Cathay Securities and Haitong Securities: Stable electricity prices and stable coal prices, the power sector shows good performance after the first mention of anti-involution
Guotai Junan released a research report stating that the State-owned Assets Supervision and Administration Commission requires stabilization of electricity and coal prices to prevent vicious competition, and the power industry is performing well. During the National Day holiday, electricity prices performed better than in previous years, and the growth rate of thermal power companies in Q3 is expected to be between 30-80%. Carbon reduction technologies for coal power are gradually maturing, and investments in flexible and efficient coal power units are increasing. The hydropower sector also generally performed well, with QYDL expected to see a net profit growth of 70%-100% in the first three quarters
According to the Zhitong Finance APP, Guotai Junan released a research report stating that before the National Day holiday, the State-owned Assets Supervision and Administration Commission held a meeting, requiring the stabilization of electricity and coal prices to prevent vicious competition. The power industry has taken the lead in proposing anti-involution measures, and the power sector performed well in the first week after the holiday (Huaneng International and Huadian International both rose by more than 3%). As the Q3 quarterly reports approach, it is estimated that thermal power companies will continue to see growth in Q3, expected to be between 30% and 80%, with traditional thermal power leaders expected to perform well.
Guotai Junan's main points are as follows:
During the National Day holiday, the minimum electricity price performed better than previous holidays
According to the statistics of spot electricity prices, in Shandong, only 1 day out of the 8 days during the National Day holiday had a negative minimum spot price, better than last year's 7-day holiday where 5 days had negative minimum prices. This may be due to the sharp increase in electricity load from the service industries such as hotels, catering, and entertainment, overturning the market's previous stereotype of low electricity consumption during holidays, compensating for the decline in industrial load.
Coal power carbon reduction co-firing plans and costs
According to the Electric Power Union's WeChat public account, CCUS technology is mature but energy consumption and costs remain high. It is estimated that China's potential for oil-driven carbon dioxide storage could reach 50 million to 100 million tons annually; deep saline aquifer storage could exceed trillions of tons. Co-firing biomass technology is mature, but it is significantly constrained by the scale, collection, location, and timing of biomass resources. Co-firing ammonia with coal has begun preliminary engineering verification, achieving a co-firing ratio of 25% to 35%, with the technology becoming increasingly mature; however, the cost of green ammonia needs to decrease. It is expected that long-term carbon reduction in coal power will be about 50%, with total costs still not exceeding those of gas power. Additionally, the article suggests that the unit investment for flexible and efficient coal power units is expected to increase by about 100 yuan per kilowatt compared to conventional coal power units.
Hydropower performance in Q3 is generally good
Due to favorable water conditions in the third quarter, QYDL announced on October 10 that it expects to achieve a net profit increase of 70%-100% to 450 million to 530 million yuan in the first three quarters, due to 23.6% more water inflow and a 50% increase in electricity generation to 7.9 billion kilowatt-hours. In the first three quarters of 2025, Guikang Power's electricity generation reached 31.8 billion kilowatt-hours, a year-on-year increase of 14.9%; of which, hydropower accounted for 28.2 billion kilowatt-hours, a year-on-year increase of 21.9%. In the first half of 2025, Guikang Power's electricity generation was 16.2 billion kilowatt-hours, a year-on-year decrease of 7.74%. The Three Gorges Group disclosed that from October 1 to 8, it generated a total of 12.98 billion kilowatt-hours, a year-on-year increase of 71.4%; of which, hydropower accounted for 11.1 billion kilowatt-hours, a year-on-year increase of 114%. The Three Gorges Group's Hubei Energy's Shuibuya, Geheyan, and Gaobazhou cascade power stations all ramped up production, generating a total of 217 million kilowatt-hours during the holiday, a year-on-year increase of 299%.
Risk Warning
Expectations for economic growth and monetary policy have led to significant fluctuations in market styles; the direction of electricity marketization is determined, but the development timeline is difficult to ascertain
