PDF《RELATIONSHIP WITH GUODIAN GROUP》

s wind power business. Further, pursuant to further confirmation issued by Guodian in July 2009, Guodian confirmed that the Company was formed and operated as the platform for the Guodian Group to develop renewable energy business which principally comprises of the wind power business. The Company has also undertaken to Guodian that other than the two coal power plants, the Company will not develop any other coal power plants in the future. Please see the subsection headed Non-Competition Agreement and Undertakings in this section for further details. Under the above arrangements and undertakings and given that Guodian will continue to focus on coal power business as one of its main businesses, while the Company'

s core business is wind power business, the Directors consider that there is clear delineation between the business of the Group and that of the Guodian Group. Guodian'

s wind power business Guodian holds, 100% of the equity interest in Guodian Xinjiang Power Co., Ltd. (国电新疆电力有限 公司) ( Guodian Xinjiang ). Guodian Xinjiang mainly engages in coal power business and hydropower business and also holds 70% interest in Alashankou Wind Farm Phase I (阿拉山口一期风电项目) ( Alashankou Wind Farm ). Guodian Xinjiang commenced the construction of Alashankou Wind Farm in

2008 with a total installed capacity of 49.5 MW. Guodian also holds, interests in Guodian Youyu Laoqianshan Wind Farm (国电右玉老千山风电场) with an installed capacity of 49.5MW, Xinganmeng Keyou Qianqi Concession Wind Farm (兴安盟科右前旗风电场特许权风电场) with an installed capacity of 49.3MW, Erlianhaote Wind Farm (二连浩特风电场) with an installed capacity of 49.5MW and Yihewusu Wind Farm (鄂尔多斯市伊和乌素风电场) with an installed capacity of 49.5MW. The Board is of the view that the above wind farms would not add value to the Group'

s business at the date of the Reorganization. The relevant factors in their analysis included the plants'

wind resource condition, geological characteristics, construction and grid connection condition, estimated profitability and investment value. Therefore, these five wind farms were not transferred to us during the Reorganization. Given that we have the option and the right of first refusal to acquire Guodian'

s wind power business pursuant to the Non-Competition Agreement, we retain the flexibility to acquire the five wind farms from Guodian in the future if our Directors believe that such acquisition would be in the interest of our business and our shareholders. The Directors believe that the above wind farms, which are still under construction and even if after the construction of which is completed, do not compete with the Company for the following reasons: ? according to the Renewable Energy Law and its implementation rules, grid companies generally must purchase the full amount of electricity generated from renewable energy projects that are located in the areas covered by the grid company, and must provide grid-connection services and related technical support. In addition, the PRC government regulates the on-grid tariffs for wind farms. As a result of these legal requirements, the Directors are of the view that wind power companies in the PRC do not compete with each other even if they are located in the same province in terms of grid-connection, electricity sales and on-grid tariff;

and ? compared to our wind power business, Guodian'

s wind power business is much smaller in scale. The existing total capacity of Guodian'