payments starting from June 15, 2010. The loan is to be paid off by December 15, 2029.

(d) The Group’s long-term borrowings are repayable as follows:

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Within 1 year or on demand ...... 64,240 661,825 847,804 After 1 year but within 2 years ...... 548,624 708,478 1,654,320 After 2 years but within 5 years ...... 1,173,083 2,813,698 4,407,864 After 5 years ...... 2,714,849 4,565,003 7,139,151 4,500,796 8,749,004 14,049,139

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21 OBLIGATIONS UNDER FINANCE LEASES

The Group had obligations under finance leases repayable as follows:

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Present value of the minimum lease payments Within 1 year ...... — 119,156 232,215 After 1 year but within 2 years ...... — 125,445 259,508 After 2 years but within 5 years ...... — 418,625 872,474 After 5 years ...... — 261,696 636,429 — 805,766 1,768,411 Present value of finance lease obligations ...... — 924,922 2,000,626

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Total minimum lease payments Within 1 year ...... — 165,911 334,552 After 1 year but within 2 years ...... — 165,911 353,457 After 2 years but within 5 years ...... — 497,732 1,060,372 After 5 years ...... — 275,530 696,629 — 939,173 2,110,458 — 1,105,084 2,445,010 Less: total future interest expenses ...... — 180,162 444,384 Present value of finance lease obligations ...... — 924,922 2,000,626

At inception, the lease periods of the finance lease obligation is approximately 7 to 10 years. The principal obligations and interest expenses are to be paid at least annually within the lease period.

22 OTHER PAYABLES

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Payables for acquisition of property, plant and equipment and intangible assets ...... 1,327,342 1,472,945 5,083,427 Retention payable (note (i)) ...... 176,953 524,295 1,045,711 Dividends payable ...... 600 5,350 — Payables for staff related costs ...... 15,860 24,068 36,569 Amounts due to related parties (note (ii)) ...... 19,860 21,506 18,073 Payables for other taxes ...... 11,282 14,528 28,684 Interest payable ...... 3,947 8,833 19,699 Payables for repairs and maintenance ...... — 2,814 — Other accruals and payables ...... 17,662 7,244 23,018 1,573,506 2,081,583 6,255,181

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Notes:

(i) Retention payable represent the retention payables due to equipment suppliers and construction contractors which will be settled upon the expiry of the warranty period.

(ii) Amounts due to related parties are unsecured, interest-free and have no fixed terms of repayment.

All of the other payables are expected to be settled within one year or are repayable on demand.

23 INCOME TAX IN THE CONSOLIDATED BALANCE SHEETS

(a) Tax payable/(recoverable) in the consolidated balance sheets represents:

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Net tax (recoverable)/payable at beginning of year ...... (19) 4,444 5,772 Provision for the year (including income tax on gain on disposal of discontinued operation) (note 6(a)) ...... 5,845 21,961 14,940 Disposal of discontinued operation (note 10(c)) ...... — (1,064) — Income tax paid ...... (1,382) (19,569) (14,974) Net tax payable at end of year ...... 4,444 5,772 5,738 Representing: Tax payable ...... 4,478 12,659 6,277 Tax recoverable ...... (34) (6,887) (539) 4,444 5,772 5,738

(b) Deferred tax assets and liabilities recognized:

The components of deferred tax assets/(liabilities) recognized in the consolidated balance sheets and the movements during the Record Period are as follows:

Tax credits for Trial domestic operation equipment income Others Total RMB’000 RMB’000 RMB’000 RMB’000 Deferred tax assets arising from: At January 1, 2008 ...... 3,090 5,483 337 8,910 Credited/(charged) to profit or loss ...... 9,860 2,580 (14) 12,426 At December 31, 2008 ...... 12,950 8,063 323 21,336 Charged to profit or loss (4,575) (333) (103) (5,011) At December 31, 2009 ...... 8,375 7,730 220 16,325 Charged to profit or loss ...... (3,256) (360) — (3,616) At December 31, 2010 ...... 5,119 7,370 220 12,709

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Depreciation of fixed Non-deductible assets and amortization costs of fixed of concession assets assets Total RMB’000 RMB’000 RMB’000 Deferred tax liabilities arising from: At January 1, 2008 ...... (1,313) — (1,313) Charged to profit or loss ...... (7,578) — (7,578) At December 31, 2008 ...... (8,891) — (8,891) Charged to profit or loss ...... (8,209) (3,748) (11,957) At December 31, 2009 ...... (17,100) (3,748) (20,848) Charged to profit or loss ...... (850) (12,576) (13,426) At December 31, 2010 ...... (17,950) (16,324) (34,274)

(c) Deferred tax assets not recognized

The Company did not expect to utilize its tax losses in the future and did not recognize deferred tax assets on tax losses of RMB16,062,000 and RMB119,304,000 as at December 31, 2008 and 2010, respectively.

24 DEFERRED INCOME

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 At the beginning of the year ...... 29,255 176,062 234,062 Additions ...... 148,939 67,207 27,910 Credited to profit or loss ...... (2,132) (9,207) (13,226) At the end of the year ...... 176,062 234,062 248,746

Deferred income mainly represents VAT refund granted by the government relating to the purchase of domestic equipment and subsidies relating to the construction of property, plant and equipment, which would be recognized as income on a straight-line basis over the expected useful life of the relevant assets, and deferred income arising from sales and leaseback transaction which would be amortised over the lease period of approximately 7 years.

25 CAPITAL AND RESERVES

(a) Dividends

The Company has not distributed any dividends during the Record Period.

Pursuant to the board resolution of the Company on November 23, 2010, the Company is to make a distribution to Huaneng Group, which represents an amount equal to the net profit attributable to the equity owner of the Company, generated during the period from January 1, 2010 (the date immediately after the date of the Reorganization) to August 5, 2010 (the “Special Distribution”).

Pursuant to the board resolution of the Company on April 29, 2011, the directors resolved to pay the Special Distribution to Huaneng Group amounting to RMB316.2 million.

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(b) Paid-in capital/share capital

For the purpose of this report, the paid-in capital of the Group as at December 31, 2008 and 2009 prior to the establishment of the Company represented the paid-in capital of HNEIC.

The share capital of the Company as at December 31, 2010 represented a total of 5,800 million ordinary shares with a par value of RMB1.00 each (note 33).

(c) Reserves

(i) Capital reserve

Capital reserve represented the contributions from the equity owner and the promoter of the Company, and distributions to the equity owner.

(ii) Reserve fund

According to the Company’s Article of Association, the Company is required to transfer 10% of its net profit as determined in accordance with the PRC Accounting Rules and Regulations to its statutory surplus reserve until the reserve balance reaches 50% of the registered capital. The transfer to this reserve must be made before distribution of a dividend to equity owner. This reserve fund can be utilized in setting off accumulated losses or increasing capital of the Company and is non-distributable other than in liquidation.

(iii) Distributability of reserves

Following the Reorganization, the payment of future dividends will be determined by the Company’s Board of Directors. The payment of the dividends will depend upon, the future earnings, capital requirements and financial conditions and general business conditions of the Company. As the controlling shareholder, Huaneng Group will be able to influence the Company’s dividend policy.

Following the establishment of the Company, under the Company Law of the PRC and the Company’s Articles of Association, net profit after tax as reported in the statutory financial statements prepared in accordance with the accounting rules and regulations of the PRC can only be distributed as dividends after allowances have been made for the following:

(i) Making up prior years’ cumulative losses, if any;

(ii) Allocations to the reserve fund as set out in note 25 (c) (ii) above; and

(iii) Allocations to the discretionary common reserve if approved by the shareholders.

After the listing of the Company’s shares on HKSE, in accordance with the Articles of Association of the Company, the net profit after tax of the Company for the purpose of dividends payment will be the lesser of (i) the net profit determined in accordance with the accounting rules and regulations of the PRC; and (ii) the net profit determined in accordance with IFRSs.

(d) Capital management

The Group’s primary objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders.

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The Group actively and regularly reviews and manages its capital structure to maintain a balance between the higher shareholder returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position, and makes adjustments to the capital structure in light of changes in economic conditions.

The Group monitors its capital structure on the basis of liability-to-asset ratio, which is calculated by dividing total liabilities by total assets. The liability-to-asset ratios of the Group as at December 31, 2008, 2009 and 2010 are 79%, 81% and 82%, respectively.

There were no changes in the Group’s approach to capital management compared with previous years. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.

26 FINANCIAL INSTRUMENTS

Exposure to credit, liquidity, interest rate and currency risks arises in the normal course of the Group’s business. The Group’s exposure to these risks and the financial risk management policies and practices used by the Group to manage these risks are described below.

(a) Credit risk

The Group’s credit risk is primarily attributable to cash and cash equivalents, trade debtors and bills receivable, prepayments and other current assets, and other financial assets.

Substantially all of the Group’s cash and cash equivalents are deposited in the stated owned/ controlled PRC banks and Huaneng Finance, a fellow subsidiary controlled by Huaneng Group, which the directors assessed the credit risk to be insignificant.

The receivables from sales of electricity mainly represent receivables from the provincial power grid companies. The Group have no significant credit risk with any of these power grid companies as the Group and its subsidiaries maintain long-term and stable business relationships with these companies. The receivables from the provincial power grid companies accounted for 98.3%, 94.1% and 97.8% of total trade debtors as at December 31, 2008, 2009 and 2010, respectively. For other trade and other receivables, the Group performs an ongoing individual credit evaluation of its customers’ and counterparties’ financial conditions. The allowance for doubtful debts has been made in the Financial Information.

The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet after deducting any impairment allowance. The Group does not provide any other guarantees which would expose the Group to credit risk.

(b) Liquidity risk

The Group’s objective is to ensure continuity of sufficient funding and flexibility by utilising a variety of bank and other borrowings with debt maturities spreading over a range of periods, thereby ensuring that the Group’s outstanding borrowing obligation is not exposed to excessive repayment risk in any one year.

The Company is responsible for the Group’s overall cash management and the raising of borrowings to cover expected cash demands. The Group’s policy is to regularly monitor current and expected liquidity requirements to ensure that it maintains sufficient reserves of cash and adequate committed lines of funding

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from major financial institutions to meet its liquidity requirements in the short and longer term. In order to repay the borrowings due within one year, the Group negotiates banking facilities and utilizes operating cash inflows in its subsidiaries.

The Group had net current liabilities of RMB2,062,156,000, RMB3,182,214,000 and RMB8,832,300,000 as at December 31, 2008, 2009 and 2010 respectively. With regards to its future capital commitments and other financing requirements, the Group has unutilized banking facilities of approximately RMB7.4 billion as of December 31, 2010.

In addition, the directors of the Group have carried out a review of the cash flow forecast for the 18-month period ending June 30, 2012. Based on such forecast, the directors have determined that adequate liquidity exists to finance the working capital and capital expenditure requirements of the Group during the period. In preparing the cash flow forecast, the directors have considered historical cash requirements of the Group as well as other key factors, including the availability of the above-mentioned borrowings financing which may impact the operations of the Group prior to the end of the next twelve months after the date of this report. The directors are of the opinion that the assumptions which are included in the cash flow forecast are reasonable. However, as with all assumptions in regard to future events, these are subject to inherent limitations and uncertainties and some or all of these assumptions may not be realized.

The following table details the remaining contractual maturities at the balance sheet date of the Group’s non-derivative financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on rates current at the balance sheet date) and the earliest date the Group can be required to pay:

Carrying Contractual 1 year 1-2 2-5 more than amount cash flows or less years years 5 years RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 December 31, 2008 Long-term borrowings (note 20(a)) ...... 4,436,556 6,334,656 305,863 849,126 1,788,701 3,390,966 Short-term borrowings (note 20(b)) ...... 2,396,240 2,469,231 2,469,231 — — — Retention payables ...... 48,738 48,738 — 48,738 — — Other payables (note 22) .... 1,573,506 1,573,506 1,573,506 — — — 8,455,040 10,426,131 4,348,600 897,864 1,788,701 3,390,966

Carrying Contractual 1 year 1-2 2-5 more than amount cash flows or less years years 5 years RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 December 31, 2009 Long-term borrowings (note 20(a)) ...... 8,087,179 10,747,668 427,880 1,134,923 3,791,957 5,392,908 Short-term borrowings (note 20(b)) ...... 2,798,513 2,867,310 2,867,310 — — — Obligations under finance leases (note 21) ...... 924,922 1,105,084 165,911 165,911 497,732 275,530 Retention payables ...... 324,396 324,396 — 293,838 30,558 — Other payables (note 22) .... 2,081,583 2,081,583 2,081,583 — — — 14,216,593 17,126,041 5,542,684 1,594,672 4,320,247 5,668,438

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Carrying Contractual 1 year 1-2 2-5 more than amount cash flows or less years years 5 years RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 December 31, 2010 Long-term borrowings (note 20(a)) ...... 13,201,335 17,481,883 707,015 2,329,348 5,948,432 8,497,088 Short-term borrowings (note 20(b)) ...... 4,817,600 4,952,018 4,952,018 — — — Obligations under finance leases (note 21) ...... 2,000,626 2,445,010 334,552 353,457 1,060,372 696,629 Retention payables ...... 761,768 821,238 — 243,360 577,878 — Other payables (note 22) . . . 6,255,181 6,255,181 6,255,181 — — — 27,036,510 31,955,330 12,248,766 2,926,165 7,586,682 9,193,717

(c) Interest rate risk

The Group’s interest rate risk arises primarily from borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk.

The Group regularly reviews and monitors the mix of fixed and variable rate borrowings in order to manage its interest rate risks. During the Record Period, however, management of the Group did not consider it necessary to use interest rate swaps to hedge their exposure to interest.

The following table details the profile of the Group’s net borrowings (interest-bearing financial liabilities less interest-bearing financial assets) at the balance sheet date. The interest rate and maturity information of the Group’s borrowings are disclosed in note 20.

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Net fixed rate borrowings: Borrowings ...... 1,974,180 1,515,841 2,166,659 Less: Bank deposits (including restricted deposits) ...... 15,000 45,000 11,695 1,959,180 1,470,841 2,154,964

Net floating rate borrowings: Borrowings ...... 4,858,616 9,369,851 15,852,276 Obligations under finance lease ...... — 924,922 2,000,626 Less: Bank deposits (including restricted deposits) ...... 1,657,232 789,743 1,298,037 3,201,384 9,505,030 16,554,865 Total net borrowings ...... 5,160,564 10,975,871 18,709,829

At December 31, 2008, 2009 and 2010, it is estimated that a general increase/decrease of 100 basis points in interest rates of net floating borrowings, with all other variables held constant, would have decreased/increased the Group’s profit after tax and retained profits by approximately RMB11,702,000, RMB37,318,000, and RMB103,478,000 respectively.

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The sensitivity analysis above has been determined assuming that the change in interest rates had occurred at the balance sheet date and had been applied to the exposure to interest rate risk for non-derivative financial instruments in existence at the balance sheet date.

The estimated 100 basis points increase or decrease represents management’s assessment of a reasonably possible change in interest rates over the period until the next annual balance sheet date. The sensitivity analysis is performed on the same basis for the entire Record Period.

(d) Currency risk

The Group is exposed to currency risk primarily through sales and purchases which give rise to receivables and borrowings and cash balances that are denominated in a foreign currency other than RMB. The currencies giving rise to this risk are primarily Euros and United States dollars.

(i) Recognized assets and liabilities

Except for CERs sales which were denominated in foreign currencies, all of the revenue- generating operations of the Group are transacted in RMB. In addition, the Group has certain borrowings that are denominated in United States dollars. The directors considered that the Group’s exposure to foreign currency risk is insignificant.

On the other hand, RMB is not a freely convertible currency and the PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future. Changes in the foreign exchange control system may prevent the Group from satisfying sufficient foreign currency demands and the Group may not be able to pay dividends in foreign currencies to its equity owner.

(ii) Exposure to currency risk

The following table details the Group’s exposure at the balance sheet date to currency risk arising from recognized assets or liabilities denominated in a currency other than RMB to which they relate.

At December 31, 2008 2009 2010 USD EUR USD EUR USD EUR RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Cash and cash equivalents ...... 4 1,937 — 1,974 34,903 1,777 Trade debtors ...... — 1,690 — 18,276 — 11,278 Other receivables ...... — 18,025 — 6,452 — 167,253 Long-term bank loans ...... (29,180) — (29,153) — (26,863) — Net exposure ...... (29,176) 21,652 (29,153) 26,702 8,040 180,308

The followings are USD and EUR exchange rates to RMB during the Record Period:

Average rate Reporting date spot rate 2008 2009 2010 2008 2009 2010 USD...... 7.0696 6.8314 6.7255 6.8346 6.8282 6.6227 EUR...... 10.1630 9.7281 9.3018 9.6590 9.7971 8.8065

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A 5% strengthening of RMB against the following currencies as at December 31, 2008, 2009 and 2010 would have increased/(decreased) the net profit and retained profit by the amount shown below.

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 USD...... 1,167 1,137 (724) EUR...... (954) (1,168) (8,683) 213 (31) (9,407)

A 5% weakening of RMB against the above currencies as at December 31, 2008 and 2009 and 2010 would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

The sensitivity analysis has been determined assuming that the change in foreign exchange rates had occurred at the balance sheet date and had been applied to the Group’s exposure to currency risk for financial instruments in existence at that date, and that all other variables, in particular interest rates, remain constant.

The stated changes represent management’s assessment of reasonably possible changes in foreign exchange rates over the period until the next annual balance sheet date. The analysis is performed on the same basis for the Record Period.

(e) Fair values

The Group has no financial instruments carried at fair value during the Record Period. The investments in unquoted equity securities (note 15(ii)) are measured at cost which fair value cannot be measured reliably as these investments in non-listed companies do not have quoted market price in an active market. The Group has no intention to dispose these investments.

The carrying amounts of the Group’s other financial instruments carried at cost or amortized cost are not materially different from their fair values as at December 31, 2008, 2009 and 2010. The fair value is estimated as the present value of future cash flows, discounted at current market interest rates for similar financial instruments.

27 COMMITMENTS

(a) Capital commitments outstanding at each year end not provided for in the Financial Information were as follows:

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Contracted for ...... 7,736,608 10,251,263 8,066,459 Authorized but not contracted for ...... 4,189,451 8,811,266 18,322,479 11,926,059 19,062,529 26,388,938

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(b) At each year end, the total future minimum lease payments under non-cancellable operating leases are payable as follows:

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Within 1 year ...... 300 786 5,274 After 1 year but within 5 years ...... 432 643 4,966 732 1,429 10,240

The Group leases certain buildings through non-cancellable operating leases. These operating leases do not contain provisions for contingent lease rentals. None of the rental agreements contain escalation provisions that may require higher future rental payments.

28 CONTINGENT LIABILITIES

Up to date, there have been no rules issued on whether the revenue from sales of CERs is subject to any VAT or business tax. Based on the discussions with local tax authorities, the directors of the Company are of the opinion that no such taxes will be applicable to the revenue from sales of CERs. Therefore, the Group has not made any provision on such contingencies.

29 MATERIAL RELATED PARTY TRANSACTIONS

(a) Transactions with related parties

The Group is part of a larger group of companies under Huaneng Group and has significant transactions and relationships with the subsidiaries of Huaneng Group.

Apart from those disclosed in note 10, 14 and note 30(a), the principal related party transactions which were carried out in the ordinary course of business are as follows:

Years ended December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Continuing related party transactions Service provided to Fellow subsidiaries (note (i)) ...... — — 4,050 Service provided by Fellow subsidiaries (note (ii)) ...... 7,484 11,067 22,916 Loan guarantees provided by/(revoked) Huaneng Group (note (iii)) ...... 3,096,935 2,303,133 (6,787,065) Related party transactions discontinued/to be discontinued Service provided to Fellow subsidiaries (note (iv)) ...... 4,148 4,750 5,920 Service provided by Huaneng Group (note (v)) ...... — — 1,854

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Years ended December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Loans received from/ (repayment to) Fellow subsidiaries (note (vi)) ...... 800,000 600,000 (1,400,000) Interest expenses Fellow subsidiaries (note (vi)) ...... 12,848 55,281 31,391 Net deposit in/(withdrawal from) Huaneng Finance (note (vii)) ...... 513,629 (304,468) (681,543) Interest income Huaneng Finance (note (vii)) ...... 8,567 9,266 9,937 Working capital provided to/ (received from) Fellow subsidiaries (note (viii)) ...... 2,601 217,172 (563,499)

Notes:

The Directors are of the opinion that the related party transactions as set out below will continue to exist following the completion of the listing on a stock exchange.

(i) Service provided to fellow subsidiaries represented CDM management services provided to certain wind power projects of Huaneng International Power Development Corporation ( ) (“HIPDC”) and Huaneng Power International Inc. ( ) (“HPI”).

(ii) Service provided by fellow subsidiaries mainly represented property insurance services provided by Alltrust Insurance Company of China Limited ( ) and property lease services provided by Xinsheng Property Management Co., Ltd. ( ).

(iii) This represented loans guaranteed by Huaneng Group, among which, the loan funded by Spanish government (note 20(c)(i)) will continue to be guaranteed by Huaneng Group.

The related party transactions as set out below have already been terminated or the Directors are of the opinion that will be discontinued after the listing of the Company’s share on a stock exchange.

(iv) Service provided to fellow subsidiaries represented management services provided to certain wind power projects of HIPDC.

(v) Service provided by Huaneng Group represented technical support service provided by Huaneng Group.

(vi) This represented short term loans borrowed from Huaneng Guicheng Trust Limited ( ) and Huaneng Finance and corresponding interest expenses incurred.

(vii) This represented net deposits placed in or net cash withdraw from Huaneng Finance and corresponding interest income generated.

(viii) This mainly represented advances to HPI and HIPDC, payments for expenditures on behalf of certain wind power projects of HPI and the subsequent repayments.

(b) Outstanding balances with related parties

The deposits placed with a fellow subsidiary, Huaneng Finance, amounted to RMB986,011,000, RMB681,543,000 and nil as at December 31, 2008, 2009 and 2010 respectively. Details of the other outstanding balances with related parties are set out in notes 15, 16, 17, 20 and 22.

(c) Transactions with other state-controlled entities in the PRC

The Group is a state-controlled entity and operates in an economic regime currently dominated by entities directly or indirectly owned or controlled by the PRC government and numerous government authorities and agencies (collectively referred to as “state-controlled entities”).

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Apart from transactions mentioned above, the Group conducts a majority of its business activities with state-controlled entities in the ordinary course of business. These transactions are carried out at terms similar to those that would be entered into with non-state-controlled entities. Transactions with other state- controlled entities included but are not limited to the following:

— Sales of electricity;

— Depositing and borrowing money;

— Purchase of materials and receiving construction work services; and

— Service concession arrangements.

The tariff of electricity is regulated by relevant government. The Group prices its other services and products based on commercial negotiations. The Group has also established its approval processes for sales of electricity, purchase of products and services and its financing policy for borrowing. Such approval processes and financing policy do not depend on whether the counterparties are state-controlled entities or not.

Having considered the potential for transactions to be impacted by related party relationships, the Group’s approval processes and financing policy, and what information would be necessary for an understanding of the potential effect of the relationship on the Financial Information, the directors are of the opinion that the following transactions require disclosure as related party transactions relating to state- controlled entities:

Years ended December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Sales of electricity ...... 320,777 847,068 1,758,556 Service concession construction revenue ...... 318,063 66,634 — Other revenue ...... 4,148 4,750 9,970 Interest income ...... 3,995 7,395 4,219 Interest expense ...... 88,795 223,153 451,617 Loans received, net ...... 4,605,195 3,331,160 5,807,297 Purchase of materials and receiving construction service ...... 3,812,052 4,407,839 9,425,819

The balances due from/(to) other state-controlled entities transactions are as follows:

At December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Receivables from sales of electricity ...... 114,296 367,838 938,296 Cash on hand and at bank and restricted deposits ...... 1,487,693 823,989 1,168,242 Borrowings ...... (6,353,615) (9,684,775) (15,492,072) Payables for purchase of materials and receiving construction service ...... (289,199) (576,473) (3,891,269)

(d) Key management personnel remuneration

Key management personnel are those persons holding positions with authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, including the Group’s directors.

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Remuneration for key management personnel, including amounts paid to the Company’s directors as disclosed in note 7, and certain of the highest paid employees as disclosed in note 8, is as follows:

Years ended December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Salaries and other emoluments ...... 1,210 2,173 3,186 Discretionary bonus ...... 617 843 958 Retirement scheme contributions ...... 326 306 312 2,153 3,322 4,456

30 NOTES TO THE CONSOLIDATED CASH FLOW STATEMENTS

(a) Disposal of a subsidiary

On August 28, 2009, the Company sold its 65% equity interests in a subsidiary, Huaneng Qidong Wind Power Company Limited (“Qidong Power”, ), which was engaged in wind power generation and sale, to HPI, a fellow subsidiary controlled by Huaneng Group. The transaction was approved by SASAC on August 28, 2009. The consideration received by the Company, amounting to RMB103,000,000, was determined with reference to an independent valuation report issued by DeveChina Assets Appraisal Co., Ltd. ( ), an independent appraiser in the PRC.

Qidong Power commenced operation in 2009. The revenue and net profit for the period from January 1, 2009 to the date of disposal amounted to RMB42,988,000 and RMB9,432,000 respectively. The assets and liabilities by major category at the date of disposal is as follows:

At date of disposal RMB’000 Cash and cash equivalents ...... 31,737 Trade and other receivables ...... 15,922 Property, plant and equipment ...... 899,733 Lease prepayments ...... 6,598 Trade and other payables ...... (196,558) Long-term borrowings ...... (600,000) Net assets ...... 157,432 Consideration received, satisfied in cash ...... 103,000 Less: Cash and cash equivalents disposed of ...... 31,737 Net cash inflow ...... 71,263

(b) Major non-cash transactions

Years ended December 31, 2008 2009 2010 RMB’000 RMB’000 RMB’000 Acquisition of property, plant and equipment by means of finance lease (including related deductible VAT) ...... — 287,413 659,336 Distribution to Huaneng Group (note 14) ...... — 55,533 —

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31 CRITICAL ACCOUNTING JUDGMENTS AND ESTIMATES IN APPLYING THE GROUP’S ACCOUNTING POLICIES

The Group’s financial condition and results of operations are sensitive to accounting methods, assumptions and estimates that underlie the preparation of the Financial Information. The Group bases the assumptions and estimates on historical experience and on various other assumptions that the Group believes to be reasonable and which form the basis for making judgments about matters that are not readily apparent from other sources. On an on-going basis, management evaluates its estimates. Actual results may differ from those estimates as facts, circumstances and conditions change.

The selection of critical accounting policies, the judgments and other uncertainties affecting application of those polices and the sensitivity of reported results to changes in conditions and assumptions are factors to be considered when reviewing the Financial Information. The principal accounting policies are set forth in note 1. The Group believes the following critical accounting policies involve the most significant judgments and estimates used in the preparation of the Financial Information.

(a) Impairment losses for bad and doubtful debts

The Group estimates impairment losses for bad and doubtful debts resulting from the inability of the customers and other debtors to make the required payments. The Group bases the estimates on the aging of the receivable balance, debtors’ credit-worthiness, and historical write-off experience. If the financial condition of the customers and debtors were to deteriorate, actual write-offs would by higher than estimated.

(b) Impairment losses of non-current assets

In considering the impairment losses that may be required for certain of the Group’s assets which include property, plant and equipment, lease prepayments and intangible assets, recoverable amount of the asset needs to be determined. The recoverable amount is the greater of the fair value less costs to sell and the value in use. It is difficult to precisely estimate selling price because quoted market prices for these assets may not be readily available. In determining the value in use, expected cash flow generated by the asset are discounted to their present value, which requires significant judgment relating to items such as level of sale volume, selling price and amount of operating costs. The Group uses all readily available information in determining an amount that is reasonable approximation of recoverable amount, including estimates based on reasonable and supportable assumptions and projections of items such as sale volume, selling price and amount of operating costs.

(c) Recognition of deferred tax assets

Deferred tax assets in respect of unused tax losses and tax credit carried forward and deductible temporary differences are recognized and measured based on the expected manner of realization or settlement of the carrying amount of the assets, using tax rates enacted or substantively enacted at the balance sheet date. In determining the carrying amounts of deferred assets, expected taxable profits are estimated which involves a number of assumptions relating to the operating environment of the Group and require a significant level of judgment exercised by the directors. Any change in such assumptions and judgment would affect the carrying amounts of deferred tax assets to be recognized and hence the net profit in future years.

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(d) Depreciation

Property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets, after taking into account the estimated residual value. The Group reviews the estimated useful lives of the assets regularly. The useful lives are based on the Group’s historical experience with similar assets and taking into account anticipated technological changes. The depreciation expense for future periods is adjusted if there are significant changes from previous estimates.

(e) Income tax

The Group files income taxes with a number of tax authorities. Judgment is required in determining the provision for taxation. There are many transactions and calculations for which the ultimate tax determinations are uncertain during the ordinary course of business. Where the final tax outcomes of these matters are different from the amounts originally recorded, the differences may impact the current income tax and deferred income tax provisions in the periods in which the final tax outcomes became available.

32 PARENT AND ULTIMATE HOLDING COMPANY

The directors of the Company consider its parent and ultimate holding company to be Huaneng Group, which is a state-owned enterprise established in the PRC. Huaneng Group does not produce financial statement available for public use.

33 THE COMPANY’S BALANCE SHEET

The balance sheet of the Company as at December 31, 2010 was as follows:

At December 31, 2010 RMB’000 Non-current assets Property, plant and equipment ...... 208,477 Investment in subsidiaries ...... 5,089,284 Loans and advances to subsidiaries ...... 8,534,026 Other non-current assets ...... 133,949 Total non-current assets ...... 13,965,736 Current assets Loans and advances to subsidiaries ...... 3,984,844 Trade debtors and bills receivable ...... 10,149 Prepayments and other current assets ...... 15,125 Restricted deposits ...... 842 Cash at bank and on hand ...... 325,224 Total current assets ...... 4,336,184 Current liabilities Borrowings ...... 3,834,264 Obligations under finance leases ...... 157,688 Other payables ...... 91,364 Tax payable ...... 3,418 Total current liabilities ...... 4,086,734 Net current assets ...... 249,450 Total assets less current liabilities ...... 14,215,186

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At December 31, 2010 RMB’000 Non-current liabilities Borrowings ...... 8,745,242 Obligations under finance lease ...... 954,111 Deferred income ...... 15,750 Total non-current liabilities ...... 9,715,103 NET ASSETS ...... 4,500,083 CAPITAL AND RESERVES Share capital ...... 5,800,000 Reserves ...... (1,299,917) TOTAL EQUITY ...... 4,500,083

Pursuant to the Approval of Establishing Huaneng Renewables Corporation Limited, issued by SASAC, the Company was established as a joint stock company on 5 August 2010. Upon establishment, the Company had a total of 5,800 million issued ordinary shares, with a par value of RMB1.00 each. The Company issued to Huaneng Group 5,510 million shares, or 95% of the total issued shares, in exchange for (a) all the assets and liabilities of HNEIC; and (b) cash of RMB1,882,396,455. The Company also issued 290 million shares, or 5% of the total issued shares, to Huaneng Capital, a wholly owned subsidiary of Huaneng Group, in exchange for cash of RMB290 million.

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34 POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE YEAR ENDED DECEMBER 31, 2010

Up to the date of this report, the IASB has issued a number of amendments and Interpretations and one new standard which are not yet effective for the year ended December 31, 2010 and which have not been adopted in preparing the Financial Information. These include the following which may be relevant to the Group.

Effective for accounting periods beginning on or after Amendment to IAS 32, Financial instruments: Presentation — Classification of rights issues February 1, 2010 Amendment to IFRS 1, First-time adoption of International Financial Reporting Standards — Limited exemption from comparative IFRS 7 disclosures for first- time adopters July 1, 2010 IFRIC 19, Extinguishing financial liabilities with equity instruments July 1, 2010 Improvements to IFRSs 2010 July 1, 2010 or January 1, 2011 Amendment to IFRIC 14, Prepayments of a minimum funding requirement January 1, 2011 IAS 24 (revised), Related party disclosures January 1, 2011 Amendment to IFRS 7, Financial instruments: Disclosures — Transfers of financial assets July 1, 2011 Amendments to IAS 12, income taxes January 1, 2012 IFRS 9, Financial instruments January 1, 2013 IFRS 10, Consolidated financial statements January 1, 2013 IFRS 11, Joint arrangements January 1, 2013 IFRS 12, Disclosure of interests in other entities January 1, 2013 IFRS 13, Fair value measurement January 1, 2013 IAS 27, Separate financial statements (2011) January 1, 2013 IAS 28, Investments in associates and joint ventures (2011) January 1, 2013

The Group is in the process of making an assessment of what the impact of these amendments, new standard and new interpretations is expected to be in the period of initial application. So far the Group believes that the adoption of these new IFRSs is unlikely to have a significant impact on the Group’s results of operations and financial position.

D SUBSEQUENT EVENTS

There were no material subsequent events subsequent to December 31, 2010.

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E SUBSEQUENT FINANCIAL INFORMATION

No audited financial statements have been prepared by the Group in respect of any period subsequent to December 31, 2010.

Yours faithfully

Certified Public Accountants Hong Kong

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The forecast of the consolidated profit attributable to equity holders of the Company for the year ending December 31, 2011 is set out in the “Financial Information — Profit Forecast” in this document.

(A) BASES AND ASSUMPTIONS

The forecast of the consolidated profit attributable to equity holders of the Company for the year ending December 31, 2011 has been prepared by the Directors on the basis of the accounting policies consistent in all material respects with those currently adopted by the Group as summarized in Appendix I to this document and has been prepared on the following principal bases and assumptions:

1. There will be no material changes in the existing government policies or political, legal, fiscal market or economic conditions in the PRC.

2. There will be no material changes in legislation and regulations governing the renewable energy industry in the PRC that will materially affect the business operation of the Group.

3. There will be no material changes in the inflation rate or foreign currency exchange rate of RMB against U.S. Dollars and Euro compared to December 31, 2010. There will be an increase in the interest rate set by the PBOC of 50 basis points since July 1, 2011 subsequent to each adjustment upwards of 25 basis points since February 9, 2011 and April 6, 2011 respectively.

4. There will be no material changes in the bases or rates of taxation or duties in the PRC.

5. The Group’s production and operation will not be significantly affected by interruptions of the supplies of raw materials and wind turbines, labor disputes, technical barrier and any other reasons that are beyond the control of the Directors.

6. There will be no material changes in technology, industry, safety standards, and environmental protection regulations in connection with the generation and sales of electricity that would have a significant negative impact on the Group’s operation in the PRC.

7. There will be no abnormal climatic conditions, particularly wind conditions which will reduce our planned electricity production of the wind farms.

8. The Directors expect that the Group will obtain approval for all applicable preferential tax treatment and exemptions in a timely manner and will obtain all the approvals from government for the new projects before commencement of construction.

9. The Directors believe that the Group is able to develop and complete the construction of new wind farms on schedule. The Directors estimate that all necessary approvals and electricity transmission and dispatch services will be obtained in a timely manner so that the wind farms will be able to sell the electricity to local grid companies upon completion of constructions.

10. The Group’s operations and financial performance will not be materially and adversely impacted by any of the risk factors set out in the section headed “Risk Factors” in this document.

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The following is the text of a letter, summary of values and valuation certificates, prepared for the purpose of incorporation in this document received from Jones Lang LaSalle Sallmanns Limited, an independent valuer, in connection with its valuation as at 28 February 2011 of the property interests of the Group.

Jones Lang LaSalle Sallmanns Limited 6/F Three Pacific Place 1 Queen’s Road East Hong Kong tel +852 2169 6000 fax +852 2169 6001 Licence No: C-030171

The Board of Directors Huaneng Renewables Corporation Limited 10-11th Floor No. 23A Fuxing Road Haidian District, Beijing, the PRC

Dear Sirs,

In accordance with your instructions to value the properties in which Huaneng Renewables Corporation Limited (the “Company”) and its subsidiaries (hereinafter together referred to as the “Group”) have interests in the People’s Republic of China (the “PRC”), we confirm that we have carried out inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the capital values of the property interests as at 28 February 2011 (the “date of valuation”).

Our valuation of the property interests represents the market value which we would define as “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.

The concept of freehold and leasehold land does not exist in the PRC. Private land ownership in the PRC was abolished in the collectivization movement during the 1950’s. Since then, the only form of ownership in land has been “socialist public ownership” of which there are two generic types: state-owned and collectively owned. Land was “allocated” free of charge by the state to the designated users (commonly state-owned enterprises) for an indefinite period. The users in return could not in any way transfer the land to other parties. Normally, when dealing with the valuation of such land, we will deem it to have “no commercial value”.

In January 1995, the “PRC, Administration of Urban Real Property Law” came into effect, reinforcing previous legislation and establishing land as a commodity. By possessing, “land use rights” users, including state-owned enterprises, could assign lease or mortgage land. Normally, to obtain such land use rights, a premium had to be paid whereupon the “allocated” land could be reclassified as “granted land”. The land is granted by the state and the premium is based upon the standard land prices (which are periodically reviewed) set by the Land Administration Bureau. Such land can be valued by reference to the standard land prices in each locality and prices paid in the market for it.

We have valued the property interests of property nos. 6, 9, 11, 12, 19, 31, 33, 35, 39 and 40 of Group I which are held and occupied by the Group by the direct comparison approach assuming sale of the property interests in their existing state with the benefit of immediate vacant possession and by making reference to comparable sales transaction as available in the relevant market.

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Where, due to the nature of the buildings and structures of the remaining properties in Group I and the particular locations in which they are situated, there are unlikely to be relevant market comparable sales available, the relevant property interests of Group I have been valued on the basis of their depreciated replacement cost.

Depreciated replacement cost is defined as “the current cost of replacing an asset with its modern equivalent asset less deductions for physical deterioration and all relevant forms of obsolescence and optimization”. It is based on an estimate of the market value for the existing use of the land, plus the current cost of replacement (reproduction) of the improvements, less deductions for physical deterioration and all relevant forms of obsolescence and optimization. The depreciated replacement cost of the property interest is subject to adequate potential profitability of the concerned business.

In valuing the property interests in Group II which are currently under development, we have assumed that they will be developed and completed in accordance with the latest development proposal provided to us by the Group. In arriving at our opinion of value, we have also taken into account the construction cost and professional fees relevant to the stage of construction as at the date of valuation and the remainder of the cost and fees to be expended to complete the development.

We have attributed no commercial value to the property interests in Group III which are leased by the Group in the PRC due either to the short-term nature of the lease or the prohibition against assignment or sub-letting or otherwise due to the lack of substantial profit rent.

Our valuation has been made on the assumption that the seller sells the property interests in the market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which could serve to affect the values of the property interests.

No allowance has been made in our report for any charge, mortgage or amount owing on any of the property interests valued nor for any expense or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of an onerous nature, which could affect their values.

In valuing the property interests, we have complied with all requirements contained in the RICS Valuation Standards (6th Edition) published by the Royal Institution of Chartered Surveyors; the HKIS Valuation Standards on Properties published by the Hong Kong Institute of Surveyors; and the International Valuation Standards published by the International Valuation Standards Council.

As the Group is in compliance with section 6 of Companies Ordinance (Exemption of Companies and Prospectuses from Compliance with Provisions) Notice, the full details of the individual leased properties under operating lease have been excluded from the valuation certificates in our valuation report to this document, of which a summary is included in the Summary of Values and the certificate for leased properties.

We have relied to a very considerable extent on the information given by the Group and have accepted advice given to us on such matters as tenure, planning approvals, statutory notices, easements, particulars of occupancy, lettings, and all other relevant matters.

We have been shown copies of various title documents including State-owned Land Use Rights Certificates, Building Ownership Certificates, Real Estate Title Certificates and official plans relating to the property interests and have made relevant enquiries. Where possible, we have examined the original documents

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We have not carried out detailed measurements to verify the correctness of the areas in respect of the properties but have assumed that the areas shown on the title documents and official site plans handed to us are correct. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations. No on-site measurement has been taken.

We have inspected the exterior and, where possible, the interior of the properties. However, we have not carried out investigation to determine the suitability of the ground conditions and services for any development thereon. Our valuation has been prepared on the assumption that these aspects are satisfactory and that no unexpected cost and delay will be incurred during construction. Moreover, no structural survey has been made, but in the course of our inspection, we did not note any serious defect. We are not, however, able to report whether the properties are free of rot, infestation or any other structural defect. No tests were carried out on any of the services.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Group. We have also sought confirmation from the Group that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to reach an informed view, and we have no reason to suspect that any material information has been withheld.

Unless otherwise stated, all monetary figures stated in this report are in Renminbi (RMB).

Our valuation is summarized below and the valuation certificates are attached.

Yours faithfully, for and on behalf of Jones Lang LaSalle Sallmanns Limited

Paul L. Brown Sam B. Q. Zhu B.Sc. FRICS FHKIS MRICS Chief Valuation Adviser Director

Notes:

(1) Paul L. Brown is a Chartered Surveyor who has 28 years’ experience in the valuation of properties in the PRC and 31 years of property valuation experience in Hong Kong, the United Kingdom and the Asia-Pacific region.

(2) Sam B. Q. Zhu is a Chartered Surveyor who has 13 years’ experience in the valuation of properties in the PRC.

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SUMMARY OF VALUES

Group I — Property interests held and occupied by the Group in the PRC

Capital value Capital value in Interest attributable to the existing state as at attributable Group as at No. Property 28 February 2011 to the Group 28 February 2011 RMB RMB

1. 122 parcels of land, various buildings and No commercial 100% No commercial structures of Baolongshan Wind Farm Phases I value value to III located in Baolongshan Town, Tongliao City, Inner Mongolia Autonomous Region The PRC

2. 384 parcels of land, various buildings and No commercial 100% No commercial structures of Zhurihe Wind Farm Phases I to III, value value Dongbaiyin Wind Farm, Xibaiyin Wind Farm, Haorigetu Wind Farm and Dagula Wind Farm located in Zhurihe Pasture, Tongliao City Inner Mongolia Autonomous Region The PRC

3. 68 parcels of land, various buildings and No commercial 100% No commercial structures of Kailujianhua Wind Farm value value located in Jianhua Town Kailu City Inner Mongolia Autonomous Region The PRC

4. 101 parcels of land, various buildings and No commercial 100% No commercial structures of Nugusitai Wind Farm and value value Halunhuduga Wind Farm located in Jianhua Town Kailu City Inner Mongolia Autonomous Region The PRC

5. 68 parcels of land, various buildings and 12,629,000 100% 12,629,000 structures of Maoming Wind Farm Phases I to II located in Xilachaolugacha Ming’an Town Damao Qi, Baotou City Inner Mongolia Autonomous Region The PRC

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Capital value Capital value in Interest attributable to the existing state as at attributable Group as at No. Property 28 February 2011 to the Group 28 February 2011 RMB RMB

6. 3 units on Level 23 and 5 underground car No commercial 100% No commercial parking spaces, Dongyuan International Plaza value value No. 60 Gangtie Avenue, Baotou City Inner Mongolia Autonomous Region The PRC

7. 67 parcels of land, various buildings and No commercial 51% No commercial structures of Xiaoliang Wind Farm and Daliang value value Wind Farm located in Zhangzisong Forestry Area, Hailaer District, Hulunbuir City Inner Mongolia Autonomous Region The PRC

8. 71 parcels of land, various buildings and 32,875,000 100% 32,875,000 structures of Lihanliang Wind Farm Phases I and II, Heishatu Wind Farm and Shilatu Wind Farm located in Xiwulanbulang Town Wuchuan County Inner Mongolia Autonomous Region The PRC

9. The 11th floor of an office building and 6 11,336,000 100% 11,336,000 underground car parking spaces located at Erduosi Street, Saihan District, Huhhot City Inner Mongolia Autonomous Region The PRC

10. 137 parcels of land, various buildings and 32,453,000 100% 32,453,000 structures of Gaoliban Wind Farm Baiyinnula Wind Farm, Denggao Wind Farm and Haoli Wind Farm located in Gaoliban Town and Bayannao’er Town Keyouzhongqi Inner Mongolia Autonomous Region The PRC

11. 5 units on Level 5 of an office building 4,367,000 100% 4,367,000 No. 1999 Dongnanhu Road, Nanguan District, Changchun City, Jilin Province The PRC

12. 16 units and 2 car parking spaces of Changxin 12,081,000 100% 12,081,000 Plaza Tower F No. 322 Qingnian Avenue, Shenyang City Liaoning Province The PRC

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Capital value Capital value in Interest attributable to the existing state as at attributable Group as at No. Property 28 February 2011 to the Group 28 February 2011 RMB RMB

13. 6 parcels of land, a building and various No commercial 100% No commercial structures of Fuxin Wind Farm Phase I located value value at the junction of Xinqiu District and Taiping District Fuxin County Fuxin City, Liaoning Province The PRC

14. 44 parcels of land, various buildings and No commercial 100% No commercial structures of Fuxin Fubei Wind Farm Phase II value value and Liangguan Yingzi Wind Farm located in Duli Village, Fuxingdi Town, Fumeng County, Fuxin City Liaoning Province The PRC

15. 6 parcels of land, various buildings and No commercial 100% No commercial structures of Fuxin Wind Farm Phase III located value value in Aerxiang Town, Zhangwu County, Fuxin City, Liaoning Province The PRC

16. 161 parcels of land and a building of Zhangbei No commercial 100% No commercial Wind Farm located in Aerxiang Town value value Zhangwu County Liaoning Province The PRC

17. 24 parcels of land, various buildings and 14,644,000 55% 8,054,000 structures of Weihai Wind Farm Phase I located in Haixitou Village, Weihaijing District, Weihai City, Shandong Province The PRC

18. 24 parcels of land, various buildings and 9,506,000 55% 5,228,000 structures of Weihai Wind Farm Phase II located in Gangxi Town, Rongcheng City Shandong Province The PRC

19. Unit 1301 on level 13 of a building No commercial 55% No commercial No. 111 value value Haibin North Road Huancui District Weihai City Shandong Province The PRC

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Capital value Capital value in Interest attributable to the existing state as at attributable Group as at No. Property 28 February 2011 to the Group 28 February 2011 RMB RMB 20. 34 parcels of land, various buildings and 12,492,000 55% 6,871,000 structures of Changdao Wind Farm located in Liancheng Village, Nanchangshan Town Changdao County, Yantai City Shandong Province The PRC 21. Various buildings and structures of Shouguang No commercial 55% No commercial Wind Farm Phases I to III located in Yingli value value Town, Shouguang City, Shandong Province The PRC 22. 51 parcels of land, various buildings and 25,250,000 100% 25,250,000 structures of Dongying Hekou Wind Farm Phases I to IV located in the northern side of Binhai Avenue, Hekou District, Dongying City, Shandong Province The PRC 23. A parcel of land, various buildings and No commercial 75% No commercial structures of Panjin Dawa Wind Farm value value located at the junction of Erjiegou Town and Wangjia Town, Dawa County Liaoning Province The PRC 24. 2 buildings of Binhai Wind Farm Phase I No commercial 100% No commercial located in Dajiawa Town, Binhai Development value value Zone, Weifang City Shandong Province The PRC 25. Various buildings and structures of Changyi No commercial 100% No commercial Wind Farm Phases I and II located in Xiaying value value Town, Changyi City Shandong Province The PRC 26. 34 parcels of land, various buildings and 14,122,000 100% 14,122,000 structures of Yudaokou Muchang Wind Farm Phase I located in Yudaokou Pasture, Weichang County, Chengde City Hebei Province The PRC 27. Various buildings and structures of Laoting No commercial 55% No commercial Wind Farm located in Erjie Village value value Jianggezhuang Town, Laoting County Tangshan City, Hebei Province The PRC

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Capital value Capital value in Interest attributable to the existing state as at attributable Group as at No. Property 28 February 2011 to the Group 28 February 2011 RMB RMB

28. 107 parcels of land, various buildings and No commercial 55% No commercial structures of Dali Dafengba Wind Farm located value value in Zhemo Mountain Yongjian Town, Weishan County Dali City, Yunnan Province The PRC

29. 64 parcels of land, various buildings and No commercial 100% No commercial structures of Eryuan Ma’anshan Wind Farm value value Phases I to III located in Jiaoshi Village, Yousuo Town and Xiyi Town, Eryuan County and Heqing County, Dali City Yunnan Province The PRC

30. 3 parcels of land, a building and various 24,234,000 52% 12,602,000 structures of Niutouling Wind Farm Phase I located in Bainiudajian Mountain, Nan’ao County, Shantou City, Guangdong Province The PRC

31. Units 501 and 502 on Level 5 of Zhongyuan 1,289,000 52% 670,000 Plaza, No. 91 Changping Road, Jinping District, Shantou City Guangdong Province The PRC

32. 27 parcels of land, various buildings and 95,294,000 50% 47,647,000 structures of Qing’ao Wind Farm Phase II and Niutouling Wind Farm Phase II located in Dongbandaoxiong Town, Shantou City Guangdong Province The PRC

33. 10 units on Level 10 of Junyue Huating 5,537,000 50% 2,769,000 Building, No. 91 Changping Road, Jinping District, Shantou City, Guangdong Province The PRC

34. 105 parcels of land, various buildings and 15,414,000 100% 15,414,000 structures of Santanghu Wind Farm Phases I and II located in Santanghu Town Hamibalikun County Xinjiang Uygur Autonomous Region The PRC

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Capital value Capital value in Interest attributable to the existing state as at attributable Group as at No. Property 28 February 2011 to the Group 28 February 2011 RMB RMB

35. 2 units on Level 5 Shuiqingmuhua Court No. 66 9,689,000 100% 9,689,000 Nanhu South Road, Urumqi City Xinjiang Uygur Autonomous Region The PRC

36. A parcel of land, various buildings and No commercial 100% No commercial structures of Dongmafang Wind Farm Phases I value value and II located in Huishungou Village, Dongmafang Town Ningwu County Xinzhou City Shanxi Province The PRC

37. 11 parcels of land, various buildings and No commercial 100% No commercial structures of Chongming Qianwei Wind Farm value value located in Huangguasha, Qianwei Village Shuxin Town Chongming County Shanghai The PRC

38. A parcel of land, various buildings and No commercial 100% No commercial structures of Hezhang Jiucaiping Wind Farm value value Phase I located in Hetao Village, Guangming Village and Zhushi Village Hezhang County Guizhou Province The PRC

39. 28 units on Levels 19, 20 and 23 of Block 4 of No commercial 100% No commercial International Metropolis Center No. 200 value value Nanzhonghuan Street Gaoxin District, Taiyuan City Shanxi Province The PRC

40. Unit 202 11,571,000 100% 11,571,000 Changxin Plaza Tower F No. 320 Qingnian Avenue Shenyang City Liaoning Province The PRC

Sub-total: 344,783,000 265,628,000

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Group II — Property interests held under development by the Group in the PRC Capital value Capital value in Interest attributable to the existing state as at attributable Group as at No. Property 28 February 2011 to the Group 28 February 2011 RMB RMB 41. A parcel of land and a building under 6,133,000 100% 6,133,000 construction located to the northern side of Qingling Avenue and the western side of Jianhua Road Xincheng District Tongliao City Inner Mongolia Autonomous Region The PRC 42. 34 parcels of land, together with various No commercial 100% No commercial buildings and structures under construction value value of Fuxin Zhalanshan Wind Farm located in Yushi Town Fumeng County Liaoning Province The PRC 43. 24 parcels of land, together with various 2,881,000 100% 2,881,000 buildings and structures under construction of Ningjin Chudao Wind Farm located in Ningjing Street, Rongcheng City Shandong Province The PRC 44. 34 parcels of land, together with various No commercial 51% No commercial buildings and structures under construction value value of Donghuqu Wind Farm located in Donghu District Manzhouli City Inner Mongolia Autonomous Region The PRC 45. 12 parcels of land, together with various No commercial 51% No commercial buildings under construction of Yiminsumu value value Wind Farm and Huihe Wind Farm located in Erwenkeqi Yiminhe Town Hulunbuir City Inner Mongolia Autonomous Region The PRC 46. A parcel of land, together with various No commercial 51% No commercial buildings and structures under construction value value of Xinba’erhu Wind Farm located in Amugulang Town Xinba’erhuzuoqi Hulunbuir City Inner Mongolia Autonomous Region The PRC

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Capital value Capital value in Interest attributable to the existing state as at attributable Group as at No. Property 28 February 2011 to the Group 28 February 2011 RMB RMB

47. 34 parcels of land, together with various No commercial 100% No commercial buildings and structures under construction value value of Duanjiabao Wind Farm located in Duanjiabao Village and Tapoquan Village, Yuanping City Shanxi Province The PRC

48. 34 parcels of land, together with various No commercial 100% No commercial buildings and structures under construction value value of Wujiashan Wind Farm located in Jiajiatun Village and Wujiashan Village, Tianzhen County Shanxi Province The PRC

49. 34 parcels of land, together with various No commercial 100% No commercial buildings and structures under construction value value of Heijiazhuang Wind Farm located in Dachongling Village and Nanbaozi Village Pianguan County Xinzhou City Shanxi Province The PRC

Sub-total: 9,014,000 9,014,000

Group III — Property interests leased and occupied by the Group in the PRC

Capital value in existing state as at No. Property 28 February 2011 RMB

50. 43 leased properties located in the PRC No commercial value

Sub-total: Nil

Capital value Capital value in attributable to the existing state as at Group as at 28 February 2011 28 February 2011 RMB RMB

Grand total: 353,797,000 274,642,000

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VALUATION CERTIFICATE

Group I — Property interests held and occupied by the Group in the PRC

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

1. 122 parcels of land The property comprises 122 parcels of land with a The property is currently No commercial various buildings and total site area of approximately 306,070 sq.m., occupied by the Group for value structures of 4 buildings and various structures erected thereon, production and ancillary Baolongshan Wind which were completed in 2008 and 2009. purposes. Farm Phases I to IV located in The buildings have a total gross floor area of Baolongshan Town approximately 3,972.8 sq.m. Tongliao City Inner Mongolia The buildings and structures mainly include an Autonomous Region integrated control building, a warehouse and The PRC 2 ancillary buildings, walls and roads.

The land use rights of 103 parcels of land with a total site area of approximately 238,278 sq.m. of the property have been allocated to Huaneng Tongliao Wind Power Co., Ltd. for industrial, wind power supporting facilities and transportation uses.

Notes:

1. Huaneng Tongliao Wind Power Co., Ltd. (“HN Tongliao”) is a wholly-owned subsidiary of the Company.

2. Pursuant to 103 State-owned Land Use Rights Certificates — Zuo Guo Yong (2010) Zi Di Nos. 40520100080-01 to 40520100080-35, 405201000087-1 to 405201000087-34, 614201024088-1 to 614201024088-24, 405201003088-25, 614201024088-26 to 614201024088-33 and 405201000088-34, the land use rights of 103 parcels of land with a total site area of approximately 238,278 sq.m. have been allocated to HN Tongliao for industrial, wind power supporting facilities and transportation uses, which have been approved by the relevant government authority to be used by the Group as allocated land (the “allocated land”).

3. Pursuant to a Building Ownership Certificate — Bao Cheng Fang Quan Zheng 2010 Zi Di No. 07401, 4 buildings with a total gross floor area of approximately 3,972.8 sq.m., which are erected on the allocated land, are owned by HN Tongliao.

4. Pursuant to a conditional document — Nei Fa Gai Neng Yuan Zi 2008 No. 221 issued by the local government authority, HN Tongliao has obtained the rights to operate the Baolongshan Wind Farm Phase I for a concession term of 25 years.

5. For the remaining 19 parcels of land with a total site area of approximately 67,792 sq.m. erected with wind turbine foundations which are excluded from our valuation. As advised by the Group, HN Tongliao is in process of applying for the relevant title certificates.

6. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assistant the Group in applying for the relevant land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates.

7. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following:

a. For the land use rights of the allocated land, the Group has obtained legal title certificates and is entitled to occupy and use the relevant land use rights in terms of the prescribed use stated in the land use rights certificates;

b. For the buildings of the property, the Group has obtained a legal title certificate and has the rights to use and occupy the buildings in accordance with the prescribed use stated in the building ownership certificate, but could transfer, donate, lease, mortgage or otherwise dispose of them after the land premium has been fully paid and relevant granted land title certificates are obtained;

c. For the remaining 19 parcels of land mentioned in note 5, as per the written confirmation for the project issued by the local government or relevant authority on the county level or above, the Group will not be subject to any penalty or

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sanction for the construction of the wind turbine foundation. There will be no legal impediment to obtained relevant title certificates after relevant procedures of the land granting or allocating have been finished;

d. The property is not subject to any mortgage or other encumbrances; and

e. The undertaking of China Huaneng Group is legal, valid and enforceable.

8. In valuing the property, we have attributed no commercial value to the property based on the above legal opinion. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the buildings and structures (excluding the land element) would be in the sum of RMB25,747,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

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VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

2. 384 parcels of land The property comprises 384 parcels of land with a The property is currently No commercial various buildings and total site area of approximately 726,890 sq.m., 10 occupied by the Group for value structures of Zhurihe buildings and various structures erected thereon, production and ancillary Wind Farm Phases I to which were completed between 2008 and 2010. purposes. III, Donybaiyin Wind Farm, Xibaiyin Wind The buildings have a total gross floor area of Farm, Haorigetu Wind approximately 4,075.21 sq.m. Farm and Dagula Wind Farm The buildings and structures mainly include located in Zhurihe 2 integrated control buildings, 3 distribution Pasture buildings, 2 residential buildings, 3 ancillary Tongliao City buildings, walls, basketball ground and roads. Inner Mongolia Autonomous Region The land use rights of 162 parcels of land with a The PRC total site area of approximately 416,858 sq.m. of the property have been allocated to Huaneng Tongliao Wind Power Co., Ltd. for industrial and transportation uses.

Notes: 1. Huaneng Tongliao Wind Power Co., Ltd. (“HN Tongliao”) is a wholly-owned subsidiary of the Company. 2. Pursuant to 162 State-owned Land Use Rights Certificates — Zuo Guo Yong (2010) Zi Di Nos. 953210000084-01 to 95321000084-34, 953201000089-1 to 953201000089-35, 9532010000085-01 to 9532010000085-25, 953201014096-01 to 953201014096-34 and 953201008097-1 to 953201008097-34, the land use rights of 162 parcels of land with a total site area of approximately 416,858 sq.m. have been allocated to HN Tongliao for industrial and transportation uses, which have been approved by the relevant government authority to be used by the Group as allocated land (the “allocated land”). 3. For the remaining 222 parcels of land with a total site area of approximately 310,032 sq.m. erected with wind turbine foundations which are excluded from our valuation. As advised by the Group, HN Tongliao is in process of applying for relevant title certificates. 4. Pursuant to 2 Building Ownership Certificates — 039-000401 Fang Quan Zheng Zuo Cheng Zi Di No. 039-000401 and Fang Quan Zheng Zuo Cheng Zi Di No. 039-000439, 10 buildings with a total gross floor area of approximately 4,075.21 sq.m., which are erected on the allocated land, are owned by HN Tongliao. 5. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for relevant land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. 6. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the land use rights of the allocated land, the Group has obtained legal title certificates and is entitled to occupy and use the relevant land use rights in terms of the prescribed use stated in the land use rights certificates; b. For the buildings of the property, the Group has obtained legal title certificates and has the rights to use and occupy the buildings in accordance with the prescribed use stated in the building ownership certificates, but could transfer, donate, lease, mortgage or otherwise dispose of them after the land premium has been fully paid and relevant granted land title certificates are obtained; c. For the remaining 222 parcels of land mentioned in note 3, as per the written confirmation issued by the local government or relevant authority on the county level or above with regard to the land and project, the Group will not be subject to any penalty or sanction for the construction of the wind turbines foundations. There will be no legal impediment to obtain relevant title certificates after relevant procedures of land granting or allocating have been finished; d. The property is not subject to any mortgage or other encumbrances; and e. The undertaking of China Huaneng Group is legal, valid and enforceable.

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7. In valuing the property, we have attributed no commercial value to the property based on the above legal opinion. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the buildings and structures (excluding the land element) would be in the sum of RMB33,619,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

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VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

3. 68 parcels of land, The property comprises 68 parcels of land with a The property is currently No commercial various buildings and total site area of approximately 165,000 sq.m., occupied by the Group for value structures of 4 buildings and various structures erected thereon production and ancillary Kailujianhua Wind Farm which were completed in 2010. purposes. located in Jianhua Town The buildings have a gross floor area of Kailu City approximately 1,573.32 sq.m. Inner Mongolia Autonomous Region The buildings and structure mainly include an The PRC integrated control building, residential building, a switch building, an ancillary building and roads.

Notes:

1. Huaneng Tongliao Wind Power Co., Ltd. (“HN Tongliao”) is a wholly-owned subsidiary of the Company. 2. On the land of the property, there are also wind turbine foundations which are excluded from our valuation. As advised by the Group, HN Tongliao is in process of applying for relevant title certificates of the property. 3. For the buildings with a total gross floor area of approximately 1,573.32 sq.m., as advised by the Group, HN Tongliao is in process of applying for the building ownership certificates.

4. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for building ownership certificate and land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. 5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the property, China Huaneng Group has made undertaking stated in note 4. There is no significant dispute over the ownership which will affect the major business of the Group. Therefore, there will be no significant adverse effect on listing and operation of the Group; b. The property is not subject to any mortgage or other encumbrances; and c. The undertaking of China Huaneng Group is legal, valid and enforceable. 6. In valuing the property, we have attributed no commercial value to the property without any title certificates. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the buildings and structures (excluding the land element) would be in the sum of RMB22,166,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

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VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

4. 101 parcels of land, The property comprises 101 parcel of land with a The property is currently No commercial various buildings and total site area of approximately 289,200 sq.m., occupied by the Group for value structures of Nugusitai 6 buildings and various structures erected thereon production and ancillary Wind Farm and which were completed in 2010. purposes. Halunhuduga Wind Farm The buildings have a gross floor area of located in approximately 3,271.62 sq.m. Jianhua Town Kailu City The buildings and structure mainly include an Inner Mongolia integrated control building, residential building, a Autonomous Region switch building, 2 ancillary buildings, a pump The PRC room and roads.

Notes:

1. Huaneng Tongliao Wind Power Co., Ltd. (“HN Tongliao”) is a wholly-owned subsidiary of the Company. 2. On the land of the property, there are also wind turbine foundations which are excluded from our valuation. As advised by the Group, HN Tongliao is in process of applying for relevant title certificates of the property. 3. For the buildings with a total gross floor area of approximately 3,271.62 sq.m., as advised by the Group, HN Tongliao is in process of applying for the building ownership certificates.

4. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for building ownership certificate and land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. 5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the property, China Huaneng Group has made undertaking stated in note 4. There is no significant dispute over the ownership which will affect the major business of the Group. There will be no significant adverse effect on listing and operation of the Group; b. The property is not subject to any mortgage or other encumbrances; and c. The undertaking of China Huaneng Group is legal, valid and enforceable. 6. In valuing the property, we have attributed no commercial value to the property without any title certificates. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the buildings and structures (excluding the land element) would be in the sum of RMB15,406,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

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VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

5. 68 parcels of land, The property comprises 68 parcels of land with a The property is currently 12,629,000 various buildings and total site area of approximately 33,699.9 sq.m., occupied by the Group for structures of Maoming 6 buildings and various structures erected thereon, production and ancillary 100% interest Wind Farm which were completed in 2009 and 2010. purposes. attributable to Phases I to II the Group: located in The buildings have a total gross floor area of RMB12,629,000 Xilachaolugacha approximately 3,129.16 sq.m. Ming’an Town Damao Qi The buildings and structures mainly include a Baotou City service building, a distribution building, 3 ancillary Inner Mongolia buildings, a warehouse, walls, wells and roads. Autonomous Region The PRC The land use rights of 34 parcels of land with a total site area of approximately 23,161.65 sq.m. of the property have been granted to Huaneng Baotou Wind Power Co., Ltd. for terms of 50 years expiring on 10 November 2059 for industrial use.

Notes: 1. Huaneng Baotou Wind Power Co., Ltd. (“HN Baotou”) is a wholly-owned subsidiary of the Company. 2. Pursuant to a State-owned Land Use Rights Grant Contract — numbered (Meng) 0008911 dated 25 August 2009, the land use rights of the property were contracted to be granted to HN Baotou for a term of 50 years expiring on 24 August 2059 for industrial use. The land premium was RMB2,408,848. 3. Pursuant to 34 State-owned Land Use Rights Certificates — Da Guo You 2010 Di Nos. 10640 to 10673, the land use rights of 34 parcels of land with a total site area of approximately 23,161.65 sq.m. have been granted to HN Baotou for terms of 50 years expiring on 10 November 2059 for industrial use. 4. For the remaining 34 parcels of land with a total site area of approximately 10,538.25 sq.m. erected with wind turbine foundations which are excluded from our valuation. As advised by the Group, HN Baotou is in process of applying for relevant title certificates. 5. Pursuant to a Building Ownership Certificate — Fang Quan Zheng Meng Zi Di No. 188011000161, 6 buildings with a total gross floor area of approximately 3,129.16 sq.m. are owned by HN Baotou. 6. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assistant the Group in applying for the relevant land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. 7. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. The Group has obtained legal title certificates for the land of the property and is entitled to occupy, use, donate, transfer, lease, mortgage or otherwise dispose of the land use rights in terms of the prescribed use terms stated in the land use rights certificates; b. The Group has obtained a legal title certificate for the buildings of the property and has the rights to occupy and use the buildings in accordance with the prescribed use stated in the building ownership certificate as well as to donate, transfer, lease, mortgage or otherwise dispose of them; c. For the remaining 34 parcels of land mentioned in note 4, upon obtaining the written confirmation for the project issued by the local government or relevant authority on the county level or above, the Group will not be subject to any penalty or sanction for the construction of the wind turbine foundation. There will be no legal impediment to obtained relevant title certificates after relevant procedures of the land granting or allocating have been finished; d. The property is not subject to any mortgage or other encumbrances; and e. The undertaking of China Huaneng Group is legal, valid and enforceable. 8. In valuing the property, we have attributed no commercial value to the land mentioned in note 4 without any land use rights certificates.

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VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

6. 3 units on Level 23 and The property comprises 3 units on Level 23 and 5 The property is currently No commercial 5 underground car underground car parking spaces of a 32-storey occupied by the Group for value parking spaces office building completed in 2008. office purpose. Dongyuan International Plaza The 3 units and 5 underground car parking spaces No. 60 Gangtie Avenue have a total gross floor area of approximately Baotou City 1,193.36 sq.m. Inner Mongolia Autonomous Region The PRC

Notes:

1. Huaneng Baotou Wind Power Co., Ltd. (“HN Baotou”) is a wholly owned subsidiary of the Company. 2. Pursuant to 3 Commodity Property Sales & Purchase Contracts — Nos. 2008-0017537 to 2008-0017539 dated 4 September 2009, 3 units with a total gross floor area of approximately 1,148.36 sq.m. of the property were contracted to be sold to HN Baotou at a total consideration of RMB6,590,309. 3. As advised by the Group, HN Baotou is in process of applying for relevant title certificates of the property.

4. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for building ownership certificates and land use rights certificates of the property and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. 5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the property, China Huaneng Group has made undertaking stated in note 4. There is no significant dispute over the ownership which will affect the major business of the Group. Therefore, there will be no significant adverse effect on listing and operation of the Group; b. The property is not subject to any mortgage or other encumbrances; and c. The undertaking of China Huaneng Group is legal, valid and enforceable. 6. In valuing the property, we have attributed no commercial value to the property with a total gross floor area of approximately 1,193.36 sq.m. for which the Group has not obtained any building ownership certificates. However, for reference purpose, we are of the opinion that the capital value of the property as at the date of valuation would be in the sum of RMB8,050,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

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VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

7. 67 parcels of land, The property comprises 67 parcels of land with a The property is currently No commercial various buildings and total site area of approximately 114,970 sq.m., occupied by the Group for value structures of Xiaoliang 5 buildings and various structures erected thereon, production and ancillary Wind Farm and Daliang which were completed in 2009. purposes. Wind Farm located in The buildings have a total gross floor area of Zhangzisong Forestry approximately 2,597.03 sq.m. Area Hailaer District Hulunbuir City The buildings and structures mainly include a Inner Mongolia distribution room, 2 equipment buildings, a switch Autonomous Region room, a warehouse, walls, gates and roads. The PRC The land use rights of 34 parcels of land with a total site area of approximately 35,800 sq.m. of the property have been allocated to Huaneng Hulunbuir Wind Power Co., Ltd. for public utility use.

Notes:

1. Huaneng Hulunbuir Wind Power Co., Ltd. (“HN Hulunbuir”) is a 51% interest owned subsidiary of the Company.

2. Pursuant to 34 State-owned Land Use Rights Certificates — Hu Hai Fen Guo Yong (2010) Zi Di Nos. 00904173-1 to 00904173-34, the land use rights of 34 parcels of land with a total site area of approximately 35,800.00 sq.m. have been allocated to HN Hulunbuir for public utility use, which have been approved by the relevant government authority to be used by the Group as allocated land (the “allocated land”).

3. Pursuant to a Building Ownership Certificate — Hu Lun Bei Er Fang Quan Zheng Hai La Er Qu Zi Di No. 10037373, 3 buildings with a total gross floor area of approximately 2,399.88 sq.m., which are erected on the allocated land, are owned by HN Hulunbuir.

4. For the remaining 33 parcels of land with a total site area of approximately 79,170 sq.m. erected with wind turbine foundations of Daliang Wind Farm which are excluded from our valuation. As advised by the Group, HN Hulunbuir is in process of applying for relevant title certificates.

5. For the remaining 2 buildings with a total gross floor area of approximately 197.5 sq.m. erected on the land mentioned in note 4, as advised by the Group, HN Hulunbuir is in process of applying for the building ownership certificates.

6. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for building ownership certificates and relevant land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates.

7. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following:

a. For the land use rights of the allocated land, the Group has obtained legal title certificates and is entitled to occupy and use the relevant land use rights in terms of the prescribed use stated in the land use rights certificates;

b. For the buildings of the property, the Group has obtained a legal title certificate and has the rights to use and occupy the buildings in accordance with the prescribed use stated in the building ownership certificates, but could transfer, donate, lease, mortgage or otherwise dispose of the buildings after the land premium has been fully paid and relevant granted land title certificates are obtained;

c. For the remaining 33 parcels of land mentioned in note 4, as per the written confirmation for the project by the local government or relevant authority on the county level or above, the Group will not be subject to any penalty or sanction for the construction of the wind turbine foundations. There will be no legal impediment to obtain relevant title certificates after the relevant procedures of land granting or allocating have been finished;

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d. For the remaining buildings mentioned in note 5, China Huaneng has made undertaking in note 6, there is no significant dispute over the ownership which will affect the major business of the Group. Therefore, there will be no significant adverse effect on listing and operation of the Group;

e. The undertaking of China Huaneng Group is legal, valid and enforceable; and

f. The property is not subject to any mortgage or other encumbrances.

8. In valuing the property, we have attributed no commercial value to the property based on the above legal opinion. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the buildings and structures (excluding the land element) would be in the sum of RMB35,635,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

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VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

8. 71 parcels of land The property comprises 71 parcels of land The property is currently 32,875,000 various buildings and with a total site area of approximately occupied by the Group for structures of Lihanliang 85,901.5 sq.m., 6 buildings and various structures production and ancillary 100% interest Wind Farm Phases I erected thereon, which were completed in 2009. purposes. attributable to and II, Heishatu Wind the Group: Farm and Shilatu Wind The buildings have a total gross floor area of RMB 32,875,000 Farm located in approximately 3,752.7 sq.m. Xiwulanbulang Town Wuchuan County The buildings and structures mainly include Inner Mongolia 2 warehouses, a switch room, 3 ancillary buildings Autonomous Region and roads. The PRC

The land use rights of 69 parcels of land with a total site area of approximately 52,633.5 sq.m. of the property have been granted to Huaneng Huhhot Wind Power Co., Ltd. for terms of 50 years expiring on 12 March and 25 July 2060 for industrial use.

Notes:

1. Huaneng Huhhot Wind Power Co., Ltd. (“HN Huhhot”) is a wholly-owned subsidiary of the Company. 2. Pursuant to 69 State-owned Land Use Rights Certificates — Wu Guo Yong (2010) Zi Di Nos. 00050 to 00083, 00209 to 00242 and 0108, the land use rights of 69 parcels of land with a total site area of approximately 52,633.5 sq.m. have been granted to HN Huhhot for terms of 50 years expiring on 12 March and 25 July 2060 for industrial use (the “granted land”). 3. For the remaining 2 parcels of land with a total site area of approximately 33,268.00 sq.m. erected with wind turbine foundations which are excluded from our valuation. As advised by the Group, HN Huhhot is in process of applying for relevant title certificates. 4. Pursuant to a Building Ownership Certificate — Nei Fang Quan Zheng Wu Zi Di No. 15529, 6 buildings with a total gross floor area of approximately 3,752.7 sq.m. are owned by HN Huhhot.

5. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for relevant land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. 6. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. The Group has obtained legal title certificates for the granted land of the property and is entitled to occupy, use, donate, transfer, lease, mortgage or otherwise dispose of the land use rights in terms of the prescribed use terms stated in the land use rights certificates; b. The Group has obtained a legal title certificate for the buildings of the property and has the rights to use and occupy the buildings in accordance with the prescribed use stated in the building ownership certificate as well as to donate, transfer, lease, mortgage or otherwise dispose of them; c. For the remaining 2 parcels of land mentioned in note 3, as per the written confirmation issued by the local government or relevant authority on the county level or above with regard to the land used for the project, the Group will not be subject to any penalty or sanction for the construction of wind turbine foundations. There will be no legal impediment to obtain relevant title certificates after the relevant procedures of land granting or allocating have been finished; d. The property is not subject to any mortgage or other encumbrances; and

e. The undertaking of China Huaneng Group is legal, valid and enforceable.

7. In valuing the property, we have attributed no commercial value to the land mentioned in note 3 without any land use rights certificates.

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VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

9. The 11th floor of an The property comprises the whole 11th floor of an The property is currently 11,336,000 office building and office building and 6 car parking spaces which occupied by the Group for 6 underground car were completed in 2009. office purpose. 100% interest parking spaces attributable to located at The 11th floor and 6 underground car parking the Group: Erduosi Street spaces have a total gross floor area of RMB11,336,000 Saihan District approximately 1,795.63 sq.m., including the office Huhhot City units with a total gross floor area of approximately Inner Mongolia 1,717.63 sq.m. Autonomous Region The PRC

Notes:

1. Huaneng Huhhot Wind Power Co., Ltd. (“HN Huhhot”) is a wholly-owned subsidiary of the Company. 2. Pursuant to a Building Ownership Certificate — Hu Fang Quan Zheng Sai Han Qu Zi Di No. 2010142298, the 11th floor of an office building with a total gross floor area of approximately 1,717.63 sq.m. is owned by HN Huhhot. 3. As advised by the Group, HN Huhhot is in process of applying for relevant title certificates of the 6 underground car parking spaces.

4. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for building ownership certificates and land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. 5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. The building ownership certificate of the 11th floor of the property has been obtained by the Group and the Group has the rights to occupy and use it in accordance with the prescribed used stated in the building ownership certificate as well as to donate, transfer, lease, mortgage or otherwise dispose of it; b. For the remaining 6 car parking spaces, China Huaneng Group has made undertaking stated in note 4. There is no significant dispute over the ownership which will affect the major business of the Group. Therefore, there will be no significant adverse effect on listing and operation of the Group; c. The property is not subject to any mortgage or other encumbrances; and d. The undertaking of China Huaneng Group is legal, valid and enforceable. 6. In valuing the property, we have attributed no commercial value to the 6 underground car parking spaces for which the Group has not obtained any building ownership certificates. However, for reference purpose, we are of the opinion that the capital value of the 6 underground car parking spaces would be in the sum of RMB1,170,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

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VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

10. 137 parcels of land The property comprises 137 parcels of land with a The property is currently 32,453,000 various buildings and total site area of approximately 109,374.72 sq.m., 6 occupied by the Group for structures of Gaoliban buildings and various structures erected thereon, production and ancillary 100% interest Wind Farm, Baiyinnula which were completed in 2009. purposes. attributable to Wind Farm, Denggao the Group: Wind Farm and Haoli The buildings have a total gross floor area of RMB32,453,000 Wind Farm approximately 3,483.26 sq.m. located in Gaoliban Town and Bayannao’er Town The buildings and structures mainly include an Keyouzhongqi industrial building, a distribution building, Inner Mongolia 4 ancillary buildings, roads, gates and sewers. Autonomous Region The PRC The land use rights of 135 parcels of land with a total site area of approximately 82,974.72 sq.m. of the property have been granted to Huaneng Keyouzhongqi Wind Power Co., Ltd. for terms of 50 years expiring on 23 February and 3 May 2060 respectively for industrial use.

Notes:

1. Huaneng Keyouzhongqi Wind Power Co., Ltd. (“HN Keyouzhongqi”) is a wholly-owned subsidiary of the Company.

2. Pursuant to 2 State-owned Land Use Rights Grant Contracts — (Meng) 2010-003 and 2010-001 dated 23 February and 3 May 2010 respectively, the land use rights of the 135 parcels of land were contracted to be granted to HN Keyouzhongqi for terms of 50 years expiring on 22 February and 2 May 2060 respectively for industrial use. The land premium was RMB3,459,200.

3. Pursuant to 135 State-owned Land Use Rights Certificates — You Zhong Guo Yong (2010) Zi Di Nos. 402000001 to 402000068, 152222603000001, 152222603010001 to 152222603010038, and 152222603020001 to 152222603020028, the land use rights of 135 parcels of land with a total site area of approximately 82,974.72 sq.m. have been granted to HN Keyouzhongqi for terms of 50 years expiring on 23 February and 3 May 2060 respectively for industrial use (the “granted land”).

4. Pursuant to a Building Ownership Certificate — Meng Fang Quan Zheng Ke You Zhong Qi Zi Di No. 156011004532, 6 buildings with a total gross floor area of approximately 3,483.26 sq.m. are owned by HN Keyouzhongqi.

5. For the remaining 2 parcels of land with a total site area of approximately 26,400 sq.m. erected with wind turbine foundations of Denggao Wind Farm and Haoli Wind Farm which are excluded from our valuation. As advised by the Group, HN Keyouzhongqi is in process of applying for relevant title certificates.

6. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for relevant land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates.

7. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following:

a. The Group has obtained legal title certificates for the granted land of the property and is entitled to occupy, use, donate, transfer, lease, mortgage or otherwise dispose of the land use rights in terms of the prescribed use terms stated in the land use rights certificates;

b. The Group has obtained a legal title certificate for the buildings of the property and has the rights to use and occupy the buildings in accordance with the prescribed use stated in the building ownership certificate as well as to donate, transfer, lease, mortgage or otherwise dispose of them;

c. For the remaining 2 parcels of land mentioned in note 5, upon obtaining the written confirmation for the project issued by the local government or relevant authority on the county level or above with regard to the land used for project, the Group will not be subject to any penalty or sanction for construction of the wind turbine foundations. There will be no

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legal impediment to obtain relevant title certificates after the relevant procedures of land granting or allocating have been finished;

d. The property is not subject to any mortgage or other encumbrances; and

e. The undertaking of China Huaneng Group is legal, valid and enforceable.

8. In valuing the property, we have attributed no commercial value to the land mentioned in note 5 without any land use rights certificates.

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VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

11. 5 units on Level 5 of an The property comprises 5 office units on Level 5 of The property is currently 4,367,000 office building an office building which was completed in 2009. occupied by the Group for No. 1999 Dongnanhu office purpose. 100% interest Road The 5 units have a total gross floor area of attributable to Nanguan District approximately 457.22 sq.m. the Group: Changchun City RMB 4,367,000 Jilin Province The PRC

Notes:

1. Huaneng Keyouzhongqi Wind Power Co., Ltd. (“HN Keyouzhongqi”) is a wholly-owned subsidiary of the Company.

2. Pursuant to 5 Building Ownership Certificates — Fang Quan Zheng Chang Fang Quan Zi Di Nos. 212000335 to 212000339, 5 units with a total gross floor area of approximately 457.22 sq.m. are owned by HN Keyouzhongqi. 3. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. The building ownership certificates of the property have been obtained by the Group and the Group has the rights to occupy and use the property in accordance with the prescribed use stated in the building ownership certificates as well as to donate, transfer, lease, mortgage or otherwise dispose of the property; and b. The property is not subject to any mortgage or other encumbrances.

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VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

12. 16 units and 2 car The property comprises 16 office units on Levels 4 The property is currently 12,081,000 parking spaces of and 24 and 2 car parking spaces of a 5-storey office occupied by the Group for Changxin Plaza Tower F building and a 26-storey office building which office purpose. 100% interest No. 322 Qingnian were completed in 2005. attributable to Avenue the Group: Shenyang City The property has a total gross floor area of RMB12,081,000 Liaoning Province approximately 1,265.51 sq.m. The PRC

Notes:

1. Huaneng Fuxin Wind Power Co., Ltd. (“HN Fuxin”) is a wholly-owned subsidiary of the Company.

2. Pursuant to 16 Building Ownership Certificates — Shen Fang Quan Zheng Shi Zhong Xin Zi Di No. NO60060629, NO60063621, NO60063623 to NO60063624, NO60063626, NO60063628 to NO60063633, NO60063635 to NO60063638 and NO60266892, 16 units with a total gross floor area of approximately 1,265.51 sq.m. are owned by HN Fuxin. 3. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. The building ownership certificates of the property have been obtained by the Group and the Group has the rights to occupy and use the property in accordance with the prescribed use stated in the building ownership certificates as well as to donate, transfer, lease, mortgage or otherwise dispose of the property; and b. The property is not subject to any mortgage or other encumbrances. 4. In valuing the property, we have attributed to no commercial value to the 2 car parking spaces for which the Group has not obtained any title certificates. However, for reference purpose, we are of the opinion that the capital value of the 2 car parking spaces as at the date of valuation would be in the sum of RMB280,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

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VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

13. 6 parcels of land, a The property comprises 6 parcels of land with a The property is currently No commercial building and various total site area of approximately 572,360 sq.m., an occupied by the Group for value structures of Fuxin industrial building and various structures erected production and ancillary Wind Farm Phase I thereon, which were completed in 2008. purposes. located at the junction of The building has a gross floor area of Xinqiu District and approximately 1,659.23 sq.m. Taiping District Fuxin County The structures mainly include roads, basketball Fuxin City ground. Liaoning Province The PRC The land use rights of the property have been allocated to Huaneng Fuxin Wind Power Co., Ltd. for public utility use.

Notes:

1. Huaneng Fuxin Wind Power Co., Ltd. (“HN Fuxin”) is a wholly-owned subsidiary of the Company. 2. Pursuant to 6 State-owned Land Use Rights Certificates — Fu Meng Guo Yong (2010) Zi Di Nos. 0078 to 0081, 613044 and 613045, the land use rights of 6 parcels of land with a total site area of approximately 572,360 sq.m. have been allocated to HN Fuxin for public utility use, which have been approved by the relevant government authority to be used by the Group as allocated land (the “allocated land”). 3. Pursuant to a Building Ownership Certificate — Fu Fang Quan Zheng Xin Qiu Qu Zi Di No. 2010004032, a building with a gross floor area of approximately 1,659.23 sq.m., which is erected on the allocated land, is owned by HN Fuxin. 4. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the land use rights of the allocated land, the Group has obtained legal title certificates and is entitled to occupy and use the relevant land use rights in terms of the prescribed use stated in the land use rights certificates; b. For the building of the property, the Group has obtained a legal title certificate and has the rights to use and occupy the building in accordance with the prescribed use stated in the building ownership certificate, but could transfer, donate, lease mortgage or otherwise dispose of it after the land premium has been fully paid and relevant granted land title certificates are obtained; and c. The property is not subject to any mortgage or other encumbrances. 5. In valuing the property, we have attributed no commercial value to the property based on the above legal opinion. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the building and structures (excluding the land element) would be in the sum of RMB37,043,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

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VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

14. 44 parcels of land The property comprises 44 parcels The property is currently No commercial various buildings and of land with a total site area of occupied by the Group for value structures of Fuxin approximately 741,163 sq.m., 14 buildings and production and ancillary Fubei Wind Farm Phase various structures erected thereon, which were purposes. II and Liangguan Yingzi completed in 2008. Wind Farm located in Duli Village The buildings have a total gross floor area of Fuxingdi Town approximately 5,892.6 sq.m. Fumeng County Fuxin City The buildings and structures mainly include switch Liaoning Province buildings, booster stations, pump rooms, roads and The PRC walls.

The land use rights of 11 parcels of land with a total site area of approximately 581,455 sq.m. of the property have been allocated to Huaneng Fuxin Wind Power Co., Ltd. for public utility use.

Notes:

1. Huaneng Fuxin Wind Power Co., Ltd. (“HN Fuxin”) is a wholly-owned subsidiary of the Company. 2. Pursuant to 11 State-owned Land Use Rights Certificates — Fu Meng Guo Yong (2010) Zi Di Nos. 622055, 625028, 627067 to 627069, 627161 to 627166, the land use rights of 11 parcels of land with a total site area of approximately 581,445.00 sq.m. have been allocated to HN Fuxin for public utility use, which have been approved by the relevant government authority to be used by the Group as allocated land (the “allocated land”). 3. Pursuant to 12 Buildings Ownership Certificates — Fu Guo Si Zi Di Nos. 201005030001 to 201005030002, and 201012030001 to 201012030007, Fang Quan Zheng Fu Guo Si Zi Di Nos. 20100503003, 201012030008, 201012030009, 12 buildings with a total gross floor area of approximately 5,638.60 sq.m., which are erected on the allocated land, are owned by HN Fuxin. 4. For the remaining 33 parcels of land with a total site area of approximately 159,718 sq.m. erected with wind turbine foundations which are excluded from our valuation. As advised by the Group, HN Fuxin is in process of applying for relevant title certificates. 5. For the remaining 2 buildings with a total gross floor area of approximately 254 sq.m. erected on the land mentioned in note 2, as advised by the Group, HN Fuxin is in process of applying for the building ownership certificates.

6. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assistant the Group in applying for building ownership certificates and the relevant land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. 7. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the land use rights of the allocated land, the Group has obtained legal title certificates and is entitled to occupy and use the relevant land use rights in terms of the prescribed use stated in the land use rights certificates; b. For the buildings of the property, the Group has obtained legal title certificates and has the rights to use and occupy the buildings in accordance with the prescribed use stated in the building ownership certificates, but could transfer, donate, lease mortgage or otherwise dispose of them after the land premium has been fully paid and relevant granted land title certificates are obtained; c. For the remaining 33 parcels of land mentioned in note 4, upon obtaining the written confirmation for the project issued by the local government or relevant authority on the county level or above, the Group will not be subject to any penalty or sanction for the construction of the wind turbine foundation. There will be no legal impediment to obtained relevant title certificates after relevant procedures of the land granting or allocating have been finished;

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d. For the remaining buildings mentioned in note 5, China Huaneng has made undertaking stated in note 6, there is no significant dispute over the ownership which will affect the major business of the Group. Therefore, there will be no significant adverse effect on listing and operation of the Group;

e. The property is not subject to any mortgage or other encumbrances; and

f. The undertaking of China Huaneng Group is legal, valid and enforceable.

8. In valuing the property, we have attributed no commercial value to the property based on the above legal opinion. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the buildings and structures (excluding the land element) would be in the sum of RMB56,532,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

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VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

15. 6 parcels of land The property comprises 6 parcels of land with a The property is currently No commercial various buildings and total site area of approximately 217,734 sq.m., 8 occupied by the Group for value structures of Fuxin buildings and various structures erected thereon, production and ancillary Wind Farm Phase III which were completed in 2010. purposes. located in Aerxiang Town The buildings have a total gross floor area of Zhangwu County approximately 2,723.56 sq.m. Fuxin City Liaoning Province The buildings and structures mainly include switch The PRC buildings, booster stations, pump rooms, roads and walls.

The land use rights of the property have been allocated to Huaneng Fuxin Wind Power Co., Ltd. for public utility use.

Notes:

1. Huaneng Fuxin Wind Power Co., Ltd. (“HN Fuxin”) is a wholly-owned subsidiary of the Company. 2. Pursuant to 6 State-owned Land Use Rights Certificates — Zhang Wu Guo Yong (2010) Di Nos. 398 to 403, the land use rights of 6 parcels of land with a total site area of approximately 217,734 sq.m. have been allocated to HN Fuxin for public utility use, which have been approved by the relevant government authority to be used as allocated land (the “allocated land”). 3. Pursuant to 8 Building Ownership Certificates — Zhang Fang Quan Zheng 2010 Zi Di Nos. 100300968 to 100300975. 8 buildings with a total gross floor area of approximately 2,723.56 sq.m., which are erected on the allocated land, are owned by HN Fuxin. 4. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the land use rights of the allocated land, the Group has obtained legal title certificates and is entitled to occupy and use the relevant land use rights in terms of the prescribed use stated in the land use rights certificates; b. For the buildings of the property, the Group has obtained legal title certificates and has the rights to use and occupy the buildings in accordance with the prescribed use stated in the building ownership certificates, but could transfer, donate, lease mortgage or otherwise dispose of them after the land premium has been fully paid and relevant granted land title certificates are obtained; and c. The property is not subject to any mortgage or other encumbrances. 5. In valuing the property, we have attributed no commercial value to the property based on the above legal opinion. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the buildings and structures (excluding the land element) would be in the sum of RMB10,293,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-31 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

16. 161 parcels of land and The property comprises 161 parcels of land with a The property is currently No commercial a building of Zhangbei total site area of approximately 726,093sq.m. an occupied by the Group for value Wind Farm located in industrial building erected thereon which were production purpose. Aerxiang Town completed in 2010. Zhangwu County Liaoning Province The building has a gross floor area of The PRC approximately 2,312 sq.m.

Notes:

1. Huaneng Fuxin Wind Power Co., Ltd. (“HN Fuxin”) is a wholly-owned subsidiary of the Company.

2. Pursuant to a Construction Land Planning Permit — Cun Di Zi Di No. 210922201000016 in favor of HN Fuxin, permission towards the planning of the subject land with a total site area of approximately 758,706 sq.m. has been issued to HN Fuxin. 3. On the land of the property, there are also wind turbine foundations which are excluded from our valuation. As advised by the Group, HN Fuxin is in process of applying for relevant title certificates. 4. For the building with a gross floor area of approximately 2,312 sq.m., as advised by the Group, HN Fuxin is in process of applying for the building ownership certificates.

5. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for building ownership certificate and land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. 6. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the property, China Huaneng Group has made undertaking stated in note 5. There is no significant dispute over the ownership which will affect the major business of the Group. Therefore, there will be no significant adverse effect on listing and operation of the Group; b. The property is not subject to any mortgage or other encumbrances; and c. The undertaking of China Huaneng Group is legal, valid and enforceable. 7. In valuing the property, we have attributed no commercial value to the property without any title certificates. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the building (excluding the land element) would be in the sum of RMB8,944,000 assuming all relevant title certificates had been obtained and it could be freely transferred.

— IV-32 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

17. 24 parcels of land The property comprises 24 parcels of land with a The property is currently 14,644,000 various buildings and total site area of approximately 17,458.00 sq.m., 4 occupied by the Group for structures of Weihai buildings and various structures erected thereon, production and ancillary 55% interest Wind Farm Phase I which were completed in 2008. purposes. attributable to located in Haixitou the Group: Village Weihaijing The buildings have a total gross floor area of RMB8,054,000 District approximately 2,005.11 sq.m. Weihai City Shandong Province The buildings and structures mainly include a The PRC switch building, an office building, 2 ancillary buildings, roads and wall.

The land use rights of the property have been granted to HNNE-CLP Weihai Wind Power Co., Ltd. for terms of 50 years expiring on 27 December 2057 for industrial use.

Notes:

1. HNNE-CLP Weihai Wind Power Co., Ltd. (“HNNE-CLP Weihai”) is a 55% interest owned subsidiary of the Company. 2. Pursuant to 24 State-owned Land Use Rights Certificates — Wei Jing Ji Qu Guo Yong (2008) Zi Di Nos. D-119 to D-142, the land use rights of 24 parcels of land with a total site area of approximately 17,458.00 sq.m. have been granted HNNE-CLP Weihai for terms of 50 years expiring on 27 December 2057 for industrial use. 3. Pursuant to 4 Buildings Ownership Certificates — Wei Fang Quan Zheng Zi Di Nos. 2010034625, 2010034631, 2010034635 and 2010034637, 4 buildings with a total gross floor area of approximately 2,005.11 sq.m. are owned by HNNE-CLP Weihai. 4. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. The Group has obtained legal title certificates of the land of the property and is entitled to occupy, use, donate, transfer, lease, mortgage or otherwise dispose of the land use rights in terms of the prescribed use terms stated in the land use rights certificate; b. The Group has obtained legal title certificates for the buildings of the property and has the rights to occupy and use the buildings in accordance with the prescribed use stated in the building ownership certificates as well as to donate, transfer, lease, mortgage or otherwise dispose of them; and c. The property is not subject to any mortgage or other encumbrances.

— IV-33 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

18. 24 parcels of land The property comprises 24 parcels of land with a The property is currently 9,506,000 various buildings and total site area of approximately 19,128.00 sq.m., occupied by the Group for structures of Weihai 4 buildings and various structures erected thereon, production and ancillary 55% interest Wind Farm Phase II which were completed in 2008. purposes. attributable to located in the Group: Gangxi Town The buildings have a total gross floor area of RMB5,228,000 Rongcheng City approximately 1,472.38 sq.m. Shandong Province The PRC The buildings and structures mainly include an integrated control building, roads, wall and gates.

The land use rights of the property have been granted to HNNE-CLP Weihai Wind Power Co., Ltd. for terms of 50 years expiring on 27 December 2057 for industrial use.

Notes:

1. HNNE-CLP Weihai Wind Power Co., Ltd. (“HNNE-CLP Weihai”) is a 55% interest owned subsidiary of the Company. 2. Pursuant to 24 State-owned Land Use Rights Certificates — Rong Guo Yong (2010) Zi Di Nos. 02162 to 02163 and 02165 to 02187, the land use rights of 24 parcels of land with a total site area of approximately 19,128.00 sq.m. have been granted to HNNE-CLP Weihai for terms of 50 years expiring on 27 December 2057 for industrial use. 3. Pursuant to 2 Buildings Ownership Certificates — Rong Fang Quan Zheng Ya Tou Di Nos. 2010003449 and 2010004819, 4 buildings with a total gross floor area of approximately 1,472.38 sq.m. are owned by HNNE-CLP Weihai. 4. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following:

a. The Group has obtained legal title certificates of the land of the property and is entitled to occupy, use, donate, transfer, lease, mortgage or otherwise dispose of the land use rights in terms of the prescribed use stated in the land use rights certificates;

b. The Group has obtained legal title certificates of the buildings of the property and has the rights to occupy and use the buildings in accordance with the prescribed use stated in the building ownership certificates as well as to donate, transfer, lease, mortgage or otherwise dispose of them; and c. The property is not subject to any mortgage or other encumbrances.

— IV-34 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

19. Unit 1301 on Level 13 The property comprises an office unit on Level 13 The property is currently No commercial of a building of a 20-storey building completed in 2010. occupied by the Group for value No. 111 office purpose. Haibin North Road The unit has a gross floor area of approximately Huancui District 1,285.12 sq.m. Weihai City Shandong Province The PRC

Notes:

1. HNNE-CLP Weihai Wind Power Co., Ltd. (“HNNE-CLP Weihai”) is a 55% interest owned subsidiary of the Company.

2. Pursuant to a Commodity Property Sales & Purchase Contract — numbered 2010011081 dated 3 July 2010, a unit with a gross floor area of approximately 1,285.12 sq.m. was contracted to be sold to HNNE-CLP Weihai at a consideration of RMB12,216,351. 3. As advised by the Group, HNNE-CLP Weihai is in process of applying for relevant title certificates of the property.

4. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for the building ownership certificate and land use rights certificate and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. 5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following:

a. For the property, China Huaneng Group has made undertaking stated in note 4. There is no significant dispute over the ownership which will affect the major business of the Group. Therefore, there will be no significant adverse effect on listing and operation of the Group;

b. The property is not subject to any mortgage or other encumbrances; and

c. The undertaking of China Huaneng Group is legal, valid and enforceable. 6. In valuing the property, we have attributed no commercial value to the property with a total gross floor area of approximately 1,285.12 sq.m. for which the Group has not obtained any building ownership certificate. However, for reference purpose, we are of the opinion that the capital value of the property as at the date of valuation would be in sum of RMB12,209,000 assuming all relevant title certificates had been obtained and the unit could be freely transferred.

— IV-35 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

20. 34 parcels of land The property comprises 34 parcels of land with a The property is currently 12,492,000 various buildings and total site area of approximately 12,657.94 sq.m., occupied by the Group for structures of Changdao 4 buildings and various structures erected thereon, production and ancillary 55% interest Wind Farm which were completed between 2006 and 2008. purposes. attributable to located in the Group: Liancheng Village The buildings have a total gross floor area of RMB 6,871,000 Nanchangshan Town approximately 2,038.75 sq.m. Changdao County Yantai City The buildings and structures mainly include an Shandong Province integrated control building, two ancillary buildings, The PRC a distribution room and walls.

The land use rights of the property have been granted to HNEEP-CLP Changdao Wind Power Co., Ltd. for terms of 50 years with the expiry dates between 20 June 2055 and 21 July 2056 for industrial use.

Notes:

1. HNEEP-CLP Changdao Wind Power Co., Ltd. (“HNEEP-CLP Changdao”) is a 55% interest owned subsidiary of the Company. 2. Pursuant to 34 State-owned Land Use Rights Certificates — Chang Guo Yong (2005) Di No. 473, Chang Guo Yong (2006) Di No. 517, Chang Guo Yong (2010) Di Nos. 5 to 36, the land use rights of 34 parcels of land with a total site area of approximately 12,657.94 sq.m. have been granted to HNEEP-CLP Changdao for terms of 50 years with the expiry dates between 20 June 2055 and 21 July 2056 for industrial use. 3. Pursuant to 2 Building Ownership Certificates — Chang Dao Xian Fang Quan Zheng Chang Fang Gong Zi Di Nos. 2010-10 and 2010-11, 4 buildings with a total gross floor area of approximately 2,038.75 sq.m. are owned by HNEEP-CLP Changdao. 4. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following:

a. The Group has obtained legal title certificates of the land of the property and is entitled to occupy, use, donate, transfer, lease, mortgage or otherwise dispose of the land use rights in terms of the prescribed use terms stated in the land use rights certificate;

b. The Group has obtained legal title certificates of the buildings of the property and has the rights to occupy and use the buildings in accordance with the prescribed use stated in the building ownership certificates as well as to donate, transfer, lease, mortgage or otherwise dispose of them; and c. The property is not subject to any mortgage or other encumbrances.

— IV-36 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

21. Various buildings and The property comprises 10 buildings and various The property is currently No commercial structures of Shouguang structures which were completed in 2008 and 2011. occupied by the Group for value Wind Farm Phases I to production and ancillary III The buildings have a total gross floor area of purposes. located in approximately 7,834.09 sq.m. Yingli Town Shouguang City The buildings and structures mainly include Shandong Province 2 switch building, 2 distribution building, 2 The PRC residential buildings, 4 ancillary buildings, walls and gates.

Notes:

1. Phase I is held by Huaneng Shouguang Wind Power Co., Ltd. (“HN Shouguang”), which is a 55% interest owned subsidiary of the Company. 2. Phases II and III are held by Huaneng Weifang Wind Power Co., Ltd. (“HN Weifang”), which is a wholly-owned subsidiary of the Company. 3. Pursuant to 5 Building Ownership Certificates — Shou Fang Quan Zheng Ying Li Zi Di Nos. 2010047190, 2010047195 and 2010047199, Shou Fang Quan Zheng Yang Kou Zi Di Nos. 2011095050 and 2011095052, 5 buildings of Phase I with a total gross floor area of approximately 2,593.69 sq.m. are owned by HN Shouguang. 4. As advised by the Group, Phase I is erected on marine reclamation land, for which the Group has obtained 2 Sea Area Use Certificates (Guo Hai Zheng Nos. 103700639 and 103700640). The certificates state that the sea area use rights with a total sea plot area of approximately 66,766.00 sq.m. have been authorized to HN Shouguang for a term expiring on 12 June 2032 for industrial use. 5. Pursuant to 5 Building Ownership Certificates — Shou Fang Quan Zheng Yang Kou Zi Di Nos. 201194197, 2011094201, 2011094203, 201194205 and 2011094211, 5 buildings of Phases II and III with a total gross floor area of approximately 5,240.4 sq.m. are owned by HN Weifang, 6. As advised by the Group, Phases II and III are erected on marine reclamation land, for which the Group has obtained 2 Sea Area Use Certificates (Guo Hai Zheng Nos. 113700132 and 113700133). The certificates state that the sea area use rights with a total see plot area of approximately 31,001.01 sq.m. have been authorized to HN Weifang for a term expiring on 29 January 2033 for industrial use, the remaining plot with a sea plot area of approximately 26,332 sq.m. is in process of application by HN Weifang. 7. We have excluded the sea area use rights mentioned in notes 4 and 6 from our valuation due to the nature of the marine reclamation land. 8. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the buildings of the property erected on the marine reclamation land, the Group has obtained legal title certificates and has the rights to use and occupy the buildings in accordance with the prescribed use stated in the building ownership certificates, but could transfer, donate, lease mortgage or otherwise dispose of them after the land premium has been fully paid and relevant land use rights certificates are obtained; and b. The property is not subject to any mortgage or other encumbrances. 9. In valuing the property, we have attributed no commercial value to the property based on the above legal opinion. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the buildings and structures (excluding the sea area use rights) would be in the sum of RMB23,252,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-37 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

22. 51 parcels of land The property comprises 51 parcels of land The property is currently 25,250,000 various buildings and with a total site area of approximately occupied by the Group for structures of Dongying 59,945.2 sq.m., 5 buildings and various structures production and ancillary 100% interest Hekou Wind Farm erected thereon, which were completed in 2009. purposes. attributable to Phases I to IV the Group: located in the northern The buildings have a total gross floor area of RMB 25,250,000 side of approximately 3,299.42 sq.m. Binhai Avenue Hekou District The buildings and structures mainly include an Dongying City integrated control building, residential building, an Shandong Province ancillary building, a warehouse, roads, walls, and The PRC boundary fences.

The land use rights of 49 parcels of land with a total site area of approximately 43,065.7 sq.m. of the property have been granted to Huaneng Dongying Hekou Wind Power Co., Ltd. for terms of 50 expiring on 11 May and 9 November 2060 respectively for industrial use.

Notes: 1. Huaneng Dongying Hekou Wind Power Co., Ltd. (“HN Dongying Hekou”) is a wholly-owned subsidiary of the Company. 2. Pursuant to 49 State-owned Land Use Rights Certificates — Dong He Guo Yong (2010) Di Nos. 453 to 464, 597 to 618 and 1331 to 1345, the land use rights of 49 parcels of land with a total site area of approximately 43,065.7 sq.m. have been granted to HN Dongying Hekou for terms of 50 years expiring on 11 May and 9 November 2060 respectively for industrial use (the “granted land”). 3. Pursuant to 2 Building Ownership Certificates — Dong Fang Quan Zheng He Kou Qu Zi Di Nos. 037652 and 037659, 5 buildings with a total gross floor area of approximately 3,299.42 sq.m. are owned by HN Dongying Hekou. 4. For the remaining 2 parcels of land with a total site area of approximately 16,879.7 sq.m. erected with wind turbine foundations which are excluded from our valuation. As advised by the Group, HN Dongying Hekou is in process of applying for relevant title certificates. 5. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for relevant land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. 6. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. The Group has obtained legal title certificates of the granted land of the property and is entitled to occupy, use, donate, transfer, lease, mortgage or otherwise dispose of the land use rights in terms of the prescribed use stated in the land use rights certificates; b. The Group has obtained legal title certificates of the buildings of the property and has the rights to occupy and use the buildings in accordance with the prescribed use stated in the building ownership certificates as well as to donate, transfer, lease, mortgage or otherwise dispose of them; c. For the remaining 2 parcels of land mentioned in note 4, as per the written confirmation for the project issued by the local government or land administration department on the county level or above, the Group will not be subject to any penalty or sanction for construction of wind turbine foundations. There will be no legal impediment to obtain relevant title certificates after the relevant procedures of land granting or allocating have been finished; d. The property is not subject to any mortgage or other encumbrances; and e. The undertaking of China Huaneng Group is legal, valid and enforceable. 7. In valuing the property, we have attributed no commercial value to the land mentioned in note 4 without any title certificates.

— IV-38 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

23. A parcel of land, various The property comprises a parcel of land with a site The property is currently No commercial buildings and structures area of approximately 24,899 sq.m., 7 buildings occupied by the Group for value of Panjin Dawa Wind and various structures erected thereon which were production and ancillary Farm located at the completed in 2010. purposes. junction of Erjiegou Town and Wangjia The buildings have a gross floor area of Town Dawa County approximately 2,801.8 sq.m. Liaoning Province The PRC The buildings and structure mainly include an integrated control building, 3 switch buildings, an equipment building, 2 warehouses, wall and roads.

Notes:

1. Huaneng Panjin Wind Power Co., Ltd. (“HN Panjin”) is a 75% interest owned subsidiary of the Company. 2. On the land of the property, there are also wind turbine foundations which are excluded from our valuation. As advised by the Group, HN Panjin is in process of applying for land use rights certificates. 3. For the buildings with a total gross floor area of approximately 2,801.8 sq.m., as advised by the Group, HN Panjin is in process of applying for the building ownership certificates.

4. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for building ownership certificate and land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. 5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the property, China Huaneng Group has made undertaking stated in note 4, there is no significant dispute over the ownership which will affect the major business of the Group. Therefore, there will be no significant adverse effect on listing and operation of the Group; b. The property is not subject to any mortgage or other encumbrances; and c. The undertaking of China Huaneng Group is legal, valid and enforceable. 6. In valuing the property, we have attributed no commercial value to the property without any title certificates. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the buildings and structures (excluding the land element) would be in the sum of RMB21,465,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-39 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

24. 2 buildings of Binhai The property comprises 2 switch buildings The property is currently No commercial Wind Farm Phase I erected on marine reclamation land, which were occupied by the Group for value located in completed in 2010. production and ancillary Dajiawa Town purposes. Binhai Development The 2 switch buildings have a total gross floor area Zone of approximately 1,336.60 sq.m. Weifang City Shandong Province The PRC

Notes:

1. Huaneng Weifang Binhai Wind Power Co., Ltd. (“HN Weifang Binhai”) is a wholly owned subsidiary of the Company.

2. Pursuant to a Building Ownership Certificate — Wei Fang Quan Zheng Bin Hai Zi Di No. 0070331, 2 buildings with a total gross floor area of approximately 1,336.60 sq.m. are owned by HN Weifang Binhai. 3. As advised by the Group, the property are erected on marine reclamation land, for which the Group has obtained 3 Sea Area Use Certificates (Guo Hai Zheng Nos. 103700643, 103700644 and 103700645). The certificates state that the sea area use rights of 3 marine reclamation land with a total sea plot area of approximately 35,069.00 sq.m. have been authorized to HN Weifang Binhai for a term expiring on 12 June 2032 for industrial use. 4. We have excluded the sea area use rights mentioned in note 3 from our valuation due to the nature of the marine reclamation land. 5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the buildings of the property erected on the marine reclamation land, the Group has obtained a legal title certificate and has the rights to use and occupy the buildings in accordance with the prescribed use stated in the building ownership certificate, but could transfer, donate, lease mortgage or otherwise dispose of them after the land premium has been fully paid and relevant granted land title certificates are obtained; and b. The property is not subject to any mortgage or other encumbrances. 6. In valuing the property, we have attributed no commercial value to the buildings based on the above legal opinion. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the buildings and structures (excluding the sea area rights element) would be in the sum of RMB5,132,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-40 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

25. Various buildings and The property comprises 5 buildings and various The property is currently No commercial structures of Changyi structures erected on marine reclamation land, occupied by the Group for value Wind Farm which were completed in 2009. production and ancillary Phases I and II purposes. located in The buildings have a total gross floor area of Xiaying Town approximately 2,764.40 sq.m. Changyi City Shandong Province The buildings and structures mainly include a The PRC switch building, a distribution building, 2 ancillary buildings, warehouse, roads, and walls.

Notes:

1. Huaneng Changyi Wind Power Co., Ltd. (“HN Changyi”) is a wholly-owned subsidiary of the Company. 2. Pursuant to 2 Building Ownership Certificates — Chang Yi Fang Quan Zheng Xia Ying Zi Di Nos. 008189 and 008190, 5 buildings (“Phase I”) with a total gross floor area of approximately 2,764.40 sq.m. are owned by HN Changyi. 3. As advised by the Group, the property are erected on marine reclamation land, for which the Group has obtained 3 Sea Area Use Certificates (Guo Hai Zheng Nos. 103700641, 103700642 and 113700120). The certificates state that the sea area use rights with a total sea plot area of approximately 63,201 sq.m. are authorized to HN Changyi for terms expiring on 12 June 2032 and 27 January 2033 for industrial use. 4. We have excluded the sea area use rights mentioned in note 3 from our valuation due to the nature of marine reclamation land. 5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the buildings of the property erected on the marine reclamation land, the Group has obtained legal title certificates and has the rights to use and occupy the buildings in accordance with the prescribed use stated in the building ownership certificates, but could transfer, donate, lease, mortgage or otherwise dispose of them after the land premium has been fully paid and relevant granted land title certificates are obtained; and b. The property is not subject to any mortgage or other encumbrances. 6. In valuing the property, we have attributed no commercial value to the property based on the above legal opinion. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the buildings and structures (excluding the sea area use rights element) would be in the sum of RMB8,023,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-41 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

26. 34 parcels of land The property comprises 34 parcels of land with a The property is currently 14,122,000 various buildings and total site area of approximately 32,000 sq.m., occupied by the Group for structures of Yudaokou 5 buildings and various structures erected thereon, production and ancillary 100% interest Muchang Wind Farm which were completed in 2010. purposes. attributable to Phase I located in the Group: Yudaokou Pasture The buildings have a total gross floor area of RMB14,122,000 Weichang County approximately 2,340.72 sq.m. Chengde City Hebei Province The buildings and structures mainly include a The PRC switch building, an integrated building, 3 ancillary buildings and roads.

The land use rights of the property have been granted to Huaneng Chengde Wind Power Generation Co., Ltd. for terms of 50 years expiring on 1 August 2059 for industrial use.

Notes:

1. Huaneng Chengde Wind Power Generation Co., Ltd. (“HN Chengde”) is a wholly-owned subsidiary of the Company. 2. Pursuant to a State-owned Land Use Rights Grant Contract — numbered c130800-2009-044 dated 26 August 2009, the land use rights of the property were contracted to be granted to HN Chengde for a term of 50 years expiring on 25 August 2059 for industrial use. The land premium was RMB2,152,300. 3. Pursuant to 34 State-owned Land Use Rights Certificates — Wei Guo Yong (2010) Zi Di Nos. 0013 to 0046, the land use rights of 34 parcels of land with a total site area of approximately 32,000 sq.m. have been granted to HN Chengde for terms of 50 years expiring on 1 August 2059 for industrial use. 4. Pursuant to a Building Ownership Certificate — Fang Quan Zheng Wei Zheng Zi Di No. 20101628, 5 buildings with a total gross floor area of approximately 2,340.72 sq.m. are owned by HN Chengde. 5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following:

a. The Group has obtained legal title certificates of the land of the property and is entitled to occupy, use, donate, transfer, lease, mortgage or otherwise dispose of the land use rights in terms of the prescribed use terms stated in the land use rights certificates;

b. For the buildings of the property, the Group has obtained legal title certificates and has the rights to use and occupy the buildings in accordance with the prescribed use stated in the building ownership certificates as well as to donate, transfer, lease, mortgage or otherwise dispose of them; and

c. The property is not subject to any mortgage or other encumbrances.

— IV-42 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

27. Various buildings and The property comprises 5 buildings and various The property is currently No commercial structures of Laoting structures erected on marine reclamation land, occupied by the Group for value Wind Farm which were completed in 2008 and 2009. production and ancillary located in purposes. Erjie Village The buildings have a total gross floor area of Jianggezhuang Town approximately 1,881.47 sq.m. Laoting County Tangshan City The buildings and structures mainly include an Hebei Province integrated control building, 2 distribution rooms, The PRC 2 warehouses, a road, a gate and a wall.

Notes:

1. Huaneng Laoting Wind Power Co., Ltd. (“HN Laoting”) is a 55% interest owned subsidiary of the Company. 2. Pursuant to 2 Building Ownership Certificates — Lao Fang Quan Zheng Cheng Guo Zi Di Nos. 201000873-01 and 201000873-02, 5 buildings with a total gross floor area of approximately 1,881.47 sq.m. are owned by HN Laoting. 3. As advised by the Group, the property are erected on marine reclamation land, for which the Group has obtained a Sea Area Use Certificate (Guo Hai Zheng Di No. 081300014). The certificate states that the sea area use rights of the marine reclamation land with a total sea plot area of approximately 17,048 sq.m. are authorized to HN Laoting for a term expiring on 16 October 2048 for industrial use. 4. We have excluded the sea area use rights mentioned in note 3 from our valuation due to the nature of marine reclamation land. 5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the buildings of the property erected on marine reclamation land, the Group has obtained legal title certificates and has the rights to use and occupy the buildings in accordance with the prescribed use stated in the building ownership certificates, but could transfer, donate, lease mortgage or otherwise dispose of them after the land premium has been fully paid and relevant granted land title certificates are obtained; and b. The property is not subject to any mortgage or other encumbrances. 6. In valuing the property, we have attributed no commercial value to the property based on the above legal opinion. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the buildings and structures (excluding the sea area use rights element) would be in the sum of RMB35,310,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-43 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

28. 107 parcels of land The property comprises 107 parcels of land The property is currently No commercial various buildings and with a total site area of approximately occupied by the Group for value structures of Dali 463,249.60 sq.m., 5 buildings and various production and ancillary Dafengba Wind Farm structures erected thereon, which were completed purposes. located in in 2009. Zhemo Mountain Yongjian Town The buildings have a total gross floor area of Weishan County approximately 1,605.29 sq.m. Dali City Yunnan Province The buildings and structures mainly include a The PRC industrial building, a canteen room, an office building, 2 warehouses, pools and roads.

The land use rights of the property have been allocated to Huaneng Hongkong Electric Dali Wind Power Co., Ltd. for public utility use.

Notes:

1. Huaneng Hongkong Electric Dali Wind Power Co., Ltd. (“HN Dali Hongkong”) is a 55% interest owned subsidiary of the Company. 2. Pursuant to 107 State-owned Land Use Rights Certificates — Wei Guo Yong (2010) Zi Di Nos. 05841 to 05855 and Da Guo Yong (2010) Zi Di Nos. 03301 to 03393, the land use rights of 107 parcels of land with a total site area of approximately 463,249.6 sq.m. have been allocated to HN Dali Hongkong for public utility use, which have been approved by the relevant government authority to be used by the Group as allocated land (the “allocated land”). 3. Pursuant to 2 Building Ownership Certificates — Da Li Shi Fang Quan Zheng Xia Guan Zi Di Nos. 20101012 and 20101013, 5 buildings with a total gross floor area of approximately 1,605.29 sq.m., which are erected on the allocated land, are owned by HN Dali Hongkong. 4. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the land use rights of the allocated land, the Group has obtained legal title certificates and is entitled to occupy and use the relevant land use rights in terms of the prescribed use stated in the land use rights certificates; b. For the buildings of the property, the Group has obtained a legal title certificates and has the rights to use and occupy the buildings in accordance with the prescribed use stated in the building ownership certificates, but could transfer, donate, lease mortgage or otherwise dispose of them after the land premium has been fully paid and relevant granted land title certificates are obtained; and c. The property is not subject to any mortgage or other encumbrances. 5. In valuing the property, we have attributed no commercial value to the property based on the above legal opinion. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the buildings and structures (excluding the land element) would be in the sum of RMB45,270,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-44 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

29. 64 parcels of land The property comprises 64 parcels of land with a The property is currently No commercial various buildings and total site area of approximately 380,136.57 sq.m., occupied by the Group for value structures of Eryuan 6 buildings and various structures erected thereon, production and ancillary Ma’anshan Wind Farm which were completed in 2010. purposes. Phases I to III located in Jiaoshi Village The buildings have a total gross floor area of Yousuo Town and approximately 2,348.1 sq.m. Xiyi Town Eryuan County and The buildings and structures mainly include Heqing County 2 switch buildings, 2 warehouses, a residential Dali City building, an integrated building and roads. Yunnan Province The PRC The land use rights of 37 parcels of land with a total site area approximately 297,699.57 sq.m. of the property have been allocated to Huaneng Eryuan Wind Power Co., Ltd. for industrial use.

Notes: 1. Huaneng Eryuan Wind Power Co., Ltd. (“HN Eryuan”) is a wholly-owned subsidiary of the Company. 2. Pursuant to 37 State-owned Land Use Rights Certificates — Er Guo Yong (2010) Di Nos. 279 to 309, Er Guo Yong (2011) Di Nos. 015, 016 and He Guo Yong (2011) Di Nos. 80 to 83, the land use rights of 37 parcels of land with a total site area of approximately 297,669.57 sq.m. have been allocated to HN Eryuan for industrial use, which have been approved by the relevant government authority to be used by the Group as allocated land (the “allocated land”). 3. Pursuant to 2 Building Ownership Certificates — Er Fang Quan Zheng You Zi Di Nos. A-187-1 to A-187-2, 6 buildings with a total gross floor area of approximately 2,348.1 sq.m., which are erected on the allocated land, are owned by HN Eryuan. 4. For the remaining 27 parcels of land with a total site area of approximately 82,467 sq.m. erected with wind turbine foundations of Eryuan Ma’anshan Wind Farm Phase III which are excluded from our valuation. As advised by the Group, HN Eryuan is in process of applying for relevant title certificates. 5. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for relevant land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. 6. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the land use rights of the allocated land, the Group has obtained legal title certificates and is entitled to occupy and use the relevant land use rights in terms of the prescribed use stated in the land use rights certificates; b. For the buildings of the property, the Group has obtained legal title certificates and has the rights to use and occupy the buildings in accordance with the prescribed use stated in the building ownership certificates, but could transfer, donate, lease, mortgage or otherwise dispose of them after the land premium has been fully paid and relevant granted land title certificates are obtained; c. For the remaining 27 parcels of land mentioned in note 4, as per the written confirmation issued by the local government or relevant authority on the county level or above with regard to the land and the project, the Group will not be subject to any penalty or sanction for construction of the wind turbine foundations. There will be no legal impediment to obtain relevant title certificates after the relevant procedures of land granting or allocating have been finished; d. The property is not subject to any mortgage or other encumbrances; and e. The undertaking of China Huaneng Group is legal, valid and enforceable. 7. In valuing the property, we have attributed no commercial value to the property based on the above legal opinion. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the buildings and structures (excluding the land element) would be in the sum of RMB5,007,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-45 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

30. 3 parcels of land, The property comprises 3 parcels of land The property is currently 24,234,000 a building and various with a total site area of approximately occupied by the Group for structures of Niutouling 106,970 sq.m., a building and various structures production and ancillary 52% interest Wind Farm Phase I erected thereon, which were completed in 2000. purposes. attributable to located in the Group: Bainiudajian Mountain The building has a gross floor area of RMB12,602,000 Nan’ao County approximately 499.58 sq.m. Shantou City Guangdong Province The building and structures mainly include a The PRC integrated building, pools and roads.

The land use rights of the property have been granted to Huaneng Shantou Nan’ao Wind Power Co., Ltd. for terms of 50 years expiring on 19 November 2048 and 27 November 2048 respectively for industrial use.

Notes:

1. Huaneng Shantou Nan’ao Wind Power Co., Ltd. (“HN Shantou Nan’ao”) is a 52% interest owned subsidiary of the Company. 2. Pursuant to 2 State-owned Land Use Rights Certificates — Nan Guo Yong (2010) Zi Di Nos. 1115 and 1092, the land use rights of 2 parcels of land with a total site area of approximately 104,494.05 sq.m. have been granted to HN Shantou Nan’ao for terms of 50 years expiring on 19 November 2048 and 27 November 2048 respectively for industrial use. 3. Pursuant to a Real Estate Title Certificate — Yue Fang Di Zheng Zi Di No. C4754886, a building with a gross floor area of approximately 499.58 sq.m., is owned by HN Shantou Nan’ao. The relevant land use rights of the building with a site area of approximately 2,475.95 sq.m. have been granted to HN Shantou Nan’ao for term expiring on 27 November 2048. 4. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. The Group has obtained legal title certificates of the land of the property and is entitled to occupy, use, donate, transfer, lease, mortgage or otherwise dispose of the land use rights in terms of the prescribed use terms stated in the land use rights certificates; b. The Group has obtained a legal title certificate of the building of the property and has the rights to occupy and use the building in accordance with the prescribed use stated in the Real Estate Title Certificate as well as to donate, transfer, lease, mortgage or otherwise dispose of it; and c. The property is not subject to any mortgage or other encumbrances.

— IV-46 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

31. Units 501 and 502 on The property comprises 2 office units on Level 5 The property is currently 1,289,000 Level 5 of of a 15-storey building completed in 1998. occupied by the Group for Zhongyuan Plaza office purpose. 52% interest No. 91 Changping Road The units have a total gross floor area of attributable to Jinping District approximately 368.10 sq.m. the Group: Shantou City RMB670,000 Guangdong Province The land use rights of the property have been The PRC granted to Huaneng Shantou Nan’ao Wind Power Co., Ltd.

Notes:

1. Huaneng Shantou Nan'ao Wind Power Co., Ltd. (“HN Shantou Nan’ao”) is a 52% interest owned subsidiary of the Company.

2. Pursuant to 2 Real Estate Title Certificates — Yue Fang Di Quan Zheng Shan Zi Di Nos. 1000027258 and 1000027257, 2 units with a total gross floor area of approximately 368.10 sq.m. are owned by HN Shantou Nan’ao. The relevant land use rights of the property with a total apportioned land area of approximately 714.53 sq.m. have been granted to HN Shantou Nan’ao for terms commencing from 7 January 1997. 3. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. The Real Estate Title Certificates of the property have been obtained by the Group and the Group has the rights to occupy and use the property in accordance with the prescribed use stated in the Real Estate Title Certificates as well as to donate, transfer, lease, mortgage or otherwise dispose of it; and b. The property is not subject to any mortgage or other encumbrances.

— IV-47 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

32. 27 parcels of land The property comprises 27 parcels of land with a The property is currently 95,294,000 various buildings and total site area of approximately 324,000 sq.m., occupied by the Group for structures of Qing’ao 5 buildings and various structures erected thereon, production and ancillary 50% interest Wind Farm Phase II and which were completed between 2006 and 2008. purposes. attributable to Niutouling Wind the Group: Farm Phase II The buildings have a total gross floor area of RMB47,647,000 located in approximately 2,574.29 sq.m. Dongbandaoxiong Town The buildings and structures mainly include a Shantou City switch building, an integrated building, a Guangdong Province warehouse, 2 ancillary buildings, a gate, basketball The PRC ground and roads.

The land use rights of 7 parcels of land with a total site area of approximately 300,000 sq.m. of the property have been granted to Huaneng Shantou Wind Power Co., Ltd. for terms of 50 years expiring on 1 March 2057 for industrial use.

Notes: 1. Huaneng Shantou Wind Power Co., Ltd. (“HN Shantou”) is a 50% interest owned subsidiary of the Company. 2. Pursuant to 7 State-owned Land Use Rights Certificates — Nan Guo Yong (2010) Zi Di Te Nos. 1094 to 1100, the land use rights of 7 parcels of land with a total site area of approximately 300,000 sq.m. have been granted to HN Shantou for terms of 50 years expiring on 1 March 2057 for industrial use (the “granted land”). 3. Pursuant to 5 Building Ownership Certificates — Yue Fang Di Zheng Zi Di Nos. C4754822 to C4754826, 5 buildings with a total gross floor area of approximately 2,574.29 sq.m. are owned by HN Shantou. 4. For the remaining 20 parcel of land with a total site area of approximately 24,000 sq.m. erected with wind turbine foundations which are excluded from our valuation. As advised by the Group, HN Shantou is in the process of applying for relevant title certificates of the land. 5. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for relevant land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. 6. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following:

a. The Group has obtained legal title certificates of the granted land of the property and is entitled to occupy, use, donate, transfer, lease, mortgage or otherwise dispose of the land use rights in terms of the prescribed use terms stated in the land use rights certificate;

b. The Group has obtained legal title certificates of the buildings of the property and has the rights to occupy and use the buildings in accordance with the prescribed use stated in the building ownership certificates as well as to donate, transfer, lease, mortgage or otherwise dispose of them;

c. For the remaining 20 parcels of land mentioned in note 4, as per the written confirmation issued by the local government or the relevant authority on the county level or above, the Group will not be subject to any penalty or sanction for construction of the wind turbine foundations. There will no legal impediment to obtain relevant title certificates after the relevant procedures of land granting or allocating have been finished;

d. The property is not subject to any mortgage or other encumbrances; and

e. The undertaking of China Huaneng Group is legal, valid and enforceable. 7. In valuing the property, we have attributed no commercial value to land mentioned in note 4 without any land use rights certificates.

— IV-48 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

33. 10 units on Level 10 of The property comprises 10 office units on Level 10 The property is currently 5,537,000 Junyue Huating of a 20-storey building completed in 2007. occupied by the Group for Building office purpose. 50% interest No. 91 Changping Road The units have a total gross floor area of attributable to Jinping District approximately 907.74 sq.m. the Group: Shantou City RMB2,769,000 Guangdong Province The land use rights have been granted to Huaneng The PRC Shantou Wind Power Co., Ltd. for composite use.

Notes:

1. Huaneng Shantou Wind Power Co., Ltd. (“HN Shantou”) is a 50% interest owned subsidiary of the Company.

2. Pursuant to 10 Real Estate Title Certificates — Yue Fang Di Zheng Zi Di Nos. C6745407 to C6745416, 10 units with a total gross floor area of approximately 907.74 sq.m. are owned by HN Shantou. The relevant land use rights of the units with a total apportioned land area of approximately 135.48 sq.m. have been granted to HN Shantou for composite use for terms expiring on 19 September 2043. 3. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following:

a. The Real Estate Title Certificates of the property have been obtained by the Group and the Group has the rights to occupy and use the property in accordance with the prescribed use stated in the Real Estate Title Certificates as well as to donate, transfer, lease, mortgage or otherwise dispose of it; and

b. The property is not subject to any mortgage or other encumbrances.

— IV-49 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

34. 105 parcels of land The property comprises 105 parcels The property is currently 15,414,000 various buildings and of land with a total site area of occupied by the Group for structures of Santanghu approximately 90,874 sq.m., 3 buildings and production and ancillary 100% interest Wind Farm Phases I and various structures erected thereon, which were purposes. attributable to II located in completed in 2009 and 2010. the Group: Santanghu Town RMB15,414,000 Hamibalikun County The buildings have a total gross floor area of Xinjiang Uygur approximately 1,926.42 sq.m. Autonomous Region The PRC The buildings and structures mainly include an industrial building, 2 ancillary buildings, boundary fences, pools and roads.

The land use rights of the property have been granted to Huaneng Xinjiang Santanghu Wind Power Co., Ltd. for terms of 50 years expiring on 27 February and 20 July 2060 respectively for industrial use.

Notes:

1. Huaneng Xinjiang Santanghu Wind Power Co., Ltd. (“HN Xinjiang Santanghu”) is a wholly-owned subsidiary of the Company. 2. Pursuant to 105 State-owned Land Use Rights Certificates — Ba Zheng Guo Yong 2010 Di Nos. 418 to 486 and Nos. 526 to 561, the land use rights of 105 parcels of land with a total site area of approximately 90,874 sq.m. have been granted to HN Xinjiang Santanghu for terms of 50 years expiring on 27 February and 20 July 2060 respectively for industrial use. 3. Pursuant to 3 Building Ownership Certificates — Fang Quan Zheng Ba Zheng Zi Di Nos. 00001077 to 00001079, 3 buildings with a total gross floor area of approximately 1,926.42 sq.m. are owned by HN Xinjiang Santanghu. 4. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following:

a. The Group has obtained legal title certificates of the land of the property and is entitled to occupy, use, donate, transfer, lease, mortgage or otherwise dispose of the land use rights in terms of the prescribed use terms stated in the land use rights certificates;

b. The Group has obtained legal title certificates of the buildings of the property and has the rights to occupy and use the buildings in accordance with the prescribed use stated in the building ownership certificates as well as to donate, transfer, lease, mortgage or otherwise dispose of them; and

c. The property is not subject to any mortgage or other encumbrances.

— IV-50 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

35. 2 units on Level 5 The property comprises 2 office units on Level 5 of The property is currently 9,689,000 Shuiqingmuhua Court a 27-storey office building completed in about occupied by the Group for No. 66 2006. office purpose. 100% interest Nanhu South Road attributable to Urumqi City The 2 units have total gross floor area of the Group: Xinjiang Uygur approximately 1,057.65 sq.m. RMB 9,689,000 Autonomous Region The PRC

Notes:

1. Huaneng Xinjiang Santanghu Wind Power Co., Ltd. (“HN Xinjiang Santanghu”) is a wholly-owned subsidiary of the Company.

2. Pursuant to 2 Commodity Property Sales & Purchase Contracts — numbered 0655210 to 0655211 dated 10 February 2010, 2 units with a total gross floor area of approximately 1,057.65 sq.m. were contracted to be sold to HN Xinjiang Santanghu at a total consideration of RMB8,122,744. 3. Pursuant to 2 Building Ownership Certificates — Wu Fang Quan Zheng Wu Shi Shui Mo Gou Qu Zi Di Nos. 2009045678 and 2009045679, 2 units with a total gross floor area of approximately 1,057.65 sq.m. are owned by HN Xinjiang Santanghu. 4. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. The building ownership certificates of the property have been obtained by the Group and the Group has the rights to occupy and use the property in accordance with the prescribed use stated in the building ownership certificates as well as to donate, transfer, lease, mortgage or otherwise dispose of it; and b. The property is not subject to any mortgage or other encumbrances.

— IV-51 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in existing state as at No. Property Description and tenure Particulars of occupancy 28 February 2011 RMB

36. A parcel of land, The property comprises a parcel of land with a The property is currently No commercial various buildings and total site area of approximately 197,543.28 sq.m., occupied by the Group for value structures of 3 buildings and various structures erected thereon production and ancillary Dongmafang Wind which were completed in 2010. purposes. Farm Phases I and II located in The buildings have a total gross floor area of Huishungou Village approximately 5,234 sq.m. Dongmafang Town Ningwu County The buildings and structure mainly include an Xinzhou City integrated control building, a switch building, a Shanxi Province residential building and roads. The PRC

Notes:

1. Huaneng Ningwu Wind Power Co., Ltd. (“HN Ningwu”) is a wholly-owned subsidiary of the Company. 2. On the land of the property, there are also wind turbine foundations which are excluded from our valuation. As advised by the Group, HN Ningwu is in process of applying for relevant title certificates. 3. For the buildings with a total gross floor area of approximately 5,234 sq.m., as advised by the Group, HN Ningwu is in process of applying for the building ownership certificates.

4. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for building ownership certificate and land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. 5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the property, China Huaneng Group has made undertaking stated in note 4. There is no significant dispute over the ownership which will affect the major business of the Group. Therefore, there is no significant adverse effect on listing and operation of the Group; b. The property is not subject to any mortgage or other encumbrances; and c. The undertaking of China Huaneng Group is legal, valid and enforceable. 6. In valuing the property, we have attributed no commercial value to the property without any title certificates. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the buildings and structures (excluding the land element) would be in the sum of RMB11,834,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-52 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in existing state as at No. Property Description and tenure Particulars of occupancy 28 February 2011 RMB

37. 11 parcels of land, The property comprises 11 parcels of land with a The property is currently No commercial various buildings and total site area of approximately 7,890 sq.m., occupied by the Group for value structures of Chongming 2 buildings and various structures erected thereon production and ancillary Qianwei Wind Farm which were completed in 2010. purposes. located in Huangguasha Qianwei Village Shuxin The buildings have a total gross floor area of Town approximately 2,230.01 sq.m. Chongming County Shanghai The buildings and structure mainly include an The PRC integrated control building, a pump house, well and roads.

The land use rights of the property have been allocated to Huaneng New Energy Shanghai Wind Power Co., Ltd. for public utility use.

Notes: 1. Huaneng New Energy Shanghai Wind Power Co., Ltd. (“HN New Energy Shanghai”) is a wholly-owned subsidiary of the Company. 2. Pursuant to 11 Real Estate Title Certificates — Hu Fang Di Chong Zi (2011) Di Nos. 002111 and 002114, 002130 to 002133 and 002137 to 002141, the land use rights of 11 parcels of land with a total site area of approximately 7,890 sq.m. have been allocated to HN New Energy Shanghai for public utility use. 3. For the buildings with a total gross floor area of approximately 2,230.01 sq.m. erected on the land mentioned above, as advised by the Group, HN New Energy Shanghai is in process of applying for the building ownership certificates.

4. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for building ownership certificate and land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. 5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the land use rights of the property, the Group has obtained legal title certificates and is entitled to occupy and use the relevant land use rights in terms of the prescribed use stated in the land use rights certificates; b. For the buildings mentioned in note 3, China Huaneng Group has made undertaking stated in note 4, there is no significant dispute over the ownership which will affect the major business of the Group. Therefore, there is no significant adverse effect on listing and operation of the Group; c. The property is not subject to any mortgage or other encumbrances; and d. The undertaking of China Huaneng Group is legal, valid and enforceable. 6. In valuing the property, we have attributed no commercial value to the property based on the legal opinion. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the buildings and structures (excluding the land element) would be in the sum of RMB8,732,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-53 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in existing state as at No. Property Description and tenure Particulars of occupancy 28 February 2011 RMB

38. A parcel of land, various The property comprises a parcel of land with a site The property is currently No commercial buildings and structures area of approximately 163,960 sq.m., 3 building occupied by the Group for value of Hezhang Jiucaiping and various structures erected thereon which were production and ancillary Wind Farm Phase I completed in December 2010. purposes. located in Hetao Village, The buildings have a total gross floor area of Guangming Village and approximately 2,689.02 sq.m. Zhushi Village Hezhang County The buildings and structures mainly include Guizhou Province integrated building, an equipment building, an The PRC ancillary building and roads.

The land use rights of the property have been allocated to Huaneng Hezhang Wind Power Co., Ltd. for industrial use.

Notes:

1. Huaneng Hezhang Wind Power Co., Ltd. (“HN Hezhang”) is a wholly-owned subsidiary of the Company. 2. Pursuant to a State-owned Land Use Rights Certificate — He Guo Yong (2011) Di No. 38, the land use rights of a parcel of land with a site area of approximately 163,960 sq.m. have been allocated to HN Hezhang for industrial use, which have been approved by the relevant government authority to be used by the Group as allocated land (the “allocated land”). 3. Pursuant to 3 Construction Work Planning Permits — Jian Zi Di Nos. 520000201000404 to 520000201000406 in favor of HN Hezhang, 3 buildings with a total gross floor area of approximately 2,689.02 sq.m. have been approved for construction. 4. As advised by the Group, HN Hezhang is in process of applying for the building ownership certificates.

5. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for building ownership and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. 6. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the land use rights of the allocated land, the Group has obtained legal title certificate and is entitled to occupy and use the relevant land use rights in terms of the prescribed use stated in the land use rights certificates; b. For the buildings of the property, China Huaneng Group has made undertaking stated in note 5. There is no significant dispute over the ownership which will affect the major business of the Group. Therefore, there will be no significant adverse effect on listing and operation of the Group; c. The property is not subject to any mortgage or other encumbrances; and d. The undertaking of China Huaneng Group is legal, valid and enforceable. 7. In valuing the property, we have attributed no commercial value to the property based on the legal opinion. However, for reference purpose, we are of the opinion that the depreciated replacement cost of the buildings and structures (excluding the land element) would be in the sum of RMB9,579,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-54 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

39. 28 units on Levels 19, The property comprises 28 office units on Levels The property is currently No commercial 20 and 23 of Block 4 of 19, 20 and 23 of a 26-storey office building vacant. value International Metropolis completed in 2010. Center No. 200 The property has a total gross floor area of Nanzhonghuan Street approximately 3,368.58 sq.m. Gaoxin District Taiyuan City Shanxi Province The PRC

Notes:

1. Pursuant to 6 Commodity Property Sales & Purchase Contracts — numbered 20081035764, 20081035767 and 20081035804 to 20081035807 all dated 21 July 2010, 6 units with a total gross floor area of approximately 804.34 sq.m. of the property were contracted to be sold to Huaneng Ningwu Wind Power Co., Ltd. (“HN Ningwu”) at a total consideration of RMB7,015,337. HN Ningwu is a wholly-owned subsidiary of the Company. 2. Pursuant to 9 Commodity Property Sales & Purchase Contracts — numbered 20081035763, 20081035765 to 20081035766, 20081035773 to 20081035774 and 20081035788 to 20081035791 all dated 21 July 2010, 9 units with a total gross floor area of approximately 877.78 sq.m. of the property were contracted to be sold to Huaneng Tianzhen Wind Power Co., Ltd. (“HN Tianzhen”) at a total consideration of RMB7,605,673. HN Tianzhen is a wholly-owned subsidiary of the Company. 3. Pursuant to 7 Commodity Property Sales & Purchase Contracts — numbered 20081035760 to 20081035762 and 20081035780 to 20081035783 all dated 21 July 2010, 7 units with a total gross floor area of approximately 882.12 sq.m. of the property were contracted to be sold to Huaneng Yuanping Wind Power Co., Ltd. (“HN Yuanping”) at a total consideration of RMB7,611,428. HN Yuanping is a wholly-owned subsidiary of the Company. 4. Pursuant to 6 Commodity Property Sales & Purchase Contracts — number 20081035772, 20081035775 and 20081035796 to 20081035799, 6 units with a total gross floor area of approximately 804.34 sq.m. of the property were contracted to be sold to Huaneng Pianguan Wind Power Co., Ltd. (“HN Pianguan”) at a total consideration of RMB7,007,502. HN Pianguan is a wholly-owned subsidiary of the Company. 5. As advised by the Group, the Group is in process of applying for relevant title certificates of the property.

6. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for building ownership certificates and land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. 7. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following:

a. For the property, China Huaneng Group has made undertaking stated in note 6. There is no significant dispute over the ownership which will affect the major business of the Group. Therefore, there will be no significant adverse effect on listing and operation of the Group;

b. The property is not subject to any mortgage or other encumbrances; and

c. The undertaking of China Huaneng Group is legal, valid and enforceable. 8. In valuing the property, we have attributed no commercial value to the property with a total gross floor area of approximately 3,368.58 sq.m. for which the Group has not obtained any building ownership certificates. However, for reference purpose, we are of the opinion that the capital value of the property as at the date of valuation would be in the sum of RMB29,240,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-55 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

40. Unit 202 The property comprises a unit on Level 2 of a The property is currently 11,571,000 Changxin Plaza Tower F 5-storey office building which was completed in occupied by the Group for No. 320 2005. office purpose. 100% interest Qingnian Avenue attributable to Shenyang City The unit has a gross floor area of approximately the Group: Liaoning Province 1,192.92 sq.m. RMB11,571,000 The PRC

Notes:

1. Huaneng Jinzhou Wind Power Co., Ltd. (“HN Jinzhou”) is a wholly-owned subsidiary of the Company.

2. Pursuant to a Building Ownership Certificate — Shen Fang Quan Zheng Shi Zhong Xin Zi Di No. N060266518, the unit with a gross floor area of approximately 1,192.92 sq.m. is owned by HN Jinzhou. 3. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. The building ownership certificate of the property has been obtained by the Group and the Group has the rights to occupy and use the property in accordance with the prescribed use stated in the building ownership certificate as well as to donate, transfer, lease, mortgage or otherwise dispose of the property; and b. The property is not subject to any mortgage or other encumbrances.

— IV-56 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Group II — Property interests held under development by the Group in the PRC

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

41. A parcel of land and a The property comprises a parcel of land with a site The property is currently 6,133,000 building under area of approximately 13,333.33 sq.m. and a under construction. construction building which was being constructed as at the date 100% interest located to the northern of valuation ( the “CIP”) on the land. attributable to side of Qingling Avenue the Group: and the western side of As advised by the Group, the CIP is scheduled to RMB6,133,000 Jianhua Road be completed in August 2011. Upon completion, Xincheng District the building will have a gross floor area of Tongliao City approximately 6,253.77 sq.m. Inner Mongolia Autonomous Region The land use rights of the property have been The PRC granted for a term of 50 years expiring on 28 October 2059 for institutional use.

Notes:

1. Huaneng Tongliao Wind Power Co., Ltd. (“HN Tongliao”) is a wholly-owned subsidiary of the Company. 2. As advised by the Group, the total construction cost of the CIP is estimated to be approximately RMB12,560,000. 3. Pursuant to a State-owned Land Use Rights Certificate — Tong Guo Yong (2009) Di No. 20129, the land use rights of a parcel of land with a site area of approximately 13,333.33 sq.m. have been granted to HN Tongliao for a term of 50 years expiring on 28 October 2059 for institutional use (the “granted land”). 4. Pursuant to a Construction Work Planning Permit — Jian Zi Di No. 15050120100152 in favour of HN Tongliao, the building with a planned gross floor area of approximately 6,253.77 sq.m. has been approved for construction.

5. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for building ownership certificate under the name of the Group after the construction is completed. 6. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. The Group has obtained a legal title certificate of the land of the property and the Group is entitled to occupy, use, donate, transfer, lease, mortgage or otherwise dispose of the land use rights in terms of prescribed use terms stated in the land use rights certificate; b. For the CIP, China Huaneng Group has made undertaking in note 5. After finishing the relevant procedures, there will be no significant dispute over the ownership which will affect the major business of the Group. Therefore, there will be no significant adverse effect on listing and operation of the Group; c. The property is not subject to any mortgage or other encumbrances; and d. The undertaking of China Huaneng Group is legal, valid and enforceable. 7. In valuing the property, we have attributed no commercial value to the CIP for which the Group has not obtained proper construction permits. However, for reference purpose, we are of the opinion that the capital value of the CIP (excluding the land element) would be in the sum of RMB1,256,000 assuming all relevant title certificates had been obtained and it could be freely transferred.

— IV-57 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

42. 34 parcels of land, The property comprises 34 parcels of land with a The property is currently No commercial together with total site area of approximately 38,868.26 sq.m. under construction. value various buildings and and various buildings and structures which were structures being constructed as at the date of valuation ( the under construction of “CIP”) on the land. Fuxin Zhalanshan Wind Farm located in As advised by the Group, the CIP is scheduled to Yushi Town be completed in July 2011. Upon completion, the Fumeng County buildings will have a total gross floor area of Liaoning Province approximately 2,766 sq.m. The PRC

Notes:

1. Huaneng Fuxin Wind Power Co., Ltd. (“HN Fuxin”) is a wholly-owned subsidiary of the Company. 2. As advised by the Group, the total construction cost of CIP is estimated to be approximately RMB7,445,000, of which RMB1,933,000 had been paid up to the date of valuation. HN Fuxin is in process of applying for relevant title certificates of the property. 3. On the land of the property, there are also wind turbine foundations which are being constructed and are excluded from our valuation.

4. Pursuant to a Reorganization Agreement, China Huaneng Group ( ), the controlling shareholder of the Company) has undertaken to assistant the Group in applying for building ownership certificates and land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. For the CIP, after the construction is completed, China Huaneng Group has undertaken to assist the Group in applying for building ownership certificates under the name of the Group after the construction is completed. 5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the land of the property, upon obtaining the written confirmation for the project issued by the local government or land administration department on the county level or above, the Group will not be subject to any penalty or sanction for current construction of the property, including any order to stop construction. There will be no legal impediment to obtain the relevant title certificates after the CIP is completed and the relevant procedures of land granting or allocating have been finished; b. For the CIP, China Huaneng Group has made undertaking in note 4. After finishing the relevant procedures, there will be no significant dispute over the ownership which will affect the major business of the Group. Therefore, there will be no significant adverse effect on listing and operation of the Group; and c. The undertaking of China Huaneng Group is legal, valid and enforceable. 6. In valuing the property, we have attributed no commercial value to the property for which the Group has not obtained any land use rights certificates and construction permits. However, for reference purpose, we are of the opinion that the capital value of the CIP (excluding the land element) would be in the sum of RMB5,584,000, assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-58 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

43. 24 parcels of land, The property comprises 24 parcels of land with a The property is currently 2,881,000 together with various total site area of approximately 16,698 sq.m. and under construction. buildings and structures various buildings and structures which were being 100% interest under construction of constructed as at the date of valuation ( the “CIP”) attributable to Ningjin Chudao Wind on the land. the Group: Farm RMB2,881,000 located in As advised by the Group, the CIP is scheduled to Ningjing Street be completed in July 2011. Upon completion, the Rongcheng City buildings will have a total gross floor area of Shandong Province approximately 1,619.81 sq.m. The PRC The land use rights of 11 parcels of land with a total site area of approximately 11,203 sq.m. of the property have been granted to Huaneng Rongcheng Wind Power Co., Ltd. for terms of 50 years expiring on 5 December 2060 for industrial use.

Notes: 1. Huaneng Rongcheng Wind Power Co., Ltd. (“HN Rongcheng”) is a wholly-owned subsidiary of the Company. 2. As advised by the Group, the total construction cost of the CIP is estimated to be approximately RMB6,776,000, of which RMB5,963,000 had been paid up to the date of valuation. HN Rongcheng is in process of applying for relevant title certificates of the property. 3. Pursuant to 11 State-owned Land Use Rights Certificates—Rong Guo Yong (2011) Di Nos. 210479 to 210489, the land use rights of 11 parcels of land of the property with a total site area of approximately 11,203 sq.m. have been granted to HN Rongcheng for terms of 50 years expiring on 5 December 2060 for industrial use. 4. For the remaining 13 parcels of land with a total site area of approximately 5,495 sq.m. erected with wind turbine foundations which are excluded from our valuation. As advised by the Group, HN Rongcheng is in process of applying for the relevant title certificates. 5. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. For the CIP, after the construction is completed, China Huaneng Group has undertaken to assist the Group in applying for building ownership certificates under the name of the Group. 6. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the land use rights of the land mentioned in note 3, the Group has obtained the legal title certificates for the land of the property and is entitled to occupy, use, donate, transfer, lease, mortgage or otherwise dispose of the land use rights in terms of the prescribed use terms stated in the land use rights certificates; b. For remaining 13 parcels of the land mentioned in note 4, as per the written confirmation issued by the local government or relevant authority on the county level or above with regard to the land and the project construction, the Group will not be subject to any penalty or sanction for current construction of the property, including any order to stop construction. There will be no legal impediment to obtain the relevant title certificates after the CIP is completed and relevant procedures of land granting or allocating have been finished; c. For the CIP, China Huaneng Group has made undertaking in note 5. After finishing the relevant procedures, there will be no significant dispute over the ownership which will affect the major business of the Group. Therefore, there will be no significant adverse effect on listing and operation of the Group; and d. The undertaking of China Huaneng Group is legal, valid and enforceable. 7. In valuing the property, we have attributed no commercial value to the property which the Group has not obtained any land use rights certificates and construction permits (excluding the land mentioned in note 3). However, for reference purpose, we are of the opinion that the capital value of the CIP (excluding the land element) would be in the sum of RMB6,099,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-59 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

44. 34 parcels of land, The property comprises 34 parcels of land with a The property is currently No commercial together with various total site area of approximately 24,899 sq.m. and under construction. value buildings and structures various buildings and structures which were being under construction of constructed as at the date of valuation ( the “CIP”) Donghuqu Wind Farm on the land. located in Donghu District As advised by the Group, the CIP is scheduled to Manzhouli City be completed in July 2011. Upon completion, the Inner Mongolia buildings will have a total gross floor area of Autonomous Region approximately 3,165.13 sq.m. The PRC

Notes:

1. Huaneng Hulunbuir Wind Power Co., Ltd. (“HN Hulunbuir”) is a 51% interest owned subsidiary of the Company. 2. As advised by the Group, the total construction cost of the CIP is estimated to be approximately RMB15,320,000, of which RMB15,300,000 had been paid up to the date of valuation. HN Hulunbuir is in process of applying for relevant title certificates of the property. 3. On the land of the property, there are also wind turbine foundations which are being constructed and are excluded from our valuation.

4. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assistant the Group in applying for land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. For the CIP, after the construction is completed, China Huaneng Group has undertaken to assist the Group in applying for building ownership certificates under the name of the Group. 5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the land of the property, as per the written confirmation for the project by the local government or land administration department on the county level or above, the Group will not be subject to any penalty or sanction for current construction of the property, including any order to stop construction. There will be no legal impediment to obtain the relevant title certificates after the CIP is completed and relevant procedures of land granting or allocating have been finished; b. For the CIP, China Huaneng Group has made undertaking in note 4. After finishing the relevant procedures, there will be no significant dispute over the ownership which will affect the major business of the Group. Therefore, there will be no significant adverse effect on listing and operation of the Group; and c. The undertaking of China Huaneng Group is legal, valid and enforceable. 6. In valuing the property, we have attributed no commercial value to the property for which the Group has not obtained any land use rights certificates and construction permits. However, for reference purpose, we are of the opinion that the capital value of the CIP (excluding the land element) would be in the sum of RMB15,320,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-60 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

45. 12 parcels of land, The property comprises 12 parcels of land with a The property is currently No commercial together with various total site area of approximately 26,011.2 sq.m. and under construction. value buildings and structures various buildings and structures which were being under construction of constructed as at the date of valuation ( the “CIP”) Yiminsumu Wind Farm on the land. and Huihe Wind Farm located in As advised by the Group, the CIP is scheduled to Erwenkeqi be completed in November 2011. Upon Yiminhe Town completion, the buildings will have a total gross Hulunbuir City floor area of approximately 2,286.8 sq.m. Inner Mongolia Autonomous Region The PRC

Notes:

1. Huaneng Hulunbuir Wind Power Co., Ltd (“HN Hulunbuir”) is a 51% interest owned subsidiary of the Company. 2. As advised by the Group, the total construction cost of CIP is estimated to be approximately RMB22,940,000, of which RMB4,994,000 had been paid up to the date of valuation. HN Hulunbuir is in process of applying for relevant title certificates of the property. 3. On the land of the property, there are also wind turbine foundations which are being constructed and are excluded from our valuation.

4. Pursuant to a Reorganization Agreement, China Huaneng Group ( ), the controlling shareholder of the Company) has undertaken to assistant the Group in applying for land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. For the CIP, after the construction is completed, China Huaneng Group has undertaken to assist the Group in applying for building ownership certificates under the name of the Group. 5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the land of the property, upon obtaining the written confirmation for the project issued by the local government or land administration department on the county level or above, the Group will not be subject to any penalty or sanction for current construction of the property, including any order to stop construction. There will be no legal impediment to obtain the relevant title certificates after the CIP is completed and the relevant procedures of land granting or allocating have been finished; b. For the CIP, China Huaneng Group has made undertaking in note 4. After finishing the relevant procedures, there will be no significant dispute over the ownership which will affect the major business of the Group. Therefore, there will be no significant adverse effect on listing and operation of the Group; and c. The undertaking of China Huaneng Group is legal, valid and enforceable. 6. In valuing the property, we have attributed no commercial value to the property for which the Group has not obtained any land use rights certificates and construction permits. However, for reference purpose, we are of the opinion that the capital value of the CIP (excluding the land element) would be in the sum of RMB6,570,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-61 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

46. A parcel of land, The property comprises a parcel of land with a site The property is currently No commercial together with various area of approximately 18,368 sq.m. and various under construction. value buildings and structures buildings and structures which were being under construction of constructed as at the date of valuation ( the “CIP”) Xinba’erhu Wind Farm on the land. located in Amugulang Town As advised by the Group, the CIP is scheduled to Xinba’erhuzuoqi be completed in December 2011. Upon Hulunbuir City completion, the buildings will have a total gross Inner Mongolia floor area of approximately 2,753.5 sq.m. Autonomous Region The PRC

Notes:

1. Huaneng Hulunbuir Wind Power Co., Ltd (“HN Hulunbuir”) is a 51% interest owned subsidiary of the Company. 2. As advised by the Group, the total construction cost of CIP is estimated to be approximately RMB15,060,000, of which RMB3,086,000 had been paid up to the date of valuation. HN Hulunbuir is in process of applying for relevant title certificates of the property. 3. On the land of the property, there are also wind turbine foundations which are being constructed and are excluded from our valuation.

4. Pursuant to a Reorganization Agreement, China Huaneng Group ( ), the controlling shareholder of the Company) has undertaken to assistant the Group in applying for land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. For the CIP, after the construction is completed, China Huaneng Group has undertaken to assist the Group in applying for building ownership certificates under the name of the Group. 5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the land of the property, as per the written confirmation for the project issued by the local government or land administration department on the county level or above, the Group will not be subject to any penalty or sanction for current construction of the property, including any order to stop construction. There will no legal impediment to obtain the relevant title certificates after the CIP is completed and the relevant procedures of land granting or allocating have been finished; b. For the CIP, China Huaneng Group has made undertaking in note 4. After finishing the relevant procedures, there will be no significant dispute over the ownership which will affect the major business of the Group. Therefore, there will be no significant adverse effect on listing and operation of the Group; and c. The undertaking of China Huaneng Group is legal, valid and enforceable. 6. In valuing the property, we have attributed no commercial value to the property for which the Group has not obtained any land use rights certificates and construction permits. However, for reference purpose, we are of the opinion that the capital value of the CIP (excluding the land element) would be in the sum of RMB6,024,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-62 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value Particulars of in existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

47. 34 parcels of land, The property comprises 34 parcels of land The property is currently No commercial together with with a total site area of approximately under construction. value various buildings and 23,233.22 sq.m. and various buildings and structures under structures which were being constructed as at the construction of date of valuation ( the “CIP”) on the land. Duanjiabao Wind Farm located in As advised by the Group, the CIP is scheduled to Duanjiabao Village and be completed in July 2011. Upon completion, the Tapoquan Village buildings will have a total gross floor area of Yuanping City approximately 2,330.07 sq.m. Shanxi Province The PRC

Notes:

1. Huaneng Yuanping Wind Power Co., Ltd. (“HN Yuanping”) is a wholly-owned subsidiary of the Company. 2. As advised by the Group, the total construction cost of the CIP is estimated to be approximately RMB6,193,000, of which RMB5,644,000 had been paid up to the date of valuation. HN Yuanping is in process of applying for relevant title certificates of the property. 3. On the land of the property, there are also wind turbine foundations which are being constructed and are excluded from our valuation.

4. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. For the CIP, after the construction is completed, China Huaneng Group has undertaken to assist the Group in applying for building ownership certificates under the name of the Group. 5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the land of the property, as per the written confirmation for the project issued by the local government or land administration department on the county level or above, the Group will not be subject to any penalty or sanction for current construction of the property, including any order to stop construction. There will be no legal impediment to obtain the relevant title certificates after the CIP is completed and relevant procedures of land granting or allocating have been finished; b. For the CIP, China Huaneng Group has made undertaking in note 4. After finishing the relevant procedures, there will be no significant dispute over the ownership which will affect the major business of the Group. Therefore, there will be no significant adverse effect on listing and operation of the Group; and c. The undertaking of China Huaneng Group is legal, valid and enforceable. 6. In valuing the property, we have attributed no commercial value to the property for which the Group has not obtained any land use rights certificates and construction permits. However, for reference purpose, we are of the opinion that the capital value of the CIP (excluding the land element) would be in the sum of RMB5,885,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-63 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

48. 34 parcels of land, The property comprises 34 parcels of land with a The property is currently No commercial together with total site area of approximately 25,422.55 sq.m. under construction. value various buildings and and various buildings and structures which were structures under being constructed as at the date of valuation ( the construction of “CIP”) on the land. Wujiashan Wind Farm located in As advised by the Group, the CIP is scheduled to Jiajiatun Village and be completed in July 2011. Upon completion, the Wujiashan Village buildings will have a total gross floor area of Tianzhen County approximately 2,226.30 sq.m. Shanxi Province The PRC

Notes:

1. Huaneng Tianzhen Wind Power Co., Ltd. (“HN Tianzhen”) is a wholly-owned subsidiary of the Company. 2. As advised by the Group, the total construction cost of the CIP is estimated to be approximately RMB10,480,000, of which RMB896,000 had been paid up to the date of valuation. HN Tianzhen is in process of applying for relevant title certificates of the property. 3. On the land of the property, there are also wind turbine foundations which are being constructed and are excluded from our valuation.

4. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group in applying for land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. For the CIP, after the construction is completed, China Huaneng Group has undertaken to assist the Group in applying for building ownership certificates under the name of the Group. 5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the land of the property, as per the written confirmation issued by the local government or relevant authority on the county level or above with regard to the land and project construction, the Group will not be subject to any penalty or sanction for current construction of the property, including any order to stop construction. There will be no legal impediment to obtain the relevant title certificates after the CIP is completed and relevant procedures of land granting or allocating have been finished; b. For the CIP, China Huaneng Group has made undertaking in note 4. After finishing the relevant procedures, there will be no significant dispute over the ownership which will affect the major business of the Group. Therefore, there will be no significant adverse effect on listing and operation of the Group; and c. The undertaking of China Huaneng Group is legal, valid and enforceable. 6. In valuing the property, we have attributed no commercial value to the property for which the Group has not obtained any land use rights certificates and construction permits. However, for reference purpose, we are of the opinion that the capital value of the CIP (excluding the land element) would be in the sum of RMB9,400,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-64 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

49. 34 parcels of land, The property comprises 34 parcels of land with a The property is currently No commercial together with various total site area of approximately 26,975 sq.m. and under construction. value buildings and structures various buildings and structures which were being under construction of constructed as at the date of valuation ( the “CIP”) Heijiazhuang Wind on the land. Farm located in As advised by the Group, the CIP is scheduled to Dachongling Village be completed in November 2011. Upon and Nanbaozi Village completion, the buildings will have a total gross Pianguan County floor area of approximately 2,304.89 sq.m. Xinzhou City Shanxi Province The PRC

Notes:

1. Huaneng Pianguan Wind Power Co., Ltd. (“HN Pianguan”) is a wholly-owned subsidiary of the Company. 2. As advised by the Group, the total construction cost of CIP is estimated to be approximately RMB10,360,000, of which RMB7,954,000 had been paid up to the date of valuation. HN Pianguan is in process of applying for relevant title certificates of the property. 3. On the land of the property, there are also wind turbine foundations which are being constructed and are excluded from our valuation.

4. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assistant the Group in applying for land use rights certificates and indemnify against any losses, claims, charges or expenses arising from the failure to obtain outstanding title certificates. For the CIP, after the construction is completed, China Huaneng Group has undertaken to assist the Group in applying for building ownership certificates with the owner of the Group. 5. We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia, the following: a. For the land of the property, as per obtaining the written confirmation for the project issued by the local government or land administration department on the county level or above, the Group will not be subject to any penalty or sanction for current construction of the property, including any order to stop construction. There will no legal impediment to obtain the relevant title certificates after the CIP is completed and the relevant procedures of land granting or allocating have been finished; b. For the CIP, China Huaneng Group has made undertaking in note 4. After finishing the relevant procedures, there is no significant dispute over the ownership which will affect the major business of the Group. Therefore, there will be no significant adverse effect on listing and operation of the Group; and c. The undertaking of China Huaneng Group is legal, valid and enforceable. 6. In valuing the property, we have attributed no commercial value to the property for which the Group has not obtained any land use rights certificates and construction permits. However, for reference purpose, we are of the opinion that the capital value of the CIP (excluding the land element) would be in the sum of RMB9,324,000 assuming all relevant title certificates had been obtained and they could be freely transferred.

— IV-65 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX IV PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Group III — Property interests leased and occupied by the Group in the PRC

Capital value in Particulars of existing state as at No. Property Description and tenure occupancy 28 February 2011 RMB

50. 43 leased properties The properties comprise 43 properties in various The properties are No commercial located in the PRC cities in the PRC which were mainly completed in currently occupied by the value various stages between 1998 and 2009. Group for office and residential purposes. The properties have a total gross floor area of approximately 13,464.01 sq.m.

The properties are leased to the Group from various independent third parties and connected parties (the “lessors”) for various terms with the expiry dates between 15 June 2011 and 31 July 2013.

Notes:

1. Pursuant to various Tenancy Agreements, 40 properties with a total gross floor area of approximately 8,889.01 sq.m. are leased to the Group for various terms with the expiry dates between 15 June 2011 and 30 November 2012 at a total annual rent of RMB1,772,426.41 exclusive of management fees, water and electricity charges for office and residential uses. As confirmed by the Group, the relevant lessors are independent third parties to the Group. 2. Pursuant to 3 Tenancy Agreements, 3 properties with a total gross floor area of approximately 4,575 sq.m. are leased to the Group for terms with expiry dates between 31 December 2011 and 31 July 2013 at a total annual rent of RMB4,797,424 exclusive of management fees, water and electricity charges for office use. As confirmed by the Group, the relevant lessors are connected parties to the Group, which are respectively Xinsheng Property Management Co., Ltd. (a wholly-owned subsidiary of China Huaneng Group) and Huaneng Dali Hydro Power Co., Ltd. (a 56% interest owned subsidiary of China Huaneng Group). 3. For 30 properties out of the 43 leased properties with a total gross floor area of approximately 10,867.31 sq.m., the respective lessors have provided the Group with the relevant building ownership certificates or commodity property sales & purchase contracts. 4. For the remaining 13 properties with a total gross floor area of approximately 2,596.7 sq.m., the Group has not been provided with relevant title certificates.

5. Pursuant to a Reorganization Agreement, China Huaneng Group ( , the controlling shareholder of the Company) has undertaken to assist the Group to obtain the lessors’ guarantee for the exclusive use of the leased properties without any dispute and to indemnify against the losses relating to the aforesaid disputes. 6. We have been provided with a legal opinion on the legality of the Tenancy Agreements to the properties issued by the Company’s PRC legal advisers, which contains, inter alia, the following: a. The Tenancy Agreements relating to the properties mentioned in note 3 are legal, valid and enforceable and can be protected by the PRC laws; b. The Tenancy Agreements relating to the properties mentioned in note 4 would be legal on the condition that the relevant lessors can provide relevant building title certificates. The Group may face the risk of discontinued use of the properties if there are any dissents on the ownership or lease rights from any third parties. However, the Group has confirmed that it is easy to find substitute properties in the relevant relocation and the property leases would have no significant adverse effect on the operation of the Group; and c. The undertaking of China Huaneng Group is legal, valid and enforceable. 7. We are of the opinion that the rent payables under the Tenancy Agreements mentioned in note 2 are based on the prevailing market rates.

— IV-66 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX V PROJECT PORTFOLIO OVERVIEW On-grid tariff (in RMB/kWh, including VAT) installed (in MW) capacity / Attributable construction capacity under installed (in MW) capacity / construction Consolidated capacity under 49.5 49.5 49.5 0.540 under (in MW) Capacity construction 100.5100.5 199.5 100.5 300 100.5 300 0.540 0.540 capacity (in MW) Installed Status Completed construction construction 100%100% Operational100% 49.5 Operational100% 49.5 Operational100% 49.5 Operational100% 49.5 49.5 Operational100% 49.5 49.5 Operational 49.5100% 49.5 48 Operational 49.5100% 0.540 49.5 49.5 Operational 49.5100% 0.540 49.5 49.5 Operational 300.15 49.5100% 0.540 Operational 49.5 48100% 0.540 49.5 49.5 Operational 0.540 28.5 49.5 300.15 Construction 48 49.5 300.15 49.5 0.540 0.540 49.5 0.540 0.540 28.5 49.5 28.5 0.540 0.540 100%100% Under Under by the Company Ownership in project held project Wind power Farm Phase I Baolongshan Wind Farm Phase II Baolongshan Wind Farm Phase III Zhurihe Wind Farm 1 Phase I Zhurihe Wind Farm 1 Phase II Zhurihe Wind Farm 1 Phase III Dongbaiyin Wind Farm Xibaiyin Wind Farm Haorigetu Wind Farm Dagula Wind Farm Baolongshan Wind Farm Phase IV Nugusitai Wind Farm Kailu Jianhua Wind Farm Halunhuduga Wind Farm Location Inner Mongolia Baolongshan Wind This Appendix V sets out certain information inThe respect table of below our sets wind forth power the projects. details of wind power projects operated by our direct subsidiaries as of December 31, 2010: (Huaneng Tongliao Wind Power Co., Ltd.) Project company Northeast China

— V-1 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX V PROJECT PORTFOLIO OVERVIEW On-grid tariff (in RMB/kWh, including VAT) installed (in MW) capacity / Attributable construction capacity under installed (in MW) capacity / construction Consolidated capacity under 49.549.5 49.5 49.5 49.5 49.5 0.540 0.540 49.549.5 49.5 49.5 49.5 49.5 0.540 0.540 49.5 49.5 49.5 0.610 under (in MW) Capacity construction 49.5 49.5 49.5 0.540 49.549.5 49.5 49.5 49.549.5 0.540 49.5 0.540 49.5 49.5 0.610 199.5 100.5 300 300 0.610 capacity (in MW) Installed Status Completed Completed Completed Completed construction construction construction construction construction construction 51% Operational 49.5 49.5 25.245 0.540 100% Under 100%100% Under Under 100%100% Under Under 100% Construction 100%100% Operational100% 49.5 Operational 49.5 Construction 100%100% 49.5 Operational100% 100.5 49.5 Operational100% 49.5 300 Operational 49.5 100.5 0.540 Construction 100.5 0.540 100.5 300 100.5 0.610 100.5 300 0.610 0.610 by the Company Ownership in project held project Wind power Donghu Wind Farm Xinba’erhu Phase I Yiminsumu Wind Farm Huihe Wind Farm 100% Under Haoli Wind Farm 100% Construction Fuxin Zhangbei Wind Farm Fuxin Zhalanshan Wind Farm Farm Daliang Wind Farm Farm Baiyinnula Wind Farm Denggao Wind Farm Phase I Fuxin Fubei Wind Farm Phase II Fuxin Wind Farm Phase III Fuxin Liangguan Yinzi Wind Farm Location Liaoning Fuxin Wind Farm Inner Mongolia Xiaoliang Wind Inner Mongolia Gaoliban Wind (Huaneng Hulunbuir Wind Power Co., Ltd.) (Huaneng Keyouzhongqi Wind Power Co., Ltd.) (Huaneng Fuxin Wind Power Co., Ltd.) Project company

— V-2 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX V PROJECT PORTFOLIO OVERVIEW On-grid tariff (in RMB/kWh, including VAT) installed (in MW) capacity / Attributable construction capacity under installed (in MW) capacity / construction Consolidated capacity under 49.5 49.549.549.5 49.5 49.549.5 49.5 0.580 49.549.5 49.5 49.549.5 0.580 49.5 49.549.5 0.580 49.5 49.5 0.580 49.5 49.5 0.580 49.5 0.580 0.580 under (in MW) Capacity construction 49.5 49.5 37.125 0.610 capacity (in MW) Installed Status Completed construction construction construction construction construction construction construction Construction 75% 55%55% Operational 27.255% Operational 19.5 Operational 49.5 27.2 14.96 19.5 49.5 0.700 10.725 27.225 0.700 0.700 100%100% Under 100% Under 100% Under 100% Under 100% Under 100% Under Under by the Company Ownership in project held project Wind power Phase III Wind Farm 1A Tongyu Xinhua Wind Farm 1B Tongyu Xinhua Wind Farm 1C Tongyu Xinhua Wind Farm 1D Tongyu Xinhua Wind Farm 1E Tongyu Xinhua Wind Farm 1F Farm Changdao Wind Farm Farm Phase I Weihai Wind Farm Phase II Jilin Taobei Wind Farm Jilin Tongyu Xinhua Location Liaoning Panjin Dawa Wind Shandong Zhongdian Shandong Weihai Wind (Huaneng Panjin Wind Power Co., Ltd.) (Huaneng Baicheng Wind Power Co., Ltd.) (Huaneng Tongyu Xinhua Wind Power Co., Ltd.) (HNEEP-CLP Changdao Wind Power Co., Ltd.) (HNNE-CLP Weihai Wind Power Co., Ltd.) East China Region Project company

— V-3 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX V PROJECT PORTFOLIO OVERVIEW On-grid tariff (in RMB/kWh, including VAT) installed (in MW) capacity / Attributable construction capacity under installed (in MW) capacity / construction Consolidated capacity under 48 48 48 0.700 under (in MW) Capacity construction 49.549.5 49.549.5 49.5 49.5 0.700 49.5 49.5 0.700 49.549.5 49.5 0.700 49.5 49.5 49.5 0.700 49.5 0.700 capacity (in MW) Installed Status Completed Completed Completed Completed Completed construction 55% Operational 49.5 49.5 27.225 0.700 100% Construction 100%100% Operational 49.5100% Construction 100% Operational100% 49.5 49.5 Operational 49.5 Construction 49.5100% 49.5 0.700 49.5 Operational100% 49.5 49.5100% 49.5 0.700 Operational 0.700 6 Under 49.5 49.5 6 0.700 6 0.700 100% Construction 100% Construction by the Company Ownership in project held project Wind power Farm Phase I Farm Phase II Farm Phase I Changyi Wind Farm Phase II Phase I Hekou Wind Farm Phase II Hekou Wind Farm Phase III Phase I Farm Ningjin Chudao Wind Farm Shouguang Wind Farm Phase III Hekou Wind Farm Phase IV Location Shandong Shouguang Wind Shandong Shouguang Wind Shandong Changyi Wind Shandong Hekou Wind Farm Shandong Binhai Wind Farm Shandong Rongcheng Wind (Huaneng Shouguang Wind Power Co., Ltd.) (Huaneng Weifang Wind Power Co., Ltd.) (Huaneng Changyi Wind Power Co., Ltd.) (Huaneng Dongying Hekou Wind Power Co., Ltd.) (Huaneng Weifang Binhai Wind Power Co., Ltd.) (Huaneng Rongcheng Wind Power Co., Ltd.) Project company

— V-4 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX V PROJECT PORTFOLIO OVERVIEW On-grid tariff (in RMB/kWh, including VAT) installed (in MW) capacity / Attributable construction capacity under installed (in MW) capacity / construction Consolidated capacity under 20 20 20 0.610 under (in MW) Capacity construction 49.549.5 49.549.5 49.5 0.510 49.5 49.5 49.5 49.5 0.510 0.510 capacity (in MW) Installed Status Completed Completed Completed construction 52% Operational50% 13.550% Operational55% 45.05 Operational 13.5 15 Operational 48 45.05 7.02 22.525 0.699 15 0.699 48 7.5 26.4 0.699 0.610 100% Under 100%100% Operational100% 49.5 Construction 100% Operational100% 49.5 Operational 49.5 49.5 Construction 49.5 49.5 0.510 49.5 49.5 49.5 0.510 0.510 by the Company Ownership in project held project Wind power Qianwei Wind Farm Phase I Farm Phase I Maoming Wind Farm Phase II Farm Phase I Lihanliang Wind Farm Phase II Heishatu Wind Farm Farm Phase I Farm Phase II Niutouling Wind Farm Phase II Wind Farm Shilatu Wind Farm 100% Construction Location Yunnan Dali Dafengba Shanghai Chongming Guangdong Niutouling Wind Guangdong Qing’ao Wind Inner Mongolia Maoming Wind Inner Mongolia Lihanliang Wind (Huaneng New Energy Shanghai Power Co., Ltd.) (Huaneng Baotou Wind Power Co., Ltd.) (Huaneng Huhhot Wind Power Co., Ltd.) (Huaneng Shantou Nan’ao Wind Power Co., Ltd.) (Huaneng Shantou Wind Power Co., Ltd.) (Huaneng Hongkong Electric Dali Wind Power Co., Ltd.) Project company West Inner Mongolia South China Region

— V-5 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX V PROJECT PORTFOLIO OVERVIEW On-grid tariff (in RMB/kWh, including VAT) installed (in MW) capacity / Attributable construction capacity under installed (in MW) capacity / construction Consolidated capacity under 42 42 42 0.610 49.5 49.549.5 49.5 49.5 0.610 49.5 0.610 under (in MW) Capacity construction 49.5 49.5 49.5 0.610 49.549.5 49.5 49.5 49.5 49.5 0.610 0.610 40.5 40.5 40.549.5 0.610 49.5 49.5 0.540 capacity (in MW) Installed Status Completed Completed Completed Completed Completed construction construction construction Construction Construction Construction Construction Construction 55% Operational 49.5 49.5 27.225 0.610 100% 100%100% Under 100% Under 100% Operational100% 49.5100% 49.5 49.5 Under 0.610 100% by the Company Ownership in project held project Wind power Eryuan Maanshan Wind Farm Phase III Farm Phase I Farm Farm Phase I Farm Phase II 100% Wind Farm Phase I Eryuan Maanshan Wind Farm Phase II Jiucaiping Wind Farm Phase I Farm Muchang Wind Farm Phase I Hebei Laoting Wind Hebei Yudaokou Shanxi Duanjiabao Wind Shanxi Wujiashan Wind Shanxi Dongmafang Wind Location Yunnan Eryuan Maanshan Guizhou Hezhang (Huaneng Eryuan Wind Power Co., Ltd.) (Huaneng Hezhang Wind Power Co., Ltd.) (Huaneng Laoting Wind Power Co., Ltd.) (Huaneng Chengde Wind Power Co., Ltd.) (Huaneng Yuanping Wind Power Co., Ltd.) (Huaneng Tianzhen Wind Power Co., Ltd.) (Huaneng Ningwu Wind Power Co., Ltd.) North China Region Project company

— V-6 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX V PROJECT PORTFOLIO OVERVIEW On-grid tariff (in RMB/kWh, including VAT) installed (in MW) capacity / Attributable construction capacity under installed (in MW) capacity / construction Consolidated capacity under 49.5 49.5 49.5 0.610 under (in MW) Capacity construction capacity (in MW) Installed Status construction 100% Under 100%100% Operational 49.5 Operational 49.5 49.5 49.5 49.5 49.5 0.580 0.580 by the Company Ownership in project held project Wind power Wind Farm Farm Phase I Santanghu Wind Farm Phase II Shanxi Heijiazhuang Location Xinjiang Santanghu Wind (Huaneng Pianguan Wind Power Co., Ltd.) (Huaneng Xinjiang Santanghu Wind Power Co., Ltd.) Project company Xinjiang

— V-7 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX VI TECHNICAL REPORT

Huaneng Renewables Corporation Limited Potential Working Capital Raising Project Technical Assessment

Final Report

May 2011

Huaneng Renewables Corporation Limited

10-11 Floor Huaneng Building, No 23A Fuxing Road, Haidian District Beijing P.R. China

— VI-1 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX VI TECHNICAL REPORT

Issue and revision record Revision Date Originator Checker Approver Description Yanmin Song Bauer Wu 0 28/05/10 Sébastien Moine Cyril Pacot Draft Report David Mudie Zoe Zhao Yanmin Song Sébastien Moine Bauer Wu 1 28/06/10 Robert Speht Guy Doyle Draft Final Report David Mudie Simon Harrison Zoe Zhao Yanmin Song Bauer Wu 2 09/07/10 Sébastien Moine Robert Speht Draft Final Report David Mudie Zoe Zhao Yanmin Song Bauer Wu 3 12/07/10 Sébastien Moine Robert Speht Draft Final Report David Mudie Zoe Zhao Yanmin Song William Senior David Mudie Paula Finlayson 4 15/07/10 Robert Speht Final Report Bauer Wu Sébastien Moine Zoe Zhao Nicola Grieve Yanmin Song Bauer Wu Jian Zhang 5 21/07/10 Robert Speht Final Report Zoe Zhao Sébastien Moine Tania Tang

6 11/08/2010 Yanmin Song Sébastien Moine Robert Speht Final Report 7 19/10/2010 Sébastien Moine Sébastien Moine Robert Speht Final Report Final Report- incorporation of 8 22/10/2010 Yanmin Song Cyril Pacot Simon Harrison amended availability data 9 09/05/2011 Caedmon Shayer Sébastien Moine Robert Speht Final Report This document is issued for the party which commissioned it and for specific purposes connected with the above-captioned project only. It should not be relied upon by any other party or used for any other purpose. This report is drafted and submitted in English and accompanied by a translated version in Chinese. Mott MacDonald does not accept any responsibility for any errors or inconsistencies in translation and where such errors or inconsistencies exist, the English version of the report shall prevail. We accept no responsibility for the consequences of this document being relied upon by any other party, or being used for any other purpose, or containing any error or omission which is due to an error or omission in data supplied to us by other parties. This document contains confidential information and proprietary intellectual property. It should not be shown to other parties without consent from us and from the party which commissioned it.

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Content

Chapter Title Page 1. Executive Summary ...... 7 1.1 Introduction ...... 7 1.2 Project Participants ...... 8 1.3 Wind Turbine Generator (WTG) Technologies ...... 9 1.4 Wind Resource Assessment ...... 9 1.5 Grid Connections Assessment ...... 9 1.6 Performance of the Wind Farms ...... 10 1.7 Operation and Maintenance of the Wind Farms ...... 11

2. Introduction ...... 11 2.1 Overview ...... 11 2.2 Assets Overview ...... 12 2.2.1 General Overview ...... 12 2.2.2 Selection of Representative Wind Farms ...... 13 2.3 Report Structure ...... 14 2.4 Status of this document ...... 15

3. Project Participants ...... 15 3.1 Introduction ...... 15 3.2 Huaneng Renewables Corporation Limited ...... 15 3.3 WTG Suppliers ...... 15 3.3.1 Sinovel Wind Group Co., Ltd...... 15 3.3.2 Dongfang Turbine Co., Ltd...... 16 3.3.3 Suzlon ...... 16 3.3.4 Zhejiang Windey Engineering Co. Ltd ...... 16 3.3.5 CSIC (Chongqing) Haizhuang Windpower Equipment Co., Ltd...... 17 3.3.6 Gamesa ...... 17 3.3.7 Vestas ...... 17 3.3.8 NEG-Micon ...... 17 3.3.9 Conclusions ...... 18 3.4 Grid Operators ...... 18 3.4.1 Grid Operators in selected Wind Farm ...... 18 3.4.2 State Grid Corporation of China (SGCC) ...... 19 3.4.3 China Southern Power Grid (CSG) ...... 19 3.4.4 Inner Mongolia Grid Company ...... 20 3.4.5 Conclusion ...... 20

4. WTG Technologies ...... 20 4.1 Key Wind Turbines Involved ...... 20 4.1.1 Sinovel SL1500-1.5MW ...... 21 4.1.2 Sinovel SL3000-3.0MW ...... 21 4.1.3 Dongfang FD77B/FD70B-1.5 MW ...... 22 4.1.4 Suzlon S82-1.5 MW ...... 23 4.1.5 Windey WD50-750 kW ...... 23 4.1.6 CSIC H93-2.0 MW ...... 24 4.1.7 Gamesa G52-850 kW ...... 24 4.1.8 Vestas V52-850 kW ...... 25

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Chapter Title Page 4.1.9 NEG-Micon TAIM-NM750 kW ...... 26 4.2 Conclusions ...... 26

5. Wind Resources Assessment ...... 26 5.1 Introduction ...... 26 5.2 Chinese Standards ...... 27 5.3 Methodology of Wind Resource Assessment for Wind Farm ...... 27 5.4 Methodology of Wind Energy Resource Measurement for Wind Farm ...... 27 5.5 Feasibility Studies for the Representative Wind Farms ...... 27 5.6 Conclusions ...... 28

6. Grid Connection Assessment ...... 29 6.1 Introduction ...... 29 6.2 Key issues addressed in Grid Connection ...... 30 6.2.1 Capacity of the wind farm step-up substation ...... 30 6.2.2 Capacity of the reactive power compensation and voltage control ...... 31 6.2.3 Capacity of Low Voltage Ride Through (LVRT) and Power Quality ...... 31 6.2.4 Accommodation capability of the local power network ...... 32 6.3 Grid Connection Assessment on each wind farm ...... 33 6.3.1 Introduction ...... 33 6.3.2 Fubei Wind Farm Phase II ...... 33 6.3.2.1 Equipment capacity ...... 33 6.3.2.2 Reactive power compensation capacity and voltage control capacity ...... 34 6.3.2.3 Local power grid operation ...... 34 6.3.3 Baolongshan Wind Farm Phase I ...... 34 6.3.3.1 Equipment capacity ...... 34 6.3.3.2 Reactive power compensation capacity and voltage control capacity ...... 35 6.3.3.3 Local power grid operation ...... 35 6.3.4 Zhurihe Wind Farm 1 Phase III ...... 35 6.3.4.1 Equipment capacity ...... 35 6.3.4.2 Reactive power compensation capacity and voltage control capacity ...... 36 6.3.4.3 Local power grid operation ...... 36 6.3.5 Maoming Wind Farm Phase I ...... 36 6.3.5.1 Equipment capacity ...... 36 6.3.5.2 Reactive power compensation capacity and voltage control capacity ...... 37 6.3.5.3 Local power grid operation ...... 37 6.3.6 Niutouling Wind Farm Phase I ...... 37 6.3.6.1 Equipment capacity ...... 37 6.3.6.2 Reactive power compensation capacity and voltage control capacity ...... 38 6.3.6.3 Local power grid operation ...... 38 6.3.7 Qing’ao Wind Farm ...... 38 6.3.7.1 Equipment capacity ...... 38 6.3.7.2 Reactive power compensation capacity and voltage control capacity ...... 39 6.3.7.3 Local power grid operation ...... 39 6.3.8 Dali Dafengba Wind Farm ...... 39 6.3.8.1 Equipment capacity ...... 39 6.3.8.2 Reactive power compensation capacity and voltage control capacity ...... 40 6.3.8.3 Local power grid operation ...... 40 6.3.9 Changdao Wind Farm ...... 40

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Chapter Title Page 6.3.9.1 Equipment capacity ...... 40 6.3.9.2 Reactive power compensation capacity and voltage control capacity ...... 41 6.3.9.3 Local power grid operation ...... 41 6.3.10 Weihai Wind Farm Phase I and Rongcheng Wind Farm ...... 41 6.3.10.1 Equipment capacity ...... 41 6.3.10.2 Reactive power compensation capacity and voltage control ...... 42 6.3.10.3 Local power grid operation ...... 43 6.3.11 Changyi Wind Farm ...... 43 6.3.11.1 Equipment capacity ...... 43 6.3.11.2 Reactive power compensation capacity and voltage control capacity ...... 43 6.3.11.3 Local power grid operation ...... 44 6.3.12 Laoting Wind Farm ...... 44 6.3.12.1 Equipment capacity ...... 44 6.3.12.2 Reactive power compensation capacity and voltage control capacity ...... 44 6.3.12.3 Local power grid operation ...... 45 6.4 Conclusions ...... 45

7. Performance of the Wind Farms ...... 46 7.1 Definition of Availability ...... 46 7.2 Wind Farms Performance — Generation and Availability ...... 47 7.2.1 Fubei Wind Farm Phase II ...... 47 7.2.1.1 Generation and Availability ...... 47 7.2.1.2 Conclusions ...... 48 7.2.2 Baolongshan Wind Farm Phase I ...... 48 7.2.2.1 Generation and Availability ...... 48 7.2.2.2 Conclusions ...... 49 7.2.3 Zhurihe Wind Farm 1 Phase III ...... 49 7.2.3.1 Generation and Availability ...... 49 7.2.3.2 Conclusions ...... 50 7.2.4 Maoming Wind Farm Phase I ...... 50 7.2.4.1 Generation and Availability ...... 50 7.2.4.2 Conclusions ...... 51 7.2.5 Niutouling Wind Farm Phase I ...... 51 7.2.5.1 Generation and Availability ...... 52 7.2.5.2 Conclusions ...... 53 7.2.6 Qing’ao Wind Farm phase II ...... 53 7.2.6.1 Generation and Availability ...... 54 7.2.6.2 Conclusions ...... 55 7.2.7 Dali Dafengba Wind Farm ...... 56 7.2.7.1 Generation and Availability ...... 57 7.2.7.2 Conclusions ...... 58 7.2.8 Changdao Wind Farm ...... 58 7.2.8.1 Generation and Availability ...... 58 7.2.8.2 Conclusions ...... 59 7.2.9 Weihai and Rongcheng Wind Farm ...... 59 7.2.9.1 Generation and Availability ...... 60 7.2.9.2 Conclusions ...... 61 7.2.10 Changyi Wind Farm ...... 61 7.2.10.1 Generation and Availability ...... 62

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Chapter Title Page 7.2.10.2 Conclusions ...... 62 7.2.11 Laoting Wind Farm ...... 63 7.2.11.1 Generation and Availability ...... 63 7.2.11.2 Conclusions ...... 65 7.3 General Conclusions ...... 65

8. Operating & Maintenance ...... 66 8.1 Introduction ...... 66 8.2 O&M Structural Organization ...... 66 8.3 O&M Arrangements ...... 67 8.4 Conclusions ...... 68

Appendices ...... 69

Glossary ...... 70

Tables Table 3.1: Grid Operators in Representative Wind Farms ...... 18 Table 4.1: WTG installed in Representative Wind Farms ...... 21 Table 4.2: Technical Summary of Sinovel SL1500 ...... 21 Table 4.3: Technical Summary of Sinovel SL3000 ...... 22 Table 4.4: Technical Summary of Dongfang FD77B/FD70B ...... 22 Table 4.5: Technical Summary of Suzlon S82 ...... 23 Table 4.6: Technical Summary of Windey WD50/750 ...... 24 Table 4.7: Technical Summary of CSIC H93-2.0MW ...... 24 Table 4.8: Technical Summary of Gamesa G52 ...... 25 Table 4.9: Technical Summary of Vestas V52 ...... 25 Table 4.10: Technical Summary of NM750 ...... 26 Table 7.1: Operational Data of Fubei Phase II ...... 48 Table 7.2: Operational Data of Baolongshan Phase I ...... 49 Table 7.3: Operational Data of Zhurihe Wind Farm 1 Phase III ...... 50 Table 7.4: Operational Data of Maoming Wind Farm Phase I ...... 51 Table 7.5: Operational Data of Niutouling Wind Farm Phase I ...... 53 Table 7.6: Operational Data of Qing’ao Phase II ...... 55 Table 7.7: Operational Data of Dali Dafengba ...... 57 Table 7.8: Operational Data of Changdao ...... 59 Table 7.9: Operational Data of Weihai Wind Farm Phase I ...... 61 Table 7.10: Operational Data of Changyi Project ...... 62 Table 7.11: Operational Data of Laoting ...... 64 Table 7.12: Monthly Average Generation of 82m and 77m WTG ...... 64

Figures Figure 2.1: Wind Resources Distribution in China and Representative Projects’ Location ...... 14 Figure 6.1: Chinese Energy Production and Consumption ...... 32 Figure 7.1: Power Curve of No.21 and 10 WTG ...... 65

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1. Executive Summary

1.1 Introduction

Mott MacDonald Limited (MM) has been appointed by Huaneng Renewables Corporation Limited (Huaneng Renewables) to act as Technical Consultant on the Company’s potential working capital raising project.

MM is a world-class multi-disciplinary consultancy engaged in development, focusing on many aspects of everyday life from energy, transport, health and education, water and the environment to building, industry and communications. MM has won recognition for technical excellence in power engineering, water, transportation, building and infrastructure and, in addition to these technical services, also offers a wide range of strategic planning, financial and business development services.

MM is a wholly independent international company, with headquarters in the UK, an annual turnover in excess of 1 billion Euros, over 14,000 staff and global experience spanning 140 countries. For the third consecutive year, MM has made the top 10 list in the UK’s Sunday Times annual ‘25 Best Big Companies to Work For’ employee survey, ranking eighth in 2010.

MM is committed to Quality Assurance and is accredited to ISO 9001 and ISO 14001.

With offices across Europe, Asia and the Pacific, the Middle East, Australia, New Zealand, Africa and the Americas, MM has in-depth knowledge and understanding of local conditions and practices, backed by its global resources.

MM played a leading role in the electricity sector restructuring in Hong Kong, Ukraine, Malaysia, Indonesia, Thailand, Philippines, Pakistan, Northern Ireland, Ireland, Singapore, Iran and Qatar where it advised the respective governments on the financial/technical options best suited to the country in question, as well as regulatory, efficiency and contractual issues. MM has been involved in regulatory reviews of electricity utility companies, which have either been corporatised or privatized and has advised various major investors on prospective power plant and distribution company acquisitions. Additionally, MM is involved with the development of privately funded power projects throughout the world as independent advisers to both owners and lenders.

MM is experienced in all types of power generation and transmission technologies and works in partnership with its clients, ensuring through total commitment that MM adds maximum value to every project. MM has engineered over 200 GW of power plants world-wide. The strength of this company lies in a rich diversity of expertise which covers the complete spectrum of disciplines and skills. It has extensive experience with the technical and power network aspects of wind power (both onshore and offshore). Its roles included providing consultancy services to financiers, potential investors, project developers, owners and contractors as well as governments, local authorities and regulatory bodies. It has undertaken a wide range of roles in project development, appraisal and implementation and is able to bring the full range of resources to its assignments in both the onshore and offshore sectors.

MM has undertaken over seventy projects in China totalling over 32 GW including wind, hydroelectric, biomass, waste-to-energy, gas and coal power plants.

MM carried out an independent technical assessment of Huaneng Renewables’ assets. This review includes wind resource assessment, power generation, availability, operational and maintenance arrangements, wind turbine technologies, grid connection arrangements and compliance with grid codes.

The assessment covers twelve representative wind farms out of the thirty-one projects included in the portfolio.

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The majority of the information from which the report was compiled comprises of documents provided by Huaneng Renewables, and discussions and meetings with relevant Huaneng Renewables staff. MM’s professional judgment was exercised with regards to the validity and use of all information submitted from external sources. MM’s knowledge of the Chinese power sector has been utilized throughout the independent technical assessment process.

A large number of wind farms are included in the asset portfolio and are spread across a wide area of China. These wind farms were designed by various local design institutes based on the same Chinese standard and the turbines were supplied by a number of domestic and international manufacturers. For these reasons it was agreed that the report would be compiled with specific reference to representative wind farms. These wind farms were selected to best encapsulate and represent the diversity of all wind farms controlled by Huaneng Renewables. Particular attention was paid to the following factors when selecting the representative wind farms:

• Wind resources and geographic coverage — The representative wind farms selected are located in areas with abundant wind resources including Guangdong, Yunnan, Shandong, Hebei, Inner Mongolia and Liaoning, as shown in Figure 2.1.

• Turbine types — The representative wind farms selected include turbines produced by both domestic and international manufacturers as detailed in section 3.3 of this report.

• Year of operation — The representative wind farms selected have different operation start dates as detailed in Table 4.1.

1.2 Project Participants

Huaneng Renewables is a wholly owned subsidiary of China Huaneng Group, formed in November 2002. Its business focuses on the investment, construction and operation of new energy projects, and mainly relies on the development and utilization of wind energy. Meanwhile, it is exploring other renewable energy technologies with a focus on solar power.

According to a trusted source, Huaneng Renewables was ranked third operator in China in terms of attributable wind installed capacity as at 31 December 2009, and first amongst the top 15 global wind power generation companies in terms of percentage growth of total installed capacity in 2009.

Based on the projects reviewed, we are satisfied that Huaneng Renewables is capable of acting as the owner of the wind farms.

Huaneng Renewables chose several international and domestic WTG suppliers to supply and maintain the turbines on its wind farms. These suppliers specifically include but are not limited to Sinovel, Dongfang, Gamesa, Suzlon and Vestas. All the WTG suppliers for the reviewed sites are renowned in the worldwide wind industry. We are satisfied that all the WTG manufacturers used are capable of delivering their role in the reviewed projects.

The transmission and distribution network in China is state-owned. There are three grid corporations in China, the State Grid Corporation of China (SGCC), the China Southern Power Grid Co., Ltd. (CSG) and the Inner Mongolia Power Company, acting as grid operators. By the end of 2009, all transmission network companies have held the public electricity transmission licenses issued by regulatory agencies. There were 2,929 distribution network companies holding public electricity supply licenses in China.

We have gained experience with SGCC, CSG and Inner Mongolia Power Company through the wind farm projects in China and the Hong Kong Electricity Market Development project. We currently have no concerns with regards to the general capabilities and experience of China transmission and distribution companies acting as grid operators.

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1.3 Wind Turbine Generator (WTG) Technologies

Representative wind farms include WTGs produced by both domestic and international manufacturers. All WTG models reviewed here have a modern design in line with current technology standards and with a rated power range of 750 kW to 3 MW. All installed WTG models have been selected according to site specific conditions.

Huaneng Renewables uses several models of WTG on its sites, including SL1500, FD70B, FD77B, G52-850, S82-1.5 MW STV, V52-850, WD50/750 and H93-2.0 MW. CSIC (Chongqing) Haizhuang Windpower Equipment Co., Ltd. did not provide a sufficient track record. Therefore, we considered a warranty period of at least three years as a reasonable mitigant. Huaneng Renewables successfully negotiated a five year warranty period with Haizhuang. Thus, we are satisfied with the mitigation applied by Huaneng Renewables as most of the models used by Huaneng Renewables have substantial track records and we consider the technology of these WTGs as mature and the models as reliable.

1.4 Wind Resource Assessment

From the pool of studies reviewed, we can conclude that there is a consistent approach to wind resource assessment and the adopted methodology is largely consistent with standard international practice. The Chinese standards have been derived from well-known international publications, although due to differences in requirements there are some differences in approach. For example, the Chinese approach does not place as much emphasis on analyzing uncertainty in energy yield prediction compared to the wider international practice. Nevertheless, there is evidence of conservatism in the following process and in the assumptions made by Huaneng Renewables. In particular, the losses applied to calculate the net yields are, in general, generous compared to those typically seen from our experience in other areas of the world. From the pool of studies reviewed we noted a tendency for the actual production to exceed the prediction.

We consider that the Chinese approach to wind resource assessment has been designed according to the nature of Chinese requirements. From the pool of studies reviewed, the applicable operational data is in good agreement with the predictions, providing confidence in the methods.

1.5 Grid Connections Assessment

The transformers at most wind farm step-up substations are appropriately sized and have sufficient capacity to export the maximum power under normal operation scenarios. However, it has been noted that the size of the 75 MVA main transformer at Weihai Wind Farm step-up substation will only just support the full output of the current units in Weihai and Rongcheng Wind Farms which are rated at 75 MW. Therefore, we consider that it is likely that the transformer will be overloaded when all WTGs of Weihai (installed capacity 69 MW) and Rongcheng (installed capacity 6 MW) simultaneously produce at their nominal full capacity; indeed it is possible for WTGs to produce power at a higher level than the nominal power rating. As a result, WTGs from these wind farms may be curtailed during periods of high output, depending on the grid power factor at the time. However, we understand from Huaneng Renewables that the grid power factor is normally maintained at one, which would avoid the need for curtailment. However, the Grid Code, which governs grid operation, does not state that a power factor of one will be maintained. In addition, we have received further information from Huaneng Renewables that a new step-up substation will be constructed at Rongcheng Wind Farm and the two 3 MW WTGs from Rongcheng wind farm will be connected to the new substation.

It appears that all overhead/cable lines are rated appropriately to export full capacity of the wind farms to the grid. All wind farms visited are connected to the grid substation via a single line connection. According to the last version of Chinese Grid Code (Trial) of wind farm grid connection published in 2006, in order to facilitate operation management and control, and to simplify system topology, it is not required to meet the ‘N-1’ security

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All the representative wind farms have appropriate switchgear installed to withstand fault current at both the wind farm step-up substations and the grid connection substations. No issue regarding switchgear rating has been identified at any of the representative wind farms. Appropriate protection schemes have been applied to all wind farms, including differential and over-current protection, which seems to be the common practice for most Chinese wind farms. Lightning protection equipment has also been installed to prevent lightning damage to the wind farm equipment. No significant issues have been raised regarding the equipment condition.

All wind turbines have controllable power factors at grid connection point as required in the Chinese Grid Code. Most wind farms have reactive power compensation equipment installed to provide reactive power support as required by the grid connection study report. Since there is no requirement to consider the installation of reactive power compensation equipment on the grid connection, there are no reactive power compensation equipment installed at Changdao, Weihai, Rongcheng and Changyi Wind Farms. In addition, all the main transformers are equipped with an on-load tap changer which is able to control voltage between 90% and 110% at the High Voltage winding. Therefore, we would consider that the wind farms have sufficient reactive and voltage control capacity to meet the reactive power demand and voltage regulation as required in the grid code.

The updated Chinese Grid Code (Revision) of wind farm grid connection requires an assessment of the power quality and low voltage ride through (LVRT) to ensure that the relevant indices are within the given limits and in accordance with technical standards. The relevant tests are required to be finished before the wind farm is connected to the grid, as most existing Chinese wind projects, including the twelve representative wind farms, will be required to be technically upgraded so that they can meet relevant requirement in the updated Chinese Grid Code in the near future.

Most of the local power grids have sufficient capability to accommodate the connection of the wind farms so that they will be able to operate during normal conditions and export the generated power to the grid as expected. However, it is noted that in Baolongshan and Zhurihe Wind Farm 1, the power generation may have to be curtailed to some extent due to local power grid’s insufficient capability to adjust active power and the requirement of heat supply using thermal power plants in winter. We understand that the local network should have sufficient capability to accommodate Huaneng Renewables wind power and we would expect that this problem could be solved by future reinforcement of the local network.

In general, we consider the grid connection of Huaneng Renewables wind power projects to be well- planned, without any major constraints found to prevent power export under normal system operating conditions. The only exception is when the local power system operates under specific scenarios, like Tongliao power system in winter. However, it is likely that such a situation can be eliminated in the medium term by future network reinforcement.

1.6 Performance of the Wind Farms

Of the twelve representative wind farms reviewed, six wind farms only started commercial operation in the last year, therefore those wind farms do not have enough operational data (at least 12 months of normal operational data is usually required) in order to assess whether the production would be in line with the estimates from the feasibility studies.

Nevertheless, within the six remaining wind farms, five projects have higher annual productions than planned with the same annual average wind speed as in the feasibility study.

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Moreover, regarding Laoting Wind Farm which showed lower performances than expected, we understand, from the available information, that lower annual average wind speed was the main reason for the lower performance. In addition, 2009 is the first operational year of the wind farm. Indeed, before May 2009, all WTGs were under commissioning and their power generation was lower than forecasted.

Overall, the equipment and facilities are well-maintained and of a high standard. The design, construction and installation are in line with our expectations.

1.7 Operation and Maintenance of the Wind Farms

Overall, Huaneng Renewables’ Operation & Maintenance arrangements for its wind farms are above our expectations and in line with international standards. We consider that these arrangements should be suitable for Huaneng Renewables as they have similarities with Operation & Maintenance structures from other companies while being specifically developed in order to be integrated within Huaneng Renewables’ organizational structure.

Although we believe that the preventive maintenance strategy for the WTGs main components could be improved, the structural organization of Operation & Maintenance, the treatment to the outage, the purchase and storage of spare parts and the Quality, Health & Safety and Environment (QHSE) requirements of Huaneng Renewables wind farms are generally acceptable and well-organized.

2. Introduction

2.1 Overview

MM has been appointed by Huaneng Renewables to act as Technical Consultant on the Company’s potential working capital raising project.

MM is a world-class multi-disciplinary consultancy engaged in development, focusing on many aspects of everyday life from energy, transport, health and education, water and the environment to building, industry and communications. MM has won recognition for technical excellence in power engineering, water, transportation, building and infrastructure and, in addition to these technical services, also offers a wide range of strategic planning, financial and business development services.

MM is a wholly independent international company, with headquarters in the UK, with an annual turnover in excess of 1 billion Euros, over 14,000 staff and global experience spanning 140 countries. For the third consecutive year, MM has made the top 10 list in the UK’s Sunday Times annual “25 Best Big Companies to Work For “employee survey, ranking eighth in 2010.

MM is committed to Quality Assurance and is accredited to ISO 9001 and ISO 14001.

With offices across Europe, Asia and the Pacific, the Middle East, Australia, New Zealand, Africa and the Americas, MM has in-depth knowledge and understanding of local conditions and practices, backed by its global resources.

MM played a leading role in the electricity sector restructuring in Hong Kong, Ukraine, Malaysia, Indonesia, Thailand, Philippines, Pakistan, Northern Ireland, Ireland, Singapore, Iran and Qatar where it advised the respective governments on the financial/technical options best suited to the country in question, as well as regulatory, efficiency and contractual issues. MM has been involved in regulatory reviews of electricity utility companies, which have either been corporatised or privatized and has advised various major investors on prospective power plant and distribution company acquisitions. Additionally, MM is involved with the development of privately funded power projects throughout the world as independent advisers to both owners and lenders.

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MM is experienced in all types of power generation and transmission technologies and works in partnership with its clients, ensuring through total commitment that MM adds maximum value to every project. MM has engineered over 200 GW of power plants world-wide. The strength of MM lies in a rich diversity of expertise which covers the complete spectrum of disciplines and skills. It has extensive experience with the technical and power network aspects of wind power (both onshore and offshore). Its roles includes providing consultancy services to financiers, potential investors, project developers, owners and contractors as well as governments, local authorities and regulatory bodies. It has undertaken a wide range of roles in project development, appraisal and implementation and is able to bring the full range of resources to its assignments in both the onshore and offshore sectors.

MM has undertaken over seventy projects in China totalling over 32 GW including wind, hydroelectric, biomass, waste-to-energy, gas and coal power plants.

MM carried out an independent technical assessment of Huaneng Renewables’ assets. This review includes wind resource assessment, power generation, availability, operational and maintenance arrangements, wind turbine technologies, grid connection arrangements and compliance with grid codes. The assessment is for twelve representative wind farms out of the thirty-one projects included in the portfolio.

The majority of information from which the report was compiled, comprises documents provided by Huaneng Renewables, and discussions and meetings with relevant Huaneng Renewables staff. MM’s professional judgment was exercised with regards to the validity and use of all information submitted from external sources. MM’s knowledge of the Chinese power sector has been utilized throughout the independent technical assessment process.

A large number of wind farms are included in the asset portfolio and are spread across a wide area of China. These wind farms were designed by various local design institutes based on the same Chinese standard and the turbines were supplied by a number of domestic and international manufacturers. For these reasons it was agreed that the report would be compiled with specific reference to representative wind farms. These wind farms were selected to best encapsulate and represent the diversity of all wind farms controlled by Huaneng Renewables. Particular attention was paid to the following factors when selecting the representative wind farms:

• Wind resources and geographic coverage — Representative wind farms selected are located in areas with abundant wind resources including Guangdong, Yunnan, Shandong, Hebei, Inner Mongolia and Liaoning, as shown in Figure 2.1.

• Turbine types — The representative wind farms selected include turbines produced by both domestic and international manufacturers as detailed in section 3.3 of this report.

• Year of operation — The representative wind farms selected have different operation start dates as detailed in Table 3.1.

The process of technical assessment was carried out in China and the UK through a variety of procedures including, but not limited to: site visits, data collection, discussion, analysis, and report production.

2.2 Assets Overview

2.2.1 General Overview

As of the end of 2009, Huaneng Renewables owned a total of 31 operational projects. The total capacity equivalent was 1,549.8 MW. All the wind farms are operated by its subsidiaries across China. The consolidated wind power portfolio including the projects in construction phase reaches 2,511.3 MW.

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Wind turbine technologies adopted in the portfolio are from renowned Chinese Wind Turbine Generator (WTG) manufacturers such as Dongfang and Sinovel and international suppliers such as Suzlon, Gamesa and Vestas. The size of the turbines varies from 750 kW to 3 MW.

2.2.2 Selection of Representative Wind Farms

Due to the large number of projects involved in the asset portfolio, it was decided that a representative sample of twelve wind farms will be assessed as part of our due diligence.

The Company provided a list of its wind farms which sets out information including types of Wind Turbine Generators (WTG), their respective size in megawatts, the geographic location and years of operation of each wind farm. All the above elements have been taken into account for selecting the 12 representative wind farms. The 12 representative wind farms are located in six provinces and autonomous regions with a total installed capacity of approximately 700MW and were selected in order to reflect the primary characteristics of the 31 wind farms included in the portfolio of the Company. For instance, wind farms using different WTG were selected so that technology, availability and utilisation hours of different WTG can be assessed and at the same time, warranties agreed amongst different WTG suppliers and the Company can be reviewed. Geographic location was also an important basis for the selection: wind farms at different operation stages located in different areas of North China Region and South China Region were selected so that relevant records of wind farms at different development stages (either in operation or under construction), performance of the wind resource at different locations as well as local grid connection condition are available for our assessment.

China has abundant wind resources, with the Global Wind Energy Council (GWEC) report “Global Wind 2009 Report”, estimating exploitable onshore wind resources at approximately 2,380 GW. According to a survey undertaken by the Chinese Renewable Energy Industries Association (CREIA) and the Business Council for Sustainable Energy (BCSE), wind resources are distributed as shown in Figure 2.1. Higher resources are located in the Northern parts of China such as Inner Mongolia, Xinjiang, Gansu Hexi Corridor, some areas of Qinghai- Tibetan Plateau, Northeast China, Hebei, and along the East China coast region from Shangdong to Fujian Provinces. The color tone in Figure 2.1 represents wind density.

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Figure 2.1: Wind Resources Distribution in China and Representative Projects’ Location

Source: BCSE/CREIA 2006

As indicated by the dark red marks in Figure 2.1 we have selected representative projects located in the wind abundant areas of Inner Mongolia, Shandong, Hebei, Guandong and Liaoning. We also chose a site with a more complex topography in Yunnan province.

2.3 Report Structure

This report provides a detailed review of key information relating to the construction and operation of the projects. It is structured as listed below:

• Project Participants;

• WTG Technologies;

• Wind Resources Assessment;

• Grid Connection Assessment;

• Performance of the Wind Farms; and

• Operation and Maintenance Execution.

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2.4 Status of this document

This Final Report presents our views on the current status of the portfolio of projects on 11 August 2010, at the time of issue of this report.

3. Project Participants

3.1 Introduction

This section of the report reviews the project participants and considers their suitability and capability for the roles envisaged. The report considers Huaneng Renewables and the main WTG suppliers. Information has been gathered from our work, discussion with the participants and also from a review of information available on the internet. We have not considered the financial strength of any participants or their suitability from a financial standpoint.

3.2 Huaneng Renewables Corporation Limited

Huaneng Renewables is a wholly owned subsidiary of China Huaneng Group, formed in November 2002. Its business focuses on the investment, construction and operation of new energy projects, and mainly relies on the development and utilization of wind energy. Meanwhile, it is exploring other renewable energy technologies with a focus on solar power.

Huaneng Renewables owns operating wind farms with a total installed capacity of 1,549.8 MW and 961.5 MW under construction as of 31 December 2009.

Huaneng Renewables has formed six wind energy bases located in Northeast, East China, West of Inner Mongolia, North China, Xinjiang and South China.

According to a trusted source, Huaneng Renewables was ranked third operator in China in terms of attributable wind installed capacity as of 31 December 2009, and was ranked the first amongst the top 15 global wind power generation companies in terms of percentage growth of total installed capacity in 2009.

Based on the projects reviewed, we are satisfied that Huaneng Renewables is capable of acting as the owner of the wind farms.

3.3 WTG Suppliers

Huaneng Renewables uses many different WTG models supplied by international and domestic manufacturers for its wind farms. WTG selection is crucial for improving the electricity production. It considers a number of factors such as suitability for site conditions, energy yield, price and technology. Huaneng Renewables manages all procurement and engineering activities of WTGs centrally from its headquarter in Beijing, and its regional subsidiaries operate those WTGs. The following sub-sections assess the capability of all WTG manufacturers utilized on the representative wind farms we visited.

3.3.1 Sinovel Wind Group Co., Ltd.

Sinovel is the main Chinese WTG manufacturer. It is engaged in development, design, manufacture, marketing, sale and operation & maintenance of both onshore and offshore WTGs.

According to its website, Sinovel has operating factories in Beijing, Tianjin, Dalian of Liaoning Province, Baotou, Xing’anmeng and Bayannaoer of Inner Mongolia, Dongying of Shandong Province, Yancheng of Jiangsu Province and Jiuquan of Gansu Province.

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In 2009, Sinovel supplied 3,510 MW and has supplied 5,658 MW of the cumulative installed capacity. This growth has allowed Sinovel to be the first WTG supplier in China and the third in the world in terms of installed capacity in 2009. According to a trusted source, the global market share of Sinovel was 3.5% in terms of cumulative installed capacity worldwide.

3.3.2 Dongfang Turbine Co., Ltd.

Dongfang Turbine (Dongfang) was set up in 1989. It is a large state-owned company focusing on research, design and manufacture of large scale equipment used in power plants. It started to develop WTGs in November 2004 using WTG technologies from REpower. Nowadays, Dongfang WTGs are in operation in several provinces in China including Shandong, Inner Mongolia, Heilongjiang, Xinjiang, Jilin, Gansu, Jiangsu, Hebei and Shanxi Provinces.

Dongfang has two factories in Deyang of Sichuan Province and Tianjin and plans to build a third factory in Gansu Province. According to a trusted source, in 2009, the capacity supplied by Dongfang was 2,475 MW in China, placing the company as the third largest WTG supplier in China and the tenth in the world. Its cumulative installed capacity was 3,765 MW. The global market share of Dongfang Steam Turbine was 2.4% in terms of cumulative installed capacity worldwide at the end of 2009.

3.3.3 Suzlon

Founded in 1995 with 20 people, Suzlon is now a leading wind power company with over 14,000 people in 21 countries. In 2009, Suzlon acquired most of the shares of REpower which gave the Indian-owned company an increasingly firm foothold in Europe. By the end of 2009, Suzlon had installed 9,671 MW across the world. According to a trusted source, this Indian company was ranked as the fifth main WTG supplier with a global market share of 9.1% (including REpower) in terms of total cumulative installed capacity worldwide.

Suzlon Energy (Tianjin) Limited is Suzlon’s wholly-owned subsidiary company and was commissioned in 2007. The plant manufactures rotor blades, nacelles, nacelle covers, control panel systems, hubs and generators. It already has several projects with a cumulative capacity of 825 MW which is equivalent to almost 600 WTGs. Suzlon supplied capacity in 2009 was 293 MW. Its cumulative installed capacity was 605 MW, giving it a ninth place ranking in the Chinese market in term of cumulative installed capacity.

3.3.4 Zhejiang Windey Engineering Co. Ltd

Zhejiang Windey Engineering Co. Ltd (Windey) was founded in 2001 as a result of a joint investment between Zhejiang Institute of Mechanical & Electrical Engineering and Zhejiang Windey Equipment Co. Ltd. Nevertheless, the development of WTGs started in these companies in 1970s.

Windey’s principal activities are development, manufacture, sale, marketing and maintenance of WTGs. Windey is also involved in the design and construction for WTG engineering, development of WTG components and equipment, wind farm planning and consultancy services.

Windey supplied capacity was 261 MW in 2009 and its cumulative installed capacity was 594 MW, ranking tenth place in the Chinese market in terms of cumulative installed capacity. Currently, Windey has two operating production facilities located in Deqing of Zhejiang Province and Zhangbei of Hebei Province. It also has a factory and research center being built in Hangzhou of Zhejiang Province. In July 2008, the first WTG with blades made of bamboo fiber, developed by Windey, started operation. The company has some long-term cooperation relationships with Mita a developer of control systems located in Denmark, and Garrad Hassan, a British technical engineering company located in several countries worldwide.

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3.3.5 CSIC (Chongqing) Haizhuang Windpower Equipment Co., Ltd.

CSIC (Chongqing) Haizhuang Windpower Equipment Co., Ltd. (CSIC or Haizhuang) was founded in 2004. It specializes in the development and manufacture of large WTGs and their related main components. The company was established by the integration of CSIC’s affiliated companies and research institutes. This integration gives CSIC access to technologies in several fields such as system integration, gearbox, generator, computer control, steel structure and hydraulic system. Currently, CSIC has three factories in Chongqing, Shandong and Inner Mongolia.

3.3.6 Gamesa

With over 15 years of experience in energy technologies, primarily wind, Gamesa is the leader in WTG design, manufacture, installation and maintenance in Spain, and one of the largest in the world. According to a trusted source, in 2009, the company was ranked as the fourth main WTG supplier in the world in terms of the cumulative installed capacity worldwide. It occupied 12.0% of the whole global market. Gamesa supplied capacity was 276 MW in 2009, and cumulatively 1,829 MW in China, ranking at fifth place in the Chinese market in terms of cumulative installed capacity.

Gamesa entered into the Chinese market in 2000 and it is one of the main investors in the wind power industry in China. Currently, the company has four manufacturing plants for blades, generators, gearboxes and nacelles assembly in Tianjin. The fifth plant in Da’an of Jilin Province is being built and scheduled to begin operation in 2011. It will manufacture G8X-2.0 MW WTGs and should have a production capacity of 250 WTGs per year. To date, Gamesa has installed a total of 2,000 G5X-850 kW turbines in China in over 60 locations. As for its wind farm development business in China, Gamesa has several wind farm projects totalling 2,400 MW at varying stages of development in the pipeline.

3.3.7 Vestas

With a 24.8% global market share in terms of cumulative installed capacity worldwide in 2009, Vestas remains the largest WTG supplier worldwide. It has over 40,000 WTGs installed in several countries. In February 2009 Vestas announced the production of two new turbine types, the 3 MW V112 and the 1.8 MW V100. The new models will be available on the market in 2010.

Vestas entered into the Chinese market more than twenty years ago and first erected its WTG in the Hainan and Shandong Province in 1986. By 31 December 2009, Vestas has supplied 2,043 WTG in 13 Provinces in China with a cumulative installed capacity of 2,107 MW. Currently as the leading international supplier in China, Vestas has a head office in Beijing, a procurement office in Shanghai, and factories in Tianjin, Xuzhou and Hohhot with more than 80% of components for its WTGs being produced in China.

3.3.8 NEG-Micon

NEG-Micon is a former Danish WTG manufacturer which is now owned by Vestas. It was formed in 1997 as a result of a merger between two former WTG suppliers. NEG-Micon offers a broad variety of WTGs, ranging from 600 kW to 2.0 MW.

NEG-Micon entered into the Chinese wind market more than ten years ago. In 1997, the same year as its creation, NEG-Micon set up a joint venture to provide technology services and the development and manufacture of WTGs in Shunyi of Beijing. The company installed WTGs in Xinjiang, Gansu, Inner Mongolia, Liaoning, Hebei and Guangdong Provinces. In 2004, NEG-Micon was merged with Vestas and is now known under the name of the main WTG supplier.

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3.3.9 Conclusions

Most WTG suppliers chosen by Huaneng Renewables to supply and maintain the turbines on its wind farms are renowned in the worldwide wind industry and we are satisfied that these WTG manufacturers are capable of delivering their role in the reviewed projects. However, Haizhuang did not provide a sufficient track record. Therefore, we considered a longer warranty period of the WTG as a reasonable mitigation. Huaneng Renewables successfully negotiated a five year warranty period with Haizhuang. Thus, we are satisfied with the mitigation applied by Huaneng Renewables and it is above our expectations.

3.4 Grid Operators

The transmission and distribution network in China is state-owned. Currently, there are three grid corporations in China, the State Grid Corporation of China (SGCC), the China Southern Power Grid Co. Ltd. (CSG) and the Inner Mongolia Power Company, including 38 transmission grid utility companies that are responsible for the operation and management of the transmission grids at a provincial level and above.

The distribution network companies are responsible for the operation and management of the distribution network and supplying electricity to the customers.

3.4.1 Grid Operators in selected Wind Farm

As detailed in section 2.2.2, the 12 wind farms we visited are distributed in regions covering from the North east to the North and Southeast to the South area. These wind farms have been connected to the 220 kV and 110 kV transmission & distribution network owned by SGCC, CSG and the Inner Mongolia Power Company.

The grid operators for the selected wind farm have been listed in Table 3.1, including local, provincial and regional Grid companies affiliated to SGCC, CSG or the Inner Mongolia Power Company.

Table 3.1: Grid Operators in Representative Wind Farms

Connected Grid Operator Capacity point Wind Farm (MW) Local Provincial Regional National Voltage

1 Fubei Wind 1.5 MW x 200 Liaoning Farm Phase II = 300 MW Electric Power Northeast Company China Grid 2 Baolongshan 1.5 MW x 33 SGCC 220 kV Wind Farm = 49.5 MW Company Phase I Limited 3 Zhurihe Wind 2MWx24 Farm 1 Phase I =48MW 4 Maoming Wind 1.5 MW x 33 Baotou Inner 220 kV farm Phase I = 49.5 MW Power Mongolia Supply Grid Company

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Connected Grid Operator point Wind Farm Capacity (MW) Local Provincial Regional National Voltage

5 Niutouling Wind 0.75 MW x 18 Guangdong Shantou Farm Phase I = 13.5 MW Power Grid Power Company 6 Qingao Wind 0.85 MW x 53 Supply Farm Phase II = 45.05 MW CSG 110 kV 7 Dali Dafengba 0.75 MW x 64 Dali Yunnan Wind Farm =48MW Power Power Grid Supply Company

8 Changdao Wind 0.85 MW x 32 Yantai Farm = 27.2 MW Power Supply

9 Weihai Wind 1.5 MW x 13 Shandong Weihai Farm Phase I = 19.5 MW Electric Grid Power 10 Rongcheng 3MWx2 Company North Company Wind Farm =6MW China Grid SGCC 110 kV Weifang 11 Changyi Wind 1.5 MW x 33 Company Grid Farm Phase I = 49.5 MW Limited Company

12 Laoting Wind 1.5 MW x 33 Tangshan Hebei Farm = 49.5 MW Grid Electric Company Power Company

3.4.2 State Grid Corporation of China (SGCC)

The SGCC was founded on 29 December 2002 as a pilot state-owned corporation by the State Council. Its core business is to construct and operate power grids and provide secure and reliable power supply for economic development. SGCC owns and manages five regional electric power grid companies and twenty-six provincial- level electric power grid companies. There are now 2,240 distribution network companies in SGCC.

SGCC supplies electricity to 88% of the national area, in twenty-six provinces. It also provides power services to 1 billion customers. In 2009, SGCC sold 2,274.8 TWh of electricity, the length of transmission line at 110 kV and above is 553,382 km, and the company’s annual revenue was RMB 1,265.98 billion.

We have gained experience with SGCC through the wind farm projects in China. We currently have no concerns with regards to the general capabilities and experience of SGCC.

3.4.3 China Southern Power Grid (CSG)

China Southern Power Grid Co., Ltd. (CSG) was founded on 29 December 2002 as a result of the power sector reform in China in 2002. CSG invests, constructs and operates the transmission and distribution networks in Guangdong, Guangxi, Yunnan, Guizhou and Hainan provinces (autonomous region) and cross-regional interconnections. It is in charge of the dispatching backbone network in five provinces, providing secure and reliable power supply and trading services. CSG owns and manages five provincial electric power grid companies and 401 distribution network companies.

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CSG supplies electricity in five provinces — covering 1,000,000 km2 and 230,000,000 customers. In 2009, CSG sold 523.9 TWh of electricity; the length of transmission line at 110 kV and above is 139,286 km; the company’s annual revenue was RMB 310.8 billion.

We have gained experience with CSG through the wind farm projects in China and Hong Kong Electricity Market Development project. We currently have no concerns with regards to the general capabilities and experience of CSG.

3.4.4 Inner Mongolia Grid Company

The Inner Mongolia Grid Company is an independent provincial Grid Corporation. It invests and constructs the transmission and distribution networks in Inner Mongolia. The Inner Mongolia Power Grid consists of the western Inner Mongolia Power Grid and the eastern Inner Mongolia Power Grid. The western Inner Mongolia Power Grid and the eastern Inner Mongolia Power Grid operate separately due to power system stability reasons. The Inner Mongolia Grid Company only operates the transmission and distribution networks in western Inner Mongolia. The eastern power grid is operated by Northeast China Power Grid Company.

We have gained experience with Inner Mongolia Grid Company through the wind farm projects in China. We currently have no concerns with regards to the general capabilities and experience of Inner Mongolia Grid Company.

3.4.5 Conclusion

The transmission and distribution network in China is state-owned. There are three grid corporations in China, the State Grid Corporation of China (SGCC), the China Southern Power Grid Co., Ltd. (CSG) and the Inner Mongolia Power Company, acting as grid operators. By the end of 2009, all transmission network companies have held the public electricity transmission licenses issued by regulatory agencies. There were 2,929 distribution network companies holding public electricity supply licenses in China.

We have gained experience with SGCC, CSG and Inner Mongolia Power Company through wind farm projects in China and the Hong Kong Electricity Market Development project. We currently have no concerns with regards to the general capabilities and experience of China transmission and distribution companies acting as grid operators.

4. WTG Technologies

4.1 Key Wind Turbines Involved

As detailed in Table 4.1, representative wind farms include WTG produced by both domestic and international manufacturers. All WTG models reviewed have a modern design in line with current technology standards and with a rated power range of 750 kW to 3 MW. All installed WTG models have been selected according to site specific conditions. In Table 4.1 the operation date means the date all wind turbines started to be in commercial operation after commissioning completed successfully.

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Table 4.1: WTG installed in Representative Wind Farms

Capacity Operation Rated Power WTG Ref Wind farm (MW) Date Manufacturer WTG Model (kW) No. 1 Changdao 27.20 2006 Gamesa G52 850 32 2 Changyi — Phase 1 49.50 2010 Suzlon S82 1,500 33 3 Dali Dafengba 48.00 2009 Windey WD50/750 750 64 4 Damao Maoming — Phase 1 49.50 2010 Dongfang FD70B 1,500 33 5 Fuxin Fubei — Phase 2 300.00 2009 Sinovel SL1500 1,500 200 6 Kezuozhongqi Zhurihe — Site 1Phase 3 48.00 2010 CSIS HZ H93-2.0 2,000 24 7 Laoting 49.50 2009 Sinovel SL1500 1,500 33 8 Niutouling — Phase 1 13.50 2000 NEG-Micon NM48/750 750 18 9 Qing’ao — Phase 2 45.05 2007 Vestas V52 850 53 10 Rongcheng 6.00 N/A Sinovel SL3000 3,000 2 11 Tongliao Baolongshan — Phase 1 49.50 2009 Dongfang FD77B 1,500 33 12 Weihai — Phase 1 19.50 2007 Sinovel SL1500 1,500 13

4.1.1 Sinovel SL1500-1.5MW

In 2009, Sinovel’s installed capacity was 3,510 MW and was mainly based on the wind turbines of the SL 1500 series. Sinovel developed its WTG technology jointly with the established German manufacturer Fuhrländer and is produced under a license agreement with AMSC Windtec. The SL1500 is a three blade, horizontal shaft WTG with a double-fed generator, active pitch, and active yaw system with variable speed operation. The wind turbine is available as a normal and low temperature version.

Overall, we consider the design of the SL1500 to be in line with the industry standards.

Table 4.2: Technical Summary of Sinovel SL1500

SL1500/77 SL1500/82 Hub Height 70 m 70 m Rotor Diameter 77.4 m 82.9 m Rated Power 1,500 kW 1,500 kW IEC Classification IEC III IEC II Certification Germanischer Lloyd Germanischer Lloyd Cut-in Wind Speed 3 m/s 3 m/s Nominal Wind Speed 11 m/s 10.5 m/s Cut-out Wind Speed 20 m/s 20 m/s Generator Double-fed asynchronous, water Double-fed asynchronous, water cooling cooling Gearbox Two planetary stages + one spur gear Two planetary stages + one spur gear stage stage Gearbox Ratio 1:104.1 1:104.1 Power regulation and control Electromechanical blade pitch Electromechanical blade pitch

4.1.2 Sinovel SL3000-3.0MW

With a capacity of 3 MW, the SL3000 is designed and produced under a license agreement with AMSC Windtec. Within 2009, a total of 100 SL3000 units were manufactured by Sinovel and a few of these turbines have been put into service in Shanghai Donghai Daqiao Project since September 2009 and successfully passed a 240 hours pre-acceptance test.

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The SL3000 follows a classic design, employing a traditional multi-stage step-up gearbox in conjunction with a double-fed induction generator (DFIG). This is a standard design approach, used by a number of other manufacturers of multi-megawatt machines. Furthermore, the wind turbine features advanced power generating technologies such as variable speed control and a pitch regulated system. Four series of this wind turbine are available; namely as a 50Hz and 60Hz version for both onshore and offshore applications.

Although the SL3000 does not have a substantial track record, its design applies the same standard to WTGs of this range. We would therefore expect a similar level of reliability as WTGs of other renowned manufacturers.

Table 4.3: Technical Summary of Sinovel SL3000

Hub Height 80 m Rotor Diameter 105 m Rated Power 3,000 kW IEC Classification IEC IIA Certification Germanischer Lloyd Cut-in Wind Speed 3 m/s Nominal Wind Speed 12 m/s Cut-out Wind Speed 25 m/s Generator Double-fed asynchronous, water cooling Gearbox Two planetary stages + one parallel shaft stage Gearbox Ratio 1:84.6 Power regulation and control Servo motor blade pitch

4.1.3 Dongfang FD77B/FD70B-1.5 MW

Dongfang Turbine manufactures WTGs under a production license with REpower. The design of the Dongfang FD77B and FD70B is based on REpower’s MD70. This design was available from 1997 and has been upgraded continuously. Based on this consistently implemented and optimized technology, the FD77B/FD70B can be considered as mature technology. In 2009, According to a trusted source, the cumulative installed capacity of Dongfang Turbine amounted to 3,765 MW.

Table 4.4: Technical Summary of Dongfang FD77B/FD70B

FD70B FD77B Hub Height 65 m 61.5 m Rotor Diameter 70 m 77 m Rated Power 1,500 kW 1,500 kW IEC Classification IEC IIA IEC IIIA Cut-in Wind Speed 3.5 m/s 3 m/s Nominal Wind Speed 13 m/s 12.5 m/s Cut-out Wind Speed 25 m/s 20 m/s Generator Asynchronous Asynchronous Gearbox Combined planetary and spur gear Combined planetary and spur gear Gearbox Ratio 1:94.99 1:104 Power regulation and control Pitch and variable speed technology Pitch and variable speed technology

The concept behind the REpower MD70, and therefore the FD77B/FD70B, is based on the successful solutions incorporated in the 600-750 kW turbines and adapted to the requirements of the megawatt class. The

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As the technology of the FD77B/FD70B is well-established, we consider that the technology is mature and proven, and this model to be reliable.

4.1.4 Suzlon S82-1.5 MW

Suzlon produces the S82-1.5 MW wind turbine mainly for the Indian and Chinese markets. As of 31 January 2010, Suzlon announced a total of 6,622 WTG installed worldwide; among these 1,212 were of the S82 model.

The wind turbine is designed for a medium wind speed regime and features a robust design with pitch regulated blade operation and a 3-stage gearbox with flexible coupling to the asynchronous induction generator.

As the technology of the S82 is well-established, we consider this model to be reliable for its application of the reviewed projects.

Table 4.5: Technical Summary of Suzlon S82

Hub Height 78 m Rotor Diameter 82 m Rated Power 1,500 kW IEC Classification IEC IIIA Certification Germanischer Lloyd Cut-in Wind Speed 4 m/s Nominal Wind Speed 14 m/s Cut-out Wind Speed 20 m/s Generator Single fed induction with variable rotor resistance, air cooling Gearbox One planetary stage + two helical stages Gearbox Ratio 1:95.09 Power regulation and control Electrical blade pitch

4.1.5 Windey WD50-750 kW

Windey has developed wind turbines since the 70s, producing the WD49/50 750 kW, WD52 800 kW and WD77/82 1,500 kW series today. The WD49/50 750 kW series relies on proven REpower design and are manufactured under a production license. The certification was accredited by Germanischer Lloyd. Based on the growing experience, Windey has successfully undertaken development and manufacturing of further wind turbines based on in-house design.

Overall, we consider the technology of the WD50/750 to be mature and proven, and this model to be reliable.

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Table 4.6: Technical Summary of Windey WD50/750

Hub Height 50 m Rotor Diameter 49 m Rated Power 750 kW Certification Germanischer Lloyd Cut-in Wind Speed 3.5 m/s Nominal Wind Speed 14 m/s Cut-out Wind Speed 25 m/s Generator Asynchronous induction generator Gearbox one planetary and two spur wheel stages Gearbox Ratio 1:67.4 Power regulation and control Mita/Windey controller Mita

4.1.6 CSIC H93-2.0 MW

The design of the H93-2.0 MW was undertaken jointly between CSIC (Chongqing) Haizhuang Wind Power Equipment co. Ltd and Aerodyn Energiesysteme GmbH, Germany, which has been involved in the development of WTG technology since 1983. Technical information has been shown in Table 4.7.

Table 4.7: Technical Summary of CSIC H93-2.0MW

Hub Height 70 m Rotor Diameter 93 m Rated Power 2,000 kW IEC Classification IEC TC IIIA Certification Germanischer Lloyd Cut-in Wind Speed 3 m/s Nominal Wind Speed 10.5 m/s Cut-out Wind Speed 25 m/s Generator Double-fed asynchronous Gearbox Ratio 1:117 Power regulation and control Pitch and variable speed technology

The H93-2.0 MW is certified by Germanischer Lloyd Certification for a site in Inner Mongolia.

Overall, we consider the design of the H93-2.0 MW to be in line with industry standards. However, due to the lack of a track record for this turbine, we consider a warranty period of at least three years as a reasonable mitigant. Huaneng Renewables successfully negotiated a five year warranty period with Haizhuang. Thus, we are satisfied with the mitigation applied by Huaneng Renewables.

4.1.7 Gamesa G52-850 kW

The design of the G52 is very similar to the Vestas V52 which is recognized as a robust product. This also reflects the common ties of the two companies. Gamesa’s G52 technology incorporates features including a double-fed induction asynchronous generator and variable speed generator as summarized in Table 4.8.

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Table 4.8: Technical Summary of Gamesa G52

Hub Height 55 m Rotor Diameter 52 m Rated Power 850 kW IEC Classification IEC IA Certification Germanischer Lloyd Cut-in Wind Speed 4 m/s Nominal Wind Speed 16 m/s Cut-out Wind Speed 25 m/s Generator asynchronous, double-fed induction Gearbox One planetary stage + two helical stages Gearbox Ratio 1:61.74 Power regulation and control Pitch and variable speed technology

With over 7,000 Gamesa G5X-850 kW WTGs installed, the G52 WTG is a standard and mature Gamesa product. Overall, we considered the G52-850 kW as a well-established and mature WTG.

4.1.8 Vestas V52-850 kW

With an installed base of over 2,100 units globally, the V52-850 kW is a mature product with a reputation for reliability within the Vestas product portfolio.

Vestas V52 is a variable speed machine. Vestas’ implementation of the double-fed induction generator (DFIG) and its associated control systems goes under the name of “OptiSpeed®”.

OptiSpeed® allows rotor speed to vary by 30% above and below the generator synchronous speed, minimizing unwanted fluctuations in the output to the grid supply and reducing loads on the drive train and structure. It also has the ability to modify the noise profile from the blades.

As for the Gamesa G52 WTG, the V52 is a standard and mature product installed in several countries throughout the world. Overall, we consider the V52-850 kW as a well-established and mature wind turbine.

Table 4.9: Technical Summary of Vestas V52

Hub Height 44–74m Rotor Diameter 52 m Rated Power 850 kW IEC Classification IEC IA/IEC IIA Certification Germanischer Lloyd Cut-in Wind Speed 4 m/s Nominal Wind Speed 16 m/s Cut-out Wind Speed 25 m/s Generator Asynchronous with Optispeed Gearbox Combination of one planetary and two helical stages Gearbox Ratio 1:62 Power regulation and control Pitch/OptiSpeed/OptiSpeed

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4.1.9 NEG-Micon TAIM-NM750 kW

NEG-Micon has been developing and manufacturing wind turbines since the late seventies and was merged with Vestas in 2004. Vestas continues to develop a selected number of its former rivals’ product lines. The technology deployed is ‘active-stall’, which is less commonly used today. A control system actuates blade pitching to induce stall as a means of control. Since it does not use power converters, there is less control of power quality as compared to a DFIG.

With a substantial track record, the NM750 is a standard and mature model. Overall, we consider the NM750 as a well-established and mature WTG.

Table 4.10: Technical Summary of NM750

Hub Height 46.4m Rotor Diameter 44 m Rated Power 750 kW IEC Classification IEC IA Certification DNV Cut-in Wind Speed 3 m/s Nominal Wind Speed 15 m/s Cut-out Wind Speed 25 m/s Generator Asynchronous Gearbox Combination of one planetary and two helical stages Gearbox Ratio 1:56.3 Power regulation and control Stall Control

4.2 Conclusions

Huaneng Renewables uses several models of WTGs on its sites. Most of the models used by Huaneng Renewables have substantial track records and we consider the technology of these WTGs as mature and the models as reliable. However, Haizhuang did not provide a sufficient track record. Therefore, we consider a warranty period of at least three years as a reasonable mitigation. Huaneng Renewables successfully negotiated a five year warranty period with Haizhuang. Thus, we are satisfied with the mitigation applied by Huaneng Renewables.

5. Wind Resources Assessment

5.1 Introduction

We have reviewed wind resource and energy yield assessments contained within the feasibility studies for each project. Our review focuses on the adopted methodology and assumptions and does not include remodeling or recalculation of the energy yields. In addition we have reviewed the applicable Chinese standards, which set out recommended practices, in order to comment on the approach compared to wider international practice.

The wind resource assessments form a key component of the feasibility studies produced during the development stage of the wind farms, and can provide a useful insight into the expected generation, particularly where limited production data is available. In the case where sufficient production data is available (at least 1 year of normal operation), we prefer to use this as an indicator for future production forecasts since there can often be changes to the wind farm design, or turbine type which compromises the preconstruction estimate.

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5.2 Chinese Standards

Although the wind resource assessments for the wind farms in this review were carried out by a number of different Chinese design institutes, the methodology and reporting of results are common to all studies and are based on the Chinese standards; GB/T 18709-2002 — Methodology of Wind Energy Resource Measurement for Wind Farm and GB/T 18710-2002 — Methodology of Wind Resource Assessment for Wind Farm. The former standard covers data collection and reporting, while the latter outlines the procedures for long-term correction, data screening, data processing and reporting.

5.3 Methodology of Wind Resource Assessment for Wind Farm

GB/T 18710-2002 is the Chinese standard for wind resource assessment and outlines the methodology for processing the wind data and reporting the results. This standard covers reference data requirements and long- term corrections as well as data screening, the formulae for extracting relevant parameters (wind shear, turbulence intensity) and reporting of the results. GB/T 18710-2002 references a number of documents including NREL/SR-440-22223 — Wind Resource Assessment Handbook. This is an American publication issued by the National Renewable Energy Laboratory of the U.S. Department of Energy and provides a good overview of the measurement based wind resource assessment method. Much of GB/T 18710-2002 is derived directly from this document and hence the approach to wind resource assessment in China is largely consistent with international practice.

MCP techniques adopted by Huaneng Renewables are based on the correlation analysis of long-term meteorological observation data and relevant historic annual wind speeds. Long-term correlations of the site data is often based on a comparison of historic annual wind speeds, although in some projects reviewed more sophisticated techniques were employed. This depends on the quality and consistency of the reference data records available. In several of the reviewed feasibility studies, where Huaneng Renewables could not achieve confidence in the reference data available, site collected data (of at least one year) was used as the basis for the energy calculations. This shows evidence of diligence in approach.

The culmination of GB/T 18710-2002, in terms of energy yield, is reporting of the average annual wind speed, the wind direction, power density (W/m2) and diurnal and seasonal profiling. In order to calculate the energy yield from a wind farm, it is necessary to calculate the wind speed distributions at each wind turbine location and to integrate these over the power curve for the chosen wind turbine. The wake losses must then be modeled, and other losses, such as electrical efficiency and availability, must be considered, in order to arrive at a Net Energy Yield.

5.4 Methodology of Wind Energy Resource Measurement for Wind Farm

The standard GB/T 18710-2002 covers key principles on meteorological mast configuration and sensor placement, including some guidance on sensor alignment and mitigating the influence from tower shading. We have observed in previous projects that fewer masts were used in the Chinese measurement campaigns compared to our preferred practice. However, in several sites we assessed, we noted that the measurement campaigns carried out by Huaneng Renewables were quite comprehensive, particularly in complex terrain sites, showing evidence of good practice.

5.5 Feasibility Studies for the Representative Wind Farms

In the feasibility studies reviewed, the wind speed distributions at each wind turbine have been modeled by WAsP, which is a software package developed by the Danish wind institution RISO. WAsP is an industry standard tool for evaluating variation in wind flow from topographic and ground cover variation in non-complex environments.

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In our experience, it is common to make some modifications to the wind farm layout between the production of the wind resource assessment and construction. In some of the feasibility studies reviewed it was noted that the turbine model, hub height or layout were not consistent with the constructed layout. In these instances the prediction in the feasibility study and actual production will not be directly comparable.

The power curves used in the feasibility studies are standard power curves provided by the WTG manufacturers. We consider these to be a reasonable basis for prediction at the feasibility study stage. The power curves used in some feasibility studies were often not listed numerically and some of the origins were not stated. Huaneng Renewables has informed us that this is due to the need to maintain fairness in the open bidding process for wind turbine selection. To appreciate the accuracy of a wind resource assessment, it is important to understand whether the power curve is theoretical or derived from measurement, and whether it is guaranteed by the manufacturer. By way of conservatism, the energy yield predictions in the Huaneng Renewables feasibility studies have generally been reduced by 5% which is in line with Chinese practice. We consider that this practice provides some comfort and compensation for the lack of detailed information on the power curves.

In some of the feasibility studies we reviewed, air density correction was calculated using a scaling factor derived from the ratio of site average air density to standard air density. In our opinion, this method does not accurately capture the impact of air density on a wind turbine power curve and can result in an over calculation of the energy lost due to air density in high altitude sites and conservative yield forecasts.

Wake modeling was carried out using WAsP software, which is an industry standard method. The results from the wake model appear to be in line with our expectations. In many of the sites visited, the wind farms have been developed in stages, or have other wind farms constructed adjacent to the site. It is understood that the influences of neighboring wind farms and of subsequent phases have not always been captured in the wind resource assessments in the feasibility studies. However, it is noted that Huaneng Renewables often leaves exclusion zones between wind farms extensions in order to reduce the influence of neighboring wakes.

The losses applied to each project vary substantially. The loss evaluations are generous in our opinion, resulting in project efficiencies of approximately 70% on average.

Uncertainty analyses are important for making commercial decisions about wind farm performance, particularly where external debt financing is sought, as they describe the probability, and hence degree of risk associated with a prediction. Adherence to published industry standards does not immunize an energy yield assessment from uncertainty as sources of error are endemic in the process and are not necessarily consistent from site to site. Debt financiers will typically base production forecasts on a higher confidence prediction since they will not benefit from any upside in revenues. Conversely, a large utility with a large portfolio of wind farms such as Huaneng Renewables or an equity investor, will base revenue projections on central-estimate (P50) production forecasts. Chinese standards do not have specific requirements for uncertainty analysis and only central estimates (P50) are provided in the feasibility studies. We have however observed a tendency for conservatism in the energy yield forecasts carried out for Huaneng Renewables which is reflected in the production data. We prefer to use production data as an indicator of future performance where sufficient data is available (one year normal operation).

5.6 Conclusions

From the pool of studies reviewed, we can conclude that there is a consistent approach to wind resource assessment and the adopted methodology is largely consistent with standard international practice. The Chinese standards have been derived from well-known international publications, although due to differences in requirements there are some differences in the approach. For example, the Chinese approach does not place as much emphasis on analyzing uncertainty in the energy yield prediction compared to the wider international practice. Nevertheless, there is evidence of conservatism in the following process and in the assumptions made

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We consider that the Chinese approach to wind resource assessment has been designed according to the nature of Chinese requirements. From the pool of studies reviewed, the applicable operation data is pretty much in line with the predictions, providing confidence in the methods.

6. Grid Connection Assessment

6.1 Introduction

The purpose of this section is to assess factors which could affect power export to the grid from the wind farms and to identify risks which may affect normal operation of the wind farms. There are usually three key aspects to be considered:

• Power transferring capacity of wind farm including whether all equipment, i.e. main transformers, export cable/overhead line have been rated appropriately to export full generation from the wind farm;

• Grid codes and essential requirements for wind farms, including whether there are sufficient reactive power sources available from the wind farm, so that the wind farm is capable of maintaining the required power factor at the grid connection point for the given voltage ranges and real power output, voltage control capacity, low voltage ride through (LVRT) and power quality indices of the wind farm connected to the grid; and

• Capability of the local power network in view of voltage/frequency deviation, system overloading and potential operational issues which may be caused by the grid connection of the wind farm.

Our assessment on the grid connection was for the twelve representative wind farms and has been undertaken based upon:

• documents provided by Huaneng Renewables;

• meetings and discussions with relevant staff of Huaneng Renewables;

• site visits to the twelve representative power plants; and

• relevant data and information from the public domain, together with our general knowledge in this field and specifically of the Chinese power sector.

We have used the following data as part of our assessment:

• feasibility study reports;

• grid connection study reports;

• single line diagrams of grid connections;

• single line diagrams of internal energy collection systems in the wind farms;

• grid connection agreement;

• grid codes and essential requirements for wind farms;

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• renewable energy policy of the Chinese Government;

• feedback to our questionnaire; and

• site visit records.

All data collected from the site visits are assumed to be the latest. During the assessment, we have not undertaken any independent simulation or calculation to validate the inputs and results in the studies conducted by different Chinese design institutes which are independent third parties to Huaneng Renewables.

The results of the studies such as power system load flow study and fault analysis by these Chinese design institutes have shown whether or not the wind farms could be connected to the grid and if any constraints exist in the local networks which could affect the level of power export from the wind farm at any time. The study results provide us with evidence of adequacy of the grid connection schemes and confirm the grid capability to deliver the wind power to the systems.

We expect any change of the network configurations in the local power grids after commissioning of the wind farms to reinforce the local network capability, and to improve the system operation and performance, which will ultimately benefit the wind farm connections and operations.

6.2 Key issues addressed in Grid Connection

Through our data review and analysis, we noted that the twelve representative wind farms are properly connected to 220 kV or 110 kV transmission and distribution network.

The key issues addressed in Grid Connection Studies are summarized in the following sub-sections of our report.

6.2.1 Capacity of the wind farm step-up substation

Capacity of a step-up main transformer

Capacity of a step-up main transformer in the substation at the wind farm site should be sufficient to transfer the power generated to the local grid as well as to provide flexibility in voltage regulation and reactive power compensation.

The step-up transformers at most wind farms have sufficient capability to export full power from the wind farm to the grid, and are equipped with on-load tap changers which are able to maintain required voltage level at the wind farm step-up substation.

It is noted that the main transformer’s capacity at Weihai Wind Farm step-up substation is the same as the total installed capacity of WTG connected to. Therefore, we consider that it is likely that the transformer will be overloaded when all WTGs of Weihai (installed capacity 69 MW) and Rongcheng (installed capacity 6 MW) will simultaneously produce at their nominal power range; indeed it is possible for WTGs to produce power at a higher level than the nominal power rating. As a result, WTGs from these wind farms may be curtailed during periods of high output, depending on the grid power factor at the time. However, we understand from Huaneng Renewables that the grid power factor is normally maintained at one, which would avoid the need for curtailment, but there is no commitment to this effect in the Grid Code, which governs grid operation. In addition, we have received the further information from Huaneng Renewables that a new step-up substation will be constructed at Rongcheng Wind Farm and two 3 MW WTGs of Rongcheng wind farm will be connected to the new substation.

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Capacity of the wind farm cable/overhead lines

Conductors of a circuit between the wind farm substation and the grid connection point should be designed to have a thermal rating adequate to meet the requirement to export the maximum apparent power output from the wind farm.

All lines are rated appropriately to export full capacity of the wind farms to the grid. All visited wind farms are connected to the grid substation via a single overhead/cable line connection. According to the last version of Chinese Grid Code (Trial) published in 2006, in order to facilitate operation management and control, and to simplify system topology, it is not required to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point. In the updated version of Chinese Grid Code (Revision) published in December 2009, there is no relevant requirement for the wind farm to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point.

‘N-1’ security contingency is a typical steady-state test and it means that the power system can operate either within emergency loading and voltage limits immediately after loss of any transmission line or transformer or generator, or with normal limits after system adjustments.

Other equipment capacity

Fault level calculation has been used to choose appropriate switchgear ratings so that the switchgear is capable of withstanding potential fault currents at the wind farm substation.

6.2.2 Capacity of the reactive power compensation and voltage control

Reactive power compliance is an important technical requirement for the wind farm to be connected to the power grid. Maintaining the required power factor needs sufficient reactive power compensation. The purpose of the reactive power compliance study is to examine whether there are sufficient reactive power sources available from the wind farm, so that the wind farm is capable of maintaining the required power factor at the grid connection point for the given voltage ranges and real power output. If study results reveal any insufficiency, reactive power compensation schemes should be considered when designing the grid connection scheme. Even though detailed reactive power studies are not performed for most Chinese wind power projects as they are elsewhere in the world, Chinese grid connection studies usually provide requirements of reactive compensation schemes under typical operating modes.

All wind turbines at the twelve visited wind farms have controllable power factors at grid connection point as required in Grid Code. Eight representative wind farms have reactive power compensation equipment installed as required by grid connection study report. However, since there is no information in the grid connection study report and the grid connection agreement relating to reactive power compensation scheme, there are no reactive power compensation equipment installed at Changdao, Weihai, Rongcheng and Changyi Wind Farms. In addition, all the main transformers are equipped with an on-load tap changer which is able to control voltage between 90% and 110% at the HV winding. Therefore, we would consider that the wind farms have sufficient reactive capacity and voltage control capacity to meet the reactive power demand and voltage regulation as required in Chinese Grid Code (Revision).

6.2.3 Capacity of Low Voltage Ride Through (LVRT) and Power Quality

Design principles adopted in wind generators differ from conventional synchronous generators. Connection of numerous WTGs in a wind farm may cause voltage deviation, voltage fluctuation, flicker, and harmonics issues which have impact on the power supply quality of local power grid. The updated Chinese Grid Code

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(Revision) of wind farm grid connection requires an assessment of the power quality and LVRT to ensure that the relevant indices are within the given limits and in accordance with technical standards.

The relevant tests are required to be finished before wind farm is connected to the grid. As most existing Chinese wind projects, the twelve representative wind farms will be required to be technically upgraded so that they can meet relevant requirement in the updated Chinese Grid Code (Revision) in the near future.

6.2.4 Accommodation capability of the local power network

The feasibility study reports have shown that the power system analysis including the ‘N-1’ security criteria has been carried out for the transmission network at the grid connection point in each wind farm project in order to assess the steady and dynamic performance of the local power network that the wind farm is connected to.

Connection of wind farms to power networks has a local effect on voltage levels and reactive power flows. However, the primary purpose of the power system operation is to deliver the active power economically and reliably from generation resources to the customers. Clearly, the introduction of distributed and variable wind farms will impact on the scheduling of conventional power system operation and on the accommodation of the local power network. On the other hand, the balance of generation supply and consumption in each power grid will also impact on the accommodation of the local power network. We have provided our analysis of this aspect below.

China is a vast country and the distribution of energy sources versus electricity demand are greatly unbalanced. Indeed, nearly two thirds of hydro resources and coal reserves are distributed in the Southwest, West, Northwest and North of China while two thirds of electricity loads are in the East and South of China, where there is a lack of electricity energy sources. Figure 6.1 shows the distribution of the electricity production and consumption in China.

Figure 6.1: Chinese Energy Production and Consumption

Heilongjiang

Jilin Inner Mongol

Liaoning Xinjiang Beijing Tianjin Hebei Ningxia Shanxi Shandong

Qinghai Gansu Jiangsu Shaanxi Henan Shanghai Anhui Tibet Chongqing Hubei Sichuan Zhejiang Jiangxi Hunan Fujian Guizhou Taiwan Yunnan Guangxi Guangdong Production and consumption differ by less than 20% Hong Kong Consumption exceeds production by more than 20%

Production exceeds Consumption by more than 20% Hainan

Source: China Statistics Yearbook 2009

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As per our analysis, most local power grids are sufficient to accommodate the wind farms to be connected so that they are able to operate in normal conditions and to export the generated power to the grid as expected. However, we noted that in Baolongshan and Zhurihe Wind Farm 1, the power generation may have to be curtailed to some extent due to local power grid’s insufficient capability to adjust active power and the requirement of heat supply in winter. We understand that the local network should have sufficient capability to accommodate Huaneng Renewables wind power and we would expect that this problem could be solved by future reinforcement of the local network.

6.3 Grid Connection Assessment on each wind farm

6.3.1 Introduction

As part of our desktop study and site visits, taking into account of the generation — demand balance and local network constraints, we will provide our assessment on the key grid connection issues and consequently identify the potential risks and operational issues for each wind farm.

6.3.2 Fubei Wind Farm Phase II

6.3.2.1 Equipment capacity

With two hundred SL 1.5 MW WTG installed, Fubei has a total installed capacity of 300 MW. Each turbine is connected to a WTG step-up transformer via underground cables. These cables are rated appropriately in order to carry maximum output from each individual turbine. Then these turbines are connected to their own 35 kV collection trunk line circuits. These circuits consist of overhead line connection only, and are rated appropriately to carry the maximum output from the wind turbines.

Two step-up substations, East and Center step-up substations have been constructed at the site with one 120 MVA — 220/35 kV transformer and two 100 MVA — 220/35 kV transformers equipped with one on-load tap changer. The 35 kV collection lines are connected to the 35 kV bus bar at the substation, and then stepped up to 220 kV via the main transformers. WTG are divided into two groups:

• 74 1.5 MW (111 MW) WTG in one group are connected to the 35 kV bus bar at East area step-up substations, and

• 126 1.5 MW (189 MW) WTG in another group are connected to the 35 kV bus bar at Center step-up substations.

The main transformer is sized at 320 MVA. The size of this transformer will support the full output of the units, which is 300 MW. Therefore, we consider that these transformers are sufficiently rated in order to export the full power from the wind farm to the grid.

East area substation is connected with Center substation by an 11.5 km LGJ-300 220 kV overhead line circuit with a thermal rating of 215.7 MVA. Center substation is connected to the 220 kV Dongliang grid substation via an 50 km LGJ — 400×2 220 kV overhead line circuit with a thermal rating of 644 MVA which is sufficient for the power evacuation from the wind farm to the grid. According to the last version of Chinese Grid Code (Trial) published in 2006, it is not required to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point. In the updated version of Chinese Grid Code (Revision) published in December 2009, there is no relevant requirement for the wind farm to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point.

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The fault withstanding capability for switchgear installed in the wind farm is 50 kA. Hence the circuit breakers should be able to withstand the fault currents. Appropriate protection schemes have been applied to the wind farm, including differential protection and over-current protection, which seem to be the common practice for most Chinese wind farms. Lightning protection equipment have been installed to prevent lightning impact on the wind farm equipment. No significant issues have been raised regarding the equipment condition.

6.3.2.2 Reactive power compensation capacity and voltage control capacity

The total capacity of the reactive power compensation device installed at the site is 29.5 MVar. In addition, the transformer is equipped with an on-load tap changer which is able to control voltage between 90% and 110% at the HV winding. Therefore, we would consider the wind farm has sufficient reactive capacity and voltage control capacity to meet the reactive power demand and voltage regulation as required in the grid code.

6.3.2.3 Local power grid operation

Fubei Wind Farm Phase II is located in west area of Fuxin city in Liaoning province, the end of Northeast China Grid. It is connected to 220 kV Dongliang substation in Fuxin power grid and dispatched by Liaoning Electrical Power Company. Fuxin power grid is located in the end of Liaoning western network. It exports the electricity to the main transmission network in Northeast Grid through 220 kV transmission lines.

As shown in Figure 6.1, electricity consumption exceeds production by more than 20% in Liaoning province. Therefore, the grid connection of Fubei Wind Farm Phase II is a useful complement to electricity consumption. We do not expect curtailments from local dispatch center to happen on Fubei Wind Farm Phase II under the normal situation.

6.3.3 Baolongshan Wind Farm Phase I

6.3.3.1 Equipment capacity

Baolongshan Wind Farm Phase I has thirty-three FD77B 1.5 MW WTG installed with a total capacity of 49.5 MW. Each turbine is connected to a WTG step-up transformer via underground cables. These cables are rated appropriately in order to carry maximum output from each individual turbine. Then these turbines are connected to their own 35 kV collection trunk line circuits. These circuits consist of overhead line connection only, and are rated appropriately to carry the maximum output from the wind turbines.

A step-up substation has been constructed at the site with two 220/35 kV transformers of 63 MVA and 90 MVA respective capacity. The 35 kV collection lines are connected to the 35 kV bus bar at the substation, and then stepped up to 220 kV via the main transformers.

Two extensions of the wind farm (Phase II and Phase III) of 49.5 MW each have been installed at the same site and shared the 220 kV step-up substation. The main transformers are sized at 153 MVA. The size of these transformers will support the full output of the units, which is 148.5 MW. Therefore, we consider that both transformers are sufficiently rated to export the full power from the wind farm to the grid.

Baolongshan Wind Farm is connected to the 220 kV Baohua substation, via a 220 kV overhead line with the type LGJ-300 and the thermal rating of 353 MVA which is sufficient for the power evacuation from the wind farm to the grid. According to the last version of Chinese Grid Code (Trial) published in 2006, it is not required to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point. In the updated version of Chinese Grid Code (Revision) published in December 2009, there is no relevant requirement for the wind farm to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point.

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The fault withstanding capability for switchgear installed in the wind farm is 40/31.5 kA. Hence the circuit breakers should be able to withstand the fault currents. Appropriate protection schemes have been applied to the wind farm, including differential protection and over-current protection, which seem to be the common practice for most Chinese wind farms. Lightning protection equipment have been installed to prevent lightning impact on the wind farm equipment. No significant issues have been raised regarding the equipment condition.

6.3.3.2 Reactive power compensation capacity and voltage control capacity

The total capacity of the reactive power compensation device installed at the site is 40 MVar. In addition, the transformer is equipped with an on-load tap changer which is able to control voltage between 90% and 110% at the HV winding. Therefore, we would consider the wind farm has sufficient reactive capacity and voltage control capacity to meet the reactive power demand and voltage regulation as required in the grid code.

6.3.3.3 Local power grid operation

Baolongshan Wind Farm Phase I is located near Tongliao city, in the eastern area of Inner Mongolia. It is connected to 220 kV Baohua substation in Tongliao power grid in the eastern Inner Mongolia power grid. However, it is dispatched by Northeast China Grid Company.

Tongliao power grid is located in the Central West part of Northeast China Grid. A main power plant, Tongliao power plant, with an installed capacity of 800 MW provides electricity in order to meet the local demand in Tongliao power grid. It also supplies its remaining generation output to Jilin provincial power grid, one of three provincial power grids in Northeast China Grid.

In winter, many thermal power generators have to be kept in operation in order to supply both electricity and heat in where Baolongshan wind farm is located. As a result, the power output from Baolongshan wind farms may have to be curtailed to some extent due to local power grid’s insufficient capability to adjust active power and the requirement of heat supply by thermal power plants in winter. We understand that the local network should have sufficient capability to accommodate Huaneng Renewables wind power and would expect that this problem could be eliminated in the medium term by future reinforcement of the local network.

6.3.4 Zhurihe Wind Farm 1 Phase III

6.3.4.1 Equipment capacity

Zhurihe Wind Farm 1 Phase III has twenty-four Haizhuang H93 — 2.0 MW WTG installed with a total capacity of 48 MW. Each turbine is connected to a WTG step-up transformer via underground cables. These cables are rated appropriately in order to carry maximum output from each individual turbine. Then these turbines are connected to their own 35 kV collection trunk line circuits. These circuits consist of overhead line connection only, and are rated appropriately to carry the maximum output from the wind turbines.

A 220 kV step-up substation has been constructed at the site with two 100 MVA — 220/35 kV transformers with an on-load tap changer. The 35 kV collection lines are connected to the 35 kV bus bar at the substation and then stepped up to 220 kV via the main transformers.

Two additional phases (Phase I and Phase II) of 49.5 MW capacity each has been installed at the same site and shared the 220 kV step-up substation. The main transformers are sized at 200 MVA. The size of these transformers will support the full output of the units, which is 147 MW. Therefore, we consider that both transformers are sufficiently rated to export the full power from the wind farm to the grid.

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Zhurihe Wind Farm 1 Phase III is connected to the 220 kV Wulijie substation via two 220 kV overhead lines (Kewu overhead line and Wubei transmission line) with total thermal rating of 600 MVA which is sufficient to export all power generated by Zhurihe Wind Farm 1 to the grid. According to the last version of Chinese Grid Code (Trial) published in 2006, it is not required to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point. In the updated version of Chinese Grid Code (Revision) published in December 2009, there is no relevant requirement for the wind farm to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point.

The fault withstanding capability for switchgear installed in the wind farm is 50/31.5 kA. Hence the circuit breakers should be able to withstand the fault currents. Appropriate protection schemes have been applied to the wind farm, including differential protection and over-current protection, which seem to be the common practice for most Chinese wind farms. Lightning protection equipment have been installed to prevent lightning impact on the wind farm equipment. No significant issues have been raised regarding the equipment condition.

6.3.4.2 Reactive power compensation capacity and voltage control capacity

The total capacity of the reactive power compensation device installed at the site is 35 MVar. In addition, the transformer is equipped with an on-load tap changer which is able to control voltage between 90% and 110% at the HV winding. Therefore, we would consider the wind farm has sufficient reactive capacity and voltage control capacity to meet the reactive power demand and voltage regulation as required in the grid code.

6.3.4.3 Local power grid operation

Zhurihe Wind Farm 1 Phase III is located in Tongliao city in the eastern area of Inner Mongolia. Like Baolongshan Wind Farm, it is also connected to Tongliao power grid in the eastern Inner Mongolia power grid via 220 kV transmission lines. However, it is dispatched by Northeast China Grid Company.

As described previously, in winter, many thermal power generators have to be kept in operation in order to supply both electricity and heat in the area where Zhurihe and Baolongshan wind farms are located. As a result, the power output from Baolongshan wind farms may have to be curtailed to some extent due to local power grid’s insufficient capability to adjust active power and the requirement of heat supply by thermal power plants in winter. We understand that the local network should have sufficient capability to accommodate Huaneng Renewables wind power and would expect that this problem could be eliminated in the medium term by future reinforcement of the local network.

6.3.5 Maoming Wind Farm Phase I

6.3.5.1 Equipment capacity

Maoming Wind Farm Phase I has thirty-three Dongfang FD70B 1.5 MW WTG installed with a total capacity of 49.5 MW. Each turbine is connected to a WTG step-up transformer via underground cables. These cables are rated appropriately in order to carry maximum output from each individual turbine. Then these turbines are connected to their own 35 kV collection trunk line circuits. These circuits consist of overhead line connection only, and are rated appropriately to carry the maximum output from the wind turbines.

A step-up substation has been constructed with one 100 MVA — 220/35 kV transformer with an on-load tap changer. The 35 kV collection lines are connected to the 35 kV bus bar at the substation and then stepped up to 220 kV via the main transformers.

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An extension of 49.5 MW total capacity is planned to be built at the same site and will share this 220 kV step-up substation. The main transformer is sized at 100 MVA. The size of the transformer will support the full output of current units, which is 49.5 MW, even the future full output of 99 MW after the commission of Maoming Wind Farm Phase II. Therefore, we consider that the main transformer is sufficiently rated to export the full power from the wind farm to the grid.

Maoming Wind Farm Phase I is connected to the 220 kV Wanghai substation via one 220 kV overhead line with a thermal rating of 250 MVA. We consider that the circuit is sufficient to export all power generated by the wind farm to the grid. According to the last version of Chinese Grid Code (Trial) published in 2006, it is not required to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point. In the updated version of Chinese Grid Code (Revision) published in December 2009, there is no relevant requirement for the wind farm to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point.

The fault withstanding capability for switchgear installed in the wind farm is 40/31.5 kA. Hence the circuit breakers should be able to withstand the fault currents. Appropriate protection schemes have been applied to the wind farm, including differential protection and over-current protection, which seem to be the common practice for most Chinese wind farms. Lightning protection equipment have been installed to prevent lightning impact on the wind farm equipment. No significant issues have been raised regarding the equipment condition.

6.3.5.2 Reactive power compensation capacity and voltage control capacity

The total capacity of the reactive power compensation device installed at the site is 20 MVar. In addition, the transformer is equipped with an on-load tap changer which is able to control voltage between 90% and 110% at the HV winding. Therefore, we would consider the wind farm has sufficient reactive capacity and voltage control capacity to meet the reactive power demand and voltage regulation as required in the grid code.

6.3.5.3 Local power grid operation

As described in Section 3.4.4, Inner Mongolia Grid Company is an independent provincial Grid Corporation. Maoming Wind Farm is located in Damao, Baotou city in the western area of Inner Mongolia. It is connected to Baotou Power Grid in the western Inner Mongolia power grid via 220 kV transmission line, and hence it is dispatched by Inner Mongolia Grid Company.

Baotou is the load center area where the electricity consumption exceeds production. Therefore, the grid connection of Maoming Wind Farm Phase I is a useful complement to electricity consumption. We do not expect curtailments from local dispatch center to happen on Maoming Wind Farm Phase I under the normal situation.

6.3.6 Niutouling Wind Farm Phase I

6.3.6.1 Equipment capacity

Niutouling Wind Farm Phase I, the first wind farm constructed in Nan’ao Island, is located in Shantou of Guandong province. With eighteen NEG-MICON 750 kW WTGs installed, Niutouling wind farm has a total capacity of 13.5 MW. The WTG is connected to a WTG step-up transformer via underground cables. These cables are rated appropriately in order to carry maximum output from each individual turbine. Then these turbines are connected to their own 10 kV collection trunk line circuits. These circuits consist of overhead line connection only, and are rated appropriately to carry the maximum output from the wind turbines.

A step-up substation has been constructed with two 31.5 MVA (63 MVA) — 110/10 kV transformers with an on-load tap changer. The 10 kV collection lines are connected to the 10 kV bus bar at the substation, and then

— VI-37 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX VI TECHNICAL REPORT stepped up to 110 kV via the main transformer. The main transformer is sized at 63 MVA. The size of the transformer will support the full output of current units, which is 13.5 MW. Therefore, we consider that the main transformer is sufficiently rated to export the full power from Niutouling Wind Farm to the grid.

Niutouling Wind Farm Phase I is connected to Jinniu substation located in Nan’ao power grid via one 110 kV overhead line with maximum capacity of 15 MVA. We consider that the circuit is sufficient to export all power generated by the wind farm to the grid. According to the last version of Chinese Grid Code (Trial) published in 2006, it is not required to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point. In the updated version of Chinese Grid Code (Revision) published in December 2009, there is no relevant requirement for the wind farm to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point.

The fault withstanding capability for switchgear installed in Jinniu substation is 31.5 kA. Hence the circuit breakers should be able to withstand the fault currents. Appropriate protection schemes have been applied to Niutouling Wind Farm Phase I, including differential protection and over-current protection, which seem to be the common practice for most Chinese wind farms. Lightning protection equipment have been installed to prevent lightning impact on the wind farm equipment. No significant issues have been raised regarding the equipment condition.

6.3.6.2 Reactive power compensation capacity and voltage control capacity

The feasibility study report indicates that all WTGs installed in the wind farm have an adjustable power factor between 0.97 leading and 0.97 lagging. There is no information in the grid connection report relating to reactive power compensation scheme. In addition, the transformer is equipped with an on-load tap changer which is able to control voltage between 90% and 110% at the HV winding. Hence, we reviewed that there is no specific reactive power compensation equipment required at Niutouling Wind Farm and consider that there are sufficient reactive capacity and voltage control capacity to meet the reactive power demand and voltage regulation as required in the grid code.

6.3.6.3 Local power grid operation

Niutouling Wind Farm Phase I is located in Nan’ao Island in Shantou of Guangdong province. It is connected to Shantou power grid via 110 kV line and dispatched by Shantou power dispatch and communication center.

Since Shantou is the load center area where the electricity consumption exceeds production by more than 20%, the grid connection of Niutouling Wind Farm Phase I is a useful complement to electricity consumption. We do not expect curtailment from the local dispatch center to be required at Niutouling Wind Farm Phase I under normal conditions.

6.3.7 Qing’ao Wind Farm

6.3.7.1 Equipment capacity

Qing’ao Wind Farm Phase II located in the East part of Nan’ao Island in Shantou, in Guandong province, has fifty-three V52-850 kW installed with a total capacity of 45.05 MW. Each WTG is connected to a WTG step-up transformer via underground cables. These cables are rated appropriately in order to carry maximum output from each individual turbine. Then these turbines are connected to their own 35 kV collection trunk line circuits. These circuits consist of overhead line connection only, and are rated appropriately to carry the maximum output from the wind turbines.

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A 110 kV step-up substation at Qing’ao wind farm Phase II has been constructed with one 50 MVA — 110/35 kV transformer with an on-load tap changer. The 35 kV collection lines are connected to the 35 kV bus bar at the substation and then stepped up to 110 kV via the main transformer. The main transformer sized at 50 MVA will support the full output of current units, which is 45.05 MW. Therefore, we consider that the main transformer is sufficiently rated to export the full power from the wind farm to the grid.

Qing’ao Wind Farm Phase II is connected to Jinniu substation located in Nan’ao power grid via one LGJ-400 110 kV overhead line with the type LGJ — 400 and maximum capacity of 100 MVA. We consider that the circuit is sufficient to export all power generated by the wind farm to the grid. According to the last version of Chinese Grid Code (Trial) published in 2006, it is not required to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point. In the updated version of Chinese Grid Code (Revision) published in December 2009, there is no relevant requirement for the wind farm to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point.

The fault withstanding capability for switchgear installed in Qing’ao wind farm is 28.4/23.7 kA. Hence the circuit breakers should be able to withstand the fault currents. Appropriate protection schemes have been applied to the wind farm, including differential protection and over-current protection, which seem to be the common practice for most Chinese wind farms. Lightning protection equipment have been installed to prevent lightning impact on the wind farm equipment. No significant issues have been raised regarding the equipment condition.

6.3.7.2 Reactive power compensation capacity and voltage control capacity

The feasibility study report indicates that all WTG installed in the wind farm have an adjustable power factor between 0.95 leading and 0.95 lagging. The total capacity of the reactive power compensation device installed at the site is 12 MVar. In addition, the transformer is equipped with an on-load tap changer which is able to control voltage between 90% and 110% at the HV winding. Therefore, we would consider the wind farm has sufficient reactive capacity and voltage control capacity to meet the reactive power demand and voltage regulation as required in the grid code.

6.3.7.3 Local power grid operation

Qing’ao Wind Farm Phase II is located in Nan’ao Island in Shantou of Guangdong province. It is connected to Shantou power grid via 110 kV line and dispatched by Shantou power dispatch and communication center.

Shantou is the load center area where the electricity consumption exceeds production by more than 20%. Therefore, the grid connection of Qing’ao Wind Farm Phase II is a useful complement to electricity consumption. We do not expect curtailment from the local dispatch center to be required at Qing’ao Wind Farm Phase II under normal conditions.

6.3.8 Dali Dafengba Wind Farm

6.3.8.1 Equipment capacity

With sixty-four WD50/750 kW installed WTGs, Dali Dafengba Wind Farm located in Dali of Yunnan province has a total capacity of 48 MW. Each turbine is connected to a WTG step-up transformer via underground cables. These cables are rated appropriately in order to carry maximum output from each individual turbine. Then these turbines are connected to their own 35 kV collection trunk line circuits. These circuits consist of overhead line connection only, and are rated appropriately to carry the maximum output from the wind turbines.

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One 110 kV step-up substation has been constructed at the site with one 63 MVA — 110/35 kV transformer with an on-load tap changer. The 35 kV collection lines are connected to the 35 kV bus bar at the substation and then stepped up to 110 kV via the main transformer. The size of the transformer at 63 MVA will support the full output of current units, which is 48 MW. Therefore, we consider that the main transformer is sufficiently rated to export the full power from the wind farm to the grid.

A nearby wind farm, Zhemoshan wind farm with a total capacity of 30.75 MW is connected to Dafengba Wind Farm via one 110 kV overhead line. Dali Dafengba Wind Farm is connected to the 110 kV Xinqiwu substation in Dali power grid via one 5.34 km LGJ-240/30 110 kV overhead line. The maximum capacity of these lines is 108 MVA. We consider that the circuit is sufficient to export all power generated by the wind farm to the grid. According to the last version of Chinese Grid Code (Trial) published in 2006, it is not required to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point. In the updated version of Chinese Grid Code (Revision) published in December 2009, there is no relevant requirement for the wind farm to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point.

The fault withstanding capability for switchgear installed in Jinniu substation is 31.5 kA. Appropriate protection schemes have been applied to the wind farm, including differential protection and over-current protection, which seem to be the common practice for most Chinese wind farms. Lightning protection equipment have been installed to prevent lightning impact on the wind farm equipment. No significant issues have been raised regarding the equipment condition.

6.3.8.2 Reactive power compensation capacity and voltage control capacity

The total installed reactive power compensation capacity in Dafengba wind farm consists of +/- 12 MVar shunt capacitor banks and 14.848 MVar shunt reactor group. In addition, the transformer is equipped with an on-load tap changer which is able to control voltage between 90% and 110% at the HV winding. Therefore, we would consider the wind farm has sufficient reactive capacity and voltage control capacity to meet the reactive power demand and voltage regulation as required in the grid code

6.3.8.3 Local power grid operation

Dali Dafengba Wind Farm is located in Dali of Yunnan province. It is connected to Dali power grid where most of the power plants are hydro power stations. In dry season, the local power grid lacks of electrical power supply. Thus, all power generated by Dali Dafengba Wind Farm will be supplied to the grid in order to meet the local demand. However, during the high-season for hydropower generation, in summer, the wind power will be exported to the main transmission grid of Yunnan power grid for provincial or national use.

Yunnan province has the biggest hydro resources in China. Its generation output will be transferred to load Center in South China through the nation’s West-to-East power transmission lines. Currently, there are eight AC and five DC transmission lines from West to East with the total installed transmission capacity of 23 GW. The annual electricity transmission reached 115.6 TWh in 2009. Therefore, we consider that the generation output from Dali Dafengba Wind Farm can be evacuated to the power grid properly.

6.3.9 Changdao Wind Farm

6.3.9.1 Equipment capacity

With thirty-two G52-850 kW WTG installed, Changdao Wind Farm located near Yantai city in Shandong province has a total capacity of 27.2 MW. Each turbine is connected to a WTG step-up transformer via underground cables. These cables are rated appropriately in order to carry maximum output from each individual

— VI-40 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX VI TECHNICAL REPORT turbine. Then these turbines are connected to their own 35 kV collection trunk line circuits. These circuits consist of overhead line connection only, and are rated appropriately to carry the maximum output from the wind turbines.

One step-up substation has been constructed at the site with one 31.5 MVA — 110/35 kV transformer with an on-load tap changer. The 35 kV collection lines are connected to the 35 kV bus bar at the substation and then stepped up to 110 kV via the main transformer. The size of the transformer at 31.5 MVA will support the full output of current units, which is 27.2 MW. Therefore, we consider that the main transformer is sufficiently rated to export the full power from the wind farm to the grid.

Changdao Wind Farm is connected to the 110 kV Changshan substation in Yantai power grid via one 2 km YJLW03-64/110 KV cable line with a maximum capacity of 72 MVA. Therefore, we consider that the circuit is sufficient to export all power generated by the wind farm to the grid. According to the last version of Chinese Grid Code (Trial) published in 2006, it is not required to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point. In the updated version of Chinese Grid Code (Revision) published in December 2009, there is no relevant requirement for the wind farm to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point.

The fault withstanding capability for switchgear installed in the wind farm is 40 kA. Hence the circuit breakers should be able to withstand the fault currents. Appropriate protection schemes have been applied to the wind farm, including differential protection and over-current protection, which seem to be the common practice for most Chinese wind farms. Lightning protection equipment have been installed to prevent lightning impact on the wind farm equipment. No significant issues have been raised regarding the equipment condition.

6.3.9.2 Reactive power compensation capacity and voltage control capacity

Since there is no information in the grid connection report and the grid connection agreement relating to reactive power compensation scheme, there is no reactive power compensation equipment installed at Changdao Wind Farm. However, all wind turbines at the site have controllable power factors at grid connection point as required in Grid Code. In addition, all the main transformers are equipped with an on-load tap changer which is able to control voltage between 90% and 110% at the HV winding. Therefore, we would consider the wind farm has sufficient reactive capacity and voltage control capacity to meet the reactive power demand and voltage regulation as required in the grid code.

6.3.9.3 Local power grid operation

Changdao Wind Farm is located in the island of Changdao area in Yantai city in Shandong province. It is connected to Yantai Power Grid in Shangdong power grid via 110 kV transmission line and it is dispatched by Yantai Power Supply Company.

The demand of Changdao County is primarily supplied from Penglai power grid part of Yantai power grid via 110 kV submarine cables. The standby capacity in Changdao Island is partially covered by diesel power generators. Therefore, the power output from Changdao Wind Farm can compensate the shortage of electricity in the island and we do not expect any curtailment from Yantai power dispatch center to happen on Changdao Wind Farm Phase I under the normal situation.

6.3.10 Weihai Wind Farm Phase I and Rongcheng Wind Farm

6.3.10.1 Equipment capacity

With thirteen SL 1.5 MW WTG installed, Weihai Wind Farm Phase I located in Rongcheng area of Weihai City in Shangdong province has a total capacity of 19.5 MW. Each turbine is connected to a WTG step-up transformer via underground cables. These cables are rated appropriately in order to carry maximum output from

— VI-41 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX VI TECHNICAL REPORT each individual turbine. Then these turbines are connected to their own 35 kV collection trunk line circuits. These circuits consist of overhead line connection only, and are rated appropriately to carry the maximum output from the wind turbines.

One 110 kV step-up substation has been constructed at the site with one 75 MVA — 110/35 kV transformer with an on-load tap changer. The 35 kV collection lines are connected to the 35 kV bus bar at the substation and then stepped up to 110 kV via the main transformer.

Weihai Wind Farm Phase II has been constructed and operated with a total capacity of 49.5 MW. In addition, with two 3 MW WTG installed, Rongcheng Wind Farm has a total capacity of 6 MW. WTG 1 and WTG 2 are respectively connected to 35 kV side of WTG 23 35 kV/690 V transformer and WTG 2 35 kV/690 V transformer in Weihai Wind Farm via 35kV cable. Then, these 35 kV collection lines are connected to the 35 kV bus bar at Weihai Wind Farm step up substation. After connecting Rongcheng 6 MW WTGs, the total capacity connected to Weihai step-up substation has reached 75 MW.

The size of the transformer at 75 MVA will only just support the full output of current units, which is 75 MW. Therefore, we consider that it is likely that the transformer will be overloaded when all WTG of Weihai (installed capacity 69 MW) and Rongcheng (installed capacity 6 MW) will simultaneously produce at their nominal power range; indeed it is possible for WTGs to produce power at a higher level than the nominal power rating. As a result, WTGs from these wind farms may be curtailed during periods of high output, depending on the grid power factor at the time. However, we understand from Huaneng Renewables that the grid power factor is normally maintained at 1, which would avoid the need for curtailment, but there is no commitment to this effect in the Grid Code, which governs grid operation. In addition, we have received the further information from Huaneng Renewables that a new step-up substation will be constructed at Rongcheng Wind Farm and then the two 3 MW WTGs of Rongcheng wind farm will be connected to the new substation.

Weihai Wind Farm is connected to the 110 kV Gangzhong substation in Weihai power grid via one 5.88 km LGJ-240/30 110 kV overhead line. The maximum capacity of this line is 100 MVA which is above the requirements. Therefore, we consider that the circuit is sufficient to export all power generated by the wind farm to the grid. According to the last version of Chinese Grid Code (Trial) published in 2006, it is not required to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point. In the updated version of Chinese Grid Code (Revision) published in December 2009, there is no relevant requirement for the wind farm to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point.

The fault withstanding capability for switchgear installed in the wind farm is twenty times of rating currents. Hence the circuit breakers should be able to withstand the fault currents. Appropriate protection schemes have been applied to the wind farm, including differential protection and over-current protection, which seem to be the common practice for most Chinese wind farms. Lightning protection equipment have been installed to prevent lightning impact on the wind farm equipment. No significant issues have been raised regarding the equipment condition.

6.3.10.2 Reactive power compensation capacity and voltage control

Since there is no information in the grid connection report and the grid connection agreement relating to reactive power compensation scheme, there are no reactive power compensation equipment installed at Weihai and Rongcheng Wind Farms. However, all wind turbines at the site have controllable power factors at grid connection point as required in Grid Code. In addition, all the main transformers are equipped with an on-load tap changer which is able to control voltage between 90% and 110% at the HV winding. Therefore, we would consider the wind farms have sufficient reactive capacity and voltage control capacity to meet the reactive power demand and voltage regulation as required in the grid code.

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6.3.10.3 Local power grid operation

Weihai and Rongcheng Wind Farms are located in Rongcheng area of Weihai city, in Shandong province. Both sites are connected into the Rongcheng 110 kV distribution network, the east part of Weihai power grid via 110 kV transmission line and it is dispatched by Weihai Power Supply Company.

With the local economic development, the load demand in Rongcheng has been increasing recently, exceeding the electricity production. Therefore, the power output from Weihai wind farm and Rongcheng wind farm can compensate the shortage of electricity in Rongcheng area and we do not expect any curtailment from Weihai power dispatch center to happen on Weihai and Rongcheng Wind Farms under the normal situation.

6.3.11 Changyi Wind Farm

6.3.11.1 Equipment capacity

With thirty-three Suzlon S82 1.5 MW WTG installed, Changyi Wind Farm Phase I located in Changyi area of Weifang city in Shangdong province has a total capacity of 49.5 MW. Each turbine is connected to a WTG step-up transformer via underground cables. These cables are rated appropriately in order to carry maximum output from each individual turbine. Then these turbines are connected to their own 35 kV collection trunk line circuits. These circuits consist of overhead line connection only, and are rated appropriately to carry the maximum output from the wind turbines.

One 110 kV step-up substation has been constructed at the site with one 63 MVA — 110/35 kV transformer with an on-load tap changer. The 35 kV collection lines are connected to the 35 kV bus bar at the substation and then stepped up to 110 kV via the main transformer. The size of the transformer at 63 MVA will support the full output of current units, which is 49.5 MW. Therefore, we consider that the main transformer is sufficiently rated to export the full power from the wind farm to the grid.

Changyi Wind Farm is connected to the 110 kV Daxing substation in Weifang power grid via one 11.8 km LGJ-300110 kV overhead line. The maximum capacity of this line is 100 MVA. We consider that the circuit is sufficient to export all power generated by the wind farm to the grid. According to the last version of Chinese Grid Code (Trial) published in 2006, it is not required to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point. In the updated version of Chinese Grid Code (Revision) published in December 2009, there is no relevant requirement for the wind farm to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point.

The fault withstanding capability for switchgear installed in the wind farm is 40/31.5 kA. Hence the circuit breakers should be able to withstand the fault currents. Appropriate protection schemes have been applied to the wind farm, including differential protection and over-current protection, which seem to be the common practice for most Chinese wind farms. Lightning protection equipment have been installed to prevent lightning impact on the wind farm equipment. No significant issues have been raised regarding the equipment condition.

6.3.11.2 Reactive power compensation capacity and voltage control capacity

Since there is no information in the grid connection report and the grid connection agreement relating to reactive power compensation scheme, there is no reactive power compensation equipment installed at Changyi Wind Farm. However, all wind turbines at the site have controllable power factors at grid connection point as required in Grid Code. In addition, all the main transformers are equipped with an on-load tap changer which is able to control voltage between 90% and 110% at the HV winding. Therefore, we would consider the wind farm has sufficient reactive capacity and voltage control capacity to meet the reactive power demand and voltage regulation as required in the grid code.

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6.3.11.3 Local power grid operation

Changyi Wind Farm is located in Changyi area of Weifang city, in Shandong province. It is connected into Weifang power grid via 110 kV overhead line and it is dispatched by Weifang Power Supply Company.

With the local economic development, the load demand in Changyi has been increasing recently, exceeding the electricity production. Therefore, the power output from Changyi Wind Farm can compensate the shortage of electricity in Changyi area and we do not expect any curtailment from Weifang power dispatch center to happen on Changyi Wind Farm under the normal situation.

6.3.12 Laoting Wind Farm

6.3.12.1 Equipment capacity

With thirty-three SL 1.5 MW WTG installed, Laoting wind farm Phase I located in Laoting area of Tangshan city in Hebei province has a total capacity of 49.5 MW. Each turbine is connected to a WTG step-up transformer via underground cables. These cables are rated appropriately in order to carry maximum output from each individual turbine. Then these turbines are connected to their own 35 kV collection trunk line circuits. These circuits consist of overhead line connection only, and are rated appropriately to carry the maximum output from the wind turbines.

One 110 kV step-up substation has been constructed at the site with one 50 MVA — 110/35 kV transformer with an on-load tap changer. The 35 kV collection lines are connected to the 35 kV bus bar at the substation and then stepped up to 110 kV via the main transformer. The size of the transformer at 50 MVA will support the full output of current units, which is 49.5 MW. Therefore, we consider that the main transformer is sufficiently rated to export the full power from the wind farm to the grid.

Laoting wind farm is connected to the 110 kV side at 220kV Jinyintan substation in Tangshan power grid via one 20 km LGJ-400 110 kV overhead line. The maximum capacity of this line is 167 MVA. We consider that the circuit is sufficient to export all power generated by the wind farm to the grid. According to the last version of Chinese Grid Code (Trial) published in 2006, it is not required to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point. In the updated version of Chinese Grid Code (Revision) published in December 2009, there is no relevant requirement for the wind farm to meet the ‘N-1’ security criteria for the transmission network from the wind farm substation to the grid connection point.

The fault withstanding capability for switchgear installed in the wind farm is 31.5 kA. Hence the circuit breakers should be able to withstand the fault currents. Appropriate protection schemes have been applied to the wind farm, including differential protection and over-current protection, which seem to be the common practice for most Chinese wind farms. Lightning protection equipment have been installed to prevent lightning impact on the wind farm equipment. No significant issues have been raised regarding the equipment condition.

6.3.12.2 Reactive power compensation capacity and voltage control capacity

The total capacity of the reactive power compensation device installed at the site is 10 MVar. In addition, the transformer is equipped with an on-load tap changer which is able to control voltage between 90% and 110% at the HV winding. Therefore we consider the reactive power compensation installed in the wind farm is sufficient to comply with the grid code.

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6.3.12.3 Local power grid operation

Laoting Wind Farm is located in Laoting area of Tangshan city, in Hebei province. It is connected into Tangshan power grid via 110 kV overhead line and it is dispatched by Tangshan Power Supply Company.

As shown in Figure 6.1 Hebei is part of the load center where the electricity consumption exceeds the production by more than 20%. With the local economic development, the load demand in Laoting has been increasing recently, exceeding the electricity production. Therefore, the power output from Laoting Wind Farm can compensate the shortage of electricity in Laoting area and we do not expect any curtailment from Tangshan power dispatch center to be required at Laoting Wind Farm under normal conditions.

6.4 Conclusions

The transformers at most wind farm step-up substations are appropriately sized and have sufficient capacity to export the maximum power under normal operation scenarios. However, it has been noted that the size of the 75 MVA main transformer at Weihai Wind Farm step-up substation will only just support the full output of the current units in Weihai and Rongcheng Wind Farms which are rated at 75 MW. Therefore, we consider that it is likely that the transformer will be overloaded when all WTGs of Weihai (installed capacity 69 MW) and Rongcheng (installed capacity 6 MW) simultaneously produce at their nominal full capacity; indeed it is possible for WTGs to produce power at a higher level than the nominal power rating. As a result, WTGs from these wind farms may be curtailed during periods of high output, depending on the grid power factor at the time. However, we understand from Huaneng Renewables that the grid power factor is normally maintained at one, which would avoid the need for curtailment. However, the Grid Code, which governs grid operation, does not state that a power factor of one will be maintained. In addition, we have received further information from Huaneng Renewables that a new step-up substation will be constructed at Rongcheng Wind Farm and the two 3 MW WTGs from Rongcheng wind farm will be connected to the new substation.

It appears that all overhead/cable lines are rated appropriately to export full capacity of the wind farms to the grid. All wind farms visited are connected to the grid substation via a single line connection. According to the last version of Chinese Grid Code (Trial) of wind farm grid connection published in 2006, in order to facilitate operation management and control, and to simplify system topology, it is not required to meet the ‘N-1’ security criteria for the transmission network between the wind farm substation and the grid connection point. In the updated version of Chinese Grid Code (Revision) of wind farm grid connection published in December 2009 there is no relevant requirement for the wind farm to meet the ‘N-1’ security criteria for the transmission network between the wind farm substation and the grid connection point.

All the representative wind farms have appropriate switchgear installed to withstand fault current at both the wind farm step-up substations and the grid connection substations. No issue regarding switchgear rating has been identified at any of the representative wind farms. Appropriate protection schemes have been applied to all wind farms, including differential and over-current protection, which seems to be the common practice for most Chinese wind farms. Lightning protection equipment has also been installed to prevent lightning damage to the wind farm equipment. No significant issues have been raised regarding the equipment condition.

All wind turbines have controllable power factors at grid connection point as required in the Chinese Grid Code. Most wind farms have reactive power compensation equipment installed to provide reactive power support as required by the grid connection study report. Since there is no requirement to consider the installation of reactive power compensation equipment on the grid connection, there are no reactive power compensation equipment installed at Changdao, Weihai, Rongcheng and Changyi Wind Farms. In addition, all the main transformers are equipped with an on-load tap changer which is able to control voltage between 90% and 110% at the High Voltage winding. Therefore, we would consider that the wind farms have sufficient reactive and voltage control capacity to meet the reactive power demand and voltage regulation as required in the grid code.

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The updated Chinese Grid Code (Revision) of wind farm grid connection requires an assessment of the power quality and low voltage ride through (LVRT) to ensure that the relevant indices are within the given limits and in accordance with technical standards. The relevant tests are required to be finished before the wind farm is connected to the grid, as most existing Chinese wind projects, including the twelve representative wind farms, will be required to be technically upgraded so that they can meet relevant requirement in the updated Chinese Grid Code in the near future.

Most of the local power grids have sufficient capability to accommodate the connection of the wind farms so that they will be able to operate during normal conditions and export the generated power to the grid as expected. However, it is noted that in Baolongshan and Zhurihe Wind Farm 1, the power generation may have to be curtailed to some extent due to local power grid’s insufficient capability to adjust active power and the requirement of heat supply using thermal power plants in winter. We understand that the local network should have sufficient capability to accommodate Huaneng Renewables wind power and we would expect that this problem could be solved by future reinforcement of the local network.

In general, we consider the grid connection of Huaneng Renewables wind power projects to be well- planned, without any major constraints found to prevent power export under normal system operating conditions. The only exception is when the local power system operates under specific scenarios, like Tongliao power system in winter. However, it is likely that such a situation can be eliminated in the medium term by future network reinforcement.

7. Performance of the Wind Farms

7.1 Definition of Availability

Availability ratio of the WTGs, as defined in the “Assessment Code of Wind Power Equipment Reliability” issued by China Electricity Council (CEC), is calculated according the following formula:

AH Availability Factor = X 100% PH

AH: Available Hours means the hours when the WTG is considered as available to produce power; PH: Physical Hours means the total hours during the availability measurement period.

The Available Hours are defined as being applied when the wind turbines are in their prearranged status, without consideration of the actual power output. All outages due to conditions unrelated to the wind turbines such as wind speed being too high, grid outages, etc, are not covered according to this definition. This is not the internationally recognized standard methodology for calculating the availability of a wind farm. The definition presented above corresponds to the average availability of the wind turbines, excluding sources of downtime unrelated to the wind turbine reliability; however we understand that it is the normal calculation method used within the Chinese wind power sector. Huaneng Renewables followed this method to calculate and assess the performance of the WTGs in its wind farms as would all other Chinese developers and producers.

The internationally recognized methodology for calculating the availability of a wind farm is to multiply the average of all WTG availabilities with the availability of the grid. Huaneng Renewables collects the average availability of all wind turbines as for the whole wind farm from its staff on each site. Then, it uses the data gathered to assess the performance, and operation and maintenance of each wind farm. The average monthly availabilities for all the operational wind farms visited, is reported to be higher than the 95% guaranteed by the WTG manufacturers.

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7.2 Wind Farms Performance — Generation and Availability

7.2.1 Fubei Wind Farm Phase II

Fubei Wind Farm Phase II is located in Fuxingdi town and Jiumiaoxiang, in the northwest part of Fuxin city, Liaoning province in Northeast China. Fuxin Wind Farms consist of three phases:

• Fuxin Gaoshanzi Wind Farm Phase I (100.5 MW, operational since October 2008)

• Fuxin Fubei Wind Farm Phase II (300 MW, operational since 1st October 2009)

• Fuxin Zhangbei Wind Farm Phase III (100.5 MW, operational since April 2010)

All Phases are owned and operated by Huaneng Fuxin Wind Power Generation Co. Ltd. Under our scope of work, we only assessed the performance of Fubei Wind Farm — Phase II.

7.2.1.1 Generation and Availability

Fubei Wind Farm Phase II with two hundred SL 1.5 MW WTG installed is constructed on relatively flat scrub/desert land which varies in altitude from 400m to 500m ASL (Above Sea Level). The terrain does not present any concerns regarding shading, channeling or excessive gradient which could cause adverse wind conditions; such as severe wind shear, inflow angles, or turbulence. The site does not seem to present any operational concern.

A control building is located near the step-up substation of the wind farm. This building includes the control center, offices, spare parts store, switchgear housing, and other site facilities. Huaneng Fuxin Wind Power Generation Co. Ltd. employs one wind farm manager and twelve operational personnel, deployed in two teams of six people. The building and facilities are of a high standard and appear to be well-maintained.

Site roads are in good condition and we do not expect any access issue during the winter period. When we visited the site in April 2010, we were able to visit the control building, site facilities and wind turbines.

Sinovel is a well-established Chinese wind turbine manufacturer with a good track record in China. No significant technical issues have been reported since the wind farm was commissioned in October 2009.

Wind resource data at the sites was recorded from two met masts installed on site by the Fuxin Bureau of Meteorology before the construction period began. However, the wind data measured by the sensors on these masts has not been used to monitor records during the operational period after construction started. During the operational period, Huaneng Renewables monitors wind speed through new, permanent met masts installed in May 2010; and the anemometers on the nacelles of the WTGs.

Currently, the WTGs are covered by a manufacturer’s warranty; which guarantees the turbine availability at 95%. The warranty period is for two years. The average wind speed at hub height (70 m) has been calculated to be 7.2 m/s and the net capacity factor for Phase II is calculated to be 25%; this is reasonable for an onshore wind farm. The production, wind, and availability data provided by Huaneng Renewables shows that there is an average availability of 99.50% since commissioning in October 2009 (listed in Table 7.1). All monthly availabilities are above the 95% guaranteed value. In 2009, the power generation from the site was 62,458 MWh in October, 83,621 MWh in November and 75,903 MWh in December. There has been insufficient data since commissioning took place in October 2009 (that is at least 12 month of normal operational data) we are therefore unable to comment on wind farm performance.

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Table 7.1: Operational Data of Fubei Phase II

Average Total generation Equivalent Full Capacity Average Wind Speed Year Month availability (MWh) Load Hours Factor at 70 m (m/s) 2009 ...... 12 99.52% 75,903 253.01 35.14% 5.69 2009 ...... 11 99.63% 83,621 278.74 38.71% 5.89 2009 ...... 10 99.34% 62,458 208.19 28.89% 5.13

7.2.1.2 Conclusions

Fubei Wind Farm’s equipment was supplied by well-known manufacturer by the industry; that employs proven technologies or has credible track records within the market. We are of the view that the turbine technologies are in accordance with current industry standards, and the sites were built to a high standard. O&M is well-managed due to the experience that Huaneng Renewables gained at Fuxin Gaoshanzhi Wind Farm (Phase I). Since commissioning was completed in October 2009, there was insufficient data (at least 12 month of normal operational data) available to comment on wind farm performance.

7.2.2 Baolongshan Wind Farm Phase I

Baolongshan Wind Farm (Phase I) is located in Baolongshan town, Tongliao city in Inner Mongolia. Baolongshan Wind Farms consist of the following three phases:

• Baolongshan Wind Farm Phase I (49.5 MW, operational since July 2009)

• Baolongshan Wind Farm Phase II (49.5 MW, commissioned in February 2009)

• Baolongshan Wind Farm Phase III (49.5 MW, commissioned in April 2009)

These wind farms are owned and operated by Huaneng Tongliao Wind Power Generation Co. Ltd. As per our scope of work, we only assessed the performance of Baolongshan wind farm Phase I.

7.2.2.1 Generation and Availability

Baolongshan Wind Farm (Phase I) with thirty-three FD77B 1.5 MW WTG installed is built on a flat grassland with an altitude of approximately 155m ASL. The terrain does not present any concerns regarding shading, channeling or excessive gradient which could cause adverse wind conditions, such as severe wind shear, inflow angles, or turbulence. Sand storms are common in the area and the climate is very cold, resulting in long periods of subzero temperatures.

A control building is located near the step-up substation of the wind farm. This building includes the control center, offices, spare parts store, switchgear housing, and other site facilities. Huaneng Baolongshan Wind Power Generation Co. Ltd. employs one wind farm manager and fifteen operational personnel, deployed in three teams of five people. The building and facilities are of a high standard and appear to be well-maintained.

The access roads on site are rough. When we went to the site in April 2010, we were able to visit the control building, site facilities and wind turbines.

Baolongshan Wind Farm Phase I used two permanent met masts on site to monitor the wind resources at the sites before construction. The wind data measured by the anemometers on the WTGs and the permanent met mast, left after construction, are used to monitor the wind during the operational period.

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Currently the WTGs are covered by a manufacturer’s warranty which guarantees the WTG availability at 95%. The warranty period is for two years. The average wind speed at hub height (70 m) has been calculated to be 7.5 m/s and the net capacity factor for Phase I is calculated to be 25%; which is reasonable for an onshore wind farm. According to the production, wind, and availability data provided by Huaneng Renewables and listed in Table 7.2, the wind farm has shown an average availability of 98.14% since July 2009. All monthly availabilities are above the 95% guaranteed value. In 2009, the total power generation from July to December was 47,207.6 MWh. In 2010, the total power generation from January to April was 37,453.4 MWh. There has been insufficient data (less than 12 months of normal operation data) since commissioning took place in July 2009. Therefore, we are unable to comment on wind farm performance.

Table 7.2: Operational Data of Baolongshan Phase I

Equivalent Average Total Full Load Year Month availability generation (MWh) Hours Capacity Factor 2010 ...... 1-4 98.02% 37,453.4 756.63 26.27% 2009 ...... 7-12 98.14% 47,207.6 953.69 21.6%

7.2.2.2 Conclusions

Equipment at Baolongshan Wind Farm was supplied by manufacturers well-known by the industry; that employs proven technologies or has credible track records within the market. We are of the view that the turbine technologies are in accordance with current industry standards, and the sites were built to a high standard. O&M is well-managed. Since commissioning was completed in July 2009, there was insufficient data (at least 12 month of normal operational data) available to comment on wind farm performance.

7.2.3 Zhurihe Wind Farm 1 Phase III

Zhurihe Wind Farm (Phase III) is located in west of Kezuozhongqi, 80 km far from Tongliao city in Inner Mongolia. Zhurihe Wind Farms consist of the following three phases:

• Zhurihe Wind Farm 1 Phase I (49.5 MW, commissioned in November 2009)

• Zhurihe Wind Farm 1 Phase II (49.5 MW, commissioned in December 2009)

• Zhurihe Wind Farm 1 Phase III (48 MW, operated on 1 April 2010)

All three phases are owned and operated by Huaneng Tongliao Wind Power Generation Co. Ltd. As per our scope of works, we only assessed the performance of Zhurihe Wind Farm 1 Phase III.

7.2.3.1 Generation and Availability

Zhurihe Wind Farm 1 (Phase III) with twenty-four Haizhuang H93 — 2.0 MW WTG installed is built on a relatively flat grass land which varies in altitude from 190 m to 210m ASL. The terrain is simple and does not present any concerns regarding shading, channeling or excessive gradient which could cause adverse wind conditions, such as severe wind shear, inflow angles, or turbulence. Sand storms are common in the area and the climate is very cold, resulting in long periods of subzero temperatures.

A control building is located near the step-up substation of the wind farm. This building includes the control center, offices, spare parts store, switchgear housing, and other site facilities. Huaneng Baolongshan

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Wind Power Generation Co., Ltd. employs one wind farm manager and twelve operational personnel, deployed in three teams of four people. The building and facilities are of a high standard and appear to be well-maintained.

The access roads on site are rough. When we went to site in April 2010, we were able to visit the control building, site facilities and wind turbines.

Zhurihe Wind Farm 1 Phase III used four permanent met masts on site to monitor the wind resources at the sites before construction. The wind data measured by the anemometers on the WTGs and the permanent met masts are used to monitor the wind during the operational period. We have been provided with the wind resources data measured since 1 January 2010.

Currently the WTGs are covered by a manufacturer’s warranty which guarantees the turbine availability at 95%. The warranty period is two years. The average wind speed at hub height (70 m) has been calculated to be 7.39 m/s and the net capacity factor for Phase II is calculated to be 25%; this is reasonable for an onshore wind farm. Production and wind data have been provided by Huaneng Renewables and are listed in Table 7.3. Since the operational period of the wind farm started in April 2010, the operational data, including monthly production and availability, was only available for April 2010.

Table 7.3: Operational Data of Zhurihe Wind Farm 1 Phase III

Total Average generation Average Wind Speed Year Month availability (MWh) at 70 m (m/s) 2010 ...... 4 98.91% 604.53 6.8

7.2.3.2 Conclusions

Zhurihe Wind Farm 1 Phase III’s equipment was supplied by manufacturer well-known in the industry that employs proven technologies or has credible track records within the market. We are of the view that the turbine technologies are in accordance with current industrial standards, and the sites were built to a high standard. O&M is well-managed due to the experience Huaneng Renewables gained at Zhurihe Wind Farm 1 (Phase I and II) projects. Since commissioning was completed in April 2010, there has been insufficient data (at least 12 months of normal operational data) available to allow us to comment on wind farm performance.

7.2.4 Maoming Wind Farm Phase I

Maoming Wind Farm (Phase I) is located in Damao, Baotou city in Inner Mongolia. Maoming Wind Farms consist of the following two phases:

• Maoming Wind Farm Phase I (49.5 MW, operated in February 2010)

• Maoming Wind Farm Phase II (49.5 MW, to be constructed)

7.2.4.1 Generation and Availability

Maoming Wind Farm (Phase I) with thirty-three Dongfang FD70B 1.5 MW WTG installed is located in Damao of Baotou city in Inner Mongolia. It is built on flat scrub/desert land which is at an altitude of

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A control building is located near the step-up substation of the wind farm. This building includes the control center, offices, spare parts store, switchgear housing, and other site facilities. Huaneng Renewables employs one wind farm manager and eight operational personnel, deployed in two teams of four people. The building and facilities are of a high standard and appear to be well-maintained.

The access roads on site are rough. When we went to site in April 2010, we were able to visit the control building, site facilities and wind turbines.

Maoming Wind Farm Phase I used four permanent met masts on site to monitor the wind resources before construction. The wind data measured by the anemometers on the WTGs and the permanent met masts is used to monitor the wind during the operational period. We have been provided with the wind resources data since 01 January 2010.

Currently the WTGs are covered by a manufacturer’s warranty which guarantees the turbine availability at 95%. The average wind speed at hub height (70 m) has been calculated to be 7.8 m/s and the net capacity factor for Phase I is calculated to be 25.0% which is typical for an onshore wind farm. Production and wind data from February to April in 2010 have been provided by Huaneng Renewables, as shown in Table 7.4. Since the wind farm has only been operational since February 2010, the operational data, including monthly production and availability, are only available from February to April 2010. Operational data during the commissioning period was heavily influenced by commissioning activities and standard teething issues. Thus, it may not be a good indicator of future performance.

Table 7.4: Operational Data of Maoming Wind Farm Phase I

Total Average generation Average Wind Speed Year Month availability (MWh) at 70 m (m/s) 2010 ...... 4 96.10% 14,371.90 9.04 2010 ...... 3 92.02% 11,156.30 9.50 2010 ...... 2 95.27% 8,427.30 8.04

7.2.4.2 Conclusions

The equipment used at Maoming Wind Farm I was supplied by manufacturer well-known to the industry that employs proven technologies or has credible track records within the market. We are of the view that the turbine technologies are in accordance with current industry standards, and the site was built to a high standard. O&M is well-managed. Since commissioning was completed in February 2010, there was insufficient data (at least 12 month normal operational data) available to allow us to comment on wind farm performance.

7.2.5 Niutouling Wind Farm Phase I

Niutouling Wind Farm Phase I is a 13.5 MW Wind Farm consist of 18 NEG-MICON 750 kW wind turbines, located in very complex terrain on Nan’ao Island near Shantou, Guangdong Province, approximately 12 miles east from the Shantou coast. The project began commercial operation in 2000. Niutouling Wind Farm Phase I was originally a demonstration project, and then became Phase I of Huaneng Renewables Nan’ao Wind Farm. The project was developed by Shantou Grid Company and is co-owned by Huaneng Renewables and the Shantou Grid Company.

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Nan’ao Island has many wind farms owned by different utility companies. The island experiences winds prevailing from the north east. The site is located on hill tops. The landscape is rural and the wind farms are surrounded by fisheries, a port and tourist areas.

Niutouling Wind Farm Phase I’s layout comprises of a single row of WTGs situated along one of the most exposed ridges on the island. The layout was designed by Guangdong Electrical Design Institute. Huaneng Renewables has a control building with permanent staff for monitoring and O&M activities at the wind farm. The site facilities include connector cables, an office building with a control room, meeting rooms, spare parts storage and workers’ accommodation. Nan’ao Island experiences typhoons. Niutouling has experienced wind speeds up to 51 m/s (design max wind speed of turbine is 60m/s) during the operational period since 2000. In our view, the facilities and building on site appear well-maintained and well organized. This wind farm is the first wind farm Huaneng Renewables commissioned. This wind farm is also the training center of O&M for Huaneng Renewables and other domestic power producers.

Phase III is currently under construction. It was noted during our site visit that some of the phase III’s turbine positions encroach on the Niutouling site and we expect that they may impact slightly on future performance of affected WTGs in phase I. It is reported that this impact has been taken into consideration when designing phase III.

7.2.5.1 Generation and Availability

The preconstruction wind resource assessment was carried out by the Guangdong Electrical Design Institute in 1998 using wind data from a meteorological station; which has been on Nan’ao Island since 1957. Huaneng Renewables installed ten met masts around the island to monitor the wind resources at the sites before construction. However, all ten masts have been now dismantled. Huaneng Renewables monitors the wind speed through the anemometers on turbine nacelles throughout the operational period. We have been provided the wind resources data measured from the masts. Huaneng Renewables has recently installed a permanent met mast on site to record future wind speeds.

The preconstruction energy yield calculations were made for a 660 kW WTG and are therefore not consistent with the constructed wind farm. The power curve for an unknown 660 kW wind turbine has been used in conjunction with WAsP software to calculate a gross yield and wake reduction. The accuracy of this method is compromised by complex terrain and we consider that there is uncertainty in these results. A series of losses totalling 25% was applied to calculate the predicted net yield of 34,835 MWh/year. We have identified significant discrepancies in the production of this figure and consider it unreliable.

Achieved production records are a much better indicator of future performance. We have been provided with the recorded production since 2001 which shows that the average capacity factor achieved is 27.5%; which is in line with our expectations.

Data provided by Huaneng Renewables shows that the wind farm has a good average availability of 98.94% since 2008 as listed in Table 7.5, and are all above the 95% guaranteed value. The availability data from 2000 to 2006 cannot be found by Huaneng Renewables.

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Table 7.5: Operational Data of Niutouling Wind Farm Phase I

Total Average Wind Speed Average generation Equivalent Full at 60 m Date availability (MWh) Load Hours Capacity Factor (m/s) Jan-Mar 2010 ...... 99.9% 10217 757 35.04% 6.46 2009 ...... 99.3% 32,942 2,444 27.9% 6.71 2008 ...... 98.6% 34,493 2,558 29.2% 6.81 2007 ...... 99.0% 33,768 2,505 28.6% 2006 ...... 33,281 2,462 28.1% 2005 ...... 29,200 2,164 24.7% 2004 ...... 31,277 2,313 26.4% 2003 ...... 32,853 2,435 27.8% 2002 ...... 30,477 2,258 25.8% 2001 ...... 34,036 2,523 28.8%

7.2.5.2 Conclusions

Niutouling began as a demonstration project; constructed and commissioned by a local construction company and the grid company in 2000. The grid company is a project shareholder and is the power off-taker. The project has been operational since 2001 and has been used to train operators for other wind farms. The reported availability is high. Records for the entire operational period could not be made available and are reported to have been lost. The recorded production for the operational period is consistent and meets our expectations following our analysis of the site and wind conditions.

7.2.6 Qing’ao Wind Farm phase II

Qing’ao is a 45 MW Wind Farm consisting of 53 Vestas V52-850 kW WTGs, located in very complex terrain and in a saline environment on Nan’ao Island near Shantou, Guangdong Province, southeast coast of China facing the South Sea. The project was developed and is co-owned by Huaneng Renewables and the Shantou Grid Company. The project began commercial operation in 2007 and forms Phase II of Huaneng Renewables Nan’ao Wind Farm.

Nan’ao Island has many wind farms owned by different utility companies. The island experiences onshore winds, prevailing from the south east. The site is located on the top of the hills in a coastal area. The landscape is rural and the wind farms are surrounded by fish cultivating pools, a port and tourist areas. Huaneng Renewables has a control building with permanent staff for monitoring and O&M activities at the wind farm. The site facilities include WTGs; connector cables; substation equipment; an office building with a control room, meeting rooms, spare parts storage, basketball ground and workers’ accommodation. In our view the facilities and building on the sites appear to be well-maintained, well-organized and are of a high standard.

The island is close to the typhoon zone and it has been reported that wind speeds as high as 51 m/s have been experienced in the last ten years. According to historical records, 25 to 28 storms and typhoons enter the South Sea per year; two to three of them bring major weather patterns (strong wind and heavy rain) to Nan’ao Island. On average, one typhoon directly hits Nan’ao Island every three to five years. The typhoon alarm is broadcasted by the central and local weather station two or three days beforehand using satellite mapping technology. Prevention approaches adopted by the project company include: drainage methods, equipment reinforcement, switching the WTGs to pause and protecting status, and shutting off the HV switches to take the wind farm off-load if necessary. In our view, these approaches are sensible.

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The wind farm layout, used in the feasibility study energy yield assessment, was originally designed by a Chinese design institute, following a pre-feasibility study by PB Power. The original layout was later altered due to complications over land approval and a new layout was designed which Vestas describe as ‘more aggressive’. Vestas carried out a study of the constructed layout including flow modeling using CFD (Computational Fluid Dynamics).

The complex terrain increases the likelihood of demanding wind conditions such as high turbulence, steep inflow angles and severe wind shear. These factors increase the loading on wind turbine rotors and increase wear and fatigue in the drive train components. To mitigate against this, Vestas imposed a significant sector management program whereby certain WTGs will be switched off when the wind is coming from particular directions. This program affects 13 out of 53 WTGs and includes the easterly and south easterly wind directions. The implementation of this measure is a condition of the Vestas warranties and has been put in place by the wind farm operators.

The original wind resource assessment was carried out by a Chinese design institute in 2006; using wind data collected between 2002 and 2003, primarily from six different masts ranging between 50m and 70m. During this period the average wind speed across the site was measured to be between 5.1 m/s and 7.8 m/s. Following a comparison with a reference data set extending back to 1996, which showed that the 2002 to 2003 period experienced lower than average wind speeds, it was shown that wind speeds increased by approximately 8%. The long-term corrected wind speeds at 50m, calculated in the feasibility study, vary from 6.0 m/s to 8.11 m/s. The wide range of wind speeds across the site reflects the significant variation in ground height (up to 555m). The average wind speed recorded across the nacelle anemometers between January 2008 and December 2009 is 6.9 m/s. The wind speeds at Nan’ao are about average for an onshore wind farm.

The energy yield prediction developed by a Chinese design institute assumed a hub height of 65m for all WTGs, however a mixture of 55m and 65m hub heights was eventually used. The power curve used in the feasibility study is reported to be provided by the WTG manufacturer.

WAsP was used to calculate the energy yield and wake losses at the turbine positions. The accuracy of this method is compromised by complex terrain and we consider that there is uncertainty in these results. A series of losses totalling 25% was applied to calculate the predicted net yield which does not include the losses associated with the Vestas sector management program described above. The net yield predicted in the feasibility study is 100,965 MWh/year, which equates to a capacity factor of 25.6% which is in line with our expectations for the reported wind speeds. We have, however identified a number of inconsistencies between the assumptions made for the feasibility energy yield prediction and the constructed wind farm which affected the accuracy of the figures.

Vestas has conducted an energy yield analysis for Qing’ao considering the constructed layout using a mixture of 55m and 65m hub heights and a site specific power curve. The study is based on a single year of data from 2002/3 which the design institute determined to be a low wind speed year, therefore results are expected to be conservative. The scope of Vestas study did not cover analysis of losses; therefore results presented by Vestas do not consider reductions for availability or electrical efficiency. The study calculated that the average hub height wind speed is 7.0 m/s and the annual gross production (not including losses or sector management) is 110 GWh/year.

7.2.6.1 Generation and Availability

The achieved production in 2008 was 121.1 GWh which is higher than predicted by both studies. The average hub height wind speed recorded at the nacelle anemometers was 7.0 m/s. In 2009 the wind farm produced 95.9 GWh which was slightly below the predicted yield despite a recorded hub height wind speed of

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6.9 m/s. However during this period the wind farm was hampered by the installation of a new under sea transmission line and the replacement of eleven generators due to a faulty batch (all of which were replaced under warranty).

Based on the recorded production during 2008 and 2009 Huaneng Renewables has set a future target energy yield of 118 GWh/year for Qing’ao. This figure has been calculated by comparing the first 24 months production at Qing’ao to the concurrent production at Niutouling Wind Farm Phase I, which has been operating since 2001. The 2008/9 production has been adjusted using the Niutouling records between 2001 and 2009 to arrive at a ‘long-term average’ production estimate. The calculation is quite rough; however the principle behind it is sound and should produce a reasonable estimate, which will include the effects of losses and the sector management program.

The wind farm availability calculated as provided by Huaneng was 99.5% for 2007, 98.7% for 2008 and 98.9% for 2009. The availability achieved is good, indicating efficient O&M practice. Records show the replacement of 11 generators in 2009 due to a faulty batch from ABB. This was carried out under warranty and had minimum impact on availability due to efficient planning. Other maintenance activities include resolving six gearbox oil leakages and the regular replacement of the pitch control actuators. During 2009 the installation and connection of the new subsea cable accounted for approximately eight days of lost production; however, this source of downtime is not included in the availability presented in Table 7.6. Assuming all sources of downtime and including the subsea cable issue, availability for 2009 is 84.0%.

The site benefits from 16 resident operators and technicians working in two shift patterns. This crew is responsible for both Qing’ao and Niutouling Wind Farm (58.5 MW in total). Many of the O&M team including the wind farm manager have been involved throughout the construction and operating phases and are well- experienced. The two year Vestas service agreement, which included an availability guarantee of 95%, expired in 2009. However, two Vestas technicians have been kept on until September 2010 to provide additional technical support and training.

Table 7.6: Operational Data of Qing’ao Phase II

Average Total Average Wind Speed availability (incl. generation Equivalent Full Capacity at hub height m/s Year-Month all downtime) (MWh) Load Hour Factor % (55/65 m) Jan-Mar 2010 ...... 99.6% 30,611 680 31.5 8.06 2009 ...... 98.9% 95,947 2,129 24.3 6.90 2008 ...... 98.7% 121,051 2,689 30.7 6.95 2007 ...... 99.5%

7.2.6.2 Conclusions

Qing’ao Wind Farm is located in complex terrain in a saline environment. The wind resource is average. Conditions are therefore challenging. Equipment and facilities are of a high standard and well-maintained. The design, construction and installation are acceptable, safe and appropriate. O&M is well-resourced and well- managed due to the experience Huaneng Renewables gained in Niutouling Wind Farm Phase I project.

We identified some discrepancies which compromise the preconstruction energy production estimates and the achieved production is much higher than predicted. Huaneng Renewables has calculated a revised annual energy yield forecast which we consider to be a reasonable estimation.

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7.2.7 Dali Dafengba Wind Farm

Dali Dafengba Wind Farm is a 48 MW wind farm consisting of 64 Zhejiang Windey WD50/750 kW wind turbines with 50m hub height which were manufactured under the license of Repower. The project is situated on a ridge overlooking the city of Dali in Yunnan Province, Southwest China. It is co-owned by Huaneng Renewables and Hongkong Electric Company Limited. The wind farm terrain is complex in nature and the site altitude is very high, located in a highland area ranging from 2,420m to 2,820m. The ground cover consists of dense foliage. The wind turbines are visible from piedmont downtown, and have become a sightseeing attraction of this tourist city. The wind farm layout consists of a single row running along a high ridgeline which runs perpendicular to the prevailing south westerly winds, minimizing wake losses. The complex terrain increases the likelihood of demanding wind conditions such as high turbulence, steep inflow angles and severe wind shear. These factors increase the loading on wind turbine rotors and increase wear and fatigue in the drive train components. The availability reported for the first 15 months operation is 97.62% and thus far there is no evidence of excessive wear and tear.

Huaneng Renewables has a control building with permanent staff for the monitoring and O&M activities for the wind farm. The site facilities include WTGs, connector cables, substation equipment, an office building with a control room and meeting rooms, spare parts storage, basketball ground and workers’ accommodation. In our view the facilities and building on the sites appear clean, well-maintained, well-organized and are of a high standard. The O&M staff resources are adequate and have generally been recruited locally. There are two wind farms currently under construction nearby, which have been developed following the success of Dafengba.

Our inspection of the wind farm showed that at one or two turbine positions the adjacent surroundings had been compromised by the extensive excavation work required to cut the crane pads, although in general the turbine layout seems reasonable given the complexity of the terrain.

The layout was designed by Kunming Hydropower Investigation, Design and Research Institute. The site benefits from the strong prevailing south westerly winds which are a characteristic of the region. Given the strong winds and complex terrain, we consider that the site offers good potential for a wind farm albeit with challenging conditions.

The wind resource assessment was carried out by the design institute in 2006 during the feasibility study. The energy yield calculations for the constructed layout were carried out in a 2007 study by the same institute and the turbine manufacturer.

The preconstruction wind study made use of wind data collected between 2005 and 2006 using five 60m met masts spaced along the ridge, although only three of them were used to calculate the wind regime as two were damaged by lightning or found to be faulty. The 60m wind speed averaged over masts 1, 2 &3 during this period, is 8.1 m/s which shows a high wind resource. We have been provided the wind resources data measured from these three masts since year 2005. Met mast 3 has been retained and is presently used to monitor the performance of the wind farm. Between 2005 and 2006 mast 3 recorded an average wind speed of 7.9 m/s at 60m. These wind speeds have not been long-term corrected using reference data, which introduces some uncertainty as to whether they represent the long-term average conditions that can be expected over the life of the wind farm. The wind speed recorded at mast 3 during a four year period between 2006 and 2010 is 8.1 m/s suggesting that the 05/06 period used in the energy yield study may slightly conservative. We visited mast 3 during our site visit. We observed that it is very close to some of the turbine positions and is expected to be influenced by the turbine wakes. Wind data recorded here since the end of 2008 is therefore not consistent with that recorded prior to construction and likely to be under-recording.

The energy yield study uses WAsP to calculate the energy yield and wake losses at the turbine positions. The accuracy of this method is compromised by complex terrain and we consider that there is uncertainty in these results.

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Owing to the high altitude, the site air density is very low. A power curve corrected to an air density of 0.894 kg/m3 has been used in the analysis report of energy yield calculation issued by Zhejiang Windey and Kunming Hydropower Investigation, Design & Research Institute in October 2007. It is noted that this power curve limits the turbine output to 680 kW, effectively reducing the wind farm rating by 9%. This power curve (reportedly guaranteed by the manufacturer) has been used in conjunction with the calculated wind regime to produce a gross yield prediction. It is reported that the power curve recorded by the SCADA system for the operational period is substantially higher than the warranted curve in the 3-15 m/s wind speed range. The SCADA power curve uses nacelle sensors to record wind speed and is subject to some uncertainty; however it does provide a good indication that the power curve used in the energy yield study is conservative.

A series of losses have been proposed to cover availability, electrical efficiency and other expected losses. These allowances amount to 23.3% listed in analysis report of energy yield calculation in December 2007, which we consider to be very high.

The Dafengba area experiences thunderstorms on average 55 days per year. Lightning has caused damage and faults to the sensors on the met masts and turbines. The safety of facilities, equipment and site persons has been addressed by installing adequate lightning conductors at the substation, office and yard.

The energy yield assessment in the feasibility study predicts that the expected annual yield from Dafengba Dali is 82,600 MWh/year which translates to a capacity factor of 19.6%. This is very low for a wind farm which exhibits such a good wind resource implying that the prediction is very conservative.

The wind farm began commercial operation in January 2009 and generated 125,400 MWh in 2009 which is substantially higher than predicted. The average wind speed recorded at 60 m on mast 3 during this period is 8.22 m/s, indicating that 2009 was a windier than average year. Availability during this period is reported to be exceptionally high.

Based on this achieved production Huaneng Renewables headquarter has issued a new target of 118 GWh per year, which is calculated based on the history production records and approved by Huaneng Renewables headquarter.

7.2.7.1 Generation and Availability

The wind farm began commercial operation in January 2009 and generated 125.4 GWh in 2009 which is substantially higher than predicted 85 GWh made in the feasibility study report. The availability during this period is reported to be 99.8% which is exceptionally high.

During 2009 two major component changes were carried out, one generator and one gearbox. Regular minor maintenance activities include replacing brake pads, oil hoses, gear oil filters and nacelle sensors.

Currently the wind turbines are covered by a manufacturer’s warranty which guarantees the WTG availability at 97%. This warranty expires at the end of 2010. Availability figures have been provided by Huaneng and compiled in Table 7.7.

Table 7.7: Operational Data of Dali Dafengba

Average Total Equivalent Average Wind availability (including generation Full Load Capacity Speed at hub Year Month grid) (MWh) Hours Factor height (60 m) 2010 ...... 1-3 99.9 44,559 928 42.5% 8.4 2009 1-12 99.8 125,426 2,613 29.8% 8.2

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7.2.7.2 Conclusions

Dafengba Dali is situated in challenging terrain and experiences an excellent wind resource. Our inspection of the site and facilities showed that the wind farm is well-equipped and well-maintained. Recorded production in the first year of operation is higher than predicted in the preconstruction estimates; however we consider that the preconstruction estimate was very conservative. The recorded production and revised future estimates are more in line with our expectations for a site exhibiting such a good wind resource. The wind turbine availability is good for a young wind farm and the O&M program is well-resourced and well-managed. The wind turbines have performed well in the challenging wind climate although we note that two major component changes have been required.

7.2.8 Changdao Wind Farm

Changdao Wind Farm is located in Changdao county of Yantai city which is the only island county in Shandong Province. The installed capacity of Changdao Wind Farm is 27.2 MW comprising 32 units of Gamesa G52-850 kW turbines. The hub height of the turbines is 55m.

The project company, HNEEP-CLP Changdao Wind Power Co. Ltd., was jointly established by Huaneng Renewables and CLP Investment Co. Ltd. with 55% and 45% of interest respectively. It was formed and registered on 02 December 2004. However, the O&M works have been managed by Huaneng Renewables staff since being commissioned on 1 May 2006.

7.2.8.1 Generation and Availability

Changdao County comprises 32 islands. The WTGs were erected on the two main islands, Nan Changshan Island and Bei Changshan Island, arranged along the top of a hill going through both islands. 22 WTGs are located in Bei Changshan Island and 10 in Nan Changshan Island. The altitude of the hill is between 90m and 200m above sea level. There are no other buildings or wind farms nearby and the access road was built specifically for the wind farm before construction and is still in good condition. However it is prone to become blocked by heavy snow in winter. In this case the project company staff or an external professional company will be tasked with clearing the road as soon as possible. As has been confirmed by Huaneng Renewables that this situation happens rarely and only lasts for short period, and so we do not consider it as a material issue for the site accessibility. Also, while corrosion is expected to occur because of the salty offshore wind, we did not witness any sign of material corrosion of the visited wind turbine.

A control building with substation is located in Nan Changshan Island. This building includes the SCADA room, offices, storage area for spare parts, switchgear housing, and other site facilities. Because the warranty period expired in 2008, the spare parts and tools for O&M are stored by Huaneng Renewables itself. According to the spare parts list provided by Huaneng Renewables and our visit on site, we consider that the management of spare parts on site is well-prepared. Huaneng Renewables employs nine staffs to do the O&M, deployed in two teams. The building and facilities are of a high standard and appear to be well-maintained.

Changdao Wind Farm used wind resource data from two met masts on site for the feasibility study, measured during one year from 01 August 2003 to 31 July 2004 and located in Nan Changshan Island and Bei Changshan Island respectively with a measurement height of 50m. The integrity ratios of the data from two met masts were 99.99% and 99.54%. According to the first met mast, the annual average wind speed was 7.0 m/s and the biggest average wind speed was 19.8 m/s. According to the second met mast, the annual average wind speed was also 7.0 m/s and the biggest average wind speed was 26.3 m/s. The prevailing wind direction was west. However the operational data shows that the prevailing wind direction is northwest. In April 2010, one of the met masts was reconstructed as a permanent met mast for the wind farm. The wind data measured by the turbine anemometers and the mast is used to monitor records during the operational period.

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The average wind speed at hub height (55m) has been calculated to be 7.0 m/s. According to production, wind, and availability data provided by Huaneng Renewables headquarter and site office, the wind farm showed good average availability of 98.79% in 2006, 97.44% in 2007, 98.76% in 2008 and 98.98% in 2009 which are listed in Table 7.8. All of them are above the 97% warranted availability figure. Comparing the annual production forecast of 58,160 MWh from the feasibility study report, we find that the actual annual production is almost similar to the forecast. In 2007 and 2009 the actual production figures were 54,817.4 MWh and 57,194.2 MWh respectively which were less than the forecast. It could be explained by the low average wind speeds measured at these times. However, in 2008 the actual production was 60,859.1 MWh which was more than the forecast with an average wind speed similar to the value from the feasibility study.

During operational period, major component failures were main shaft of No.10 WTG and the gearbox of No.5 WTG. They have now been replaced. Minor component failures include VOG sensors, contractors and low voltage switches in box transformers, which have also been repaired or replaced as necessary. When we visited site on 28 April 2010, there were no accidents or incidents since the wind farm had been commissioned.

Table 7.8: Operational Data of Changdao

Average Total generation Utilization Average wind speed Year Month availability (MWh) hours Capacity factor at 55m (m/s) 2009 ...... 1-12 98.98% 57,194.2 2,103 0.24 6.92 2008 ...... 1-12 98.76% 60,859.1 2,237 0.26 6.99 2007 ...... 1-12 97.44% 54,817.4 2,015 0.23 6.00 2006 ...... 4-12 98.79% 43,961.1 1,616 0.24 5.07

7.2.8.2 Conclusions

Performance at Changdao Wind Farm exceeded prediction in 2008 but was lower in 2007 and 2009. Lower than average wind speeds could account for the poor performance. However, the availabilities are good. Design, construction and installation are acceptable, safe and in line with our expectations. O&M appears to be well- managed.

7.2.9 Weihai and Rongcheng Wind Farm

Weihai Wind Farm Phase I is located in Rongcheng of Weihai City in Shandong province. It is to the north of the road along the Yellow Sea. Currently Weihai Wind Farm consists of two phases in operation:

• Weihai Wind Farm Phase I (19.5 MW, Sinovel FL1500/77*13)

• Weihai Wind Farm Phase II (49.5 MW)

As per our scope of work, we only considered Weihai Wind Farm Phase I. HNEEP-CLP Weihai Wind Power Co. Ltd. is the project company jointly established by Huaneng Renewables and CLP Investment Co. Ltd. with 55% and 45% stakes respectively. However, the O&M works have been the responsibility Huaneng Renewables staff since its operation. The commissioning date for the last WTG was 01 December 2008.

Huaneng Renewables planned to develop the offshore Wind Farm, more than 4 km off the shore in Rongcheng. But no offshore wind projects are currently under development in China as technologies and expertise for offshore WTGs, foundations, construction and wind resources assessment are considered by Chinese developers as immature. Therefore, Huaneng Renewables built Rongcheng Wind Farm and erected two WTG on a beach near Weihai Wind Farm as the prototype for its future offshore wind farm. The WTG used is Sinovel SL3000/100 with the hub height 80m and a maximum rating of 3 MW.

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Huaneng Rongcheng Wind Power Co. Ltd, which is the project company for Rongcheng Wind Farm and future offshore Wind Farm is wholly owned by Huaneng Renewables and was founded on 31 December 2008. Currently two WTGs are still under testing. This work is carried out by Sinovel engineers and supported by staff from the project company at Weihai Wind Farm.

7.2.9.1 Generation and Availability

Weihai Wind Farm Phase I is constructed on a plain beach area. There are few buildings near the WTGs. There are some sea water pools for breed shrimps. The altitude of Weihai Wind Farm Phase I is 22m ASL. As all WTGs are located near the road along the sea front they have an easy and convenient access route. However, due to heavy rain in summer and heavy snow in winter accessibility can become problematic. Although some corrosion could be expected due to the salty offshore wind, there was no obvious corrosion on the WTGs we inspected during our visit.

There is a control building and substation at Weihai Wind Farm. This building includes the SCADA room, offices, spare parts store, switchgear housing, and other site facilities. Because it is still in the warranty period, the O&M works are the responsibility of the Sinovel engineers. Sinovel will transfer spare parts defined in the contract to the Weihai Wind Farm Project Company before the warranty period expires. However, we note that the warranty period is due to expire very soon and understand that Huaneng Renewables intends to extend the warranty period with Sinovel. Huaneng Renewables employs ten staff in its site office, deployed in two teams. Currently, Huaneng Renewables’ employees manage Weihai Wind Farm Phases I and II and Rongcheng Wind Farm with Sinovel’s resident site engineers. The building and facilities are of a high standard and appear to be well-maintained.

Weihai Wind Farm used wind resource data from Daxi met mast on site for its feasibility study undertaken between July 2003 and December 2004. The integrity ratio of the data from the met mast was 99.99%. The average wind speed at hub height (70m) was calculated to be 6.6 m/s and the annual average power density was calculated to be 388.8 W/m2 showing good wind regime. The prevailing wind came from the north whilst the strongest wind came from the northwest. In March 2010, the met mast was reconstructed as permanent met mast. The wind data is measured by the WTG anemometers and the mast during the operational period.

Production, wind, and availability data provided by Huaneng Renewables headquarters and site office show an improving average availability of 94.00% in 2007, 95.00% in 2008 and 97.69% in 2009 as listed in Table 7.9. All annual availabilities are equal or above the 95% warranted availability figure; apart from 2007 when the availability was slightly lower. We compared the annual production forecast of 39,203 MWh in the feasibility study report and found slight discrepancies. In 2008 the actual production was 31,704.2 MWh; less than the forecast. However, in 2009 the actual production was higher than forecasted at 42,873.2 MWh. These variations are due to the wind speeds being below average in 2008 and above average in 2009. In addition, Ronggang transmission line could not be used to export power from January 2008 to November in 2008. This impacted on power output to the grid. During this period WTGs for phase II were undergoing testing and commissioning which also impacted on the power output for Phase I.

During the operational period, component failures included failures relating to the box transformer, converters, fuses, batteries and slip rings. These components failures have now been rectified.

Huaneng Renewables provided us with power curves for some WTGs at Weihai Wind Farm Phase I, obtained during the 500 hrs preliminary acceptance test. These power curves were taken from the SCADA system. From the power curve figures we can see that the cut-in speed is around 3 m/s; rated speed is approximately 11 m/s, cut-out speed is approximately 26 m/s and rated power is 1.5 MW. These are the same as parameters provided by Sinovel except for the cut-out speed which is above 21 m/s.

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Table 7.9: Operational Data of Weihai Wind Farm Phase I

Average Total generation Utilization Average wind speed Year Month availability (MWh) hours Capacity factor at 70m (m/s) 2009 ...... 1-12 97.69% 42,873.2 2,199 0.25 6.8 2008 ...... 1-12 95.00% 31,704.2 1,626 0.19 6.1 2007 ...... 4-12 94.00% 29,902.5 1,533 0.23 6.6

The terrain at Rongcheng Wind Farm is similar to Weihai Wind Farm. The two WTGs are located near WTG# 2 and WTG# 23 of Weihai Wind Farm Phase I. Rongcheng and Weihai Wind Farms share the same control building, substation and staff.

No feasibility study had been undertaken; however we have seen a project application report which covers many of the same necessary contents, albeit in a simpler style. Huaneng Renewables undertook a feasibility study for the future offshore wind farm, including the two existing WTGs. A met mast was installed on 1 September 2009. The average wind speed measured at hub height was 6.7 m/s. The prevailing wind direction is northwest and annual on-grid power output forecast is 12,033 MWh.

Installation was completed on 7 December 2009 and snagging and testing have started. Several faults in the WTGs and SCADA system have been identified and have been investigated. Historical records such as power output, availability, and average wind speeds can not be provided by the SCADA system. Huaneng Renewables informed us that the commissioning has been completed in July 2010.

7.2.9.2 Conclusions

Performance at Weihai Wind Farm Phase I was better than the predicted in 2007 and 2009 and below predicted levels in 2008. We understand that the wind speeds in 2008 was below average. In addition, 110 kV Ronggang transmission line could not be used from January 2008 to November 2008. This outage impacted on power output to the grid for Phase I and Phase II. During this period, WTGs for Phase II were undergoing testing and commissioning. All WTG availabilities are above 95% except in 2007. However, the 2007 capacity factor was higher than the forecasted feasibility study value.

Following the connection of the 6 MW Rongcheng Wind Farm, the total capacity connected to Weihai step-up substation reached 75 MW which is equal to the rating of the 75 MVA — 110/35 kV transformer at the site. It is recommended that the transformer should be sized slightly bigger than the installed generation capacity to avoid overloading. Huaneng Renewables confirmed that the two WTGs at Rongcheng Wind Farm will be connected to Rongcheng step-up substation, which will be operational in 2012.

The commissioning date for the two WTGs at Rongcheng Wind Farm has been delayed and has been completed in July 2010. Due to the delay in commissioning, Huaneng Renewables has requested that the turbine manufacturer, Sinovel, extends the warranty period at Rongcheng Wind Farm. We understand that Huaneng Renewables reserves its right to claim against Sinovel for losses incurred. As the two WTGs erected are a newly designed prototype, there may be some unexpected faults and will need a longer period to snag and test. To ensure successful take-over the Project Company is working closely with Sinovel engineers during the testing phase.

7.2.10 Changyi Wind Farm

Changyi Wind Farm is located in the north of Changyi city in Shandong Province. The installed capacity of Changyi Wind Farm is 49.5 MW with 33 units of Suzlon S82 LTV wind turbines with a hub height of 78m.

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Huaneng Changyi Wind Power Co., Ltd. which is the project company was wholly owned by Huaneng Renewables. It was formed and registered in November 2008. The commissioning date of Changyi Wind Farm was January 2010.

7.2.10.1 Generation and Availability

Changyi Wind Farm is constructed on a beach area near to a dyke. The terrain is flat, with limited flora. There are shrimp breeding pools and salt collection pools at the base of some WTGs. Changyi Wind Farm is at an altitude of 1 to 5m above sea level. Access to the wind farm is via soil track which appear unaffected by heavy rain or snow. Due to the salt air, corrosion is expected to occur in the WTGs. After inspection we found that bolts connecting the bottom section of WTG tower to the foundation had been corroded. However, Huaneng Renewables and Suzlon have adopted some measures, such as using rubber caps covering each screw, to mitigate against excessive corrosion. We understand that Huaneng Renewables plans to build Phase II near this wind farm and it is currently at the feasibility stage. We have confirmed that the feasibility study will consider a sufficient distance from Phase I in order to reduce impact on phase I as much as possible.

There is a control building with substation at Changyi Wind Farm. This building includes the SCADA room, offices, spare parts store, switchgear housing, data room and other site facilities. We note that document control at this site is of a high quality. As the WTG are still within the warranty period, the O&M Works are undertaken by Suzlon engineers. The construction company and manufacturers are responsible for the BOP O&M during the first year warranty period. The spare parts store room we visited was clean and all parts were clearly identified. Huaneng Renewables intends to undertake all O&M works itself once the warranty period has expired. Huaneng Renewables employs ten staff in its site office, deployed in two teams on a five day rota basis. The building and facilities are of a high standard and appear to be well-maintained.

Wind data had been gathered prior to construction through a single 70m met mast installed on site. The furthest turbine is located 4 km from the met mast, which is a reasonable setup for a measuring campaign. Met mast data was collected between September 2006 and August 2007. Wind speeds for a hub height of 78m have been predicted as 6.67 m/s; resulting in a projected annual on-grid energy yield of 111,874.6 MWh. The prevailing wind direction is southeast.

From the information Huaneng Renewables provided, Changyi Wind Farm has been connected to the grid in June 2009 and it was in commissioning period until December 2009.

During the operational period, there was a major component failure when a generator failed. This has now been replaced. Minor failures occurred at box transformers, sensors and pitch motors. These have now all repaired or replaced as necessary. We are not aware of any health and safety accidents and incidents since the wind farm has been operational.

Table 7.10: Operational Data of Changyi Project

Total Average generation Equivalent Full Capacity Average Wind Speed Year-Month availability (MWh) Load hours Factor at 78m (m/s) 2010 (Jan-Mar) ...... 97.25% 7.2

7.2.10.2 Conclusions

Changyi Wind Farm was commissioned less than a year ago and as such, there is insufficient operational data to undertake an assessment of the wind farm’s performance. Performance was instead based on a review of a pre-construction wind/feasibility study. We have been provided with a high level review of the measuring

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Greater comfort could be gained through a review of the detailed information collected during the pre-construction wind study. Suzlon and Huaneng Renewables have taken acceptable measures to prevent corrosion at the WTGs. The building, facilities and equipment are of a high standard and appear to be well- maintained. The design, construction and installation are acceptable. O&M is well-managed and all faults have dealt with in an acceptable manner.

7.2.11 Laoting Wind Farm

Laoting Wind Farm is located in Laoting County near the sea in Hebei Province. The installed capacity of Laoting Wind Farm is 49.5 MW with thirty-three Sinovel SL1500 WTGs. These have a hub height of 70m.

Huaneng Laoting Wind Power Co. Ltd. is the Project Company. It was established on 13 June 2008 by Huaneng Renewables and Hongkong Electric Laoting Co. Ltd., with 55% and 45% stake respectively. O&M works have been undertaken by Huaneng Renewables staff throughout its operational life. The commissioning date was 11 December 2008.

7.2.11.1 Generation and Availability

Laoting Wind Farm is constructed on a beach area. Laoting Wind Farm sits at an altitude of between 0 and 3m ASL. The nearest village is about 2 km from the wind farm and there is no other wind farm in the vicinity. Access to the wind farm is gained via a soil track. We understand that for a short period of time, twice a year, the track becomes impassable due to heavy rain and snow. As the wind farm is located in an area of salty offshore wind, corrosion is expected. However we could find no obvious sign of corrosion at the time of our visit.

Laoting Wind Farm has a control building with substation. This building includes the SCADA room, offices, spare parts store, switchgear housing, garage, SVC room and other site facilities. As it is still in its warranty period, the O&M works are undertaken by Sinovel engineers. BOP O&M, including the access road, WTG foundations, cables and box transformers are undertaken by the on-site staff. The spare parts store room we visited was clean and all parts were clearly identified. Huaneng Renewables has eight staffs at its site office, deployed in two teams on a three days rota basis. The building and facilities are of a high standard and appear to be well-maintained.

Three met masts were installed at Laoting Wind Farm. Wind resources data collected from No.1 met mast was used for the feasibility study undertaken between 1 October 2004 and 1 October 2005; data collected from the other two met masts was used as validation. The integrity ratio of the data from the No.1 met mast was 96.5%. The average wind speed at hub height (70m) was calculated to be 6.9 m/s and the prevailing wind direction is north to northeast. Data gathered by the WTG anemometers and the met masts is used to monitor wind conditions during the operational period.

According to the production, wind and availability data provided by Huaneng Renewables headquarters and site office, the wind farms showed a very good average availability of 98.36% in 2009 (listed in Table 7.11), above the 97% warranted availability figure. However, it is worth noting that the calculation of availability, as presented by Huaneng Renewables, includes a few caveats such as wind turbines are considered as available when they are actually down due to extreme weather conditions, or grid problems. This is in line with European market practices. Therefore, we consider the actual availability of the wind farms to be potentially lower than the figures Huaneng Renewables provided to us. We compared the annual production figure of 101,470 MWh in the

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During the operational period, component failures have included pitch, converter and sensors. These have been repaired or replaced as necessary.

Table 7.11: Operational Data of Laoting

Total Average generation Equivalent Full Capacity Average Wind Speed Year-Month availability (MWh) Load hours Factor at 70m (m/s) 2009 (Jan-Dec) ...... 98.36% 90,774.5 1,834 20.9% 5.15

It is worth noting that there are two different rotor diameters among 33 WTGs. The rotor diameter of five of the WTGs (4, 6, 21, 28 and 29) is 82m. These five wind turbines were erected as prototypes to assess the different output between two WTG models. The rotor diameter of the remaining WTGs is 77m.

Monthly production figures and power curves provided by Huaneng Renewables headquarters and site office show that performance of WTGs with 82m rotor diameter was better than those with 77m rotor diameter. The figures in Table 7.12 show that, with the exception of June 2009, average power generation of the 82m WTG was greater than that of the 77m WTG by an average of 7.9%. Huaneng Renewables has stated that the June 2009 below average power generation reading of 82m WTG was due to a meter reading error by the Programmable Logic Controller’s (PLC). This fault has been rectified by Sinovel. Performance of 82m WTG appears to be better than 77m WTG under the same conditions.

Table 7.12: Monthly Average Generation of 82m and 77m WTG

Average generation per unit of Average generation per unit of Increasing Month 82m WTG (MWh) 77m WTG (MWh) ratio (%) April ...... 348.0 321.2 8.3 May...... 287.8 267.4 7.6 June ...... 238.3 249.4 -4.5 July ...... 160.2 145.7 9.9 August ...... 181.0 168.7 7.3 September ...... N/A N/A N/A October ...... 231.3 211.6 9.3 November ...... 265.5 250.2 6.1 December ...... 294.5 274.9 7.1 Average ...... 252.6 234.2 7.9

Huaneng Renewables provided us with power curves for five 82m WTGs and five 77m WTGs from their first Quarterly Report in 2009. We can see from these figures that rated wind speed of 82m WTG was around 11 m/s but rated wind speed of 77 m WTG was around 12 m/s. Also the curve of 82m WTGs showed better performance especially from cut-in speed to rated speed than the curve of 77m WTGs and wind turbines usually operate within this range. Figure 7.1 shows clearly that the rated wind speed of No.21 WTG was 11 m/s and No.10 WTG was 12 m/s.

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Figure 7.1: Power Curve of No.21 and 10 WTG

No.21 WTG Power Curve No.10 WTG Power Curve

7.2.11.2 Conclusions

Laoting Wind Farm has shown a good availability which was 99.19% in its first year of operation. But the power out-put was lower than forecast. It was mainly because the wind speed in 2009 was lower than the long- term average wind speed. Average wind speed was just 5.15m/s. In addition, before May 2009 all WTGs were under commissioning and their power generation was lower than forecast. We got further information from Huaneng Renewables that the power generation from January to May in 2010 was much higher than in 2009.

Laoting Wind Farm has two WTG models, with a rotor diameter of 82m and 77m respectively. Huaneng Renewables’ data shows that the 82m WTG model outperforms the 77m WTG.

The site benefits from good access to each WTG. We did not see any obvious signs of corrosion at the WTG we visited. The building, facilities and equipment are of a high standard and appear to be well-maintained. O&M is well-managed.

7.3 General Conclusions

Of the twelve representative wind farms reviewed, six wind farms only started commercial operation in the last year, therefore those wind farms do not have enough operational data (at least 12 months of normal operational data is usually required) in order to assess whether the production would be in line with the estimates from the feasibility studies.

Nevertheless, within the six remaining wind farms, five projects have higher annual productions than planned with the same annual average wind speed as in the feasibility study.

Moreover, regarding Laoting Wind Farm which showed lower performances than expected, we understand, from the available information, that lower annual average wind speed was the main reason for the lower performance. In addition, 2009 is the first operational year of the wind farm. Indeed, before May 2009, all WTGs were under commissioning and their power generation was lower than forecasted.

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Overall, the equipment and facilities are well-maintained and of a high standard. The design, construction and installation are in line with our expectations.

8. Operating & Maintenance

8.1 Introduction

To operate its wind farms, Huaneng Renewables’ strategy is to rely on wind turbine manufacturers during the warranty period of the wind turbines and to subsequently handover this responsibility to its own O&M team on site.

The warranty provided by the manufacturers for the Huaneng Renewables wind farms usually lasts for a two year period, in line with current industry standards, and wind farms in other countries. We consider this warranty duration generally acceptable for WTG technologies with proven track records. However, Haizhuang did not provide a satisfactory track record. Therefore, we consider a warranty period of at least three years as a reasonable mitigant. Huaneng Renewables has successfully negotiated a five years warranty period with Haizhuang. Thus, we are satisfied with the mitigation applied by Huaneng Renewables.

We are aware of only one unresolved major commercial issue related to WTG performance in Rongcheng Wind Farm, which only contains two offshore wind turbines of 3 MW. Huaneng Renewables has requested the turbine manufacturer Sinovel to extend the warranty period of Rongcheng Wind Farm, due to the delay of commissioning. The performance of the two pilot turbines at Rongcheng could not meet the design value and are still under commission. There are clear delay damage clauses in the turbine contract with Sinovel. Huaneng Renewables has not requested any delay damage compensation, considering the long-term working relationship with Sinovel and protecting the domestic WTG industry development. Meanwhile, Huaneng Renewables reserves the rights to claim appropriate compensation from Sinovel at any time.

The wind farm electrical equipment are maintained by the O&M team themselves after the warranty period has expired. Few faults occurred in those devices, as those products are mature in the industry. The voltage level, current and capacity of electrical equipment are all standard specifications. Most technicians are experienced and trained in operating and maintaining WTGs. In our view, the safety and performance targets should be achieved based upon adequate experience of technicians and compliance with proper procedures laid out by WTG manufacturers.

The maintenance of road access to the wind farms is sub-contracted to local transportation service & maintenance. This is a common practice in the industry. The export lines connected to the grid are managed and maintained by the local grid company, as required by industry regulations.

8.2 O&M Structural Organization

The number of O&M people on site is decided by Huaneng Renewables headquarters based on internal principles. The employees are recruited and trained by the Huaneng Renewables headquarters, which ensure control of the qualification and competency of the employees on site.

The organizational structure of each wind farm is proposed by each project company, and then approved by Huaneng Renewables headquarters. They assign the general manager and other senior managers. Other O&M employees are hired by each project company.

Project companies usually set three divisions for production, maintenance and execution. The maintenance team usually has two shifts, one foreman for each shift with three or four maintenance employees. This arrangement could satisfy most daily requirements, e.g. replacement of consumable parts; meanwhile

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8.3 O&M Arrangements

In order to maximize revenue, high power availability is critical for a wind turbine. A number of factors can affect this availability; O&M arrangements are likely to be one of these factors and will have a very high impact. A commercial balance between the O&M cost and availability exists and these need to be considered carefully in contract negotiations. Liquidated damages are the key protection against poor availability. Finally, care is needed during the O&M contract negotiation with respect to the definition of ‘availability’. WTG suppliers will typically exclude a number of events as part of the contracted availability calculation, allowing them to limit their responsibilities over events outside their control (e.g. network outages). During site visits we raised these points and requested evidence of the relevant documentation. In our view these issues have been, in general, properly addressed by Huaneng Renewables in the O&M negotiation agreements. We are satisfied with this arrangement.

All O&M agreements that have been reviewed include training programs arranged by the manufacturers. These are usually comprehensive, and include four weeks training in factories and on site, covering most topics and problems that may occur on site. The service team is trained by using the maintenance manual, keeping records of faults, operation and control of turbines, erection method for replacement, maintenance procedures, trouble shooting and spare part management. We understood that in addition to the standard training, Huaneng Renewables’ staffs also assist the manufacturer’s team during scheduled and unscheduled maintenance. We are satisfied that experience can be gained by the team through this arrangement.

As previously discussed, most of the wind farms we visited started commercial operation in the past two years and are still in the warranty period and continue to be maintained by the manufacturers. According to the maintenance records on site, and interviews with the manufacturers’ onsite staff, the scheduled maintenance has been carried out in accordance with definitions in the agreements. We noticed that the WTG Maintenance form elaborates on inspection and items to be checked by the manufacturer’s maintenance staff regularly. The form is comprehensive and includes all the main items. Once the warranty period expires, the regular maintenance of turbines will be done by site personal from Huaneng Renewables. Manufacturer servicing will still be accessible, as most of the WTG suppliers have a regional service center in the area where the wind farms are located. As Huaneng Renewables is one of the major wind power producers in China and with the ongoing relationship with most of the major turbine manufacturers, we expect the manufacturer to respond rapidly to service requests.

In our view, plant maintenance by an external specialized company allows for more confidence in the quality of the service. However, we acknowledge that there are few companies other than the WTG manufacturers, with a significant track record in the Chinese market and Huaneng Renewables may consider it cost effective to manage this service internally. This could help to set a solid foundation for the rapid expansion of its wind portfolio that has taken place in recent years and may contribute to its ambitious plans for future growth. Some companies with large wind farm portfolios use the same strategy as Huaneng Renewables and have their own service team. However, we consider that it is necessary to have a corporate strategy and guidance documents for training and O&M that defines best practice principles during these activities in order to ensure the same quality of maintenance and to share experiences. Huaneng Renewables indicates that the guidance documents of O&M is in the drafting stage, and will be issued before the end of 2010. Currently, the O&M procedure and work of Huaneng Renewables’ wind farms follow two national O&M standards which are called ‘DL/T 666-1999 Code on Operation of Wind Farm’ and ‘DL/T 797-2001 Code on Operation of Wind Farm’ which were issued by the national authority.

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According to the Huaneng Renewables’ statement, its plan for maintaining the wind turbines after the warranty period is to sign a long-term service agreement with the manufacturers in order to solve all technical problems during operation. During this period Huaneng Renewables will train a professional team for WTG servicing to meet instant service requirements on site. Finally, Huaneng Renewables plans to establish a long- term contract with an external maintenance company so costs can be optimized. In our view, this strategic scheme seems reliable and could be cost effective.

The storage of spare parts is well-registered, well-managed and well-recorded at all the wind farms visited. According to Huaneng Renewables headquarters’ plan, spare parts are separated into three categories. The consumable parts e.g. sensors, tools, brake pieces and sealing are purchased by the site project company regularly according to a fixed rate. The intermediate spare parts e.g. switches and frequency converters, which have a typically higher failure rate and low costs, are purchased according to the headquarters’ annual plan. Major spare parts e.g. generators and gearboxes are managed by headquarters. Huaneng Renewables has agreements with the WTG manufacturers which request that those major spare parts shall be stored in a manufactory for use by Huaneng Renewables. In our view, the management of the spare parts by Huaneng Renewables seems efficient, practical and cost-effective.

We considered Huaneng Renewables quality control as adequate. The high energy production and availability of the representative wind farms also provides confidence in this matter. The procurement, construction, recruitment and training, primary controlled by Huaneng Renewables headquarter, show good management capabilities. The Health & Safety and Environment (HSE) system is well-established and well- implemented among the wind farms. The personal protection equipment is sufficient on site and the employees are required to follow procedures before they start working on site. Quality, Health & Safety and Environment manuals and relevant system files are drafted and executed based on the Huaneng Renewables headquarters’ QHSE system requirements.

8.4 Conclusions

Overall, Huaneng Renewables’ O&M arrangements for its wind farms are above our expectations and in line with international standards. We consider that these arrangements should be suitable for Huaneng Renewables as they have similarities with other O&M structures from other companies while being specifically developed in order to be integrated within Huaneng Renewables’ organizational structure.

Although we believe that the preventive maintenance strategy for WTG main components could be improved, the structural organization of O&M, the treatment to the outage, the purchase and storage of spare parts and the QHSE requirements of Huaneng Renewables wind farms are generally acceptable and well- organized.

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Appendices

Ref Document Title 1 Huaneng Renewables’ feedback to MM’s Questionnaires for 12 respective wind farm 2 Feasibility study report for each wind farm 3 Grid connection report for each wind farm 4 Project Progress for each wind farm 5 Project Schedule & Construction Report for each wind farm 6 Wind Turbine Supply Agreement for each wind farm 7 WTG tech Specification for each wind farm 8 Single Line Diagram (electronic version) for each wind farm 9 Met mast data during operational period for each wind farm 10 WTG Layout for each wind farm 11 Operational monthly data (availability, generation) for each wind farm 12 Spare parts list for each wind farm 13 Technical specification (main transformer, WTG transformer, inter-array cables, export cables) for each wind farm 14 Grid connection agreement for each wind farm 15 Grid Code for connecting the Wind Farm 16 SGCC Annual Report in 2009 and in 2008 17 CSG Annual Report in 2009 and in 2008 18 SGCC, CSG and Inner Mongolia Power Company’s website 19 Safety requirement and assessment of Wind Farm Grid Connection 20 QA list from Huaneng Renewables 21 MML internal information 22 Information from public website 23 State Electricity Regulatory Commission’s website

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Glossary

ASL Above Sea Level BCSE Business Council for Sustainable Energy BOP Balance Of Plant CEC China Energy Council Chinese Grid Code/Chinese Chinese Grid Code (Revision) of wind farm grid connection published in Grid Code (Revision) December 2009 Chinese Grid Code (Trial) Chinese Grid Code (Trial) of wind farm grid connection published in 2006 COD Commercial Operation Date CREIA Chinese Renewable Energy Industries Association CSG China Southern Power Grid Co., Ltd. Cut-in Wind Speed Wind speed at which a wind turbine begins to generate electricity. Cut-out Wind Speed Wind speed at which a wind turbine ceases to generate electricity. DFIG Double-Fed Induction Generator GB/T Guobiao/Tujian, Chinese National Standard, Recommended GE General Electric Company, Energy Gearbox Ratio Ratio of the speed of rotation of the powered gear to that of the final gear. GL Germanischer Lloyd GWEC Global Wind Energy Council HSE Health & Safety and Environment Hub Height Distance from the ground to the centre-line of the turbine rotor IEC International Electrotechnical Commission IPE Implementation in Production and Erection LVRT Low Voltage Ride Through MCP Measure Correlate Predict MM Mott MacDonald Limited NCAR National Center for Atmospheric Research O&M Operation and Maintenance Project Efficiency Difference between net yield and gross yield QHSE Quality, Health & Safety and Environment Rated Power Maximum power that a WTG can produce at constant wind speed SCADA System Control and Data Acquisition SGCC State Grid Corporation of China TC Technical Consultant UK United Kingdom US United States WAsP Wind Atlas Analysis and Application Program WTG Wind Turbine Generator

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GW Giga Watt (electric) GWh Giga Watt hour (electric generation) Hz Hertz (frequency) kA kilo Ampere (power) km kilometer (length) kV kilo voltage (electric) m meter (length) m2 square meter (area) m/s meter per second (velocity) MPa Mega Pascal (pressure) MW Mega Watt (electric) MVA Mega Volt Ampere (apparent power) MVar Mega Volt-ampere reactance (reactive power) TWh Tera Watt hour (electric generation) V Voltage (electric) W/m2 Watt per square meter (power density) % Percent °C Degrees Centigrade (temperature)

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This appendix contains a summary of laws and regulations in respect of taxation and foreign exchange in Hong Kong and the PRC.

A. TAXATION IN THE PRC

Taxes Applicable to Joint-Stock Limited Companies

Enterprise Income Tax

Enterprise Income Tax Law of the People’s Republic of China ( , “Income Tax Law”) was promulgated on March 16, 2007, effective January 1, 2008. The Income Tax Law regulates the rate of enterprise income tax at 25%. Enterprises established before promulgation of the Income Tax Law and entitled to benefit from a preferential tax rate as per the tax laws and administrative regulations then prevailing may gradually shift to the tax rate defined by the Income Tax Law within five years after effectiveness of the Income Tax Law according to the Notice on the Implementation of the Transitional Preferential Tax Policies ( ), or Circular 39, issued by the PRC State Council on December 26, 2007. Those entitled to the preference of fixed tax holiday or fixed-term tax reductions may continue to benefit in the same manner according to the requirements of Circular 39 until expiration of the tax holiday or the term of the preference. For those who have not benefited from such preference due to the failure to realize profit, the preference will be applied starting from the effective date of the Income Tax Law, January 1, 2008.

Business Tax

According to the Provisional Regulations of The People’s Republic of China on Business Tax ( ) and the Detailed Rules for Implementation of the Provisional Regulations of The People’s Republic of China on Business Tax ( ), both of which became effective on January 1, 1994 and amended on January 1, 2009, all institutions and individuals providing taxable services, transferring intangible assets or selling real estate within the PRC shall pay business tax.

Value-added Tax (VAT)

According to the Provisional Regulations of the People’s Republic of China on Value-added Tax ( ) in effect since January 1, 1994 and the Detailed Rules for Implementation of the Provisional Regulations of the People’s Republic of China on Value-added Tax ( ) in effect since December 25, 1993, both of which are first amended on January 1, 2009, all institutions and individuals selling goods or providing processing, repairing or replacement services or importing goods within the PRC shall pay VAT.

The tax rate of 13% shall be levied on general taxpayers selling or importing grain, edible vegetable oil, tap water, heating supply, air-conditioning, gas, liquefied petroleum gas, natural gas, marsh gas, coal products for civil use, books, newspapers, magazines, feedstuff, chemical fertilizer, pesticide, farming machines, films for agricultural use and other goods specified by the State Council; the rate applicable to goods exported by taxpayers shall be zero unless otherwise prescribed by the State Council.

The rate of 17% shall be levied on taxpayers selling or importing goods other than the abovementioned items, and to taxpayers providing processing, repair or replacement services.

The rate applicable to goods sold or taxable services provided by small-scale taxpayers is 3%. A small- scale taxpayer is defined as a taxpayer engaged in the manufacturing of goods or the supply of taxable services, or primarily dealing in the manufacturing of goods or supply of taxable services while concurrently engaged in

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Individuals, non-enterprise institutions, and enterprises not frequently incurring taxable activities with annual taxable income beyond the figure set for small-scale taxpayers shall be deemed as small-scale taxpayers for the purpose of VAT payment.

The withholding agent of the VAT should be: (i) the domestic agents of foreign entities or individuals, who provide taxable services within the territory of the PRC but have no business institutions in the PRC; or (ii) the assignee of the assets or the purchaser of the services in case there is no domestic agent.

Stamp Tax

According to the Provisional Regulations of the People’s Republic of China on Stamp Duty ( ) and the Detailed Rules for Implementation of the Provisional Regulations of the People’s Republic of China on Stamp Tax ( ) as brought into effect on October 1, 1988, all institutions and individuals executing or receiving taxable documents within the PRC shall pay stamp tax. The list of taxable documents includes purchase and sale contracts, processing contracts, construction project contracts, property lease contracts, cargo freight contracts, warehousing and storage contracts, loan contracts, property insurance contracts, technical contracts, other documents that resemble a contract in nature, title transfer deeds, business account books, certificates of rights, licenses and other taxable documents specified by the Ministry of Finance.

Pursuant to the Notice on Certain Policies Related to Stamp Tax issued by the Ministry of Finance and State Administration of Taxation ( ) on November 27, 2006, the electricity sale and purchase contracts entered into by the power generator and the grid companies are purchase and sale contracts at the rate of 0.3‰.

Taxes Applicable to Shareholders of Companies

Dividend-related Tax

According to the Law of the People’s Republic of China on Individual Income Tax ( ), hereinafter referred to as the “Individual Income Tax Law”) brought into effect on September 10, 1980 and the latest amendment on December 29, 2007, individual income tax at the rate of 20% shall be levied on dividends of H shares received by any and all foreign individuals that are non-Chinese residents.

However, according to the terms of the Circular on Questions Concerning Tax on the Profits Earned by Enterprise with Foreign Investment, Foreign Enterprises and Foreign Individuals From Transfer of Stocks (Stock Rights) and on Dividend Income ( ) as promulgated by the State Administration of Taxation on July 21, 1993 (hereinafter referred to as the “Taxation Notice”), the income from dividends (bonuses) received by foreign enterprises and foreign individuals who hold B-shares or overseas shares from China’s domestic enterprises which issue B-shares or overseas shares, is temporarily exempted from enterprise income tax and individual income tax.

Furthermore, it is specified in the Letter of the State Administration of Taxation concerning Taxation Issues of Dividends Received by Foreign Individuals Holding Shares of Companies Listed in China ( ) as promulgated by the State

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Administration of Taxation on July 26, 1994 that dividends (capital bonuses) received by foreign individuals holding B-shares or overseas shares (including H-shares) from Chinese enterprises issuing such shares are temporarily exempted from individual income tax.

As of yet, the tax authority in charge has not imposed any individual income tax upon dividends of overseas shares. Individual income tax, therefore, is temporarily exempted or reduced for dividends or other distributions of H-shares held by any foreign individuals according to the prevailing PRC laws and regulations.

According to the Circular on Questions Concerning Withholding and Remitting Enterprise Income Tax for Dividends Received by Oversea H-share Holders (Enterprise shareholders) from Chinese Resident Enterprises ( ) issued by the State Administration of Taxation on November 6, 2008, enterprise income tax at the rate of 10% shall be levied on dividends of H-shares of 2008 and thereafter received by any oversea enterprise shareholders that are non-Chinese residents from Chinese resident enterprises.

Share transfer-related tax

According to the Individual Income Tax Law, proceeds received from sale of capital securities by any non-Chinese resident individual shall be levied an individual income tax of 20%.

However, according to the Taxation Notice, income tax is temporarily exempted for net income obtained by foreign enterprises through transferring B-shares or overseas shares (including H-shares) issued by Chinese enterprises and not held by the foreign enterprises’ organizations or related business entities within the territory of the PRC, and for income received by foreign individuals from transfers of their B-shares or overseas shares (including H-shares) issued by Chinese enterprises.

Furthermore, pursuant to the Notice of the Ministry of Finance and the State Administration of Taxation concerning the Continued Individual Income Tax Exemption for Individuals’ Proceeds from Share Transfers ( ) which came into effect on March 30, 1998, and effective since January 1, 1997, individual income tax exemption is continually valid from individuals’ transfers of shares of public companies.

Estate duty or inheritance tax

There is no estate duty or inheritance tax levied in China at present.

B. THE PRC LAWS AND REGULATIONS CONCERNING FOREIGN EXCHANGE CONTROL

The foreign exchange control system of China has experienced a number of reforms and the current system contains three major regulatory laws and regulations since 1993.

The People’s Bank of China (“PBOC”), as authorized by the State Council, promulgated the Announcement Concerning Further Reformation of the Foreign Exchange Control System ( )on December 28, 1993, which was brought into force on January 1, 1994.

The Regulations of the People’s Republic of China on Management of Foreign Exchanges ( ), “Foreign Exchange Regulations”) promulgated by the State Council, implemented on April 1, 1996, first amendment on January 14, 1997 and latest amendment on August 6, 2008, applies to the receipts, payments or business activities in China that are transacted in foreign currencies by domestic institutions, individuals, foreign institutions and foreign individuals visiting China. The second

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The Regulations on Control of Foreign Exchange Settlements, Sales and Payments ( ) issued by PBOC on June 20, 1996 and implemented on July 1, 1996 governs the foreign exchange settlements, purchases, foreign exchange account openings and payments to foreign countries that are incurred in China by domestic institutions, individual residents, foreign organizations’ institutions in China and foreign individuals visiting China.

PBOC publicizes the exchange rates between RMB and other major foreign currencies on each business day. The exchange rates are determined by reference to the preceding day’s trading prices of RMB against major foreign currencies in the inter-bank foreign exchange market.

The PRC government has been loosening its control over foreign exchange purchases. Any Chinese enterprise in need of foreign currencies in their day-to-day business activities, trade and nontrade operations, import business and payment of foreign debts may purchase foreign currencies from designated banks, provided that they submit the required appropriate supporting documents. In addition, if foreign-funded enterprises are in need of foreign currencies for distributing dividends, capital bonuses or profits to foreign investors, the amount so needed after payment of the appropriate dividend tax may be drawn from the enterprises’ foreign exchange accounts maintained with designated banks. If the foreign currency in such an account is insufficient, the foreign- funded enterprise may apply to the government authority in charge for purchasing the necessary amount of foreign currency from a designated bank to cover the deficiency.

Although the foreign exchange control over transactions under current accounts has decreased, enterprises shall obtain approval from the State Administration of Foreign Exchange before they accept foreign-currency loans, provide foreign-currency guarantees, make investments in foreign countries or carry out any other capital account transactions involving the purchase of foreign currencies.

In foreign exchange transactions, designated banks may freely determine applicable exchange rates based on the rates publicized by PBOC and subject to certain governmental restrictions.

The Notice Concerning Foreign Exchange Control of Overseas-listed Enterprises, ( ) as jointly promulgated by China Securities Regulatory Commission (“CSRC”) and the State Administration of Foreign Exchange (“SAFE”), came into effect on January 13, 1994, and provides that:

(i) Funds raised by domestic enterprises through issuing shares in foreign countries shall be categorized as income from capital projects, and may be deposited in cash in foreign exchange accounts opened in China as approved by the SAFE.

(ii) A domestic enterprise issuing shares in foreign countries shall, within ten days after the foreign funds raised through the issuance of the shares have become available, transfer the full amount of the funds into China and deposit the amount in a foreign exchange account opened with approval.

(iii) Foreign currencies needed by domestic enterprises issuing shares in foreign countries for the purpose of distributing dividends and capital bonuses to overseas shareholders may be paid and remitted by the enterprises’ banks from their foreign exchange accounts with approval of the SAFE. The enterprises’ foreign currency uses for other purposes shall be handled according to applicable regulations.

(iv) If the sum of foreign-currency funds raised by a domestic enterprise through the issuance of shares in foreign countries reaches 25% or more of the enterprise’s total equity, it may apply to the Ministry of Commerce of the PRC (previously known as the Ministry of Foreign Trade and Economic

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Cooperation of China) or its authorized department to establish a Sino-foreign joint venture according to the Law on Sino-foreign Joint Ventures. If it is granted the status of a Sino-foreign joint venture, its foreign-currency income and expenses shall be handled pursuant to the foreign exchange control regulation governing foreign-invested enterprises.

The Notice Concerning Further Improving Foreign Exchange Control of Overseas-listed Enterprises ( ), jointly issued by CSRC and SAFE, took effect on September 1, 2002, and provides that:

(i) Domestic equity holders of companies with foreign shares listed overseas and of overseas listed companies controlled by Chinese investors shall, within 30 days after obtaining CSRC’s approval for issuing and listing shares in foreign countries, fulfill the procedure with SAFE for foreign exchange registration of overseas-listed shares.

(ii) Companies with foreign shares listed overseas shall, within 30 days after the funds raised have become ready, transfer into China the amount of the funds remaining after deduction of associated costs and expenses, and shall not retain the funds in foreign countries without permission of SAFE. The funds transferred back into China shall be subject to control as if they were funds directly injected by foreign investors and may be kept in earmarked accounts or be used for foreign exchange settlement if approved by SAFE.

(iii) Foreign-currency funds, obtained by domestic equity holders of companies with foreign shares listed overseas and of overseas listed companies controlled by Chinese investors through reducing holdings of shares in listed companies or through the listed companies’ sale of their assets (or equity), shall be transferred back into China within 30 days after the funds become available and after deduction of associated costs and expenses, which may not be detained in foreign countries without approval of SAFE. Foreign exchange settlement shall be made for such funds as approved by SAFE after they are transferred back into China.

(iv) If overseas accounts are to be opened to temporarily keep the abovementioned foreign-currency funds before they are transferred back into China, application may be made to SAFE for opening such earmarked foreign exchange accounts, of which the maximum term shall be 3 months from the date of account opening.

(v) Overseas listed companies controlled by Chinese investors who have injected funds raised in China as investment or foreign debts shall fulfill appropriate procedures according to prevailing regulations governing investments, foreign debts and foreign exchange control.

(vi) The procedure for foreign exchange registration of overseas investment shall be carried out according to regulations for overseas investments of domestic equity holders of overseas listed companies controlled by Chinese investors who inject assets or equity in foreign countries. The asset or equity to be so injected shall be appraised. The amount of the overseas investment shall not be less than the appraised value of the asset or equity to be injected, and the asset appraisal and confirmation procedure prescribed by the state-owned assets administration shall be fulfilled if the investment involves state-owned assets.

(vii) Companies with foreign shares listed overseas needing to repurchase their own shares listed and circulated in foreign countries shall, after obtaining the approval from CSRC, follow procedures set by SAFE for changing foreign exchange registration of their overseas-listed shares and for approval of opening an overseas account and remittance of funds to foreign countries.

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On September 9, 2003, SAFE issued the Notice Concerning Improving Foreign Exchange Control of Overseas Listings ( ), clarifying relevant issues in the Notice Concerning Further Improving Foreign Exchange Control of Overseas Listings.

On February 1, 2005, SAFE issued the Notice Concerning Foreign Exchange Control of Overseas Listings ( ), further revising and supplementing the abovementioned notices as follows:

The time limit for domestic equity holders of companies with foreign shares listed overseas and of overseas listed companies controlled by Chinese investors to transfer funds back into China has been extended to “within six months after the funds so raised have become ready’’, and for earmarked overseas foreign exchange accounts, the time period has been extended to “two years from the date of account opening.”

On November 9, 2010, the SAFE promulgated the Notice of the State Administration of Foreign Exchange on Relevant Issues Concerning Strengthening the Administration of the Foreign Exchange Business ( ), regulating that the settlement of exchange shall comply with the use of proceeds as disclosed in the document. For the settlement of proceeds over-raised or beyond the use as disclosed in the document, a resolution of the board of directors in relation to the use of exchange settlement shall be submitted separately. If the proceeds are to be settled and paid to the other party to the transaction, they shall not be settled and retained in the party’s own RMB account.

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This appendix sets out summaries of certain aspects of the PRC legal and judicial system, its arbitration system and its company and securities regulations. It also contains a summary of certain Hong Kong legal and regulatory provisions, including summaries of certain material differences between the PRC Company Law and Hong Kong company law, certain requirements of the certain applicable rules and regulations and the Mandatory Provisions.

PRC LAWS AND REGULATIONS

(a) The PRC legal system

The PRC legal system is based on the PRC Constitution (hereinafter referred to as “the Constitution”) and is made up of written laws, administrative regulations, local regulations, autonomy regulations and separate rules, rules of State Council departments, rules of local governments and international treaties of which the PRC government is a signatory. Court judgments do not constitute legally binding precedents, although they may be used for judicial reference and guidance.

According to the Constitution and the Legislation Law of the PRC (“the Legislation Law”), the National People’s Congress (“NPC”) and the standing committee of the NPC (“the Standing Committee”) are empowered to exercise the legislative power of the State. The NPC enacts and amends basic laws governing criminal offences, civil affairs, the State organs and other matters. The Standing Committee enacts and amends laws other than those that shall be formulated by the NPC, and during the period of adjournment of the NPC, the Standing Committee may partially supplement and amend the laws enacted by the NPC, but not in contradiction to the basic principles of such laws. The State Council is the highest organ of state administration and enacts administrative regulations based on the Constitution and laws. The people’s congresses at the provincial level and their standing committees may, in light of the specific circumstances and actual needs of their respective administrative areas, enact local regulations, provided that such local regulations do not contravene any provision of the Constitution, laws or administrative regulations. The ministries and commissions of the State Council, the PBOC, the National Audit Office of the PRC as well as other state organs endowed with administrative functions directly under the State Council may, according to laws, administrative regulations, decisions and orders of the State Council, formulate ministerial rules within their authorities. The people’s governments of the provinces, autonomous regions, and municipalities directly under the central government and the comparatively larger cities may enact rules, in accordance with laws, administrative regulations and the local regulations of their respective provinces, autonomous regions or municipalities. The people’s congresses of the national autonomous regions have the power to enact autonomous regulations and separate regulations on the basis of the political, economic and cultural characteristics of the local nationalities that reside in the area.

The Constitution has supreme legal authority and no laws, administrative regulations, local regulations, autonomous regulations or separate regulations may contravene the Constitution. The significance of laws is greater than that of administrative regulations, local regulations, and rules. The significance of administrative regulations is greater than that of local regulations and rules. The significance of local regulations is greater than that of the rules of the local governments at or below the corresponding level. The significance of the rules enacted by the people’s governments of the provinces or autonomous regions is greater than that of the rules enacted by the people’s governments of the comparatively larger cities within the administrative areas of the provinces and the autonomous regions.

The NPC has the power to alter or annul any inappropriate laws enacted by its Standing Committee, and to annul any autonomous regulations or separate regulations which have been approved by its Standing Committee but which contravene the Constitution or the Legislation Law. The Standing Committee has the power to annul any administrative regulation that contravenes the Constitution and laws, to annul any local regulation that contravenes the Constitution, laws or administrative regulations, and to annul any

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autonomous regulation or local regulation which has been approved by the standing committees of the people’s congresses of the relevant provinces, autonomous regions or municipalities directly under the Central Government, but which contravene the Constitution and the Legislation Law.

The State Council has the power to alter or annul any inappropriate ministerial rules and rules of local governments. The people’s congresses of provinces, autonomous regions or municipalities directly under the Central Government have the power to alter or annul any inappropriate local regulations enacted or approved by their respective standing committees. The people’s governments of provinces and autonomous regions have the power to alter or annul any inappropriate rules enacted by the people’s governments at the lower level.

The power to interpret laws is vested in the Standing Committee by the Constitution. According to Resolutions of the Standing Committee on Improving Interpretation of Laws passed on June 10, 1981, in cases where the scope of provisions of laws or decrees needs to be further defined or additional stipulations need to be made, the Standing Committee shall provide interpretations or make stipulations by means of decrees. Interpretation of questions involving the specific application of laws and decrees in court trials shall be provided by the Supreme People’s Court. Interpretation of questions involving the specific application of laws and decrees in the procuratorial work of the procuratorates shall be provided by the Supreme People’s Procuratorate. If the interpretations provided by the Supreme People’s Court and the Supreme People’s Procuratorate are at variance with each other in principle, they shall be submitted to the Standing Committee for interpretation or decision. Interpretation of questions involving the specific application of laws and decrees in areas unrelated to judicial and procuratorial work shall be provided by the State Council and supervisory authorities. In case where the scope of local regulations needs to be further defined or additional stipulations need to be made, the standing committees of the people’s congresses of provinces, autonomous regions and municipalities directly under the Central Government which have enacted these regulations shall provide the interpretations or make the stipulations. Interpretation of questions involving the specific application of local regulations shall be provided by the supervisory authorities under the people’s governments of provinces, autonomous regions and municipalities directly under the Central Government.

(b) The PRC judicial system

According to the Constitution and the Law of Organization of the People’s Courts of the PRC (hereinafter referred to as the “Law of Organization of the People’s Courts”), the People’s Courts consist of the Supreme People’s Court, the local people’s courts, the military courts and other special people’s courts. The local people’s courts are comprised of the basic people’s courts, the intermediate people’s courts and the higher people’s courts. The basic people’s courts are further divided into civil, criminal and administrative divisions. The intermediate people’s courts have divisions similar to those of the basic people’s courts, and other special divisions, such as the intellectual property division, where necessary.

The people’s courts at lower levels are subject to supervision of the people’s courts at higher levels. The people’s procuratorates also have the power to exercise legal supervision over the litigation proceedings of people’s courts at the same level or below. The Supreme People’s Court is the highest judicial organ of the PRC and it has the power to supervise the administration of justice by the people’s courts at all levels.

The people’s courts have adopted a “second instance as final” appellate system. A party may appeal against a judgment or ruling by the people’s court of first instance to the people’s court at the next higher level prior to the judgment or the ruling of the first instance is legally effective. The judgment or the ruling of the second instance by the people’s court at the next higher level is final and legally binding. First judgments or rulings by the Supreme People’s Court are final as well. However, in the case that the Supreme People’s Court or the people’s court at a higher level finds definite error(s) in the legally effective

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judgment or ruling by the people’s court at a lower level, or the presiding judge of the people’s court finds definite error(s) in the legally effective judgment by the court over which he/she presides, the case may then be retried in accordance with the judicial supervisory procedures.

The Civil Procedure Law of the PRC (hereinafter referred to as the “Civil Procedure Law”) sets forth provisions for the jurisdiction of the people’s courts, the procedures to be followed for conducting a civil action and the procedures for enforcement of a civil judgment or ruling. All parties to a civil action conducted within the PRC must comply with the Civil Procedure Law. A civil case is generally heard by a local court in the defendant’s place of domicile. The parties to a contract may, by express agreement, select a court of jurisdiction where civil actions may be brought, provided that the court of jurisdiction is located in either the plaintiff’s or the defendant’s place of domicile, or the place of execution or implementation, or the place of the object of the action, and provided that the provisions of the Civil Procedure Law regarding jurisdiction by level and exclusive jurisdiction shall not be violated.

A foreign individual or enterprise generally has the same litigation rights and obligations as a citizen or legal person of the PRC. Should the judicial system of a foreign country limits the litigation rights of the PRC citizens or enterprises, the PRC courts may apply the same limitations to the citizens and enterprises of that foreign country. If any party to a civil action refuses to comply with a legally effective judgment or ruling by a people’s court or an effective award by an arbitration tribunal in the PRC, the other party may apply to the people’s court for the compulsory enforcement of the judgment, ruling or award. However, specific time limits are imposed on the right to apply for such compulsory enforcement. The time limit for the submission of an application for enforcement shall be two years. The suspension or termination of the time limit for the submission of an application for enforcement shall be governed by the provisions on the suspension or termination of the statute of limitation.

When a party applies to a people’s court for enforcing an effective judgment or ruling by a people’s court against a party who is not located within the territory of the PRC or whose property is not within the PRC, the party may apply to a foreign court with proper jurisdiction for recognition and enforcement of the judgment or ruling. A foreign judgment or ruling may also be recognized and enforced by the people’s court according to the PRC enforcement procedures if the PRC has entered into, or acceded to, an international treaty with the relevant foreign country on the mutual recognition and enforcement of judgments and rulings, or if the judgment or ruling satisfies the court’s examination based on the principle of reciprocity, unless the people’s court finds that the recognition or enforcement of such judgment or ruling will result in the violation of the basic legal principles of the PRC, its sovereignty or security, or for reasons related to the public interests.

(c) The PRC Company Law, Special Regulations and Mandatory Provisions

On December 29, 1993, the Company Law of the PRC was adopted by the standing committee of the Eighth NPC, which came into effect on July 1, 1994 and was amended for the first time on December 25, 1999, the second time on August 28, 2004 and the third time on October 27, 2005. The newly amended Company Law of the PRC (hereinafter referred to as the new “Company Law”) came into effect on January 1, 2006.

The Special Provisions of the State Council Concerning the Floatation and Listing Abroad of Shares by Joint Stock Limited Companies (hereinafter referred to as the “Special Provisions”) were adopted at the 22nd Standing Committee Meeting of the State Council on July 4, 1994. The Special Provisions was formulated according to Article 85 and Article 155 of the Company Law and applies to the overseas share subscription and listing of joint stock limited companies.

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The Mandatory Provisions in Articles of Association of Joint Stock Limited Companies to be Listed Overseas (hereinafter referred to as the “Mandatory Provisions”) were promulgated by the former Securities Commission of the State Council and the State Economic System Restructuring Commission on August 27, 1994, prescribing provisions which must be incorporated into the articles of association of joint stock limited companies to be listed overseas. Therefore, the Mandatory Provisions have been incorporated into the Articles of Association (which are summarized in Appendix IX).

(i) General provisions

A “joint stock limited company” (hereinafter referred to as the “company”) is a corporate legal person incorporated under the Company Law, whose registered capital is divided into shares of equal par value. The liability of its shareholders is limited to the extent of the shares they hold, and the liability of the company is limited to the full amount of all the assets it owns.

A State-owned enterprise that is restructured into a company must comply with the conditions and requirements specified by laws and administrative regulations for the modification of its operation mechanisms, the handling and evaluation of the company’s assets and liabilities and the establishment of its internal management organs.

A company must conduct its business in accordance with law and professional ethics. A company may invest in other limited liability companies and joint stock limited companies. The liabilities of the company to such invested companies are limited to the amount invested. Unless otherwise provided by laws, a company cannot be the capital contributor who has the joint and several liability associated with the debts of the invested enterprises.

(ii) Incorporation

A company may be incorporated by promotion or public subscription.

A company may be incorporated by two to 200 promoters, but at least half of the promoters must reside in the PRC. According to the Special Regulations, state-owned enterprises or enterprises with the majority of their assets owned by the PRC government can be restructured in accordance with the relevant regulations to become joint stock limited companies which may issue shares to overseas investors.

A company incorporated by promotion is one with registered capital entirely subscribed for by the promoters. Where a company is incorporated by public subscription, the promoters are required to subscribe for not less than 35% of the total shares of the company, and the remaining shares can be offered to the public or specific persons.

The Company Law provides that for companies incorporated by way of promotion, the registered capital shall be the total capital subscribed for by all promoters as registered with the relevant administrative bureau for industry and commerce; the initial capital contribution by all promoters of a company shall not be less than 20% of the registered capital, and the remaining shall be paid up within two years by the promoters from the date of incorporation of the company. For investment companies, the remaining shall be paid up within five years from the date of incorporation of the company; for companies incorporated by way of public subscription, the registered capital is the amount of total paid-up capital as registered with the relevant administrative bureau for industry and commerce.

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The registered capital of a company at a minimum should be RMB5 million. Pursuant to the Securities Law, the total capital of a company which proposes to apply for its shares to be listed on a stock exchange shall not be less than RMB30 million.

The promoters shall convene an inaugural meeting within 30 days after the issued shares have been completely paid up, and shall give notice to all subscribers or make a public announcement of the date of the inaugural meeting 15 days prior to the meeting. The inaugural meeting may be convened only with the presence of shareholders holding shares representing more than 50% of the total issued shares of the company. Matters to be dealt with at the inaugural meeting include adopting the draft articles of association proposed by the promoters and electing the board of directors and the Board of Supervisors of the company. Any resolution of the meeting shall be approved by subscribers with more than half of the voting rights of those present at the meeting.

Within 30 days after the conclusion of the inaugural meeting, the board of directors shall apply to the registration authority for registration of the incorporation of the company. A company is formally established and has the qualification of a legal person once the registration has been approved by the relevant administrative bureau for industry and commerce and a business license has been issued.

The promoters of a company shall individually and jointly be liable for: (i) the payment of all expenses and liabilities incurred in the incorporation process if the company cannot by incorporated; (ii) the repayment of subscription monies to the subscribers together with interest at bank rates for a deposit of the same term if the company cannot be incorporated; and (iii) damages suffered by the company as a result of the default of the promoters in the course of incorporation of the company. According to the Provisional Regulations Concerning the Issue and Trading of Shares promulgated by the State Council on April 22, 1993 (which is only applicable to the issue and trading of shares in the PRC and relevant activities), if a company is incorporated by means of public subscription, the promoters of the company are required to assume joint liability for the accuracy of the contents of this document and to ensure that this document does not contain any misleading statement or omission of any material information.

(iii) Share capital

The promoters of a company may make capital contributions in cash, or in kind that can be valued in currency and transferable according to laws such as intellectual property rights or land-use rights based on their appraised value, provided that the amount of capital contribution in cash by all shareholders shall not be less than 30% of the company’s registered capital.

There is no limit under the Company Law as to the percentage of shares held by an individual shareholder in a company.

If capital contribution is made other than in cash by the promoters of the company, valuation and verification of the properties contributed must be carried out and converted into shares. A company may issue registered or bearer shares. However, shares issued to promoter(s) or legal person(s) shall be in the form of registered shares and shall be registered under the name(s) of such promoter(s) or legal person(s) and shall not be registered under a different name or the name of a representative.

The Special Regulations and the Mandatory Provisions provide that shares issued to foreign investors and listed overseas shall be issued in registered form and shall be denominated in RMB and subscribed for in foreign currency.

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Pursuant to the Special Regulations and the Mandatory Provisions, shares issued to foreign investors and investors from Hong Kong, Macau and Taiwan and listed overseas are defined as overseas-listed-foreign-invested shares, and those issued to investors within the PRC other than the aforementioned areas are defined as domestic shares. Qualified Foreign Institutional Investors (“QFII”) approved by China Securities Regulatory Commission (hereinafter referred to as “CSRC”) may hold domestic listed shares. A company may offer its shares to the public overseas with approval by the securities administration department of the State Council. Detailed measures shall be specified by the State Council based on the Special Regulations. According to the Special Regulations, upon approval of CSRC, a company may agree, in the underwriting agreement on issuing overseas-listed-foreign-invested shares, to retain not more than 15% of the aggregate amount of overseas-listed-foreign-invested shares proposed to be issued less the amount of underwritten shares. The share offering price may be equal to or in excess of par value, but shall not be less than par value. The transfer of shares by shareholders shall be conducted in legally established stock exchanges or via other methods as stipulated by the State Council. The transfer of registered shares by a shareholder must be conducted by means of an endorsement or by other means stipulated by laws or by administrative regulations. Bearer shares are transferred by delivery of the H share certificates to the transferee. No modification registration shall be made to the registrar of shareholders within thirty (30) days prior to the shareholders’ assembly being held or within five (5) days prior to the benchmark date set for the purpose of distribution of dividends.

(iv) Increase in capital

Pursuant to the Company Law, an increase in the capital of a company by means of an issue of new shares must be approved by shareholders in general meeting. Except for abovementioned conditions of obtaining approval at the general meeting required by the Company Law, the Securities Law requires the following conditions for a company to offer new shares to the public: (i) a complete and well-operated organization; (ii) capability of making profits continuously and a healthy financial status; (iii) no false records or significant irregularities in its financial statements over the last three years; (iv) fulfill any other requirements as prescribed by the securities administration authority of the State Council as approved by the State Council.

The public offer requires the approval of the securities administration authority of the State Council. After payment in full for the new shares issued, a company must modify its registration with the relevant administrative bureau for industry and commerce and issue a public notice accordingly.

(v) Reduction of share capital

Subject to the minimum registered capital requirements, a company may reduce its registered capital in accordance with the following procedures stipulated by the Company Law:

• the company shall prepare a balance sheet and an inventory of assets;

• the reduction of registered capital must be approved by shareholders in the general meeting;

• the company shall inform its creditors of the reduction in capital within ten days and publish an announcement of the reduction in newspapers within 30 days once the resolution approving the reduction in capital being passed;

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• creditors of the company may require the company to clear its debts or provide guarantees covering the debts within the statutory time limit; and

• the company must apply to the relevant administrative bureau for industry and commerce for registration of the reduction in registered capital.

(vi) Repurchase of shares

A company shall not purchase its own shares other than for the following purposes:

• to reduce the registered capital by cancelling its shares or to merge with another company holding its shares;

• to grant shares as a reward to the staff of the company;

• to purchase the company’s own shares upon request of its shareholders who vote against the resolution regarding the merger or division of the company in a general meeting; or

• other purposes permitted by laws and administrative regulations.

The shares repurchased by the company as a reward to its staff shall not exceed 5% of the total number of its issued shares. Any fund for the repurchase shall be paid out of after-tax profits of the company, and the shares repurchased shall be transferred to the staff of the company within one year. The Mandatory Provisions stipulate that upon obtaining approvals from relevant supervisory authorities in accordance with the articles of association of the company, a company may, for the aforementioned purposes, repurchase its issued shares by way of a general offer to its shareholders or purchase on a stock exchange or through outside-market contract.

(vii) Transfer of shares

Shares may be transferred in accordance with the relevant laws and regulations. A shareholder shall transfer his/her shares in stock changes established pursuant to laws or by other means as stipulated by the State Council. Registered shares may be transferred by endorsement or in any other manner specified in applicable laws and regulations. Shares held by the promoter(s) of a company shall not be transferred within one (1) year from the date of incorporation of the company. Shares issued by a company prior to the public offer of its shares shall not be transferred within one (1) year from the date of its shares being listed on a stock exchange. Directors, supervisors and senior management personnel of the company shall not transfer over 25% of the total shares they hold in the company each year during their term of office, and shall not transfer any share of the company held by each of them within one (1) year from the listing date.

(viii) Shareholders

The articles of association of a company set forth the shareholders’ rights and obligations and are binding on all the shareholders. Pursuant to the Company Law and the Mandatory Provisions, a shareholder’s rights include:

• the right to attend in person or appoint a representative to attend the shareholders’ general meeting and to vote in respect of the amount of shares held;

• the right to transfer his/her shares in accordance with applicable laws and regulations as well as the articles of association;

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• the right to inspect the company’s articles of association, shareholders’ registers, records of short-term debentures, minutes of shareholders’ general meeting, board resolutions, supervisor resolutions and financial accounting reports, and to put forward proposals or raise questions on the business operations of the company;

• if a resolution approved by the shareholders’ general meeting or by the board of directors violates any law or regulation, or infringes on the shareholders’ lawful rights and interests, the right to institute an action in a people’s court demanding that the illegal infringing action be stopped;

• the right to receive dividends based on the number of shares held;

• the right to obtain surplus assets of the company upon its termination in proportion to shares he/she holds; to claim against other shareholders who abuse their rights of shareholders for the damages; and

• any other shareholders’ rights specified in the articles of association.

The obligations of shareholders include: abide by the articles of association of the company; pay the subscription monies in respect of shares subscribed for; be liable for debts and liabilities of the company to the extent of the amount of subscription monies agreed to be paid in respect of the shares taken up; no abuse of shareholders’ rights to damage the interests of the company or other shareholders of the company; no abuse of the independent status of the company as a legal person and its limited liability companies as to damage the interests of the creditors of the company; and any other obligation specified in the articles of association of the company.

(ix) Shareholders’ general meeting

The shareholders’ general meeting is the organ of authority of a company, which exercises its functions and powers in accordance with the Company Law.

The shareholders’ general meeting exercises the following functions and powers:

• to decide on operational policies and investment plans of the company;

• to elect or remove the directors and supervisors who are not representatives of the employees, and

• to decide on matters relevant to remuneration of directors and supervisors;

• to review and approve reports of the board of directors;

• to review and approve reports of the board of supervisors or the supervisors;

• to review and approve annual financial budgets and financial accounts proposed by the company;

• to review and approve proposals for profit distribution and for recovery of losses of the company;

• to decide on increase and reduction of the registered capital of the company;

• to decide on bond issuances of the company;

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• to decide on merger, division, dissolution and liquidation of the company and other issues;

• to amend the articles of association of the company; and

• other functions and powers specified in the articles of association of the company.

The annual shareholders’ general meeting must be convened once a year. An extraordinary shareholders’ general meeting shall be held within two months after the occurrence of any of the following circumstances:

• the number of directors is less than the number provided for in the Company Law or less than two-thirds of the number specified in the articles of association of the company;

• the losses of the company which are not made up reach one-third of the total paid-up share capital of the company;

• as requested by a shareholder holding, or shareholders holding in aggregate, 10% or more of the shares of the company;

• when deemed necessary by the board of directors;

• as suggested by the board of supervisors; or

• other matters required by the articles of association.

The shareholders’ general meeting shall be convened by the board of directors and shall be presided over by the chairman of the board of directors.

The notice to convene the shareholders’ general meeting shall be dispatched to all the shareholders 20 days before the general meeting pursuant to the Company Law, and 45 days pursuant to the Special Regulations and the Mandatory Provisions, stating the matters to be reviewed at the general meeting. Under the Special Regulations and the Mandatory Provisions, shareholders intending to attend are required to send written confirmations of their attendance to the company 20 days before the general meeting. According to the Special Regulations, at the annual shareholders’ general meeting of the company, shareholders with 5% or more of the voting rights in the company are entitled to propose to the company in writing new resolutions to be reviewed at the general meeting, which if within the functions and powers of the shareholders’ general meeting, are required to be added to the agenda of the general meeting.

Shareholders present at the shareholders’ general meeting possess one vote for each share they hold. However, the company shall have no vote for any of its own shares the company holds.

Resolutions proposed at the shareholders’ general meeting shall be approved by more than half of the voting rights cast by shareholders present in person (including those represented by proxies) at the general meeting, except that such resolutions as merger, division or reduction of registered capital, the issue of bonds or short-term debentures, the change in the form of the company or the amendment to the articles of association, shall be approved by shareholders with more than two-thirds of the voting rights cast by shareholders present (including those represented by proxies) at the general meeting.

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A shareholder may entrust a proxy to attend a shareholders’ general meeting. The proxy shall present a power of attorney issued by the shareholder to the company and shall exercise his voting rights within the authorization scope. There is no specific provision in the Company Law regarding the number of shareholders constituting a quorum in a shareholders’ meeting, although the Special Regulations and the Mandatory Provisions provide that a company’s annual general meeting may be convened when replies to the notice of that meeting from shareholders holding shares representing 50% of the voting rights in the company have been received 20 days before the proposed date, or if that 50% level is not achieved, the company shall within five days of the last day for receipt of the replies notify shareholders again by public announcement of the matters to be considered at the meeting and the date and place of the meeting, and the annual general meeting may be held thereafter. The Mandatory Provisions require class meetings to be held in the event of a variation or derogation of the class rights of a class. Holders of domestic invested shares and holders of overseas listed foreign invested shares are deemed to be different classes of shareholders for this purpose.

(x) Directors

A company shall have a board of directors, which shall consist of five to nineteen members, and there can be staff representatives of the company. The term of office of the directors shall be provided for by the articles of association, but each term of office shall not exceed three years.

The directors may hold consecutive terms upon re-election. Meetings of the board of directors shall be convened at least twice a year. A notice of meeting shall be given to all directors at least ten days before the meeting. The board of directors may provide for a different method of giving notice and notice period for convening an extraordinary meeting of the board of directors.

Under the Company Law, the board of directors exercises the following functions and powers:

• to convene the shareholders’ general meeting and report on its work to the shareholders;

• to implement the resolution of the shareholders’ general meeting;

• to decide on the company’s business plans and investment plans;

• to formulate the company’s proposed annual financial budget and final accounts;

• to formulate the company’s proposals for profit distribution and for recovery of losses;

• to formulate proposals for the increase or reduction of the company’s registered capital and the issue of corporate bonds;

• to prepare plans for the merger, division or dissolution of the company;

• to decide on the company’s internal management structure;

• to appoint or dismiss the company’s general manager, and based on the general manager’s recommendation, to appoint or dismiss deputy general managers and financial officers of the company and to decide on their remuneration;

• to formulate the company’s basic management system; and

• other functions and powers as specified in the articles of association.

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In addition, the Mandatory Provisions provide that the board of directors is also responsible for formulating the proposals for amendment of the articles of association of a company.

Meetings of the board of directors shall be held only if more than half of the directors are present. Resolutions of the board of directors require the approval of more than half of all directors.

If a director is unable to attend a board meeting, he may appoint another director by a written power of attorney specifying the scope of the authorization for another director to attend the meeting on his behalf.

If a resolution of the board of directors violates the laws, administrative regulations or the company’s articles of association as a result of which the company sustains serious losses, the directors participating in the resolution are liable to compensate the company. However, if it can be proven that a director expressly objected to the resolution when the resolution was voted on, and that such objections were recorded in the minutes of the meeting, such director may be relieved of that liability.

Under the Company Law, the following persons may not act as a director of a company:

• persons without capacity or restricted capacity to undertake civil liabilities;

• persons who have committed the offence of corruption, bribery, taking of property, misappropriation of property or destruction of the social economic order, and have been sentenced to criminal punishment, where less than five years have elapsed since the date of completion of the sentence; or persons who have been deprived of their political rights due to criminal offence, where less than five years have elapsed since the date of the completion of implementation of this deprivation;

• persons who are former directors, factory managers or managers of a company or enterprise that has been bankrupt and has been liquidated due to mismanagement, and those persons are personally liable for the bankruptcy of such company or enterprise, where less than three years have elapsed since the date of the completion of the bankruptcy and liquidation of the company or enterprise;

• persons who were legal representatives of a company or enterprise which had its business license revoked due to violation of the law and who are personally liable, and less than three years have elapsed since the date of the revocation of the business license; or

• persons who have a relatively large amount of debt due and outstanding; or other circumstances under which a person is disqualified from acting as a director of a company are set out in the Mandatory Provisions (which have been incorporated in the Articles of Association, a summary of which is set out in Appendix IX).

The board of directors shall appoint a chairman, who is elected with approval of more than half of all the directors. The chairman of the board of directors exercises the following functions and powers (including but not limited to):

• to preside over shareholders’ general meetings and convene and preside over meetings of the board of directors;

• to check on the implementation of the resolutions of the board of directors;

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The legal representative of a company, in accordance with the company’s articles of association, may be the chairman, any executive director or the manager. The Special Regulations provide that a company’s directors, supervisors, managers and other officers bear fiduciary duties and the duty to act diligently. They are required to faithfully perform their duties, protect the interests of the company and not to use their positions for their own benefit. The Mandatory Provisions (which have been incorporated into the Articles of Association, a summary of which is set out in Appendix IX) contains further elaborations of such duties.

(xi) Supervisors

A company shall have a Board of Supervisors composed of not less than three members. Each term of office of a supervisor is three years, and the supervisors may hold consecutive terms upon re-election. The Board of Supervisors is made up of shareholders representatives and an appropriate proportion of the company’s staff representatives; and the percentage of the number of the company’s staff representatives shall not be less than one-third. Directors and senior management shall not act as supervisors.

The Board of Supervisors exercises the following functions and powers:

• check the financial affairs of the company;

• supervise the directors and senior management in the performance of their duties, and to put forward proposals on the removal of any director or senior manager who violates laws, administrative regulations, the articles of association or any resolution of the shareholders’ meeting;

• require the director or senior manager to make corrections if his act is detrimental to the interests of the company;

• propose the convening of extraordinary shareholders’ general meetings, and to convene and preside over shareholders’ meetings when the board of directors fails to exercise the function of convening and presiding over shareholders’ meetings;

• put forward proposals at shareholders’ general meetings;

• initiate actions against directors or senior management; and

• other functions and duties as provided for by the articles of association.

The circumstances under which a person is disqualified from being a director of a company described above apply mutates mutandis to supervisors of a company.

(xii) Managers and senior officers

A company shall have a manager who shall be appointed or removed by the board of directors. The manager is accountable to the board of directors and may exercise the following powers:

• manage the production, operation and management of the company and arrange for the implementation of resolutions of the board of directors;

• arrange for the implementation of the company’s annual business and investment plans;

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• formulate plans for the establishment of the company’s internal management structure;

• formulate the basic administration system of the company;

• formulate the company’s internal rules;

• recommend the appointment and dismissal of deputy managers and any financial officer and appoint or dismiss other administration officers (other than those required to be appointed or dismissed by the board of directors);

• attend board meetings as a non-voting attendant; and

• other powers conferred by the board of directors or the company’s articles of association.

The Special Regulations and the Mandatory Provisions provide that the other senior management personnel of a company include the financial officers, secretary of the board of directors and other executives as specified in the articles of association of the company.

The circumstances under which a person is disqualified from being a director of a company described above apply mutatis mutandis to managers and officers of the company. The articles of association of a company shall have binding effect on the shareholders, directors, supervisors, managers and other senior management of the company. Such persons shall be entitled to exercise their rights, apply for arbitration and issue legal proceedings according to the articles of association of the company. The provisions of the Mandatory Provisions regarding the senior management personnel of a company have been incorporated in the Articles of Association (a summary of which is set out in Appendix IX).

(xiii) Duties of directors, supervisors, managers and senior officers

A director, supervisor, manager and other senior officers of a company are required under the Company Law to comply with the relevant laws, regulations and the company’s articles of association, carry out their duties honestly and protect the interests of the company. A director, supervisor, manager and other senior officers of a company is also under a duty of confidentiality to the company and is prohibited from divulging secret information of the company unless permitted by the relevant laws and regulations or by the shareholders.

A director, supervisor, manager and other senior officers who contravenes any law, regulation or the company’s articles of association in the performance of his duties which results in any loss to the company shall be personally liable to the company.

The Special Regulations and the Mandatory Provisions provide that a director, supervisor, manager and other senior officers of a company owe fiduciary duties to the company and are required to perform their duties faithfully and to protect the interests of the company and not to make use of their positions in the company for their own benefit.

(xiv) Finance and accounting

A company shall establish its financial and accounting systems according to the laws, administrative regulations and the regulations of the responsible financial department of the State Council. At the end of each financial year, a company shall prepare a financial report which shall be audited and verified as provided by law.

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A company shall make available its financial statements at the company for the inspection by the shareholders at least 20 days before the convening of the annual general meeting of shareholders. A company established by the public subscription method must publish its financial statements.

When distributing each year’s after-tax profits, the company shall set aside 10% of its after-tax profits for the company’s statutory common reserve (except where such reserve has reached 50% of the company’s registered capital). After a company has made an allocation to its statutory common reserve from its after-tax profit, subject to a resolution of the shareholders’ meeting or the shareholders’ general meeting, the company may make an allocation to a discretionary common reserve from the after-tax profits.

If the aggregate balance of the company’s statutory surplus reserve is not enough to make up for the losses of the company of the previous year, the current year’s profits shall first be used for making good the losses before the statutory surplus reserve is set aside according to the provisions of the preceding paragraph.

After the losses have been made up and statutory surplus reserves have been set aside from the after-tax profit, the remaining profits shall be distributed to shareholders in proportion to the number of shares held by shareholders as in the case of a joint stock limited company, except as otherwise provided in the articles of association.

The capital common reserve of a joint stock limited company is made up of the premium over the nominal value of the shares of the company on issue, and other amounts required by the financial department of the State Council to be treated the capital reserve.

The company’s common reserves shall be used for making up losses, expanding the production and business scale or increasing the registered capital of the company, but the capital reserve shall not be used for making up the company’s losses. Where the statutory surplus reserve is converted into registered capital, the balance of the statutory surplus reserve shall not be less than 25% of the registered capital after such conversion.

(xv) Appointment and retirement of auditors

The Special Regulations require a company to employ an independent PRC qualified accounting firm to audit the company’s annual report and review and check other financial reports.

The auditors are to be appointed for a term commencing from the close of an annual general meeting and ending at the close of the next annual general meeting.

If a company removes or ceases to continue to appoint the auditors, it is required by the Special Regulations to give prior notice to the auditors and the auditors are entitled to make representations before the shareholders in general meeting. The appointment, removal or non re-appointment of auditors shall be decided by the shareholders at shareholders’ general meetings and shall be filed with the CSRC for record.

(xvi) Distribution of profits

The Special Regulations provide that the dividends and other distributions to be paid to holders of overseas listed foreign invested shares shall be declared and calculated in Renminbi and paid in foreign currency. Under the Mandatory Provisions, the payment of foreign currency to shareholders shall be made through a receiving agent.

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(xvii) Amendments to articles of association

Any amendments to the company’s articles of association must be made in accordance with the procedures set forth in the company’s articles of association. Any amendment of provisions incorporated in the articles of association in connection with the Mandatory Provisions will only be effective after approval by the companies’ approval department of the State Council and CSRC. In relation to matters involving the company’s registration, the company shall modify its registration with the companies’ registration authority.

(xviii) Dissolution and liquidation

A company may apply for the declaration of insolvency by reason of its inability to pay debts as they fall due. After the People’s Court has made a declaration of the company’s insolvency, the shareholders, the relevant authorities and the relevant professionals shall form a liquidation committee to conduct the liquidation of the company.

Under the Company Law, a company shall be dissolved in any of the following events:

(1) the term of its operations set down in the company’s articles of association has expired or events of dissolution specified in the company’s articles of association have occurred;

(2) the shareholders in a general meeting have resolved to dissolve the company;

(3) the company is dissolved by reason of its merger or demerger;

(4) the company is subject to the revocation of business license, a closure order or dismissal in accordance with laws; or

(5) in the event that the company encounters substantial difficulties in its operation and management and its continuance shall cause a significant loss, in the interest of shareholders, and where this cannot be resolved through other means, shareholders who hold more than 10% of the total shareholders’ voting rights of the company may present a petition to the People’s Court for the dissolution of the company.

Where the company is dissolved in the circumstances described in (1), (2), (4) and (5) above, a liquidation committee must be formed within 15 days from the date of dissolution.

Members of the liquidation committee shall be appointed by the shareholders in the general meeting.

If a liquidation committee is not established within the stipulated period, the company’s creditors can apply to the People’s Court for its establishment. The liquidation committee shall notify the company’s creditors within ten days after its establishment, and issue a public notice in the newspapers within 60 days. A creditor shall lodge his claim with the liquidation committee within 30 days after receiving notification, or within 45 days of the public notice if he did not receive any notification.

The liquidation committee shall exercise the following functions and powers during the liquidation period:

• handle the company’s assets and to prepare a balance sheet and an inventory of the assets;

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• notify creditors or issue public notices;

• deal with and settle any outstanding business of the company;

• pay any tax overdue;

• settle the company’s financial claims and liabilities;

• handle the surplus assets of the company after its debts have been paid off; and

• represent the company in civil lawsuits.

If the company’s assets are sufficient to meet its liabilities, they shall be applied towards the payment of the liquidation expenses, wages owed to the employees and labor insurance expenses, tax overdue and debts of the company. Any surplus assets shall be distributed to the shareholders of the company in proportion to the number of shares held by them.

A company shall not engage in operating activities unrelated to the liquidation. If the liquidation committee becomes aware that the company does not have sufficient assets to meet its liabilities, it must immediately apply to the People’s Court for a declaration for bankruptcy.

Following such declaration, the liquidation committee shall hand over all affairs of the liquidation to the people’s court.

Upon completion of the liquidation, the liquidation committee shall submit a liquidation report to the shareholders’ general meeting or the relevant supervisory department for verification. Thereafter, the report shall be submitted to the company registration authority in order to cancel the company’s registration, and a public notice of its termination shall be issued.

Members of the liquidation committee are required to discharge their duties honestly and in compliance with relevant laws. A member of the liquidation committee is liable to indemnify the company and its creditors with respect to any loss arising from his willful or material default.

(xix) Overseas Listing

The shares of a company shall only be listed overseas after obtaining approval from the securities regulatory authority of the State Council and the listing must be arranged in accordance with procedures specified by the State Council.

According to the Special Regulations, a company’s plan to issue overseas listed foreign invested shares and domestic invested shares which has been approved by the Securities Commission may be implemented by the board of directors of a company by way of separate issues, within 15 months after approval is obtained from CSRC.

(xx) Loss of H share certificates

A shareholder may apply, in accordance with the relevant provision set out in the PRC Civil Procedure Law, to a people’s court in the event that H share certificates in registered form are either stolen or lost, for a declaration that such certificates will no longer be valid. After such a declaration has been obtained, the shareholder may apply to the company for the issue of replacement certificates.

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The Mandatory Provisions provide for a separate procedure regarding loss of H share certificates (which has been incorporated in the Articles of Association, a summary of which is set out in Appendix IX).

(xxi) Suspension and Termination of Listing

The new and amended Company Law has deleted provisions governing suspension and termination of listing. The new Securities Law has been amended as follows: the trading of shares of a company on a stock exchange may be suspended if so decided by the securities administration department of the State Council (the new Securities Law has renamed this as the Securities Exchange) under one of the following circumstances:

(1) the registered capital or shareholding distribution no longer complies with the necessary requirements for a listed company;

(2) the company failed to make public its financial position in accordance with the requirements or there is false information in the company’s financial report with the possibility of misleading investors;

(3) the company has committed a major breach of the law;

(4) the company has incurred losses for three (3) consecutive years; or

(5) other circumstances as required by the listing rules of the relevant stock exchange(s).

Under the Securities Law, in the event that the conditions for listing are not satisfied within the period stipulated by the relevant stock exchange in the case described in (1) above, or the company has refused to rectify the situation in the case described in (2) above, or the company fails to become profitable in the next subsequent year in the case described in (4) above, the relevant stock exchange shall have the right to terminate the listing of the shares of the company.

The Company Law provides that the securities administration department of the State Council may also terminate the listing of a company’s shares in the event that the company resolves to cease operation or is so instructed by its government supervisory body, or the company is declared bankrupt.

(xxii) Merger and demerger

Companies may merge through merger by absorption or through the establishment of a newly merged entity. If it merges by absorption, the company which is absorbed shall be dissolved. If it merges by forming a new corporation, both companies will be dissolved.

(d) Securities law and other relevant regulations

The PRC has promulgated a number of regulations that relate to the issue and trading of Shares and disclosure of information by the Company. In October 1992, the State Council established the Securities Committee and the CSRC. The Securities Committee is responsible for co-coordinating the drafting of securities regulations, formulating securities-related policies, planning the development of securities markets, directing, coordinating and supervising all securities-related institutions in the PRC and administering the CSRC. The CSRC is the regulatory body of the Securities Committee and is responsible

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for the drafting of regulatory provisions of securities markets, supervising securities companies, regulating public offers of securities by the PRC companies in the PRC or overseas, regulating the trading of securities, compiling securities related statistics and undertaking research and analysis.

The Securities Law took effect on July 1, 1999 and was revised for the first time as of August 28, 2004 and for the second time on October 27, 2005. This is the first national securities law in the PRC, and it is divided into 12 chapters and 240 articles regulating, among other things, the issue and trading of securities, takeovers by listed companies, securities exchanges, securities companies and the duties and responsibilities of the State Council’s securities regulatory authorities. The Securities Law comprehensively regulates activities in the PRC securities market. Article 238 of the Securities Law provides that a company must obtain prior approval from the State Council’s regulatory authorities to list shares outside the PRC. Article 239 of the Securities Law provides that specific measures with respect to shares of companies in the PRC that are to be subscribed and traded in foreign currencies shall be separately formulated by the State Council. Currently, the issue and trading of foreign issued shares (including H Shares) are still mainly governed by the rules and regulations promulgated by the State Council and the CSRC.

(e) Arbitration and enforcement of arbitral awards

The Arbitration Law of the People’s Republic of China (the “Arbitration Law”) was passed by the Standing Committee on August 31, 1994 and became effective on September 1, 1995. It is applicable to contract disputes and other property disputes between natural person, legal person and other organizations where the parties have entered into a written agreement to refer the matter to arbitration before an arbitration committee constituted in accordance with the Arbitration Law. Under the Arbitration Law, an arbitration committee may, before the promulgation by the PRC Arbitration Association of arbitration regulations, formulate interim arbitration rules in accordance with the Arbitration Law and the PRC Civil Procedure Law. Where the parties have by agreement provided arbitration as the method for dispute resolution, the people’s court will refuse to handle the case.

The certain applicable rules and regulations and the Mandatory Provisions require an arbitration clause to be included in a company’s Articles of Association and, in the case of the certain applicable rules and regulations, also in contracts with each of the directors and supervisors, to the effect that whenever any disputes or claims arise between holders of H Shares and the company; holders of H Shares and the directors, supervisors, manager or other senior officers; or holders of H Shares and holders of domestic shares, with respect to any disputes or claims in relation to the companies affairs or as a result of any rights or obligations arising under its Articles of Association, the PRC Company Law or other relevant laws and administrative regulations, such disputes or claims shall be referred to arbitration. Where a dispute or claim of rights referred to in the preceding paragraph is referred to arbitration, the entire claim or dispute must be referred to arbitration, and all persons who have a cause of action based on the same facts giving rise to the dispute or claim or whose participation is necessary for the resolution of such dispute or claim shall comply with the arbitration. Disputes with respect to the definition of shareholders and disputes related to a company’s register of shareholders need not be resolved by arbitration.

A claimant may elect for arbitration to be carried out at either the China International Economic and Trade Arbitration Commission in accordance with its Rules or the Hong Kong International Arbitration Center in accordance with its Securities Arbitration Rules. Once a claimant refers a dispute or claim to arbitration, the other party must submit to the arbitral body elected by the claimant. If the claimant elects for arbitration to be carried out at the Hong Kong International Arbitration Center, any party to the dispute or claim may apply for a hearing to take place in Shenzhen in accordance with the Securities Arbitration Rules of the Hong Kong International Arbitration Center.

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Under the Arbitration Law and the PRC Civil Procedure Law, an arbitral award is final and binding on the parties. If a party fails to comply with an award, the other party to the award may apply to the people’s court for enforcement. A people’s court may refuse to enforce an arbitral award made by an arbitration commission if there is any procedural or membership irregularity specified by law or the award exceeds the scope of the arbitration agreement or is outside the jurisdiction of the arbitration commission.

A party seeking to enforce an arbitral award by a PRC arbitration panel against a party who, or whose property, is not within the PRC, may apply to a foreign court with jurisdiction over the case for enforcement. Similarly, an arbitral award made by a foreign arbitration body may be recognized and enforced by the PRC courts in accordance with the principles of reciprocity or any international treaty concluded or acceded to by the PRC.

The PRC acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) adopted on June 10, 1958 pursuant to a resolution of the Standing Committee passed on December 2, 1986. The New York Convention provides that all arbitral awards made in a state which is a party to the New York Convention shall be recognized and enforced by other parties to the New York Convention, subject to their right to refuse enforcement under certain circumstances, including where the enforcement of the arbitral award is against the public policy of the state to which the request for enforcement is made.

It was declared by the Standing Committee simultaneously with the accession of the PRC that (1) the PRC will only recognize and enforce foreign arbitral awards on the principle of reciprocity and (2) the PRC will only apply the New York Convention in disputes considered under the PRC laws to arise from contractual and non-contractual mercantile legal relations. On June 18, 1999, an arrangement was made between Hong Kong and the Supreme People’s Court of the PRC for the mutual enforcement of arbitral awards. This new arrangement was approved by the Supreme People’s Court of the PRC and the Hong Kong Legislative Council, and became effective on February 1, 2000. The arrangement is made in accordance with the spirit of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958. Under the arrangement, awards made by the PRC arbitral authorities recognized under the Arbitration Ordinance of Hong Kong can be enforced in Hong Kong. Hong Kong arbitration awards are also enforceable in China.

HONG KONG LAWS AND REGULATIONS

Company Law

The Hong Kong law applicable to a company having share capital incorporated in Hong Kong is based on the Companies Ordinance and is supplemented by the common law. The Company, being a joint stock limited company established in the PRC, is governed by the PRC Company Law and all other rules and regulations promulgated pursuant to the PRC Company Law applicable to joint stock limited companies established in the PRC issuing overseas listed foreign shares.

Set out below is a summary of the material differences between the Hong Kong company law applicable to a company incorporated in Hong Kong and the PRC Company Law applicable to a joint stock limited company established and existing under the PRC Company Law. This summary is, however, not intended to be an exhaustive comparison.

Corporate existence

Under Hong Kong company law, a company having share capital is incorporated following the issue of a certificate of incorporation by the Registrar of Companies in Hong Kong, and upon its incorporation, a company

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Under the PRC Company Law, a company may be incorporated by either promotion or public subscription. Under the PRC Company Law, the monetary contribution by all the shareholders must not be less than 30% of the registered capital. There is no such restriction on a Hong Kong company under Hong Kong law.

Share capital

Under Hong Kong law, the authorized share capital of a Hong Kong company is the amount of share capital which the company is authorized to issue and a company is not bound to issue the entire amount of its authorized share capital. For a Hong Kong company, the authorized share capital may be larger than the issued share capital. Hence, the directors of a Hong Kong company may, with the prior approval of the shareholders, if required, cause the company to issue new shares.

The PRC Company Law does not recognize the concept of authorized share capital. The registered capital of a joint stock limited company is the amount of the issued share capital. A company must have a minimum registered capital of RMB5 million, or a higher amount as may otherwise be required by laws and regulations. Under the PRC Securities Law, a company which is authorized by the relevant securities administration authority to list its shares on a stock exchange must have a registered capital of not less than RMB30 million. Any increase in the registered capital must be approved by the shareholders at a shareholders’ general meeting and by the relevant PRC governmental and regulatory authorities.

Restrictions on shareholding and transfer of shares

Under the PRC Company Law, shares in a joint stock limited company held by its promoters cannot be transferred within one year after the date of establishment of the company. Shares in issue prior to the company’s public offering cannot be transferred within one year from the day when the shares are listed and traded on the stock exchange. Shares in a joint stock limited company held by its directors, supervisors and senior managers and transferred each year during their term of the office shall not exceed 25% of the total shares they held in the company. Moreover, the shares they held in the company cannot be transferred within one year from the listing date of the shares, or within six months after such personnel leave the post.

There are no such restrictions on shareholdings and transfers of shares under Hong Kong law.

Financial assistance for acquisition of shares

The PRC Company Law does not contain any provision prohibiting or restricting a joint stock limited company or its subsidiaries from providing financial assistance for the purpose of an acquisition of its own or its holding company’s shares. The Mandatory Provisions contain certain restrictions on a company and its subsidiaries providing such financial assistance similar to those under Hong Kong company law.

Variation of class rights

Under Hong Kong company law, if the share capital of a company is divided into different classes of shares, special rights attaching to any class of shares may only be varied if approved by a specified proportion of the holders of the relevant class.

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The PRC Company Law does not contain any specific provision relating to variation of class rights. Under the Mandatory Provisions, class rights may not be varied or abrogated unless approved by a special resolution of shareholders in general meeting and by two-thirds or more of the votes cast by shareholders of the affected class present in person or by proxy at a separate class meeting. For the purpose of a variation of class rights, domestic shares and foreign shares are treated as separate classes of shares. However, the special procedures for approval by separate class shareholders shall not apply to the following circumstances: (i) an issue of shares by the joint stock limited company in any 12 month period either separately or concurrently following the approval by a special resolution of shareholders in general meeting not exceeding 20% of each of the issued domestic shares and foreign shares existing as at the date of such special resolution; and (ii) an issue of domestic shares and foreign shares in accordance with the plan of the company approved by the securities authority and which are completed within 15 months following the establishment of the company. The Mandatory Provisions contain detailed provisions relating to circumstances which are deemed to constitute a variation of class rights.

Directors

The PRC Company Law, unlike Hong Kong company law, does not contain any requirements relating to the declaration of interests in material contracts except for related-party transactions, restrictions on directors’ authority in making major dispositions, restrictions on companies providing certain benefits such as loans to directors and guarantees in respect of directors’ liability and prohibition against compensation for loss of office without shareholders’ approval. The Mandatory Provisions, however, contain requirements and restrictions on major dispositions and specify the circumstances under which a director may receive compensation for loss of office, all of which provisions have been incorporated in the Articles of Association, a summary of which is set out in Appendix IX of this document.

Board of supervisors

Under the PRC Company Law, the board of directors of a joint stock limited company is subject to the supervision of a board of supervisors. There is no mandatory requirement for the establishment of a board of supervisors for a company incorporated in Hong Kong. The Mandatory Provisions provide that each supervisor owes a duty, in the exercise of his powers, to act in good faith and honestly in what he considers to be in the best interests of the company and to exercise the care, diligence and skill that a reasonably prudent person would exercise under comparable circumstances.

Derivative action by minority shareholders

Hong Kong law permits minority shareholders to start a derivative action on behalf of all shareholders against directors who have been guilty of a breach of their fiduciary duties to the company, if they control a majority of votes at a general meeting thereby effectively preventing a company from suing the directors in breach of their duties in its own name.

The PRC Company Law gives shareholders of a joint stock limited company who, individually or jointly, hold more than 1% of the shares in the company for more than 180 days consecutively the right to request the board of supervisors in writing to initiate proceedings in the people’s court in the event that the directors and senior managers violate their fiduciary obligations to a company. In the event that the supervisor violates its fiduciary obligation to a company, the above said shareholders may request the board of directors in writing to initiate proceedings in the people’s court. If the board of supervisors or the board of directors refuses to initiate such proceedings, or has not initiated proceedings within 30 days upon receipt of the request in writing from the shareholders, or if under urgent situations, the failure to initiate a proceeding immediately may cause irremediable damages to the company, the above said shareholders shall, for the benefit of the company, have the

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Protection of minorities

Under Hong Kong law, a shareholder who complains that the affairs of a company incorporated in Hong Kong are conducted in a manner unfairly prejudicial to his interests may petition to court to either wind up the company or make an appropriate order regulating the affairs of the company. In addition, on the application of a specified number of members, the Financial Secretary of the Hong Kong Government may appoint inspectors who are given extensive statutory powers to investigate the affairs of a company incorporated in Hong Kong.

The PRC law does not contain similar safeguards. The Mandatory Provisions, however, contain provisions to the effect that a controlling shareholder may not exercise its voting rights in a manner prejudicial to the interests of the shareholders generally or of some part of the shareholders of a company to relieve a director or supervisor of his duty to act honestly in the best interests of the company or to approve the expropriation by a director or supervisor of the company’s assets or the individual rights of other shareholders.

Notice of shareholders’ meetings

Under the PRC Company Law, notice of a shareholders’ general meeting must be given not less than 20 days while notice of a shareholders’ extraordinary meeting must be given not less than 15 days before the meeting. Under the Special Regulations and the Mandatory Provisions, 45 days’ written notice must be given to all shareholders and shareholders who wish to attend the meeting must reply in writing 20 days before the date of the meeting.

For a company incorporated in Hong Kong, the minimum notice periods of a general meeting convened for passing an ordinary resolution and a special resolution are 14 days and 21 days, respectively; and the notice period for an annual general meeting is 21 days.

Quorum for shareholders’ meetings

Under Hong Kong law, the quorum for a general meeting is two members unless the articles of association of the company otherwise provide. For one member companies, one member will be a quorum.

The PRC Company Law does not specify any quorum requirement for shareholders’ general meeting but the Special Regulations and the Mandatory Provisions provide that a company’s general meeting can be convened when replies to the notice of that meeting have been received from shareholders whose shares represent 50% of the voting rights in the company at least 20 days before the proposed date of the meeting. If that 50% level is not achieved, the company shall within five days notify shareholders by public announcement and the shareholders’ general meeting may be held thereafter.

Voting

Under Hong Kong law, an ordinary resolution is passed by a simple majority of votes cast by members present in person or by proxy at a general meeting and a special resolution is passed by a majority of not less than three-fourths of votes cast by members present in person or by proxy at a general meeting.

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Under the PRC Company Law, the passing of any resolution requires one half or more of the votes cast by shareholders present in person or by proxy at a shareholders’ general meeting except in cases of proposed amendment to the articles of association, merger, separation, dissolution or change of corporate form of a joint stock limited company and other proposals provided by the articles of association which requires two-thirds or more of votes cast by shareholders present in person or by proxy at a shareholders’ general meeting.

Financial disclosure

A joint stock limited company is required under the PRC Company Law to make available at its office for inspection by shareholders its annual balance sheet, profit and loss account, changes in financial position and other relevant annexures 20 days before the annual general meeting of shareholders. In addition, a joint stock limited company of public offer stocks must publish its financial statements. The annual balance sheet has to be verified by registered accountants. The Companies Ordinance requires a company to send to every shareholder a copy of its balance sheet, auditors’ report and directors’ report which are to be laid before the company in its annual general meeting not less than 21 days before such meeting.

A joint stock limited company is required under the PRC law to prepare its financial statements in accordance with the PRC accounting standards. The Mandatory Provisions require that the company must, in addition to preparing accounts according to the PRC standards, have its accounts prepared and audited in accordance with International Financial Reporting Standards or Hong Kong accounting standards and its financial statements must also contain a statement of the financial effect of the material differences (if any) from the financial statements prepared in accordance with the PRC accounting standards.

The Special Regulations require that there shall not be any inconsistency between the information disclosed within and outside the PRC and that, to the extent that there are differences in the information disclosed in accordance with the relevant PRC and overseas laws, regulations and requirements of the relevant stock exchanges, such differences shall also be disclosed simultaneously.

Information on directors and shareholders

Under the PRC Company Law, the public and the shareholders of a joint stock limited company have access to information on its articles of associations, shareholders’ general meeting minutes and financial reports. Under the Mandatory Provisions, shareholders have the right to inspect and copy (at reasonable charges) certain information about shareholders and directors similar to that available under Hong Kong law to shareholders of a company incorporated in Hong Kong.

Receiving agent

Under both the PRC and Hong Kong law, dividends once declared become debts payable to shareholders. The limitation period for debt recovery action under Hong Kong law is six years while that under the PRC law is two years. The Mandatory Provisions require the appointment of a trust company registered under the Hong Kong Trustee Ordinance (Chapter 29 of the Laws of Hong Kong) as receiving agent to receive on behalf of holders of foreign shares dividends declared and all other monies owed by a joint stock limited company in respect of such foreign shares.

Corporate reorganization

Corporate reorganization involving a company incorporated in Hong Kong may be effected in a number of ways, such as a transfer of the whole or part of the business or property of the company in the course of being

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Arbitration of disputes

In Hong Kong, disputes between shareholders and a company incorporated in Hong Kong or its directors may be resolved through the courts. The Mandatory Provisions provide that such disputes should be submitted to arbitration at either the HKIAC or the CIETAC, at the claimant’s discretion.

Mandatory transfers

Under the PRC Company Law, after-tax profits of a company are subject to deductions of contributions to the statutory surplus reserve fund and the statutory public welfare fund of a company before they can be distributed to its shareholders. There are prescribed percentages under the PRC Company Law for such deductions. There are no such requirements under Hong Kong law.

Securities Arbitration Rules

The Articles of Association provide that certain claims arising from the Articles of Association or the PRC Company Law shall be arbitrated at either the CIETAC or the HKIAC in accordance with their respective rules. The Securities Arbitration Rules of the HKIAC contain provisions allowing an arbitral tribunal to conduct a hearing in Shenzhen for cases involving the affairs of companies incorporated in the PRC and listed on the Stock Exchange so that the PRC parties and witnesses may attend. Where any party applies for a hearing to take place in Shenzhen, the tribunal shall, where satisfied that such application is based on bona fide grounds, order the hearing to take place in Shenzhen conditional upon all parties including witnesses and the arbitrators being permitted to enter Shenzhen for the purpose of the hearing. Where a party (other than a PRC party) or any of its witnesses or any arbitrator is not permitted to enter Shenzhen, then the tribunal shall order that the hearing be conducted in any practicable manner, including the use of electronic media. For the purpose of the Securities Arbitration Rules, a PRC party means a party domiciled in the PRC other than the territories of Hong Kong Special Administration Region, the Macau Special Administrative Region of the PRC and Taiwan.

PRC LEGAL MATTERS

DeHeng Law Offices, our legal advisers on the PRC law, has delivered to us a legal opinion dated May 30, 2011 confirming that it has reviewed the summaries of the PRC laws and regulations as contained in this Appendix and that, in its opinion, such summaries are correct summaries relevant to the PRC laws and regulations.

Any person wishing to have detailed advice on the PRC law and the laws of any jurisdiction is recommended to seek independent legal advice.

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The Company was incorporated in the PRC as a joint stock limited company with limited liability on August 5, 2010 under the Companies Law of the PRC (the “Companies Law”). The Articles of Association (the “Articles”) comprise its constitution.

1 DIRECTORS AND BOARD OF DIRECTORS

(a) Power to allot and issue shares

There is no provision in the Articles of Association empowering the Board to allot or issue shares. In order to allot or issue shares, the Board shall prepare a proposal for approval by shareholders in general meeting by way of special resolution. Any such allotment or issue must be conducted in accordance with the procedures stipulated by relevant laws and administrative regulations.

(b) Power to dispose of the Company’s or any of its subsidiaries’ assets

The Board shall not, without the approval of shareholders in general meeting, dispose or agree to dispose of any fixed assets of the Company where the aggregate of: (i) the prospective value of the proposed disposition; and (ii) where any fixed assets of the Company have been disposed of in the period of four months immediately preceding the proposed disposition, the amount or value of the consideration for any such disposition, exceeds 33% of the value of the Company’s fixed assets as shown in the last audited balance sheet placed before the shareholders in general meeting. For the purposes of this provision, disposition includes an act involving a transfer of an interest in property other than by way of security.

The validity of a transaction for the disposition of fixed assets by the Company shall not be affected by a breach of the above-mentioned restriction contained in the Articles of Association.

(c) Compensation or payments for loss of office

The contract for emoluments entered into by the Company with a Director or Supervisor shall make provision for the right of a Director or Supervisor, in connection with the takeover of the Company, subject to the approval of the shareholders in a general meeting, to receive compensation or other payment for loss of office or for his retirement for office. A takeover of the Company means:

(i) an offer made to all shareholders of the Company; or

(ii) an offer is made such that the offer or will become the controlling shareholder of the Company (as defined in the Articles of Association).

If the relevant Director or Supervisor does not comply with above provisions, any sum received by the Director or Supervisor on account of the payment shall belong to those persons who have sold their shares as a result of the offer, and the expenses incurred by the Director or Supervisor in distributing that sum pro rata among those persons shall be borne by him and not deducted from the sum distributed.

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(d) Loans to Directors, Supervisors and other officers

The Company is prohibited from directly or indirectly making any loan or guarantee to its Directors, Supervisors, the President, or other senior officers or the Directors, Supervisors, the President, or other senior officers of its holding company. The Company is also prohibited from, providing any loan or guarantee in connection with a loan made by any connected person to such a Director, Supervisor, the President, or other senior officer. A loan made by the Company in breach of the prohibition described above shall be forthwith repayable by the recipient of the loan regardless of the terms of the loan. A guarantee for a loan provided by the Company in breach of the prohibition referred to above shall be unenforceable against the Company unless:

(i) the guarantee was provided in connection with a loan to a person connected with a Director, Supervisor, the President, or other senior officer of the Company or its holding company and at the time the loan was advanced the lender did not know of the relevant circumstances, or

(ii) the collateral provided by the Company has been lawfully disposed of by the lender to a bona fide purchaser.

The following transactions are not subject to the foregoing prohibition:

(i) the provision of a loan or a guarantee for a loan by the Company to a company which is a subsidiary of the Company;

(ii) the provision of a loan or a guarantee for a loan or any other funds by the Company to any of its Directors, Supervisors, the President, or other senior officer to meet expenditure incurred or to be incurred by him for the purposes of the Company or for the purpose of enabling him to perform properly, in accordance with the terms of an employment contract approved by the shareholders’ general meeting his duties; and

(iii) the Company may make a loan to or provide a guarantee in connection with a loan by another person to any of its Directors, Supervisors, the President, or other senior officers or other connected persons where the ordinary course of its business includes the making of loans or the giving of guarantees and provided that the making of such loans or the giving of such guarantees is on normal commercial terms.

For these purposes, guarantee includes an undertaking or property provided to secure the performance of obligations by the obligor.

(e) Disclosure of interests in and voting on contracts with the Company or any of its subsidiaries

Where a Director, Supervisor, the President, or other senior officer is in any way, directly or indirectly, materially interested in a contract, transaction or arrangement or proposed contract, transaction or arrangement with the Company other than his contract of service, he shall declare the nature and extent of his interest to the Board at the earliest opportunity, whether or not the contract, transaction or arrangement or proposal is otherwise subject to the approval of the board of Directors.

Unless the interested Director, Supervisor, the President or other senior officer has disclosed his interest in accordance with the preceding paragraph of this Article and the contract, transaction or arrangement has been approved by the board of Directors at a meeting in which the interested Director is not counted in the quorum and has refrained from voting, the contract, transaction or arrangement in which a Director, Supervisor, the President or other officer is materially interested is voidable at the instance of the Company except as against a bona fide party thereto acting without notice of the breach of duty by the Director, Supervisor, the President or other officer concerned.

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A Director, Supervisor, the President and other officer of the Company is deemed to be interested in a contract, transaction or arrangement in which his related parties or associates have interest.

Where a Director, Supervisor, the President, or other senior officer of the Company gives the Board a general notice in writing stating that, by reason of the facts stated in the notice, he is interested in contracts, transactions or arrangements of any description which may subsequently be entered into by the Company, then he shall be deemed to have made a disclosure for the purposes of the relevant provisions in the Articles of Association so far as the content stated in such notice is concerned, if such notice shall have been given to the Board before the date on which the question of entering into the relevant contract, transaction or arrangement is first taken into consideration by the Company.

(f) Remuneration

The Company shall, with the prior approval of shareholders in general meeting, enter into a contract in writing with each Director or Supervisor for emoluments in respect of their services. The Directors or Supervisor have no power under the Articles of Association to determine the remuneration for themselves.

The said emoluments include:

(i) emoluments in respect of their services as Director, Supervisor or senior officer of the Company;

(ii) emoluments in respect of their services as Director, Supervisor or senior officer of any subsidiary of the Company;

(iii) emoluments otherwise in connection with services for the management of the Company or any subsidiary thereof; and

(iv) payments by way of compensation for loss of office, or in connection with their retirement from office.

Except under a contract entered into in relation to the above, no proceedings shall be brought by a Director or Supervisor against the Company for anything due to him in respect of the matters specified above.

(g) Retirement, appointment and removal

The following persons may not serve as a Director, Supervisor, the President, or other senior officer of the Company:

(i) an individual who has no civil capacity or has restricted civil capacity;

(ii) persons who have committed the offences of corruption, bribery, trespass of property, misappropriation of property or damaging the social economic order, and have been penalized due to the above offences, where less than five years have elapsed since the date of the completion of implementation of the penalty or persons who have committed crimes and have been deprived of their political rights due to such crimes, where less than five years have elapsed since the date of the completion of the implementation of such deprivation;

(iii) persons who were former directors, factory chiefs or managers of a company or enterprise which has become insolvent and has been liquidated and were personally liable for the insolvency of such company or enterprise, where less than three years have elapsed since the date of the completion of the insolvency and liquidation of such company or enterprise;

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(iv) persons who were legal representatives of a company or enterprise which had its business license revoked due to a violation of the law and were ordered to close down and were personally liable for the matters above, where less than three years have elapsed since the date when the business license of the company or enterprise was revoked;

(v) persons who have failed to pay a relatively large debt when due and outstanding;

(vi) persons who have committed criminal offences and are still under investigation by law administration authorities;

(vii) persons who were not allowed to be heads of enterprises as stipulated by laws, administrative regulations;

(viii) persons who are not natural persons;

(ix) persons who have been convicted of offences of violating provisions of the relevant securities laws and regulations or offences of fraud or acting in bad faith by the relevant authority, where less than five years have lapsed since the date of conviction; and

(x) other persons stipulated by the laws and regulations of where the Company’s shares are listed.

The validity of the conduct of Directors, the President, or other senior officers who have acted on behalf of the Company with respect to third parties who have acted in good faith shall not be affected due to any irregularity in the employment, election or qualification of such Directors, the President, or other senior officers.

The board of Directors shall consist of 11 Directors. A Director is not required to hold any shares in the Company.

The chairman and vice chairman of the board of Directors shall be elected or removed by more than one half of all of the Directors. A Director (without prejudice to any claim for damages under any contract) may be removed by ordinary resolution at a Shareholders’ general meeting.

The term of office of the chairman and other Directors shall be three years and is renewable upon re-election.

The minimum length of the period for giving written notice of the intention to nominate a person for election as a Director and of his willingness to be elected shall be at least seven days. The period for giving such written notice shall commence after the date the Company gives notice of the general meeting by post, and shall end not later than seven days before the date of the general meeting.

The list of Directors’ and Supervisors’ candidates shall be proposed in form of a motion to the shareholders’ general meeting for resolution.

Where there are two or more candidates for the election of Directors at a shareholders’ general meeting, each of the shares held by the shareholders (including proxy) shall have the same number of votes as the number of candidates, and the voting rights can be concentrated on electing one person, or be separated on electing several per persons, but explanations have to be made on the allocations of the voting rights.

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(h) Liabilities

The Directors, Supervisors, the President, and other senior officers of the Company owe fiduciary duties and duties of diligence to the Company. In addition to any rights and remedies provided for in relevant laws and administrative regulations, the Company is entitled to adopt the following measures where a Director, Supervisor, the President, or other senior officer is in breach of his duties owed to the Company:

(i) to claim against such a Director, Supervisor, the President or other senior officer for losses incurred by the Company as a result of his breach;

(ii) to rescind any contract or transaction entered into between the Company and the Director, Supervisor, the President or other senior officer and a third party where such third party has knowledge or should have had knowledge of the breach of duty;

(iii) to account for the profits made by the Director, Supervisor, the President or other senior officer as a result of his breach;

(iv) to recover any monies received by the Director, Supervisor, the President or other senior officer which should have been received by the Company, including, without limitation, commissions; and

(v) to demand the return of the interest earned or which may have been earned on any monies referred to in (iv) above by the Director, Supervisor, the President or other senior officer which should have been received by the Company.

The Board shall carry out its duties in compliance with the laws and administrative regulations, the Articles of Association and resolutions of the shareholders’ general meetings. Each Director, Supervisor, the President, and other senior officer of the Company should abide by his fiduciary principles in the discharge of his duties, and not to place himself in a position where his duty and his own interests may conflict. Such principles include (but are not limited to) the performance of the following:

(i) to act honestly in what he considers to be in the best interest of the Company;

(ii) to exercise his powers within the scope specified and not to act ultra vires;

(iii) to exercise the discretion vested in him personally and not allow himself to act under the direction of another;

(iv) unless and to the extent permitted by law or by the shareholders, having been informed of the relevant facts, at a general meeting, not to delegate the exercise of his discretion;

(v) to treat shareholders of the same class equally and to treat shareholders of different classes fairly;

(vi) except in accordance with the Articles of Association or with the informed consent of shareholders in general meeting, not to enter into any contract, transaction or arrangement with the Company;

(vii) not without the approval of the shareholders, having been informed of the relevant facts, at a general meeting, to use the Company’s assets for his personal benefit in any manner;

(viii) not to use his position to accept bribes or other illegal income and not to misappropriate the Company’s fund or expropriate the Company’s assets in any manner, including (without limitation) opportunities beneficial to the Company;

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(ix) not without the informed consent of shareholders in general meeting, to accept commissions in connection with the Company’s transactions;

(x) to abide by the Articles of Association, faithfully perform his duties and protect the interests of the Company, and not to use his position and powers in the Company to seek personal gain;

(xi) not to compete with the Company in any way except with the informed consent of shareholders given in general meeting, and not to harm the interests of the Company by way of connected transaction ;

(xii) not to misappropriate the Company’s funds or lend to others the Company’s funds, not to open any bank account in his own name or other name for the deposit of the Company’s assets, and not to provide security for debts of shareholders of the Company or any other individuals;

(xiii) without the informed consent of shareholders in general meeting, not to disclose confidential information of the Company acquired while in office and not to use such information other than in furtherance of the interests of the Company, save and except that disclosure of information to a court or a relevant governmental authority is permitted where (i) the disclosure is made under compulsion of law; (ii) there is a duty to the public to disclose; or (iii) the personal interests of the Director, Supervisor, the President or other senior officer require disclosure.

A Director, Supervisor, the President, or other senior officer of the Company shall not direct persons connected to him to do what he is not permitted to do. A person is connected to a Director, Supervisor, the President, or other senior officer if he is:

(i) the spouse or minor child of such a Director, Supervisor, the President, or other senior officer;

(ii) a trustee for such a Director, Supervisor, the President, or other senior officer or any person referred to in (i) above;

(iii) a partner of such a Director, Supervisor, the President, or other senior officer or of any person referred to in (i) and (ii);

(iv) a company in which that a Director, Supervisor, the President, or other senior officer, alone or jointly with one or more persons referred to in above (i), (ii) and (iii) or with any of other Directors, Supervisors, the President, or other senior officers of the Company, have de facto control; or

(v) a Director, Supervisor, the President, or other senior officer of a company referred to in (iv) above.

The fiduciary duties of a Director, Supervisor, the President, and other senior officer of the Company do not necessarily cease with the termination of his tenure. The duty of confidentiality in relation to trade secrets of the Company survives the termination of his term of office. Other duties may continue for such period as fairness may require depending on the time lapse between the termination of his term of office and the occurrence of the matter in question and the circumstances and the terms under which the relationships between him and the Company are terminated.

Except in circumstances referred to in the Articles of Association, liabilities of a Director, Supervisor, the President, or other senior officer arising from the violation of a specified duty may be released by informed shareholders in general meeting.

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In addition to obligations imposed by relevant laws, administrative regulations or the listing rules of the securities exchange on which the Company’s shares are listed, Directors, Supervisors, the President, and other senior officers in the exercise of their powers and the discharge of their duties shall owe the following obligations to the shareholders:

(i) not to cause the Company to go beyond the business scope specified by its business license;

(ii) to act honestly in what they consider to be the best interest of the Company;

(iii) not to deprive in any way the Company of its assets, including (but not limited to) opportunities beneficial to the Company; and

(iv) not to deprive shareholders of their personal rights and interests, including (but not limited to) rights to distributions and to vote, except in a Company reorganization submitted in accordance with the provisions of the Articles of Association and adopted at a shareholders’ general meetings.

Each of the Directors, Supervisors, the President, and other senior officers of the Company owes a duty, in the exercise of his powers and discharge of his duties, to exercise the care, diligence and skill that a reasonably prudent person would exercise under the similar circumstances.

Where the Company incurs losses as a result of a Director or senior officer having violated any provision of law, administrative regulation or the Articles of Association in the course of performing their duties with the Company, shareholders alone or in aggregate holding 1% or more of the Company’s shares for one hundred and eighty (180) consecutive days or more shall be entitled to request in writing the Board of Supervisors to initiate proceedings in a court; where the Company incurs losses as a result of the Board of Supervisors having violated any provision of law, administrative regulation or the Articles of Association in the course of performing its duties with the Company, shareholders may request the Board in writing to initiate proceedings in a court.

If the Board of Supervisors or the Board refuses to initiate proceedings upon receipt of the written request of shareholders set forth in the preceding paragraph, or fails to initiate such proceedings within thirty (30) days from the date on which such request is received, or in case of emergency where failure to initiate such proceedings will immediately result in irreparable damage to the Company’s interests, shareholders described in the preceding paragraph shall have the right to initiate proceedings in a court directly in their own name in the interests of the Company.

Shareholders provided for in the first paragraph of this Article may also initiate proceedings in a court in accordance with the preceding two paragraphs in the event that the lawful interests of the Company is infringed upon by a third party and that the Company suffers from losses accordingly.

Shareholders may initiate proceedings in a court if a Director or senior officer has breached the laws, administrative regulations or these Articles of Association resulting in impairing the interests of shareholders.

2 GIVING OF FINANCIAL ASSISTANCE TO PURCHASE THE SHARES OF THE COMPANY OR ANY OF ITS SUBSIDIARIES

Subject to the Articles of Association:

(i) neither the Company nor any of its subsidiaries shall at any time or in any manner provide financial assistance to a person who acquires or is proposing to acquire shares in the Company. The said person includes any person who has directly or indirectly incurred a liability as a result of the acquisition of shares in the Company; and

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(ii) neither the Company nor any of its subsidiaries shall at any time or in any manner provide financial assistance to the person mentioned in the foregoing paragraph for the purposes of reducing or discharging his liabilities.

The following transactions are not prohibited:

(i) the provision of financial assistance where the Company’s principal purpose for giving that assistance is genuinely for the Company’s interests and not for the purpose of acquiring the Company’s shares or the provision of such assistance is incidental to some broader objective of the Company;

(ii) a distribution of the Company’s assets by way of dividend lawfully declared;

(iii) a distribution of dividends by way of bonus shares;

(iv) a reduction of share capital, repurchase of shares of the Company or a reorganization of the share capital effected in compliance with the Articles of Association;

(v) the provision of loans by the Company in the ordinary course of its business, provided that the Company’s net assets are not thereby reduced or, to the extent that those assets are reduced, the assistance is provided out of distributable profits; and

(vi) the Company’s contribution to employees’ share schemes provided that the Company’s net assets are not thereby reduced or, to the extent that those assets are thereby reduced, the assistance is provided out of distributable profits.

For these purposes,

(i) “financial assistance” includes, without limitation to:

(aa) assistance given by way of gift;

(bb) assistance given by way of guarantee (including the provision of any undertaking or property to secure the performance of obligations by the obligor) or indemnity, (other than an indemnity in respect of the Company’s own default) or by way of release or waiver;

(cc) assistance given by way of a loan; or entering into an agreement under which the Company needs to perform its obligations ahead of the other contracting parties; or entering into an agreement for the change of the loan, the contracting parties or the assignment of rights arising under such loan or such agreement; or

(dd) assistance given by the Company in any other manner when the Company is insolvent or has no net assets or where its net assets would thereby be reduced to a material extent; and

(ii) “incurring a liability” includes incurring a liability by making an agreement or arrangement (whether enforceable or unenforceable, and whether made on one’s own account or on the account of any other person) or by changing one’s financial position by any other means.

3 ALTERATIONS TO CONSTITUTIONAL DOCUMENTS

The Company may, in accordance with provisions contained in relevant laws, administrative regulations and the Articles of Association, amend its Articles of Association.

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The amendments to the Articles of Association involving the contents of the Mandatory Provisions shall become effective upon approvals by the company approval authorities of the State Council and the securities regulatory authority of the State Council. If there is any change relating to the registered particulars of the Company, application shall be made for registration of the changes in accordance with law.

4 VARIATION OF RIGHTS OF EXISTING SHARES OR CLASSES OF SHARES

The Company may not vary or abrogate rights attached to any class of shares (“Class Rights”) unless approved by a special resolution of shareholders in general meeting and by holders of shares of that class at a separate meeting conducted in accordance with the provisions of the Articles of Association. The following circumstances shall be deemed to be a variation or abrogation of the Class Rights of a class:

(i) to increase or decrease the number of shares of such class, or increase or decrease the number of shares of a class having voting or distribution rights or other privileges equal or superior to the shares of such class;

(ii) to effect an exchange of all or part of the shares of such class into those of another class or to affect an exchange or create a right of exchange of all or part of the shares of another class into the shares of such class;

(iii) to remove or reduce rights to accrued dividends or rights to cumulative dividends of such class;

(iv) to reduce or remove a dividend preference or a liquidation preference attached to shares of such class;

(v) to add, remove or reduce conversion, options, voting, transfer or pre-emptive rights or rights to acquire securities of the Company of such class;

(vi) to remove or reduce rights of such class of shares to receive payments from the Company in any particular currency;

(vii) to create a new class of shares having voting or distribution rights or privileges equal or superior to the shares of such class;

(viii) to restrict the transfer or ownership of the shares of such class or to increase any such restrictions;

(ix) to issue rights to subscribe for, or convert into, shares in the Company of such class or another class;

(x) to increase the rights or privileges of another class;

(xi) to restructure the Company where the proposed restructuring will result in different classes of shareholders bearing a disproportionate burden of such restructuring; and

(xii) to vary or abrogate the provisions in these Articles of Association.

Shareholders of the affected class, whether or not having the right to vote at general meetings, shall nevertheless have the right to vote at class meetings in respect of matters concerning paragraphs (ii) to (viii), (xi) and (xii) above, but Interested Shareholder(s) (as defined below) shall not be entitled to vote at class meetings.

Resolutions of a class of shareholders shall require the approval of shareholders present representing more than two thirds of the voting rights of that class voting in favor of such resolutions.

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Written notice of a class meeting shall be given by the Company 45 days prior to the date of the meeting to notify all the registered shareholders holding shares of that class of the matters to be considered at the meeting and the date and place of the meeting. A shareholder who intends to attend the meeting shall deliver a written reply confirming his attendance at the class meeting to the Company 20 days prior to the date of the meeting.

The Company can convene a class shareholders’ meeting, if the number of shares of the class carrying voting rights represented by shareholders intending to attend represents more than one half of the total number of such shares of the Company. If not, the Company shall make an announcement, within five days, once again notifying the shareholders of the matters proposed to be considered and the date and place of the meeting. Once an announcement has been so made, the Company may convene the class shareholders’ meeting.

Notice of class meetings need only be served on shareholders entitled to vote thereat. Meetings of any class of shareholders shall be conducted in a similar way as closely as possible to the provisions for general meetings of shareholders set out in the Articles of Association. The provisions of the Articles of Association relating to the conduct of any meeting of shareholders shall apply to any class meeting.

In addition to holders of other class shares, holders of Domestic Shares and Foreign Shares are deemed to be shareholders of different classes. Voting by holders of different classes of Shares is not required in the following situations:

(i) where the Company issues, upon the approval by special resolution of its shareholders in general meeting, either separately or concurrently once every twelve months, not more than 20% of each of its existing issued Domestic Shares or Foreign Shares;

(ii) where the Company completes, within 15 months from the date on which approval is given by the securities regulatory authorities of the State Council, its plan (made at the time of its establishment) to issue Domestic Shares and Foreign Shares; and

(iii) where shares of our Company registered on our domestic share register may be transferred to overseas investors, and such transferred shares may be listed or traded on an overseas stock exchange, subject to the approval of the Securities Authority of the State Council.

For the purposes of the class rights provisions of the Articles of Association, an “Interested Shareholder” is:

(i) in the case of a repurchase of shares by offers to all shareholders or public dealing on a stock exchange, a controlling shareholder within the meaning of the Articles of Association;

(ii) in the case of a repurchase of shares by an off-market contract under the Articles of Association, a shareholder to whom the proposed contract is related;

(iii) in the case of a restructure of the Company, a shareholder within a class who bears less than a proportionate amount of obligations imposed on the shareholders of that class or who has an interest different from the interest of the other shareholders of that class.

5 SPECIAL RESOLUTIONS — MAJORITY REQUIRED

Resolutions of general meetings are divided into ordinary resolutions and special resolutions. To adopt an ordinary resolution, more than the one half votes represented by shareholders (including proxies) present at the meeting must be exercised in favor of the resolution. To adopt a special resolution more than the two thirds votes represented by the shareholders (including proxies) present at the shareholders’ general meeting must be exercised in favor of the resolution.

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6 VOTING RIGHTS (GENERALLY ON A POLL AND RIGHT TO DEMAND A POLL)

The ordinary shareholders of the company have the right to attend or appoint a proxy to attend shareholders’ general meetings and to vote thereat. Shareholders (including proxies) when voting at a shareholders’ general meeting may exercise voting rights in accordance with the number of shares carrying the right to vote and each share shall have one vote.

At any shareholders’ meeting, voting shall be on a poll. On a poll taken at a meeting, a shareholder (including his proxy) entitled to two or more votes need not cast all his votes in the same way.

In the case of an equality of votes, the chairman of the meeting shall be entitled to an additional vote.

7 REQUIREMENTS FOR ANNUAL GENERAL MEETINGS

A shareholders’ general meeting shall either be an annual general meeting or an extraordinary general meeting. Shareholders’ general meetings shall be convened by the board of Directors. Annual general meetings are held once every year within six months after the financial year end.

8 ACCOUNTS AND AUDIT

(a) Financial and accounting system

The Company shall establish its financial and accounting systems and internal audit system in accordance with the laws, administrative regulations and the PRC accounting standards formulated by the finance regulatory authority of the State Council.

The board of Directors of the Company shall place before the shareholders at every annual general meeting such financial reports as are required by the laws, administrative regulations or directives promulgated by competent local governments and supervisory authorities to be prepared by the Company.

The financial statements of the Company shall, in addition to being prepared in accordance with the PRC accounting standards and regulations, be prepared in accordance with either international accounting standards or that of the place outside China where the Company’s shares are listed. If there is any material difference between the financial statements prepared respectively in accordance with the aforesaid accounting standards, such difference shall be stated and explained in the financial statements. For the purposes of distribution of the Company’s after-tax profits in a financial year, the lower of the after-tax profits as shown in the different set of financial statements shall be adopted.

The financial reports of the Company shall be made available at the Company for inspection by shareholders 20 days before the annual general meeting. Every shareholder of the Company is entitled to a copy of the financial reports.

A copy of the above financial report shall, at least 21 days before the date of the general meeting, be delivered or sent by pre-paid post to the registered address of every holder of Foreign Shares.

The interim results or financial information that the Company announces or discloses shall be compiled according to both the PRC accounting standards, rules and regulations, and international accounting standards or accounting standards of the place at which shares of the Company are listed.

The Company shall disclose its financial reports two times in each financial year, that is, its interim financial reports within 60 days of the end of the first six months of a financial year and its annual financial reports within 120 days of its financial year end.

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The Company shall not keep any other books of accounts other than those provided by law.

(b) Appointment and removal of accountants

The Company shall appoint an independent firm of accountants which is qualified under the relevant regulations of the State to audit the Company’s annual reports and review the Company’s other financial reports.

The first accountants firm of the Company may be appointed by the inaugural meeting prior to the first annual general meeting and the accountants firm so appointed shall hold office until the conclusion of the first annual general meeting.

The accountants firm appointed by the Company shall hold office from the conclusion of the annual general meeting of shareholder until the conclusion of the next annual general meeting of shareholders.

The shareholders in general meeting may by ordinary resolution remove an accountants firm before the expiry of its term of office, notwithstanding the stipulations in the contract between the Company and the firm, but without prejudice to the firm’s right to claim, if any, for damages in respect of such removal.

The remuneration of an accountants firm or the manner in which such remuneration is determined shall be decided by the shareholders in general meeting.

The Company’s appointment of, removal of and non-reappointment of an accountants firm shall be resolved upon by the shareholders in general meeting. Prior to the removal or the non-renewal of the appointment of the accountants firm, an advance notice of such removal or non-renewal shall be given to the accountants firm and such firm shall have the right to attend and to make representation to the shareholders’ general meeting.

Where the accountants firm resigns its post, it shall make clear to the shareholders’ general meeting whether there is any impropriety on the part of the Company.

The accountants firm may resign its office by depositing at the Company’s legal address a resignation notice which shall become effective on the date of such deposit or on such later date as may be stipulated in such notice. Such notice shall include the following:

(i) a statement to the effect that there are no circumstances connected with its resignation which it considers should be brought to the notice of the shareholders or creditors of the Company; or

(ii) a statement of any such circumstances.

Where a notice is deposited under the preceding paragraph, the Company shall within fourteen (14) days send a copy of the notice to the relevant governing authority. If the notice contains a statement under circumstance (2) of the preceding paragraph, a copy of such statement shall be placed at the Company for shareholders’ inspection. The Company shall also send a copy of such statement by prepaid mail to every holder of overseas listed foreign shares at the address registered in the register of shareholders. Where the accountants firm’s notice of resignation contains a statement of any circumstance which should be brought to the notice of the shareholders or creditors of the Company, it may require the board of Directors to convene a shareholders’ extraordinary general meeting for the purpose of receiving an explanation of the circumstances connected with its resignation.

9 NOTICE OF MEETING AND BUSINESS TO BE CONDUCTED THEREAT

The shareholders’ general meeting is the organ of authority of the Company and shall exercise its functions and powers in accordance with law.

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The Company shall not enter into any contract with any person other than a Director, Supervisor, the President, or other senior officer whereby such person is entrusted with the management of the whole or a material part of any business of the Company without the prior approval of shareholders in general meeting. Shareholders’ general meetings are divided into annual general meetings and extraordinary general meetings. Under any of the following circumstances, the Board shall convene an extraordinary general meeting within two months of the occurrence of any one of the following events:

(i) when the number of Directors is less than the number of Directors required by the Company Law or two-thirds of the number of Directors specified in the Articles of Association;

(ii) when the unaccounted losses of the Company amount to one third of its share capital;

(iii) when shareholders individually or collectively holding 10% or more of the Company’s issued and outstanding shares carrying voting rights requests in writing the convening of an extraordinary general meeting;

(iv) when the board of Directors considers necessary or upon the request of the Board of Supervisors.

To convene a general meeting, the Company shall give written notices 45 days before the date of the meeting, informing all registered shareholders of the matters proposed to be considered at the meeting and the date and place of the meeting. Shareholders who will attend the meeting shall return the written replies of attendance to the Company to be received by the Company 20 days before the date of the meeting.

When the Company is to convene an annual general meeting, shareholders individually or collectively holding 3 percent or more of shares carrying voting rights shall have the right to put forward new proposals in writing to the Company. The Company shall calculate, according to the written replies received 20 days before the date of the meeting, the number of shares carry voting rights that the shareholders attending the meeting represent. The Company can convene a shareholders’ general meeting if the number of shares carrying voting rights represented by shareholders intending to attend attain more of the one half of total number of shares carrying voting rights. If not, the Company shall make an announcement, within 5 days, once again notifying the shareholders of the matters proposed to be considered and the date and place of the meeting. Once an announcement has been so made, the Company may convene the general meeting. An extraordinary general meeting may not decide on matters not specified in the notice.

A notice of meeting of shareholders shall be in writing and:

(i) specify the time, place, the date of the meeting;

(ii) state the matters and proposals to be discussed at the meeting;

(iii) provide such information and explanation as are necessary for the shareholders to exercise an informed judgment on the proposals before them. Without limiting the generality of the foregoing, where a proposal is made to amalgamate the Company with another company, to repurchase shares of the Company, to reorganize the share capital or to restructure the Company in any other way, the terms of the proposed transaction must be provided in detail together with copies of the proposed agreement, if any, and the reasons for and consequences of such proposal must be properly explained;

(iv) contain a disclosure of the nature and extent, if any, of material interests of any Director, Supervisor, the President, or other senior officer in the transaction proposed and the effect of the proposed transaction on them in their capacity as shareholders in so far as it is different from the effect on the interests of other shareholders of the same class;

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(v) contain the text of any special resolution proposed to be passed at the meeting;

(vi) contain conspicuously a statement that a shareholder entitled to attend and vote is entitled to appoint one or more proxies to attend and vote instead of him and that a proxy need not be a shareholder;

(vii) specify the time and place for lodging proxy forms for the relevant meeting;

(viii) specify the date of the share register listing the shareholders that have the right to attend and vote at the shareholders’ meeting; and

(ix) specify the name, telephone number and email address of the contact person for the meeting.

Notices of shareholders’ general meetings shall be served on the shareholders (whether or not they are entitled to vote at the meeting) by personal delivery or prepaid mail to their addresses registered in the register of shareholders. Notice of shareholders’ general meetings may be made by way of public announcement (including published on the website of the Company) subject to prior written or implied consent of the shareholders in accordance with relevant laws and regulations as well as the amended certain applicable rules and regulations.

Public announcement of notices of shareholders’ general meetings for holders of Domestic Shares shall be published in one or more newspapers designated by the securities regulatory authority of the State Council and the website of the Company during 45 days to 50 days prior to the date of the meeting. Upon the publication of announcement, all holders of Domestic Shares shall be deemed to have received notice of the relevant shareholders’ meeting.

The accidental omission to give notice of a meeting to, or the non receipt of notice of a meeting by, any person entitled to receive notice shall not invalidate the proceedings at that meeting.

Shareholders or the Board of Supervisors requisitioning an extraordinary general meeting of shareholders or class meeting shall abide by the following procedures:

(i) The Board of Supervisors or two or more shareholders individually or collectively holding more than ten percent (including the ten percent) of the shares carrying voting rights at the meeting to be convened may, by signing one or more counterpart written requisition(s) stating the object of the meeting, require the board of Directors to convene an extraordinary general meeting or a class shareholders’ meeting. The board of Directors shall as soon as possible after receipt of such written requisition(s) proceed to so convene the extraordinary general meeting or class shareholders’ meeting. The shareholdings referred to above shall be calculated as at the date of the delivery of the written requisition(s).

(ii) Where the board of Directors fails to issue notice of convening meeting within thirty days upon receipt of the above written request, shareholder(s) individually or collectively holding more than ten percent (including the ten percent) of the shares carrying voting rights at the meeting to be convened may request by written requisition(s) the Board of Supervisors to convene the extraordinary general meeting or class shareholders’ meeting. The Board of Supervisors may convene the meeting on their own accord within four months upon the board of Directors having received such request. Where the Board of Supervisors fails to convene and hold the meeting, shareholder(s) individually or collectively holding ten percent or more shares carrying voting rights on such proposed meeting for over ninety consecutive days may convene meeting on their own accord. The convening procedures shall as much as possible be equivalent to those of for meeting convened by the board of Directors.

The matters which require the sanction of an ordinary resolution at a shareholders’ general meeting shall include:

(i) work reports of the Board and the Board of Supervisors;

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(ii) plans for the distribution of profits and for making up losses proposed by the Board;

(iii) the election and removal of the members of the Board and Supervisors representing Shareholders, their remuneration and method of payment;

(iv) the annual budget and final account report, balance sheet, profit and loss statement and other financial statement of the Company; and

(v) save as required by laws and regulations or the listing rules of stock exchange in where the shares of the Company are listed or by these Articles of Association, all other matters except those required to be adopted by special resolution;

The matters which require the sanction of a special resolution at a shareholders’ general meeting include:

(i) the increase in or reduction of registered share capital, share repurchase and issue of any class of shares, warrants and other similar securities of the Company;

(ii) the issue of debentures;

(iii) the demerger, merger, dissolution, liquidation or change of the form of the Company;

(iv) amendments to the Articles of Association; and

(v) other important matters which were adopted by passing ordinary resolutions at shareholders’ general meeting that are required to be adopted by special resolutions. where any shareholder is, under the certain applicable rules and regulations, required to abstain from voting on any particular resolution or restricted to voting only for or only against any particular resolution, any votes cast by or on behalf of such shareholder or his proxy in contravention of such requirement or restriction (provided that the Company is informed) shall not be counted.

If a resolution of a shareholders’ general meeting or the Board of the Company is in breach of any law and administrative regulation, the shareholders shall have the right to petition to a court to render the same as invalid.

If the procedures for convening a meeting of, or the method of voting at, a general meeting or the Board are in breach of any law, administrative regulation or these Articles of Association, or the content of a resolution is in breach of the Articles of Association, shareholders may petition to a court to rescind such resolutions within sixty (60) days from the date on which such resolution is passed.

10 TRANSFER OF SHARES

Subject to the approval of the securities authority of the State Council, holders of our Domestic Shares may transfer their Shares to overseas investors, and such transferred shares may be listed or traded on an overseas stock exchange. Any listing or trading of the transferred shares on an overseas stock exchange shall also comply with the regulatory procedures, rules and requirements of such overseas stock exchange.

Shares of the Company held by the promoter are not transferable within one (1) year commencing from the date of establishment of the Company. Shares of the Company that are already in issue prior to its public offering are not transferable within one (1) year commencing from the date on which the shares of the Company were listed and traded on a stock exchange.

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The Directors, Supervisors and senior officers of the Company shall report to the Company the number of shares held by them in the Company and the subsequent changes in their shareholdings. The number of shares which a Director, Supervisor or senior officer may transfer every year during his term of office shall not exceed 25% of the total number of the Company’s shares in his or her possession; and shares of the Company in his or her possession are not transferable within one (1) year commencing from the date on which the shares of the Company were listed and traded on a stock exchange. Such personnel shall not transfer the Company’s shares in their possession within six (6) months after they have terminated their employment with the Company.

Any gains from the sale of shares of the Company by any Company’s Director, Supervisor, senior officer or shareholders holding 5% or more of the shares in the Company within six (6) months after purchasing such shares, or thereafter any gains from repurchasing such shares in the Company within six (6) months after the sale thereof, shall be vested in by the Company. The Board of the Company shall forfeit such gains from the abovementioned parties. If the Board of the Company fails to comply with the provision set forth in this paragraph, the responsible Director(s) shall be jointly and severally liable therefor in accordance with the law.

If the Board of the Company fails to comply with the provision set forth in the preceding paragraph, a shareholder shall have the right to require the Board to effect the same within thirty (30) days. If the Board fails to do so within the said time limit, a shareholder shall have the right to initiate proceedings in a court directly in his own name in the interests of the Company.

All the fully paid-up H Shares can be freely transferred in accordance with the Articles of Association. However, the Board may refuse to recognize any instrument of transfer without giving any reason, unless:

(i) a fee (for each instrument of transfer) of HK$2.50 or any maximum fee as stipulated from time to time by the Stock Exchange has been paid to the Company for registration of any instrument of transfer or any other document which is related to or will affect ownership of or change of ownership of the shares;

(ii) the instrument of transfer only involves Overseas Listed Foreign Shares listed in Hong Kong;

(iii) the stamp duty chargeable on the instrument of transfer has been paid;

(iv) the relevant share certificate and any evidence in relation to the right of the transferor to transfer the shares reasonably requested by the Board has been submitted;

(v) if it is intended to transfer the shares to joint owners, then the maximum number of joint owners shall not exceed four;

(vi) the Company does not have any lien on the relevant shares; and

(vii) no transfer shall be made to minors or persons of unsound mind or under other legal disability.

11 POWER OF THE COMPANY TO PURCHASE ITS OWN SHARES

The Company may, with the approval in accordance with the procedures provided in the Articles of Association and subject to the approval of the relevant governing authorities of the State, repurchase its issued shares in the following circumstances:

(i) cancellation of its shares for the purpose of reducing its share capital;

(ii) merging with another company which holds Shares;

(iii) granting shares as incentive compensation to the staff of the Company;

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(iv) acquiring the shares of shareholders who vote against any resolution adopted at the shareholders’ general meeting on the merger or division of the Company; or

(v) other circumstances permitted by the laws and administrative regulations.

After purchasing shares as stipulated in item (i), (ii) and (iii) of Article 30, the Company shall cancel such shares within the period prescribed by laws and administrative regulations, and shall make an application to its original registration authority to modify the registration on its registered capital and have a relevant announcement published. If the Company repurchases its own shares in accordance with item (iii) of Article 30, the shares so repurchased shall not exceed the maximum proportion prescribed by laws and administrative regulations, and shall be transferred to the employees within the time prescribed by laws and administrative regulations.

The Company may, upon the approval of the relevant state governing authorities, repurchase its shares in one of the following ways:

(i) making a pro rata general offer of repurchase to all its shareholders;

(ii) repurchasing Shares through public dealing on a stock exchange;

(iii) repurchasing by an off-market agreement outside a stock exchange; and

(iv) other ways as approved by the relevant regulatory authority.

The Company may, with the prior approval of shareholders obtained at a shareholder’s meeting in accordance with the Articles of Association, repurchase its shares by an off-market contract but the Company may rescind or vary such contract or waive any or part of its rights under a contract so entered into by the Company with the prior approval of shareholders obtained at a shareholder’s meeting in the same manner.

A contract to repurchase Shares as mentioned above includes but is not limited to an agreement to become obliged to repurchase or acquire rights to repurchase Shares. The Company shall not assign a contract to repurchase its shares or any of its rights thereunder.

Unless the Company is in the course of liquidation, it shall comply with the following provisions in relation to repurchase of its issued shares:

(i) where the Company repurchases its shares at par value, payment shall be made out of the book surplus distributable profits of the Company and out of the proceeds from any issue of new shares made for the purpose of the repurchase;

(ii) where the Company repurchases its shares at a premium to the par value, payment up to their par value may be made out of the book surplus distributable profits of the Company and the proceeds from any issue of new shares made for the purpose of the repurchase. Payment of the portion in excess of the par value shall be effected as follows:

(a) if the Shares being repurchased were issued at par value, payment shall be made out of the book surplus distributable profits of the Company;

(b) if the Shares being repurchased were issued at a premium to the par value, payment shall be made out of the book surplus distributable profits of the Company and the proceeds from any issue of new shares made for the purpose of the repurchase, provided that the amount paid out of such proceeds shall neither exceed the aggregate of the premiums received by the Company

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on the issue of the Shares repurchased nor the current amount of the share premium account or the capital reserve fund account of the Company (including the premiums on the new issues) at the time of the repurchase;

(iii) payment by the Company for the following purposes shall be made out of the Company’s distributable profits:

(a) acquisition of rights to repurchase Shares;

(b) variation of any contract to repurchase Shares;

(c) release of any of the Company’s obligations under a contract to repurchase Shares; and

(iv) After the Company’s registered capital has been reduced by the aggregate par value of the cancelled shares in accordance with the relevant regulations, the amount deducted from the distributable profits for paying up the par value portion of the repurchased shares shall be transferred to the Company’s share premium account or capital reserve fund account.

Where the Company has the power to purchase for redemption a redeemable share:

(i) purchase not made through the market or by tender shall be limited to a maximum price; and

(ii) if purchases are by tender, tenders shall be available to all shareholders alike.

12 POWER OF ANY SUBSIDIARY OF THE COMPANY TO OWN SHARES IN ITS PARENT COMPANY

The Articles of Association contains no restrictions preventing any subsidiary of the Company from holding Shares.

13 DIVIDENDS AND OTHER METHODS OF DISTRIBUTION

The Company may distribute dividends by way of cash or bonus shares.

The Company shall appoint on behalf of holders of Foreign Shares receiving agents to receive on behalf of such shareholders dividends and other monies payable by the Company in respect of their Shares. The receiving agent appointed on behalf of holders of Foreign Shares listed in Hong Kong shall be a company registered as a trust company under the Trustee Ordinance of Hong Kong.

Dividends and other payments payable by the Company to holders of Domestic Shares shall be denominated and declared in Renminbi, and payable in Renminbi within three months following the announcement of profit distribution. Dividends and other payments payable to holders of Foreign Shares shall be denominated and declared in Renminbi and payable in foreign currency within three months following the announcement of profit distribution.

14 PROXIES

Any shareholder entitled to attend and vote at a shareholders’ general meeting shall be entitled to appoint one or more persons (whether or not a shareholder) as his proxy to attend and vote on his behalf. A proxy so appointed shall be entitled to exercise the following rights in accordance with the authorization from that shareholder:

(i) the shareholder’s right to speak at the meeting;

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(ii) the right to demand, whether on his own or together with others, a poll;

(iii) the right to vote on a poll according to the number of shares, the voting rights of which he is authorized to exercise; however, if the proxy represents more than one shareholder, the proxy must vote on a poll.

The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorized in writing, or if the appointor is a legal person either under seal or under the hand of a Director or attorney duly authorized. The instrument appointing a voting proxy shall be deposited at the Company’s domicile or at such other place as is specified in the notice convening the meeting not less than 24 hours prior to the time for holding the meeting at which the proxy propose to vote or the time specified for the passing of the resolution. If such instrument is signed by another person under a power of attorney or other authorization documents given by the appointor, such power of attorney or other authorization documents shall be notarized. The notarized power of attorney or other authorization documents shall, together with the instrument appointing the voting proxy, be deposited at the Company’s domicile or at such other place as is specified in the notice convening the meeting. If the appointor is a legal person, its legal representative or any person authorized by resolutions of its board of Directors or other governing body shall attend the shareholders’ meeting as the appointor’s representative.

Any form issued to a shareholder by the Board for the purpose of appointing a proxy shall be such as to enable the shareholder, according to his free will, to instruct his proxy to vote in favor of or against the motions proposed and in respect of each individual matters to be voted on at the meeting. Such a form shall contain a statement that in the absence of instructions from the appointor, the proxy may vote as he thinks fit.

A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or loss of capacity of the appointor or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the share in respect of which the proxy is given, provided that no notice in writing of such death, loss of capacity, revocation or transfer as aforesaid shall have been received by the Company before the commencement of the meeting at which the proxy is used.

15 CALLS ON SHARES AND FORFEITURE OF SHARES

Any amount paid up in advance of calls on any share may carry interest but shall not entitle the relevant shareholder to participate in respect thereof in a dividend subsequently declared.

Subject to compliance with the relevant laws and administrative regulations of the PRC, the Company may exercise its right to confiscate the dividends which are not claimed by anyone but such right can only be exercised after the expiry of the relevant time frame.

16 INSPECTION OF REGISTER OF SHAREHOLDERS AND OTHER RIGHTS OF SHAREHOLDERS

The Company shall keep a register of shareholders.

The Company may, in accordance with the understanding or agreements between the securities regulatory authority of the State Council and the overseas securities regulatory organizations, maintain the register of shareholders of Foreign Shares overseas and appoint overseas agent(s) to manage such share register.

Duplicates of the share register for holders of Foreign Shares shall be maintained at the Company’s residence. The appointed overseas agent(s) shall ensure the consistency between the original and the duplicate of the share register. The original register of Overseas-listed Foreign-Invested Shares listed in Hong Kong shall be maintained at Hong Kong.

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If there is any inconsistency between the original and the duplicate of share register for holders of Foreign Shares, the original shall prevail.

The Company shall keep a complete register of shareholders.

The register of shareholders shall comprise of the following parts:

(i) register(s) of shareholders other than those specified in items (ii) and (iii) below kept at the domicile of the Company;

(ii) register(s) of holders of the Company’s overseas-listed foreign-investment shares kept in the place of the stock exchange(s) where those foreign-investment shares are traded; and

(iii) register(s) of shareholders kept at other places as the board of Directors thinks necessary for the purpose of listing.

Different parts of the register of shareholders shall not overlap. No transfer of Shares registered in any part of the register shall, during the continuance of that registration, be registered in any other part of the register.

The alteration or rectification of any part of the register of shareholders shall be carried out in accordance with the laws of the place where such part of the register is maintained.

No changes which are required by reason of a transfer of Shares may be made to the register of shareholders within 30 days prior to the date of a shareholders’ general meeting or 5 days prior to the record date for the Company’s distribution of dividends.

When the Company decides to convene a shareholders’ general meeting, distribute dividends, liquidate or carry out other activities which require the determination of shareholdings, the board of Directors shall fix a record date for the purpose of determining the shareholding. A person who is registered in the register as shareholders of the Company at the end of the record date shall be a shareholder of the Company.

Any person who objects to what is contained in the register of shareholders and wishes to register his name on, or delete his name from, the register may apply to the court which jurisdiction to amend the register.

The right of the Shareholders to information includes, but without limitation, the following:

(i) the right to a copy of the Articles of Association after payment of costs;

(ii) the right to inspect and copy, subject to payment of a reasonable fee:

(a) all parts of the register of members;

(b) personal particulars of each of the Company’s Directors, Supervisors, the President, and other senior officers;

(iii) status of the Company’s share capital;

(iv) the latest audited financial statements, and report of Directors, report of auditors and report of Board of Supervisors;

(v) special resolutions of the Company;

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(vi) reports showing the aggregate par value, quantity, highest and lowest price paid in respect of each class of shares repurchased by the Company since the end of the last accounting year and the aggregate amount paid by the Company for this purpose;

(vii) copies of the latest annual inspection report which have been filed with the Industry and Commerce administration and other competent authority in the PRC; and

(viii) Minutes of shareholders’ general meetings.

Shareholders demanding inspection of the relevant information or copies of the materials mentioned in the preceding paragraph shall provide to the Company written documents indicating the class and number of shares they hold. After confirmation of the shareholder’s identity, the Company shall provide such information based on the shareholder’s request.

17 QUORUM FOR SHAREHOLDERS MEETINGS

The Company can convene a shareholders’ meeting if the number of Shares carrying voting rights represented by shareholders intending to attend comprise at least half of the total number of Shares carrying voting rights.

The Company can convene a class shareholders’ meeting, if the number of Shares of the class carrying voting rights represented by shareholders intending to attend comprise at least half of the total number of such Shares of the class.

18 RIGHTS OF MINORITY SHAREHOLDERS IN RELATION TO FRAUD OR OPPRESSION

In addition to the obligations imposed by laws and administrative regulations or certain applicable rules and regulations, a controlling shareholder, when exercising his rights as a shareholder, shall not exercise his voting rights to make a decision which is prejudicial to the interests of the shareholders generally or of some of the shareholders of the Company in respect of the following matters:

(i) to relieve a Director or Supervisor of his duty to act honestly in the best interests of the Company;

(ii) to approve the expropriation by a Director or Supervisor (for his own benefit or for the benefit of another person), in any guise, of the Company’s assets, including (without limitation) opportunities beneficial to the Company; or

(iii) to approve the expropriation by a Director or Supervisor (for his own benefit or for the benefit of another person) of the individual rights of other shareholders, including (without limitation) rights to distributions and voting rights, but not including a restructuring of the Company submitted to and approved by shareholders’ general meeting in accordance with the Articles of Association.

19 PROCEDURE ON DISSOLUTION AND LIQUIDATION

The Company shall be dissolved and liquidated in accordance with law upon occurrence of any of the following events:

(i) a resolution for dissolution is passed by a shareholders’ general meeting;

(ii) dissolution is necessary due to a merger or division of the Company;

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(iii) the Company is legally declared insolvent due to its failure to repay debts due;

(iv) the Company is cancelled business license, ordered to close down or deregistered;

(v) other circumstances in which the Company is required to dissolve according to laws and regulations.

Where the Company is dissolved by virtue of the reasons set out in items (i) in the preceding Article, the Company shall establish a liquidation committee within 15 days, and the members of the liquidation committee shall be selected at shareholders’ general meeting in the form of ordinary resolution.

Where the Company is dissolved by virtue of the reasons set out in items (iii) in the preceding Article, the People’s Court shall in accordance with the requirements under the relevant laws, organize the shareholders, the relevant authorities and the professional bodies to establish a liquidation committee for the purpose of dissolution of the Company.

Where the Company is dissolved by virtue of the reasons set out in items (iv) in the preceding Article, the relevant authorities shall organize the shareholders, the relevant authorities and the professional bodies to establish a liquidation committee for the purpose of dissolution of the Company.

Where the Board proposes to liquidate the Company due to causes other than where the Company has declared that it is insolvent, the Board shall include a statement in its notice convening a shareholders’ general meeting to consider the proposal to the effect that, after making full inquiry into the affairs of the Company, the Board is of the opinion that the Company will be able to pay all its debts in full within 12 months from the commencement of the liquidation.

Upon the passing of the resolution by the shareholders in general meeting for the liquidation of the Company, all functions and powers of the Board shall cease.

The liquidation group shall act in accordance with the instructions of the shareholders’ general meeting to make a report at least once every year to the shareholders’ general meeting on the group’s receipts and payments, the business of the Company and the progress of the liquidation, and to present a final report to the shareholders general meeting on completion of the liquidation.

The liquidation group shall within ten days of its establishment send a notice to creditors, and within 60 days of its establishment make a public announcement in a newspaper. The liquidation group shall carry out registration of creditors’ rights so reported.

During the liquidation period, the liquidation group shall exercise the following functions and powers:

(i) to sort out the Company’s assets and prepare a balance sheet and an inventory of assets respectively;

(ii) to notify all creditors by notice or public announcements;

(iii) to dispose of and liquidate any relevant unfinished business matters of the Company;

(iv) to pay all outstanding taxes;

(v) to settle claims and debts;

(vi) to deal with assets remaining after the Company’s debts having been paid in full; and

(vii) to represent the Company in any civil proceedings.

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The liquidation committee shall thoroughly examine the assets of the Company, and prepare a balance sheet and an inventory of assets. Upon completion, the liquidation committee shall draw up a proposal for liquidation and submit the same to the shareholders’ meeting or relevant governing authorities for confirmation.

If the liquidation committee, having thoroughly examined the Company’s assets and having prepared a balance sheet and assets list, discovers that the Company’s assets are insufficient to pay its debts in full, it shall immediately apply to the People’s Court for a declaration of insolvency. After the People’s Court has declared the Company insolvent, the company’s liquidation committee shall turn over any matters regarding the liquidation to the People’s Court.

Following the completion of liquidation, the liquidation group shall prepare a report on liquidation and a statement of the receipts and payments and financial books and records during the period of liquidation, which shall be audited by the PRC certified public accountants and submitted to the shareholders’ general meeting or the relevant governing authority for confirmation. The liquidation group shall also within 30 days after such confirmation, submit the documents referred to in the preceding paragraph to the company registration authority and apply for cancellation of registration of the Company, and publish an announcement relating to the termination of the Company.

20 OTHER PROVISIONS MATERIAL TO THE COMPANY OR ITS SHAREHOLDERS

(a) General provisions

The Company is a joint stock limited company of perpetual existence.

The Company may invest in other companies, unless otherwise stipulated by the law, the Company making such investment shall not bear joint and several liability for the debts of the enterprise in which the company invests.

The Article of Association constitute a legal document regulating the relationship between the Company and each of its shareholders and among the shareholders interest, actionable by a shareholder against the Company and vice versa and by shareholders against each other in respect of rights and obligations concerning the affairs of the Company arising out of the Articles of Association. The shareholders may also bring actions against the Directors, Supervisors, the President, and other senior officers of the Company. For the purposes of the Articles of Association, actions include court proceedings and arbitration proceedings.

(b) Shares and transfers

Foreign investors referred to in the Articles of Association mean those investors of foreign countries and regions of Hong Kong, Macau and Taiwan who subscribe for Shares issued by the Company; domestic investors referred to in the Articles of Association mean those investors within the territory of the PRC (excluding investors of the regions referred to in the preceding sentence) who subscribe for Shares issued by the Company.

The Company may increase its capital in the following ways:

(i) offering new shares to non-specially-designated investors for subscription;

(ii) issuing new shares to its existing shareholders;

(iii) allotting bonus Shares to its existing shareholders;

(iv) conversion of capital reserve; and

(v) any other ways permitted by laws and administrative regulations.

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The Company’s increase of capital by issuing new Shares shall, after being approved in accordance with the provisions of the Articles of Association, be conducted in accordance with the procedures stipulated by the relevant laws and administrative regulations of the State.

The Company may reduce its registered capital in accordance with the procedures stipulated by the Company Law and other regulations and the provisions of the Articles of Association.

When the Company reduces its registered capital, it shall prepare a balance sheet and an inventory of assets. The Company’s registered capital after reduction shall not be less than the statutory minimum amount.

Subject to the approval of the securities authority of the State Council, holders of our Domestic Shares may transfer their Shares to overseas investors, and such transferred shares may be listed or traded on an overseas stock exchange. Any listing or trading of the transferred shares on an overseas stock exchange shall also comply with the regulatory procedures, rules and requirements of such overseas stock exchange.

(c) Shareholders

A shareholder of the Company is a person who lawfully holds Shares and has his name recorded on the register of shareholders.

A shareholder enjoys rights, and is subject to obligations, according to the class and number of Shares he holds. Holders of the same class of Shares enjoy the same rights and subject to the same obligations.

Unless specified otherwise in the Articles of Association, the holders of Domestic Shares and Foreign Shares are ordinary shareholders with the same rights and subject to the same obligations. The ordinary shareholder of the Company shall enjoy the following rights:

(i) the right to dividends and other distributions in proportion to the number of Shares held by him;

(ii) the right to request, convene, preside, attend or appoint a proxy to attend shareholders’ general meetings and to vote thereat;

(iii) the right to supervise the Company’s business operations, and the right to present proposals and inquiries;

(iv) the right to transfer, give or pledge Shares in accordance with the laws, administrative regulations and the Articles of Association;

(v) the right to obtain relevant information in accordance with the provisions of the Articles of Association;

(vi) in the event of the termination or liquidation of the Company, to participate in the distribution of surplus assets of the Company according to the number of Shares held by him;

(vii) in the event of a merger or division of the Company, the right to request the Company to purchase his Shares if he objects to the merger or division; and

(viii) other rights conferred by laws, administrative regulations and the Articles of Association.

The Company shall not freeze or otherwise impair any of the rights attaching to any share by reason only that the person or persons who are interested directly or indirectly therein have failed to disclose their interests to the Company.

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A shareholder is not being liable to make any further contribution to the share capital other than the terms agreed.

Share certificates of the Company shall be in registered form.

Share certificates of the Company shall be signed by the legal representative of the Company. Where the stock exchanges on which Shares are listed require the share certificates to be signed by senior officers of the Company, the share certificates shall also be signed by such senior officers. The share certificates shall take effect after being affixed with the Company’s securities seal or a machine-imprinted seal of the Company provided that such seal shall only be affixed with the authority of the Board of Directors. The signatures of the legal representative or other senior officers of the Company on the Share certificates may be printed in mechanical form.

Any person who is registered shareholder or who requests to have his name (title) entered into the register of shareholders may, if his share certificate (the “original certificate”) in respect of shares in the Company is lost, apply to the Company for a replacement new share certificate in respect of such shares (the “Relevant Shares”).

If a holder of Domestic Shares loses his share certificate and applies for a replacement new share certificate, it shall be dealt with in accordance with relevant provisions of the Company Law. If a shareholder of Foreign Shares listed in Hong Kong loses his share certificate and applies for a replacement new share certificate, the issue of such certificate shall comply with the following requirements:

(i) the applicant shall submit an application to the Company in the form prescribed by the Company accompanied by a notarial certificate or a statutory declaration stating the grounds upon which the application is made and the circumstances and evidence of the loss of the original certificate and declaring that no other person is entitled to be registered as a shareholder in respect of the Relevant Shares.

(ii) before the Company decides to issue the replacement new share certificate, no statement made by any person other than the applicant declaring that he shall be registered as a shareholder in respect of the Relevant Shares has been received.

(iii) the Company shall, if it decides to issue a replacement new share certificate to the applicant, make an announcement of its decision at least once every 30 days for a period of 90 days in such newspapers as may be designated by the Board.

(iv) the Company shall have, prior to publication of its decision to issue a replacement new share certificate, delivered to the stock exchange on which its shares are listed a copy of the announcement to be published. The Company may publish the announcement upon receiving a confirmation from such stock exchange that the announcement has been exhibited in the premises of the stock exchange. The announcement shall be exhibited in the premises of the stock exchange for a period of 90 days. In the case of an application to issue a replacement new certificate being made without the consent of the registered holder of the Relevant Shares, the Company shall deliver by post to such registered shareholder a copy of the announcement to be published.

(v) if, by the expiration of the 90-day period referred to in above (iii) and (iv), the Company shall not have received from any person notice of any disagreement to such application, the Company may issue a replacement new share certificate to the applicant accordingly.

(vi) where the Company issues a replacement new share certificate under the Articles of Association, it shall forthwith cancel the original share certificate and enter the cancellation and replacement issue in the register of shareholders accordingly.

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(vii) all expenses relating to the cancellation of an original share certificate and the issue of a replacement new share certificate by the Company shall be borne by the applicant. The Company may refuse to take any action until reasonable security is provided by the applicant for such expenses.

(d) Untraceable members

The Company may exercise power to cease sending dividend warrants by post to a holder of foreign shares listed overseas when such warrants have not be cashed twice in a row. However, such power may be exercised after the first occasion on which such a warrant is returned undelivered. The Company shall not exercise power to sell the shares of a shareholder who is untraceable unless:

(i) during a period of 12 years at least three dividends in respect of the shares in question have become payable and no dividend during that period has been claimed; and

(ii) on expiry of the 12 years the Company, after approval by the securities regulatory authority of the State Council, gives notice of its intention to sell the shares by way of an advertisement published in the newspapers and notifies the Stock Exchange of such intention.

(e) The board of Directors

The board of Directors shall be accountable to the general meeting of the shareholders, and shall exercise the following functions and powers:

(i) to convene general meetings and report on its work to the shareholders;

(ii) to implement the resolutions of general meetings;

(iii) to decide on the Company’s business plans, investment plans, detailed annual business objectives, and financing plans other than by ways of issue of corporate bonds or other securities and of listing;

(iv) to formulate the Company’s proposed annual financial budget and final accounts;

(v) to formulate the Company’s profit distribution plan and plan for making up for losses;

(vi) to formulate proposals for the increase or reduction of the Company’s registered capital, and plans for the issue of corporate bonds or other securities and the listing plan;

(vii) to prepare plans for material acquisition, purchase of the Company’s shares, or merger, demerger, dissolution or change of the form of the Company;

(viii) to decide on the establishment of the Company’s internal management structure, and to decide on the establishment and cancellation of the Company’s branches and other sub-branches;

(ix) to elect the Company’s chairman and vice chairman; to nominate, appoint or dismiss the Company’s President;

(x) pursuant to the nominations of the Board chairman to appoint or dismiss the Board secretary of the Company, to appoint or dismiss chairmen of all special committees under the Board;

(xi) pursuant to the President’s nominations to appoint or dismiss a vice president and chief accountant of the Company and to decide on their remuneration, incentive and punishment;

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(xii) to formulate the Company’s basic management system;

(xiii) to propose plans for the amendment to these Articles of Association;

(xiv) to formulate the Company’s share incentive scheme;

(xv) to deal with disclosures of information on our Company;

(xvi) to decide on the establishment of special committees;

(xvii) to decide on and to monitor the implementation of our Company’s risk management system, including risk assessments, financial control, internal audit, legal risk control;

(xviii)to propose to the shareholders’ general meetings the appointment or replacement of the auditor of our Company;

(xix) to receive regular or irregular work reports submitted by the Company’s President or senior officers appointed by the President, and to approve the work reports of the President;

(xx) to decide on corporate guarantees in accordance with the applied laws and the Articles of Association. The Board may delegate the aforesaid rights to the Company’s management team;

(xxi) to exercise other functions and powers conferred by laws and regulations, the listing rules of the stock exchange on which the shares of the Company are listed, the shareholders’ general meetings and these Articles of Association.

Resolutions relating to the above, with the exception of items (vi), (vii) and (xiii) above which shall require the consent of more than two thirds of the Directors, shall require the consent of more than half of the attended Directors. The Board shall carry out its duties in accordance with laws and administrative regulations of the State, these Articles of Association and resolutions of the shareholders.

Meetings of the Board shall be held regularly at least four times each year and shall be convened by the Chairman of the board of Directors. A quorum will be formed by more than half of the Directors attending in person and appointing another Director as his attorney.

If a Director is unable to attend a Board meeting, he may appoint another Director by a written power of attorney to attend on his behalf. Such a power of attorney shall specify the scope of authorization.

A Director shall be deemed to be unable to carry out his duties if he or she fails to attend two consecutive Board meetings in person and fails to appoint another Director to attend Board meetings on his behalf. The Board shall propose at the shareholders’ general meeting for the removal of such Director.

Directors attending Board meetings shall exercise their powers as Directors within their scope of authorization. If a Director fails to attend a Board meeting and does not appoint an attorney to attend, the Director is deemed to have relinquished his rights to vote at that meeting.

Each Director shall have one vote. Unless specified otherwise in the Articles of Association, resolutions of the board of Directors must be passed by more than half of all the Directors. Where the number of votes cast for and against a resolution is equal, the Chairman shall have the right to cast an additional vote.

In the event that a Director is connected to companies (it means that the Director acts as a Director or senior management of the counter party, or can exercise direct or indirect control over a legal person entity of the

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(f) Independent Directors

Members of the Board of the Company shall include at least one-third or more of the independent Directors.

(g) Secretary of the board of Directors

The secretary of the Board shall be a natural person who has the requisite professional knowledge and experience, and shall be appointed by the Board.

(h) Board of Supervisors

The Company shall have a Board of Supervisors.

The Board of Supervisors shall be composed of three members, one of whom shall be the chairman of the Board of Supervisors.

The election or removal of the chairman of the Board of Supervisors shall be decided by two-thirds or more of the Supervisors. Decisions of the Board of Supervisors shall be made by the affirmative vote of two-thirds or more of the Supervisors.

The terms of office of Supervisors shall be three years, renewable upon re-election.

The Directors, the President, financial officer of the Company shall not act concurrently as Supervisors. The Board of Supervisors shall be accountable to the shareholders’ general meeting and exercise the following functions and powers in accordance with law:

(i) to examine the Company’s financial affairs;

(ii) to supervise the Directors and senior officers in their performance of duties and to propose the removal of Directors and senior officers who have contravened any law, administrative regulations, these Articles of Association or shareholders’ resolutions;

(iii) to demand any Director, the President and other senior officer of the Company who acts in a manner which is harmful to the Company’s interests to rectify such behavior;

(iv) to inspect financial information such as financial reports, business reports and profit distribution plans and, in case doubt, professionals such as registered accountants and certified auditors may be hired to provide assistance in the name of the Company.

(v) to propose to convene a shareholders’ extraordinary general meeting, and to convene and preside over shareholders’ general meetings when the Board fails to perform the duty of convening and presiding over the general meeting;

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(vi) to propose resolutions at a shareholders’ general meeting;

(vii) to propose to convene an extraordinary meeting of the board of Directors;

(viii) to elect the chairman of Board of Supervisors;

(ix) to institute a suit to the Directors or senior officers of the Company by laws;

(x) other functions and powers conferred these Articles of Association. Supervisors shall be present at meetings of the Board.

(i) The President

The Company shall have one President, who shall be appointed and dismissed by the Board. The President shall be accountable to the Board and exercise the following functions and powers:

(i) to be in charge of the Company’s production, operation and management and report to the Board;

(ii) to organize the implementation of the resolutions of the Board;

(iii) to organize the implementation of the Company’s annual business plan, investment and funding plan;

(iv) to draft plans for the establishment of the Company’s internal management structure;

(v) to propose plans for the establishment of the Company’s branches and sub-branches;

(vi) to propose the Company’s basic management system;

(vii) to formulate detailed rules and regulations of the Company;

(viii) to propose the appointment or dismissal of the Company’s vice President and general accountant, and advise on their remuneration;

(ix) to appoint or dismiss the employees other than those appointed or dismissed by the Board, and decide on their assessment, remuneration, incentive and punishment; and

(x) other functions and powers conferred by these Articles of Association and the Board.

(j) Common Reserve Fund

When distributing the after-tax profits of the current year, the Company shall allocate 10% of its profits into its statutory common reserve fund. When the cumulated amount of the statutory common reserve fund of the Company has reached 50% or more of its registered capital, no further allocations is required.

Where the statutory common reserve fund of the Company is insufficient to make up for the losses of the Company incurred during the previous years, before making allocation to the statutory common reserve fund in accordance with the preceding paragraph, the profits generated during the current year shall be used to make up for such losses.

After making allocation to the statutory common reserve fund of the Company from its after-tax profits, the Company may, subject to resolutions adopted at a general meeting, also allocate funds from the after-tax profits to the discretionary common reserve fund.

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After making up for the losses and making contributions to the common reserve fund, any remaining profits shall be distributed to the shareholders in proportion to their respective shareholdings, except when it is stipulated in the Articles of Association that profit distributions shall not be made in accordance with the shareholding proportion.

If the shareholders’ general meeting has, in violation of the provisions of the preceding paragraphs, distributed profits to the shareholders before the Company has made up for its losses and made allocations to the statutory common reserve fund, the shareholders must return the profits distributed in violation of the provision to the company.

No profits shall be distributed in respect of the shares held by the Company.

(k) Settlement of Disputes

The Company shall act according to the following principles to settle disputes:

(1) For any disputes or claims related to matters of the Company (i) the Company and its Directors or senior officers; and (ii) between shareholders of overseas listed foreign shares and the Company; between shareholders of overseas listed foreign shares and the Directors, Supervisors, the President or other senior management officers of the Company; between shareholders of overseas listed foreign shares and shareholders of domestic invested shares, that arise based on the rights and obligations stipulated in these Articles of Association, the Company Law and the relevant laws and administrative regulations of the State Council on the Overseas Offering and Listing of shares by Joint Stock Companies and other relevant laws and administrative regulations, any such disputes or claims shall be referred by the relevant parties to arbitration. Where a dispute or claim involves the above parties, the entire claim or dispute must be referred to arbitration and all persons (being the Company or shareholders, Directors, Supervisors, the President or other senior management officers of the Company), who have a cause of action based on the same facts giving rise to the dispute or claim or whose participation is necessary for the resolution of such dispute or claim, shall submit to arbitration. Disputes regarding definition of shareholders and registration of members may be resolved other than by way of arbitration.

(2) The claimant may refer the arbitration to either the China International Economic Centre in accordance with its arbitration rules, and may also refer the arbitration to the Hong Kong International Arbitration Centre in accordance with its securities arbitration rules. Once a claimant refers a dispute or claim to arbitration, the other party must submit to the arbitral body elected by the claimant. If the claimant refers the arbitration to the Hong Kong International Arbitration Centre, either party may request the arbitration to be conducted in Shenzhen in accordance with the securities arbitration rules of the Hong Kong International Arbitration Centre.

(3) Unless otherwise provided in the laws and administrative regulations, any disputes or claims arising out of item (1) above shall be resolved in accordance with the laws of the PRC.

(4) The decision made by the arbitral body shall be final and conclusive, and shall be binding on the parties.

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1. FURTHER INFORMATION ABOUT OUR COMPANY

A. Incorporation

Our Company was established in the PRC under the Company Law as a joint stock limited liability company on August 5, 2010, converting from our predecessor HNEIC. Our Company has established a place of business at 8th Floor, Gloucester Tower, The Landmark, 15 Queen’s Road Central, Hong Kong and has been registered as a non-Hong Kong company in Hong Kong under Part XI of the Hong Kong Companies Ordinance on October 4, 2010. Ms. Mok Ming Wai of KCS Hong Kong Limited has been appointed as our agent for the acceptance of service of process in Hong Kong. As we are incorporated in the PRC, our corporate structure and Articles of Association are subject to the relevant laws and regulations of the PRC. A summary of the relevant provisions of our Articles of Association is set out in Appendix IX. A summary of certain relevant aspects of the laws and regulations of the PRC is set out in Appendix VIII.

B. Changes in share capital

At the time of the establishment as a joint stock limited company, our registered capital was RMB5,800 million, divided into 5,800,000,000 shares of nominal value of RMB1.00 each, all of which were fully paid up or credited as fully paid up and were held by our promoters as follows:

Approximate percentage of shareholding in the registered capital of Name of promoter Number and Type of shares the Company Huaneng Group ...... 5,510,000,000 95% Huaneng Capital ...... 290,000,000 5%

D. Our Reorganization

We underwent our Reorganization, details of which are set out in the section headed “History, Reorganization and Corporate Structure.” As confirmed by our PRC legal advisers, we have obtained all necessary approvals from relevant PRC regulatory authorities required for the implementation of the Reorganization. These approvals include:

(a) on April 22, 2010, the SASAC issued an approval document (Guo Zi Gai Ge [2010] 292) to approve the proposal relating to the Reorganization;

(b) Beijing Pan-china Assets Appraisal Co., Ltd. appraised the non-cash assets which were to be injected into the Company as of December 31, 2009 and issued an appraisal report (Tian Xing Ping Bao Zi [2010] 109) on July 20, 2010;

(c) the appraisal report was filed with SASAC (Filing Form No. 20100047);

(d) on August 3, 2010, the SASAC issued an approval (Guo Zi Chan Quan [2010] 740) approving the Company’s management plan of the state-owned shares;

(e) on August 4, 2010, the SASAC issued an approval (Guo Zi Gai Ge [2010] 818) approving the establishment of the Company as a joint stock limited company;

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(f) on August 4, 2010, Huaneng Group and Huaneng Capital convened an inaugural meeting of the Company for the establishment of the Company as a joint stock limited company; and

(g) on August 5, 2010, a new business license was issued by the State Administration for Industry and Commerce, whereupon we were formally established as a joint stock limited company.

2. SUBSIDIARIES

Our principal subsidiaries as of December 31, 2010 are set out under the financial statements in the Accountants’ Report as included in Appendix I to this document. The following alterations in the registered capital of our principal subsidiaries have taken place within the two years preceding the date of this document:

(a) on March 5, 2009, the registered capital of Huaneng Fuxin Wind Power Co., Ltd. ( ) was increased from RMB100,000,000 to RMB450,000,000; on March 23, 2011 the registered capital of Huaneng Fuxin Wind Power Co., Ltd. ( ) was increased from RMB450,000,000 to RMB1,081,250,000;

(b) on July 28, 2010, the registered capital of Huaneng Dongyinghekou Wind Power Co., Ltd. ( ) was increased from RMB20,000,000 to RMB100,000,000; on August 20, 2010, the registered capital of Huaneng Dongyinghekou Wind Power Co., Ltd. ( ) was increased from RMB100,000,000 to RMB150,000,000; on November 29, 2010, the registered capital of Huaneng Dongyinghekou Wind Power Co., Ltd. ( ) was increased from RMB150,000,000 to RMB250,000,000; on February 25, 2011 the registered capital of Huaneng Dongyinghekou Wind Power Co., Ltd. ( ) was increased from RMB250,000,000 to RMB280,000,000;

(c) on February 21, 2011, the registered capital of Huaneng Dali Wind Power Co., Ltd. ( ) was increased from RMB200,000,000 to RMB400,000,000;

(d) in 2009, the registered capital of Huaneng Changyi Wind Power Co., Ltd. ( ) was increased from RMB20,000,000 to RMB80,000,000; on May 26, 2010, the registered capital of Huaneng Changyi Wind Power Co., Ltd. ( ) was increased from RMB80,000,000 to RMB110,000,000; on February 17, 2011, the registered capital of Huaneng Changyi Wind Power Co., Ltd. ( ) was increased from RMB110,000,000 to RMB140,000,000;

(e) on December 22, 2009, the registered capital of Huaneng Eryuan Wind Power Co., Ltd. ( ) was increased from RMB10,000,000 to RMB20,000,000; on February 5, 2010, the registered capital of Huaneng Eryuan Wind Power Co., Ltd. ( ) was increased from RMB20,000,000 to RMB40,000,000; on June 11, 2010, the registered capital of Huaneng Eryuan Wind Power Co., Ltd. ( ) was increased from RMB40,000,000 to RMB60,000,000; on October 11, 2010, the registered capital of Huaneng Eryuan Wind Power Co., Ltd. ( ) was increased from RMB60,000,000 to RMB90,000,000; on December 8, 2010, the registered capital of Huaneng Eryuan Wind Power Co., Ltd. ( ) was increased from RMB90,000,000 to RMB120,000,000; on February 15, 2011 the registered capital of Huaneng Eryuan Wind Power Co., Ltd. ( ) was increased from RMB120,000,000 to RMB150,000,000;

(f) on May 14, 2009, the registered capital of Huaneng Baotou Wind Power Co., Ltd. ( ) was increased from RMB30,000,000 to RMB54,000,000; on September 22, 2009, the registered capital of Huaneng Baotou Wind Power Co., Ltd.

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( ) was increased from RMB54,000,000 to RMB84,000,000; on February 4, 2010, the registered capital of Huaneng Baotou Wind Power Co., Ltd. ( ) was increased from RMB84,000,000 to RMB132,940,700; on January 25, 2011, the registered capital of Huaneng Baotou Wind Power Co., Ltd. ( ) was increased from RMB132,940,700 to RMB142,940,700;

(g) on December 30, 2008, the registered capital of Huaneng Tongliao Wind Power Co., Ltd. ( ) was increased from RMB20,000,000 to RMB170,120,000; and on June 10, 2009, the registered capital of Huaneng Tongliao Wind Power Co., Ltd. ( ) was decreased from RMB170,120,000 to RMB101,864,000; on October 28, 2009, the registered capital of Huaneng Tongliao Wind Power Co., Ltd. ( ) was increased from RMB101,864,000 to RMB171,864,000; on December 10, 2009, the registered capital of Huaneng Tongliao Wind Power Co., Ltd. ( ) was increased from RMB171,864,000 to RMB229,864,000; on December 29, 2009, the registered capital of Huaneng Tongliao Wind Power Co., Ltd. ( ) was increased from RMB229,864,000 to RMB309,864,000; on June 18, 2010, the registered capital of Huaneng Tongliao Wind Power Co., Ltd. ( ) was increased from RMB309,864,000 to RMB484,864,000; on August 13, 2010, the registered capital of Huaneng Tongliao Wind Power Co., Ltd. ( ) was increased from RMB484,864,000 to RMB524,864,000; on October 13, 2010, the registered capital of Huaneng Tongliao Wind Power Co., Ltd. ( ) was increased from RMB524,864,000 to RMB680,864,000; on November 16, 2010, the registered capital of Huaneng Tongliao Wind Power Co., Ltd. ( ) was increased from RMB680,864,000 to RMB760,864,000; on December 24, 2010, the registered capital of Huaneng Tongliao Wind Power Co., Ltd. ( ) was increased from RMB760,864,000 to RMB940,864,000; on December 27, 2010, the registered capital of Huaneng Tongliao Wind Power Co., Ltd. ( ) was increased from RMB940,864,000 to RMB1,140,864,000; on January 18, 2011, the registered capital of Huaneng Tongliao Wind Power Co., Ltd. ( ) was increased from RMB1,140,864,000 to RMB1,147,864,000;

(h) on January 18, 2011, the registered capital of Huaneng Pianguan Wind Power Co., Ltd. ( ) was increased from RMB200,000,000 to RMB500,000,000;

(i) on June 24, 2010, the registered capital of Huaneng New Energy Shanghai Power Co., Ltd. ( ) was increased from RMB10,000,000 to RMB25,000,000; on December 30, 2010, the registered capital of Huaneng New Energy Shanghai Power Co., Ltd. ( ) was increased from RMB25,000,000 to RMB44,000,000;

(j) According to the capital verification report of Huaneng Weifang Wind Power Co., Ltd. ( ) dated November 1, 2010, the registered capital of Huaneng Weifang Wind Power Co., Ltd. ( ) was increased from RMB20,000,000 to RMB70,000,000; according to the capital verification report of Huaneng Weifang Wind Power Co., Ltd. ( ) dated November 19, 2010, the registered capital of Huaneng Weifang Wind Power Co., Ltd. ( ) was increased from RMB70,000,000 to RMB90,000,000; on December 24, 2010, the registered capital of ( ) was increased from RMB90,000,000 to RMB120,000,000;

(k) on December 23, 2010, the registered capital of Huaneng Tieling Wind Power Co., Ltd. ( ) was increased from RMB98,500,000 to RMB155,500,000;

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(l) on December 17, 2010, the registered capital of Huaneng Baicheng Wind Power Co., Ltd. ( ) was increased from RMB20,000,000 to RMB40,000,000;

(m) on May 12, 2010, the registered capital of Huaneng Xinjiang Santanghu Wind Power Co., Ltd. ( ) was increased from RMB20,000,000 to RMB40,000,000; on August 9, 2010, the registered capital of Huaneng Xinjiang Santanghu Wind Power Co., Ltd. ( ) was increased from RMB40,000,000 to RMB60,000,000. According to the capital verification report of Huaneng Xinjiang Santanghu Wind Power Co., Ltd. ( ) dated September 13, 2010, the registered capital of Huaneng Xinjiang Santanghu Wind Power Co., Ltd. ( ) was increased form RMB60,000,000 to RMB110,000,000; on December 15, 2010, the registered capital of Huaneng Xinjiang Santanghu Wind Power Co., Ltd. ( ) was increased form RMB110,000,000 to RMB130,000,000;

(n) on September 1, 2010, the registered capital of Huaneng Hezhang Wind Power Co., Ltd. ( ) was increased from RMB20,000,000 to RMB40,000,000; on December 14, 2010, the registered capital of Huaneng Hezhang Wind Power Co., Ltd. ( ) was increased from RMB40,000,000 to RMB60,000,000;

(o) on January 29, 2010, the registered capital of Huaneng Rongcheng Wind Power Co., Ltd. ( ) was increased from RMB1,000,000 to RMB10,000,000; on September 19, 2010, the registered capital of Huaneng Rongcheng Wind Power Co., Ltd. ( ) was increased from RMB10,000,000 to RMB30,000,000; on December 10, 2010, the registered capital of Huaneng Rongcheng Wind Power Co., Ltd. ( ) was increased from RMB30,000,000 to RMB60,000,000;

(p) on December 9, 2010, the registered capital of Huaneng Tongyu Xinhua Wind Power Co., Ltd. ( ) was increased from RMB30,000,000 to RMB40,000,000;

(q) on December 1, 2010, the registered capital of Huaneng Weifang Binhai Wind Power Co., Ltd. ( ) was increased from RMB40,000,000 to RMB90,000,000;

(r) on September 17, 2009, the registered capital of Huaneng Keyouzhongqi Wind Power Co., Ltd. ( ) was increased from RMB20,000,000 to RMB60,000,000; on December 30, 2009, the registered capital of Huaneng Keyouzhongqi Wind Power Co., Ltd. ( ) was increased from RMB60,000,000 to RMB80,000,000; on June 30, 2010, the registered capital of Huaneng Keyouzhongqi Wind Power Co., Ltd. ( ) was increased from RMB80,000,000 to RMB100,000,000; on July 26, 2010, the registered capital of Huaneng Keyouzhongqi Wind Power Co., Ltd. ( ) was increased from RMB100,000,000 to RMB160,000,000; on November 11, 2010 the registered capital of Huaneng Keyouzhongqi Wind Power Co., Ltd. ( ) was increased from RMB160,000,000 to RMB180,000,000; on November 30, 2010, the registered capital of Huaneng Keyouzhongqi Wind Power Co., Ltd. ( ) was increased from RMB180,000,000 to RMB230,000,000;

(s) on February 3, 2010, the registered capital of Huaneng Ningwu Wind Power Co., Ltd. ( ) was increased from RMB20,000,000 to RMB30,000,000; on June 10, 2010, the registered capital of Huaneng Ningwu Wind Power Co., Ltd. ( ) was increased from RMB30,000,000 to RMB60,000,000; on November 4, 2010, the registered capital of Huaneng Ningwu Wind Power Co., Ltd. ( ) was increased from RMB60,000,000 to RMB80,000,000;

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(t) on November 5, 2009, the registered capital of Huaneng Huhhot Wind Power Co., Ltd. ( ) was increased from RMB20,000,000 to RMB50,000,000; on December 22, 2009, the registered capital of Huaneng Huhhot Wind Power Co., Ltd. ( ) was increased from RMB50,000,000 to RMB90,000,000; and on December 30, 2009, the registered capital of Huaneng Huhhot Wind Power Co., Ltd. ( ) was increased from RMB90,000,000 to RMB138,451,300; on June 8, 2010, the registered capital of Huaneng Huhhot Wind Power Co., Ltd. ( ) was increased from RMB138,451,300 to RMB178,241,300; on October 28, 2010, the registered capital of Huaneng Huhhot Wind Power Co., Ltd. ( ) was increased from RMB178,241,300 to RMB228,241,300;

(u) on September 30, 2010, the registered capital of Huaneng Lijin Wind Power Co., Ltd. ( ) was increased from RMB20,000,000 to RMB30,000,000;

(v) on August 30, 2010, the registered capital of Huaneng Laoting Wind Power Co., Ltd. ( ) was decreased from RMB190,740,000 to RMB185,280,000;

(w) on July 7, 2010, the register capital of Huaneng Hongkong Electric Dali Wind Power Co., Ltd. ( ) was decreased from RMB188,140,000 to RMB150,690,000;

(x) on January 14, 2010, the registered capital of Huaneng Shantou Wind Power Co., Ltd. ( ) was increased from RMB144,300,000 to RMB194,190,000;

(y) on September 10, 2009, the registered capital of Huaneng Chengde Wind Power Co., Ltd. ( ) was increased from RMB20,000,000 to RMB40,000,000; on October 29, 2009, the registered capital of Huaneng Chengde Wind Power Co., Ltd. ( ) was increased from RMB40,000,000 to RMB60,000,000; on December 2, 2009, the registered capital of Huaneng Chengde Wind Power Co., Ltd. ( ) was increased from RMB60,000,000 to RMB80,000,000;

(z) on July 4, 2008, the registered capital of HNNE-CLP Weihai Wind Power Co., Ltd. ( ) was increased from RMB243,570,000 to RMB253,240,000.

Save as disclosed in this document, there has been no alteration in the share capital of any of our subsidiaries mentioned above within the two years immediately preceding the date of this document.

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3. SINO-FOREIGN JOINT VENTURES

Our principal subsidiaries are listed in the Accountants’ Report set out in Appendix I to this document.

Information regarding the Sino-foreign equity joint ventures, cooperative or contractual joint ventures in which we are interested are set out below:

1. Huaneng Tieling Daxing Wind Power Co., Ltd. ( )

Parties and equity interest: The Company 75% CSR HK 25% Term of joint venture: June 28, 2010 to June 27, 2031 Date of establishment: June 28, 2010 Scope of business: Investment in, development, operation and management of wind power projects; production and sale of electricity; provision of consulting, development, construction and other related service of power projects. Nature: Sino-foreign equity joint venture Total investment amount: RMB475,640,000 Registered share capital: RMB163,960,000

2. Huaneng Tieling Wind Power Co., Ltd. ( )

Parties and equity interest: The Company 75% CSR HK 25% Term of joint venture: December 21, 2009 to December 20, 2030 Date of establishment: December 21, 2009 Scope of business: Investment in, development, operation and management of wind power projects; production and sale of electricity; provision of consulting, development, construction and other related service of power projects. Nature: Sino-foreign equity joint venture Total investment amount: RMB460,000,000 Registered share capital: RMB155,500,000

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3. Huaneng Panjin Wind Power Co., Ltd. ( )

Parties and equity interest: The Company 75% CSR HK 25% Term of joint venture: September 17, 2009 to September 16, 2030 Date of establishment: September 17, 2009 Scope of business: Developments, operation and management of wind farms; production and sale of electricity; provision of consulting and other related service of power projects Nature: Sino-foreign equity joint venture Total investment amount: RMB541,080,000 Registered share capital: RMB541,080,000

4. Huaneng Shouguang Wind Power Co., Ltd. ( )

Parties and equity interest: The Company 55% Bowen Limited 45% Term of joint venture: October 21, 2008 to October 16, 2029 Date of establishment: October 21, 2008 Scope of business: Development, operation and management of wind farms, provision of electricity consulting of power projects; production and sale of electricity Nature: Sino-foreign equity joint venture Total investment amount: RMB559,075,700 Registered share capital: RMB186,730,000

5. Huaneng Laoting Wind Power Co., Ltd. ( )

Parties and equity interest: The Company 55% HEI Leting Limited 45% Term of joint venture: June 13, 2008 to June 12, 2029 Date of establishment: June 13, 2008 Scope of business: Production and sale of electricity; provision of consulting and other related service of power projects Nature: Sino-foreign equity joint venture Total investment amount: RMB571,570,000 Registered share capital: RMB185,280,000

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6. Huaneng Hongkong Electric Dali Wind Power Co., Ltd. ( )

Parties and equity interest: The Company 55% Hongkong Electric Yunnan Dali Wind Power Co., Ltd. 45% Term of joint venture: December 25, 2007 to December 24, 2028 Date of establishment: December 25, 2007 Scope of business: Construction and operation of Dali Dafengba wind farm and sale of electricity; consulting of power projects Nature: Sino-foreign equity joint venture Total investment amount: RMB451,160,000 Registered share capital: RMB150,690,000

7. Huaneng Shantou Wind Power Co., Ltd. ( )

Parties and equity interest: The Company 50% CLP Asia Nan’ao Wind Power Limited (BVI) 25% Guangdong Electric Power Development Co., Ltd. 25% Term of joint venture: December 28, 2005 to December 27, 2025 Date of establishment: December 28, 2005 Scope of business: Investment in, construction, operation and management of wind power projects; provision of consulting and other related service of power projects Nature: Sino-foreign equity joint venture Total investment amount: RMB583,380,000 Registered share capital: RMB194,190,000

8. HNNE-CLP Weihai Wind Power Co., Ltd. ( )

Parties and equity interest: The Company 55% China Energy Investment Co., Ltd. (Hong Kong) 45% Term of joint venture: September 28, 2005 to September 27, 2026 Date of establishment: September 28, 2005 Scope of business: Development, operation and management of wind farms; provision of consulting and other related service of power projects Nature: Sino-foreign equity joint venture Total investment amount: RMB720,793,500 Registered share capital: RMB253,240,000

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9. HNEEP-CLP Changdao Wind Power Co., Ltd. ( )

Parties and equity interest: The Company 55% China Energy Investment Co., Ltd. (Hong Kong) 45% Term of joint venture: December 2, 2004 to December 2, 2025 Date of establishment: December 2, 2004 Scope of business: Construction, operation and management of wind farms and related consulting service Nature: Sino-foreign equity joint venture Total investment amount: RMB247,680,000 Registered share capital: RMB99,072,000

10. Huaneng Tieling Kaiyuan Wind Power Co., Ltd. ( )

Parties and equity interest: The Company 75% CSR HK 25% Term of joint venture: December 21, 2010 to December 20, 2031 Date of establishment: December 21, 2010 Scope of business: Development, operation and management of wind farms; production and sale of electricity; provision of consulting and other related service of power projects Nature: Sino-foreign equity joint venture Total investment amount: RMB477,726,000 Registered share capital: RMB159,400,000

The entitlements of joint venture partners to profits, dividends and other distributions of the above joint ventures are proportionate to their capital contribution ratios.

Upon expiry of the joint venture, the joint venture partners shall be entitled to the distributable assets proportionate to their capital contribution ratios provided that the liquidation fees, payment to employees, tax and debts have been paid in accordance with relevant legal procedure.

4. FURTHER INFORMATION ABOUT OUR BUSINESS

A. Summary of our material contracts

We have entered into the following contracts (not being contracts entered into in the ordinary course of business) within two years preceding the date of this document which are or may be material:

(a) CDM services agreement dated December 2, 2009 entered into between HNEIC and HIPDC Jilin Tongyu Wind Power Branch ( ) (“Jilin Tongyu”) in respect of HNEIC providing CDM services to Huaneng Tongyu 100.5 MW Wind Farm ( );

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(b) CDM services agreement dated December 2, 2009 entered into between HNEIC and Jilin Tongyu in respect of HNEIC providing CDM services to Huaneng Jilin Tongyu Wind Farm II ( );

(c) CDM services agreement dated December 2, 2009 entered into between HNEIC and HIPDC Jilin Baicheng Wind Power Branch ( ) (“Jilin Baicheng”) in respect of HNEIC providing CDM services to Huaneng Taobei 49.3 MW Wind Farm ( );

(d) CDM services agreement dated December 2, 2009 entered into between HNEIC and Jilin Baicheng in respect of HNEIC providing CDM services to Huaneng Jilin Taobei Wind Farm II ( );

(e) CDM services agreement dated December 2, 2009 entered into between HNEIC and Huaneng Qidong Wind Power Co., Ltd. ( ) in respect of HNEIC providing CDM services to Jiangsu Qidong 91.5 MW Wind Farm ( );

(f) CDM services agreement dated entered into in January 2010 between HNEIC and HPI in respect of HNEIC providing CDM services to Gansu Ganhekou Wind Farm II ( );

(g) CDM services agreement dated entered into in January 2010 between HNEIC and HPI in respect of HNEIC providing CDM services to Gansu Qiaowan Wind Farm II ( );

(h) CDM services agreement dated entered into in January 2010 between HNEIC and HPI in respect of HNEIC providing CDM services to Gansu Qiawan Wind Farm III North ( );

(i) Equity interest transfer agreement entered into in 2010 between Sino Neoenergy Development Ltd. (Hong Kong) ( ) as transferor and HNEIC as transferee in respect of the transfer of 24% interest in Huaneng Panjin Wind Power Co., Ltd. ( )ata consideration of RMB1.0;

(j) Equity interest transfer agreement dated March 2, 2010 entered into between HNEIC as transferor and HCI as transferee in respect of the transfer of 73.4% interest in Zhejiang Yunhe County Shitang Hydro-Power Plant ( ) at nil consideration;

(k) Reorganization Agreement dated August 5, 2010 entered into between Huaneng Group, Huaneng Capital and the Company in respect of the Reorganization;

(l) Non-Competition Agreement dated August 6, 2010, as amended by a supplemental agreement dated November 23, 2010 entered into between Huaneng Group and the Company (for itself and for its subsidiaries from time to time) regarding the non-competition undertakings as more details set out in the section headed “Relationship with Controlling Shareholder” in this document;

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B. Our intellectual property rights

1. Trademarks

As of the Latest Practicable Date, we have been granted licenses with respect to the following registered trademark:

Place of Application Date of No. Trademark Applicant Registration Class Number Application Valid Period 1. the Company the PRC 1 3672767 August 14, July 28, 2005 2003 to July 27, 2015

As of the Latest Practicable Date, we have applied for the following trademarks in the PRC:

Place of Application Date of No. Trademark Applicant Application Class Number Application

1. the Company the PRC 9 8271452 May 6, 2010 2. the Company the PRC 7 8271453 May 6, 2010 3. the Company the PRC 6 8271454 May 6, 2010 4. the Company the PRC 4 8271455 May 6, 2010 5. the Company the PRC 1 8271456 May 6, 2010 6. the Company the PRC 45 8271465 May 6, 2010 7. the Company the PRC 42 8271466 May 6, 2010 8. the Company the PRC 40 8271467 May 6, 2010 9. the Company the PRC 39 8271468 May 6, 2010 10. the Company the PRC 35 8271469 May 6, 2010 11. the Company the PRC 19 8271470 May 6, 2010 12. the Company the PRC 11 8271471 May 6, 2010

As of the Latest Practicable Date, we have applied for the following trademarks in Hong Kong:

Place of Application Date of No. Trademark Applicant Application Class Number Application 1. HNEIC Hong Kong 1,4,6,7,9,11,19,35, 301604862 May 4, 2010 39,40,42,45 2. HNEIC Hong Kong 1,4,6,7,9,11,19,35, 301604862 May 4, 2010 39,40,42,45

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As of the Latest Practicable Date, as a licensee, we have been granted the rights to use the following trademarks:

Place of Application Date of No. Trademark Applicant Registration Class Number Application Valid Period 1. Huaneng the PRC 1 601601 July 10, July 9, Group 2002 2012

Huaneng the PRC 2 606452 August 20, August 19, Group 2002 2012

Huaneng the PRC 3 601531 July 10, July 9, Group 2002 2012

Huaneng the PRC 4 601631 July 10, July 9, Group 2002 2012

Huaneng the PRC 5 605384 August 10, August 9, Group 2002 2012

Huaneng the PRC 6 601897 July 10, July 9, Group 2002 2012

Huaneng the PRC 7 604549 July 30, July 29, Group 2002 2012

Huaneng the PRC 8 603276 July 20, July 19, Group 2002 2012

Huaneng the PRC 9 601841 July 10, July 9, Group 2002 2012

Huaneng the PRC 10 601950 July 10, July 9, Group 2002 2012

Huaneng the PRC 11 603006 July 20, July 19, Group 2002 2012

Huaneng the PRC 12 603260 July 20, July 19, Group 2002 2012

Huaneng the PRC 13 600547 June 30, June 29, Group 2002 2012

Huaneng the PRC 14 602387 July 10, July 9, Group 2002 2012

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Place of Application Date of No. Trademark Applicant Registration Class Number Application Valid Period Huaneng the PRC 15 602175 July 10, July 9, Group 2002 2012

Huaneng the PRC 16 602368 July 10, July 9, Group 2002 2012

Huaneng the PRC 17 601187 June 30, June 29, Group 2002 2012

Huaneng the PRC 18 602101 July 10, July 9, Group 2002 2012

Huaneng the PRC 19 601062 June 30, June 29, Group 2002 2012

Huaneng the PRC 20 602073 July 10, July 9, Group 2002 2012

Huaneng the PRC 21 602055 July 10, July 9, Group 2002 2012

Huaneng the PRC 22 600847 June 30, June 29, Group 2002 2012

Huaneng the PRC 23 602165 July 10, July 9, Group 2002 2012

Huaneng the PRC 24 602151 July 10, July 9, Group 2002 2012

Huaneng the PRC 25 602320 July 10, July 9, Group 2002 2012

Huaneng the PRC 26 602065 July 10, July 9, Group 2002 2012

Huaneng the PRC 27 602152 July 10, July 9, Group 2002 2012

Huaneng the PRC 28 613946 October 10, October 9, Group 2002 2012

Huaneng the PRC 29 602512 July 20, July 19, Group 2002 2012

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Place of Application Date of No. Trademark Applicant Registration Class Number Application Valid Period Huaneng the 30 601565 July 10, July 9, Group PRC 2002 2012

Huaneng the 31 601277 July 10, July 9, Group PRC 2002 2012

Huaneng the 32 602551 July 20, July 19, Group PRC 2002 2012

Huaneng the 33 601657 July 10, July 9, Group PRC 2002 2012

Huaneng the 34 601503 July 10, July 9, Group PRC 2002 2012

Huaneng the 35 777075 February 7, February 6, Group PRC 2005 2015

Huaneng the 36 772584 November 28, November 27, Group PRC 2004 2014

Huaneng the 37 777849 February 14, February 13, Group PRC 2005 2015

Huaneng the 38 777198 February 7, February 6, Group PRC 2005 2015

Huaneng the 39 776769 January 28, January 27, Group PRC 2005 2015

Huaneng the 40 776239 January 21, January 20, Group PRC 2005 2015

Huaneng the 41 777700 February 14, February 13, Group PRC 2005 2015

Huaneng the 42 774488 December 21, December 20, Group PRC 2004 2014

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Place of Application Date of No. Trademark Applicant Registration Class Number Application Valid Period 2. Huaneng the PRC 1 601602 July 10, July 9, Group 2002 2012 Huaneng the PRC 2 606487 August 20, August Group 2002 19, 2012 Huaneng the PRC 3 601530 July 10, July 9, Group 2002 2012 Huaneng the PRC 4 601632 July 10, July 9, Group 2002 2012 Huaneng the PRC 5 605383 August 10, August 9, Group 2002 2012 Huaneng the PRC 6 601898 July 10, July 9, Group 2002 2012 Huaneng the PRC 7 604550 July 30, July 29, Group 2002 2012 Huaneng the PRC 8 603275 July 20, July 19, Group 2002 2012 Huaneng the PRC 9 601842 July 10, July 9, Group 2002 2012 Huaneng the PRC 10 601949 July 10, July 9, Group 2002 2012 Huaneng the PRC 11 603004 July 20, July 19, Group 2002 2012 Huaneng the PRC 12 603262 July 20, July 19, Group 2002 2012 Huaneng the PRC 13 600546 June 30, June 29, Group 2002 2012 Huaneng the PRC 14 602388 July 10, July 9, Group 2002 2012 Huaneng the PRC 15 602176 July 10, July 9, Group 2002 2012 Huaneng the PRC 16 602366 July 10, July 9, Group 2002 2012 Huaneng the PRC 17 601188 June 30, June 29, Group 2002 2012 Huaneng the PRC 18 601099 June 30, June 29, Group 2002 2012 Huaneng the PRC 19 601060 June 30, June 29, Group 2002 2012 Huaneng the PRC 20 602074 July 10, July 9, Group 2002 2012 Huaneng the PRC 21 602057 July 10, July 9, Group 2002 2012

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Place of Application Date of No. Trademark Applicant Registration Class Number Application Valid Period Huaneng the PRC 22 600848 June 30, 2002 June 29, 2012 Group Huaneng the PRC 23 602167 July 10, 2002 July 9, 2012 Group Huaneng the PRC 24 602154 July 10, 2002 July 9, 2012 Group Huaneng the PRC 25 602323 July 10, July 9, Group 2002 2012 Huaneng the PRC 26 602067 July 10, July 9, Group 2002 2012 Huaneng the PRC 27 602162 July 10, July 9, Group 2002 2012 Huaneng the PRC 28 613947 October 10, October 9, Group 2002 2012 Huaneng the PRC 29 601480 July 10, July 9, Group 2002 2012 Huaneng the PRC 30 601566 July 10, July 9, Group 2002 2012 Huaneng the PRC 31 601276 July 10, July 9, Group 2002 2012 Huaneng the PRC 32 602552 July 20, July 19, Group 2002 2012 Huaneng the PRC 33 601655 July 10, July 9, Group 2002 2012 Huaneng the PRC 34 601502 July 10, July 9, Group 2002 2012 Huaneng the PRC 35 777077 February 7, February 6, Group 2005 2015 Huaneng the PRC 36 772586 November 28, November 27, Group 2004 2014 Huaneng the PRC 37 778251 February 21, February 20, Group 2005 2015 Huaneng the PRC 38 777194 February 7, February 6, Group 2005 2015 Huaneng the PRC 39 776771 January 28, January 27, Group 2005 2015 Huaneng the PRC 40 776240 January 21, January 20, Group 2005 2015 Huaneng the PRC 41 777726 February 14, February 13, Group 2005 2015 Huaneng the PRC 42 774854 December 28, December 27, Group 2004 2014

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2. Domain Names

As of the Latest Practicable Date, we have registered the following domain names:

Place of Date of No. Domain Name Applicant Application Application Valid Period

1. hnr.com.cn the Company the PRC March 11, 2010 March 11, 2010 to March 11, 2015 2. hnrec.com.cn the Company the PRC March 11, 2010 March 11, 2010 to March 11, 2015 3. hnrec.com the Company the PRC March 11, 2010 March 11, 2010 to March 11, 2015 4. hnrec.cn the Company the PRC March 11, 2010 March 11, 2010 to March 11, 2015

Save as disclosed herein, there are no patents, trademarks or other intellectual or industrial property rights which are material in relation to our business.

C. Particulars of service contracts

Each of the executive Directors and non-executive Directors, entered into a service contract with our Company on August 17, 2010. The principal particulars of these service agreement are (a) for a term of three years commencing from August 4, 2010 and (b) are subject to termination in accordance with their respective terms. The service agreements may be renewed in accordance with our Articles of Association and the applicable Rules.

Each of the Supervisors entered into a contract in respect of, among others, compliance of relevant laws and regulations, observations of the Articles of Association and provision on arbitration with our Company on August 17, 2010.

Save as disclosed above, none of the Directors or Supervisors has or is proposed to have a service contract with us (other than contracts expiring or determinable by the employer within one year without the payment of compensation (other than statutory compensation)).

D. Directors’ and Supervisors’ remuneration

The aggregate amounts of remuneration paid and benefits-in-kind granted to the Directors and the Supervisors in respect of each of the three years ended December 31, 2008, 2009 and 2010 were approximately RMB1.8 million, RMB2.9 million and RMB3.8 million respectively. Save as disclosed under note 7 to the financial statements in the Accountants’ Report set out in Appendix I to this document, no Director or Supervisor received other remuneration or benefits in kind from the Company in respect of the three financial years ended December 31, 2008, 2009 and 2010.

Under the current arrangements, the Directors will be entitled to receive compensation (including remuneration and benefits-in-kind) from our Company for the year ending December 31, 2011 under

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arrangement in force as of the date of this document which is expected to be approximately RMB3.7 million in aggregate.

Under the current arrangements, the Supervisors will be entitled to receive compensation (including remuneration and benefits-in-kind) from our Company for the year ending December 31, 2011 under arrangement in force as of the date of this document which is expected to be approximately RMB0.7 million in aggregate.

E. Personal guarantees

The Directors and Supervisors have not provided personal guarantees in favor of lenders in connection with banking facilities granted to us.

G. Related party transactions

During the two years preceding the date of this document, we have engaged in the material related party transactions as described in note 29 to the financial statements in the Accountants’ Report set out in Appendix I to this document.

H. Disclaimers

Save as disclosed in this document:

(a) none of the Directors or Supervisors nor any of the parties listed in the paragraph headed “Qualification of experts” of this Appendix is interested in our promotion, or in any assets which have, within the two years immediately preceding the issue of this document, been acquired or disposed of by or leased to us, or are proposed to be acquired or disposed of by or leased to our Company;

(b) none of the parties listed in the paragraph headed “Qualification of experts” of this Appendix:

(i) is interested legally or beneficially in any of our Shares or any shares in any of our subsidiaries; or

(ii) has any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for our securities; and

(c) none of the Directors or Supervisors or their respective associates or any shareholders of our Company (who to the knowledge of the Directors owns more than 5% of our issued share capital) has any interest in our five largest suppliers or our five largest customers.

6. OTHER INFORMATION

A. Estate Duty

We have been advised that no material liability for estate duty under the PRC law is likely to fall upon us.

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B. Litigation

Save as disclosed in “Business — Legal Compliance and Proceedings,” as of the Latest Practicable Date, our Company is not involved in any material litigation, arbitration or administrative proceedings. So far as we are aware, no such litigation, arbitration or administrative proceedings are pending or threatened.

E. Qualification of experts

The qualifications of the experts who have given opinions in this document are as follows:

Name Qualification

KPMG Certified public accountants Jones Lang LaSalle Sallmanns Limited Property valuers DeHeng Law Offices PRC legal advisers Garrad Hassan Industry consultant Mott MacDonald Limited Independent technical consultant

F. No material adverse change

The Directors confirm that there has been no material adverse change in our financial or trading position since December 31, 2010.

H. Bilingual Document

The English language and Chinese language version of this document are being published separately.

I. Miscellaneous

(a) save as disclosed in this document, within the two years preceding the date of this document, we have not issued nor agreed to issue any share or loan capital fully or partly paid either for cash or for a consideration other than cash;

(b) no share or loan capital of our Company, if any, is under option or is agreed conditionally or unconditionally to be put under option;

(c) we have not issued nor agreed to issue any founder shares, management shares or deferred shares;

(d) the Company has no outstanding convertible debt securities or debentures;

(e) within the two years immediately preceding the date of this document, no commission, discount, brokerage or other special term has been granted in connection with the issue or sale of any capital of the Company;

(f) there is no arrangement under which future dividends are waived or agreed to be waived;

(g) there has been no interruption in our business which may have or have had a significant effect on the financial position in the last 12 months; and

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(h) none of the equity and debt securities of our Company, if any, is listed or dealt with in any other stock exchange nor is any listing or permission to deal being or proposed to be sought. We currently do not intend to apply for the status of a Sino-foreign investment joint stock limited company and do not expect to be subject to the PRC Sino-Foreign Joint Venture Law.

J. Consents

Each of the experts as referred to in the paragraph headed “Qualification of experts” in this Appendix has given, and has not withdrawn, their respective written consents to the issue of this document with the inclusion of their reports and/or letters and/or valuation certificates and/or the references to their names included herein in the form and context in which they are respectively included.

Save as disclosed in this document, none of the experts named above has any shareholding interests in any member of our Group or the right (other than the penal provisions) of sections 44A and 44E of the Hong Kong Companies Ordinance so far as applicable.

K. Promoters

The promoters of our Company are Huaneng Group and Huaneng Capital.

Save as disclosed in this document, within the two years immediately preceding the date of this document, no cash, securities or other benefit has been paid, allotted or given to the promoters named above in connection with the related transactions described in this document.

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