According to the Zhitong Finance APP, Guosen Securities released a research report stating that the market-oriented reform policy for the on-grid electricity price of renewable energy has been implemented. The on-grid electricity price for renewable energy will be determined by the market, while a sustainable development price settlement mechanism for renewable energy will be promoted. The price difference settlement method will help renewable energy generation projects maintain a reasonable rate of return, and the profitability of renewable energy generation is expected to gradually stabilize. It is reported that on February 9, 2025, the National Development and Reform Commission and the National Energy Administration issued the &#34;Notice on Deepening the Market-oriented Reform of Renewable Energy On-grid Electricity Prices to Promote High-quality Development of Renewable Energy&#34; (hereinafter referred to as the &#34;Notice&#34;).
<h2>The main viewpoints of Guosen Securities are as follows:</h2>
Main Content of the Notice
First, promote the comprehensive market formation of on-grid electricity prices for renewable energy, with the principle that all on-grid electricity from renewable energy projects enters the electricity market, and the on-grid electricity price is formed through market transactions; second, establish a sustainable development price settlement mechanism for renewable energy, with the price level (referred to as mechanism price), electricity scale, execution period, etc., clarified by provincial price authorities in conjunction with provincial energy authorities and electricity operation authorities. For the electricity included in the mechanism, if the average market transaction price is lower or higher than the mechanism price, the grid enterprises will conduct price difference settlement as stipulated, and the settlement costs will be included in local system operation costs, which will be borne by industrial and commercial users. In addition, the Notice insists on differentiated policies, distinguishing between existing projects and incremental projects, maintaining policy continuity for existing projects, and stabilizing revenue expectations for incremental projects.
This market-oriented reform policy for renewable energy on-grid electricity prices does not affect the electricity price levels for residential and agricultural users, who will continue to implement the current catalog sales electricity price policy.
For industrial and commercial users, according to publicly available information from the National Development and Reform Commission, static estimates indicate that the average electricity price for industrial and commercial users nationwide in the first year of reform implementation is expected to be basically flat compared to the previous year. In regions where electricity supply exceeds demand and renewable energy market prices are lower, there may be a slight decrease. Subsequently, the electricity prices for industrial and commercial users will fluctuate with electricity supply and demand and the development of renewable energy.
The policy ensures a reasonable rate of return for renewable energy projects and promotes the stable development of the renewable energy generation industry.
While promoting the full participation of renewable energy in the market, the Notice establishes a sustainable development price settlement mechanism. For the electricity included in the mechanism, when the market transaction price is lower than the mechanism price, a price difference compensation will be provided; when it is higher than the mechanism price, the price difference will be deducted. This price difference settlement method allows renewable energy generation enterprises to have reasonable and stable expectations, promoting the stable and healthy development of the industry.
Investment Recommendations: Recommend national leading renewable energy generation companies Longyuan Power (00916, 001289.SZ), Three Gorges Energy (600905.SH), high-quality regional offshore wind power companies Guangxi Energy (600310.SH), Funiu Co., Ltd. (688483.SH), and Zhongmin Energy (600163.SH), as well as high-quality existing wind and solar assets that are actively exploring a second growth curve, Jinkai New Energy (600821.SH).
Risk Warning: Risk of electricity price decline, policy change risks, decline in green electricity consumption levels, and electricity consumption growth rate not meeting expectations

301162

000862

000155

601619

Guotai Junan Securities released a research report stating that the market-oriented reform policy for the on-grid electricity price of new energy has been implemented. The electricity price for new energy will be determined by the market, and a sustainable price settlement mechanism will be promoted to maintain a reasonable rate of return. This policy is expected to promote the steady development of the new energy power generation industry, with no impact on electricity prices for residential and agricultural users. The electricity price for industrial and commercial users is expected to remain the same as last year and will fluctuate in the future with changes in electricity supply and demand and the development of new energy

Zhitong

SPRIXIN

Yin Xing Energy

CNDL

Jiaze Renewables

CHINA LONGYUAN

CTGR

ZMNY

NYOCOR Co., Ltd.

GUOSEN SECURITIES

FUNENG CO.,LTD.

Guotai Junan Securities: The market-oriented reform of the on-grid electricity price for new energy is advancing, and the return on investment for power generation projects is expected to maintain a reasonable level