To all shareholders:

2010 was a successful year for the transformation of China Power. In the year, captialised on the strategies to develop both hydro-power and coal-fired power businesses, profitability of the Company increased and the market position as an environmental-friendly electricity generator of the Company was further consolidated. Restructuring of the Company's power generation business enriched the profit stream of the Company instead of relying on the single coal-fired business and facilitated the Company to expand into a new market despite the unfavorable coal-fired power market. In 2010, with the joint efforts of all employees, the operating results of the Company achieved a steady growth, enabling the Company to realize its promises to create value for its shareholders and to shoulder its social responsibilities.

I hereby give my sincerest thanks to all shareholders of China Power who have been concerned about and supportive of us on behalf of the Board of China Power and all employees.

Business Review of 2010

2010 was a year full of opportunities and challenges, difficulties and hopes. In the year, the PRC economy maintained its rapid recovery and growth with a GDP growth rate reaching 10.30%. National electricity consumption increased by 14.56% as compared to last year, representing a further recovery of the power market. However, in the face of certain risks in the domestic economic environment, such as increasing inflationary pressures and rising coal price, competition in the power generation market was intensifying and the power operation environment in China was challenging. In order to cope with the changing market, China Power speeded up its restructuring and exerted effort to strengthen its operating results, including assets operation, projects establishment, cost control, and energy conservation and emission reduction.

In 2010, China Power achieved remarkable results through optimizing assets portfolio, increasing the generation and price of electricity, securing high quality projects, reducing unit fuel costs of coal-fired power plants and energy conservation. Profit attributable to equity holders of the Company for the year amounted to RMB666,892,000. Profit generated from hydro-power amounted to RMB376,027,000, accounting for 56.37% of total profit. The unit fuel cost of coal-fired power plants of the Company amounted to RMB235.72/MWh, representing an increase of 10.26% as compared with 2009, however less than our expectation at the beginning of the year, which revealed the Company's relatively effective control over the increasing fuel costs. The average net coal consumption rate of the Company amounted to 324.51 g/KWh, decreased by 5.34 g/KWh as compared to last year.

Contribution from hydro-power was significant and the strategic transformation completed successfully. In 2010, being the first full financial year after the acquisition of assets of Wu Ling Power by China Power, hydro-power assets made a great contribution to the overall profit of the Group. By putting the strategy to incorporate both hydro-power and coal-fired power into full implementation, profit stream of the Company, which relied on the single coal-fired business previously, was substantially changed. Despite the market condition with high coal price, the Company's position in the capital market in Hong Kong was further strengthened.

Power generation and power tariffs were increased. The Company increased its profit by restructuring its electricity generation business and increasing generation. The base volume power generation accounted for 90% of the total generation during the year, representing an increase of 11 percentage points as compared to last year. The net power generation for the year amounted to 46,002,897MWh, representing an increase of 32.52% compared to last year. Although the fuel pass through had not yet started, the average realized tariffs of hydro-power and coal-fired electricity recorded increases. The tariffs of coal-fired and hydro-power was RMB328.25/MWh and RMB258.71/MWh, respectively.

High quality projects were in the pipeline. Two 1000MW power generation units of Pingwei Power Plant III were selected as the "Anhui-to-East Power Transfer" project according to the "Wanjiang Planning" of the state. Application for the approval of the project was submitted to the National Development and Reform Commission. The preliminary works of the expansion project of a 1000MW power generation unit in Changshu Power Plant was in progress. Feasibility studies of two 1000MW coal-fired generation units of Shentou Power Plant II constructed pursuant to the policy of "Replacement of Small Units with Larger Units" had commenced. For hydro-power, Wu Ling Power was granted rights to develop hydro-power project with installed capacity of 189MW in Sichuan and Hunan and rights to develop hydropower project with installed capacity of 200MW in Xinjiang.

Unit fuel cost was effectively controlled. In order to cope with adverse effects brought by the increasing coal price, the Group strived to control fuel costs arising from fuel procurement, transportation, storage, blending and energy consumption of generating units. In 2010, the unit fuel cost of the Company was RMB235.72/MWh, representing an increase of 10.26% as compared to last year, however less than the expectation at the beginning of the year.

Efforts were exerted in the energy conservation and emission reduction in coal-fired power generating units of the Company. Through upgrading the technology of energy conservation, the Group's pollutants discharge and emission continued to decrease every year. The desulphurization rate of coal-fired power generating units in 2010 was 93.93%, which was in compliance with the laws and regulations related to environmental protection promulgated by the state and local governments. The Company also applied scientific measures of energy conservation and emission reduction. The carbon dioxide emission decreased by 378,000 tons.

Development Outlook for 2011

In 2011, the domestic economy is expected to grow steadily and the market demand in power industry will be prosperous. It is expected that the electricity consumption for the year will amount to approximately 4.7 trillion KWh, the year-on-year growth will be approximately 12%, and the utilization hours of electricity generating facilities will be approximately 4,650 hours. On the other hand, the competition in the electricity market will be increasingly intense and the changes in fuel market and the adjustment of the tariff may have some uncertainty. China Power will continue to strengthen its internal management and promote the corporate culture featuring "Still water runs deep" to enhance its operating results.

Key Work Emphasis for 2011

2011 will be the starting year for the planning of the mid-term development of China Power. The Group will coordinate its operations and optimize its development model.

We will further optimize the structure of our power business. We will grasp the new developing opportunities in the first year of the "Twelfth Fifth Year" and focus to develop load centers and high quality coal-fired projects with large capacity in resources-rich regions in order to expand our presence into prime strategic regions. We will further improve the management of approved construction projects so to ensure those generating units start operation successfully. The Company will also accelerate the development of clean energy by conducting merger and acquisition activities through Wu Ling Power.

We will comprehensively enhance the management of the Company. In 2011, the Group will further enhance the management of safe production and production operations. The Company will also strengthen the strategic cooperation of the integration of coal and electricity and promote refined fuel management to minimize the increase of fuel costs. Restructuring of electricity generation will continue in order to enhance the efficiency of power generation units. The Company will closely monitor various electricity tariff related policies and hydro-power tariff to insure the Company can get a reasonable tariff level. Efforts will also be put in the reduction of financing cost by maintaining reasonable management of financing progress and size.

We will carry out measures to save energy and reduce emission. The Company will formulate plans to enhance the efficiency of its coal-fired power generating units with capacity of over 300 MW through system upgrades and strengthening of consolidated benchmarking management. The Company will also pay attention to the change of national environment protection policies and upgrade the desulphurization and dust wiping of coal-fired generation units.

We will continue to promote our corporate culture of "Still water runs deep". Taking "responsibility, integrity, wisdom and value" as our core value, the Group will further develop the sense of identity and cohesion among our employees, so as to boost their enthusiasm and initiative and encourage them to work towards value creation.

Facing both opportunities and challenges, we believe that, with the cares and supports of all shareholders, and with the dedication of our excellent management team and all employees, the Company will achieve remarkable development and create more values in 2011.

Li Xiaolin
Chairman

30 March 2011