--- title: "Guangfa Securities: The value of large hydropower energy storage is being realized, with power generation growth significantly outperforming the industry" type: "News" locale: "en" url: "https://longbridge.com/en/news/247777235.md" description: "Guangfa Securities released a research report stating that although the national hydropower generation in the second quarter of 2023 declined year-on-year, large hydropower companies rely on water storage to achieve an increase in electricity generation. It is expected that the second half of 2025 will see a peak in hydropower production, with a lower electricity generation base, declining costs, and the implementation of long-term contract electricity prices driving excellent performance in the hydropower sector. Changjiang Electric Power and Yalong River continue to maintain growth in electricity generation despite low water levels" datetime: "2025-07-09T08:44:02.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/247777235.md) - [en](https://longbridge.com/en/news/247777235.md) - [zh-HK](https://longbridge.com/zh-HK/news/247777235.md) generator: "portal-rs" --- # Guangfa Securities: The value of large hydropower energy storage is being realized, with power generation growth significantly outperforming the industry According to the Zhitong Finance APP, GF Securities released a research report stating that in the first quarter, hydropower companies relied on water storage to achieve an increase in electricity generation. The water inflow was good in April and May last year, resulting in a high electricity generation base, while the water inflow in April and May this year was relatively low, with national hydropower electricity generation down by -6.5% and -14.3% year-on-year, respectively. However, Changjiang Electric Power and Yalong River still maintained an increase in electricity generation due to their reliance on water storage. Although national hydropower electricity generation declined year-on-year in the second quarter, large hydropower still achieved an increase in electricity generation due to its reliance on water storage and adjustment capabilities. In the second half of 2025, hydropower will see a peak in production, with a low electricity generation base after August last year, continuous decline in costs, and the implementation of long-term electricity prices, which is expected to lead to outstanding performance in the hydropower sector. ## GF Securities' main viewpoints are as follows: **Water inflow is low in Q2, leading to a decline in hydropower electricity generation, while large hydropower relies on water storage to achieve an increase in electricity generation.** In the first quarter, hydropower companies relied on water storage to achieve an increase in electricity generation. The water inflow was good in April and May last year, resulting in a high electricity generation base, while the water inflow in April and May this year was relatively low, with national hydropower electricity generation down by -6.5% and -14.3% year-on-year, respectively. However, Changjiang Electric Power and Yalong River still maintained an increase in electricity generation due to their reliance on water storage. Based on data from provincial hydrological websites, it is estimated that in Q2 2025, Changjiang Electric Power's electricity generation will be 69.395 billion kWh, up by 2.2% year-on-year (with generation growth rates of -2.0%, -3.0%, and +8.2% from April to June), and the total electricity generation in H1 2025 will be 127.074 billion kWh, up by 5.4% year-on-year. The estimated electricity generation for Yalong River in Q2 will be 20.356 billion kWh, up by 9.8% year-on-year (with growth rates of +24.0%, -15.5%, and +4.1% from April to June), and the total electricity generation in H1 2025 will be 43.593 billion kWh, up by 14.2% year-on-year. It is estimated that the electricity generation of the Dadu River in Q2 2025 will be approximately 13.693 billion kWh, up by 2.3% year-on-year, with a cumulative electricity generation of 19.344 billion kWh in H1 2025, down by 1.7% year-on-year. Although national hydropower electricity generation declined year-on-year in the second quarter, large hydropower still achieved an increase in electricity generation due to its reliance on water storage and adjustment capabilities. **The water release strategy has been adjusted in the second quarter, and the current water levels of major power stations are relatively high year-on-year.** According to the Sichuan Provincial Hydrology and Water Resources Survey Center and the Changjiang Water Resources Network, at the beginning of the year, the Yalong River and Changjiang Electric Power were respectively 5.9 billion and 4 billion kWh higher year-on-year, with Changjiang Electric Power's total energy storage in the entire river basin being 10.8 billion kWh higher year-on-year, driving the growth of electricity generation in the first quarter. In May, the water level entered a stable period, and electricity prices in Sichuan Province decreased month-on-month. At the same time, to ensure supply for the Chengdu Universiade, Yalong River changed its water release strategy to start water storage, with energy storage continuing to increase from May to June. Changjiang Electric Power maintained stable energy release, and the overall energy release from January to May was comparable to last year's scale. By the end of May, it maintained a high water level entering the flood season, and in June, water release ensured an increase in electricity generation. As of the end of June 2025, Yalong River's energy storage was 15.141 billion kWh (up by 2.001 billion kWh year-on-year), and Changjiang Electric Power's energy storage was 11.034 billion kWh (up by 2.156 billion kWh year-on-year). Considering the increase in Yalong River's water storage, Changjiang Electric Power's total energy storage in the entire river basin was 4.154 billion kWh higher year-on-year. **Hydropower is entering a new round of production peaks, focusing on the decline in long-term interest rates to enhance hydropower valuation.** Starting in 2024, Huaneng Hydropower's Toba and Yingliangbao power stations, Dadu River's Shuangjiangkou, and other four power stations, as well as Sichuan Investment Energy's Yinjing Hydropower Station, Huanghe Yangqu Hydropower Station, and Guotou Electric Power's Indonesia Batang power station will successively enter the production period, ushering in a new round of production peaks Long-term interest rates remain low, and the dividend value of hydropower continues to stand out. The current dividend yield of Changjiang Electric Power is approximately 3.1% (calculated based on the 2024 dividend per share and the closing price on July 4). In recent years, the dividend yield has typically been around 3.5% to 3.7%. In a declining interest rate environment, the valuation has not seen significant improvement (with a spread of 148 basis points over the ten-year government bond yield, close to the 84th percentile since 2018). With the prolonged low-interest-rate environment, the decline in long-term interest rates will dilute funding costs, which is expected to lower the target dividend yield. In the second half of 2025, hydropower will reach a peak in production, with a lower power generation base since August last year, continuously declining costs, and the implementation of long-term contract electricity prices, leading to strong performance in the hydropower sector. **Investment Recommendation** Focus on the expected difference in hydropower brought by water storage. It is recommended to pay special attention to Yalong River (ChuanTou Energy (600674.SH), Guotou Power (600886.SH)), Changjiang Electric Power (600900.SH), and keep an eye on Huaneng Hydropower (600025.SH) and Guodian Power (600795.SH). **Risk Warning** Water flow fluctuations; reservoir regulation capacity may be less than expected; risks of adjustments in on-grid electricity prices ### Related Stocks - [600900.CN](https://longbridge.com/en/quote/600900.CN.md) - [600025.CN](https://longbridge.com/en/quote/600025.CN.md) ## Related News & Research - [CYPC steps up Three Gorges flood controls as reservoir inflow hits 38,000 cubic meters per second](https://longbridge.com/en/news/296306917.md) - [Pinnacle West Capital Stock: Analyst Estimates & Ratings](https://longbridge.com/en/news/296614145.md) - [Apollo Atomics wants to make nuclear power cheaper by shrinking an overlooked part](https://longbridge.com/en/news/296502139.md) - [08:15 ETNow's the Time: Late Summer Is the Best Season For Homebuyers to Score a Deal in These U.S. Metros](https://longbridge.com/en/news/296616885.md) - [Zephyr Introduces the Presrv™ Gourmet Clear Ice Machine](https://longbridge.com/en/news/296352842.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**