Guotai Haitong: Electricity price logic continuously realized, electricity company profits may rise in the first quarter.

Guotai Haitong released a research report stating that according to the statistics from the National Energy Administration, as of March, the country's cumulative installed power generation capacity was 3.43 billion kilowatts, with a year-on-year increase of 14.6%. By March 2025, the total electricity consumption of the whole society was 828.2 billion kilowatt-hours, with a year-on-year increase of 4.8% (1-2 months 1.3%). Currently, the farther north, the better the thermal power electricity price: the higher the proportion of new energy, the scarcity of thermal power in time-sharing. At the same time, the decline in annual long-term electricity prices in the south this year has also put pressure on southern thermal power plants. Power plants have shifted from pursuing quantity to pursuing price and efficiency. The spot electricity price in the south has also started to rise recently. The possibility of the northern electricity price reaching the bottom is already high, while differences in the southern region still exist. In the future, there may witness two historical firsts: the rise in spot electricity prices in 2025 and the rise in annual long-term agreements in 2026. Guotai Haitong's main points are as follows: In the years 2025-2026, the perception of power companies and investors in the electricity market will change. In Q1 2025, Huaneng Power International, Inc.'s coal-fired capacity decreased by 10% year-on-year, with a price drop of about 1 cent; Huadian Power International Corporation's electricity consumption decreased by 8.5% year-on-year, with a price drop of about 0.4 cents; although Beijing Jingneng Power did not announce the electricity price, with Q1 profit increasing by 130% year-on-year, the probability of a good electricity price is also high. Currently, the farther north, the better the thermal power electricity price: the higher the proportion of new energy, the scarcity of thermal power in time-sharing. At the same time, the decline in annual long-term electricity prices in the south this year has also put pressure on southern thermal power plants. Power plants have shifted from pursuing quantity to pursuing price and efficiency. The spot electricity price in the south has also started to rise recently. The possibility of the northern electricity price reaching the bottom is already high, while differences in the southern region still exist. In the future, there may witness two historical firsts: the rise in spot electricity prices in 2025 and the rise in annual long-term agreements in 2026. The perception of power companies and investors on electricity prices will be completely changed. The decline in thermal power generation in March has narrowed. According to the National Energy Administration: as of March, the country's cumulative installed power generation capacity was 3.43 billion kilowatts, with a year-on-year increase of 14.6%; among them, solar/wind power was 0.95/0.54 billion kilowatts, with year-on-year increases of 43.4% and 17.2%, respectively; from January to March, the investment in power projects was 132.2 billion yuan, with a year-on-year decrease of 2.5%. In March, thermal power generation decreased by 2.3% year-on-year (1-2 months decreased by 5.8%), hydropower increased by 9.5% year-on-year (1-2 months increased by 4.5%), nuclear power increased by 23% year-on-year (1-2 months increased by 7.7%), wind power increased by 8.2% year-on-year(1-2 months increased by 10.4%), and solar power increased by 8.9% year-on-year (1-2 months increased by 27.4%). By March 2025, the total electricity consumption of the whole society was 828.2 billion kilowatt-hours, with a year-on-year increase of 4.8% (1-2 months 1.3%). Global development of new energy In March, France repeatedly activated the European emergency assistance mechanism to export excess electricity to neighboring countries, with prices reaching as high as 12,000 euros/MWh, and reducing the generation of renewable energy, with this situation expected to last at least until June. By the end of March, Zhejiang had installed 50 million kilowatts of solar power, a year-on-year increase of 41%, accounting for nearly one-third of the total installed capacity. On April 15th, the maximum output of solar power in Zhejiang was 34.36 million kilowatts, accounting for 39% of the maximum daily power load. Guangdong's new energy installed capacity was 67.4 million kilowatts, a year-on-year increase of 35%, accounting for 30% of the total capacity. Sichuan has introduced a subsidy mechanism into the coal-fired power generation system, with "government contract price - market highest price" subsidy mechanism. The difference = government-authorized contract price - MAX (province's annual centralized trading corresponding monthly average price, monthly and monthly central trading average price, each unit's monthly medium- to long-term contract price). When the market price is lower than the contract price, the difference is shared by the government or users; if the market price is higher than the contract price, coal-fired power companies do not need subsidies, and the transaction is done directly at the market price. This design ensures the basic income of coal-fired power companies and encourages them to participate in market competition. The price is set at 0.4392 yuan/kWh by 2025. Shandong's distributed power generation has fully entered the spot market. The Provincial Energy Bureau issued a notice on the public consultation of the "Implementation Rules for the Development and Construction Management of Distributed Photovoltaic Power Generation in Shandong Province (Draft for Solicitation of Opinions)". The document stipulates that for self-generated excess electricity connected to the grid, the proportion of self-generated electricity to the total electricity production should not be less than 50%, and all grid-connected electricity should participate in the electricity spot market. Risk warning Economic growth expectations and monetary policy may cause significant fluctuations in market style; the direction of electricity marketization is determined, but the development time is difficult to predict.