According to the report from China Galaxy Securities, in January-February, the newly installed wind power capacity nationwide was 9.28 GW, a year-on-year decrease of 6.2%. The cumulative installed capacity of renewable energy has surpassed that of thermal power for the first time, and there is still significant room for growth in the future. Additionally, the growth rate of electricity consumption slightly increased in January-February, with rapid growth in electricity consumption in industries such as information technology and wholesale retail. The bank believes that the energy consumption target assessment in the final year of the 14th Five-Year Plan is expected to catalyze the demand for green electricity. At the same time, after the establishment of a sustainable pricing settlement mechanism for renewable energy, the future revenue expectations for the industry will be clearer. It is recommended to seize the turning point opportunities in the sector, with individual stocks suggested to focus on national leading enterprises such as CHINA LONGYUAN (001289.SZ) and CTGR (600905.SH).

Thermal Power: The recent sharp decline in coal prices is expected to reverse the market's pessimistic fundamental expectations for thermal power in 2025. It is recommended to pay attention to companies with large market coal exposure and those in regions with smaller reductions in annual long-term contract electricity prices for 2025. Individual stocks suggested include ZZEPC (600023.SH), HPI (600011.SH), and WanNeng Power (000543.SZ).

Hydro and Nuclear: In a declining interest rate cycle, hydropower and nuclear power, which have strong dividend attributes, possess long-term allocation value. At the same time, nuclear power also has high forward growth potential. Individual stocks suggested include Yangtze Power (600900.SH) and China National Nuclear Power (601985.SH).

The main points from China Galaxy Securities are as follows:

Event: The National Energy Administration and the National Bureau of Statistics released statistical data on the electricity industry and energy production: In January-February 2025, the newly installed wind power capacity nationwide was 9.28 GW, a year-on-year decrease of 6.2%; the newly installed solar power capacity was 39.47 GW, a year-on-year increase of 7.5%; and the newly installed thermal power capacity was 3.88 GW, a year-on-year decrease of 23.6%. The total electricity consumption in society for January-February was 1,556.4 billion kWh, a year-on-year increase of 1.3%.

The cumulative installed capacity of renewable energy has surpassed that of thermal power for the first time, and there is still significant room for growth in the future.

As of the end of February 2025, the cumulative installed capacity of wind power and solar power was 529.82 GW and 926.22 GW, respectively, representing year-on-year growth of 17.6% and 42.9%, accounting for 15.6% and 27.2% of the total installed capacity. The cumulative installed capacity of renewable energy reached 1,456.04 GW, exceeding the cumulative installed capacity of thermal power of 1,448.09 GW during the same period. According to the "Implementation Plan for the Optimization of Power System Regulation Capacity (2025-2027)" issued by the National Development and Reform Commission and the National Energy Administration in December 2024, by 2027, the power system regulation capacity will be significantly enhanced, supporting the reasonable consumption and utilization of more than 200 GW of newly added renewable energy annually from 2025 to 2027. It is expected that there will still be significant room for growth in renewable energy installations in the future, and the structure of power generation installations in China will continue to become cleaner.

In January-February, the power generation of large-scale enterprises slightly decreased, with an expanded decline in thermal power generation.

In January-February, the power generation of large-scale industrial enterprises was 14,921 billion kWh, a year-on-year decrease of 1.3%. The power generation from large-scale industrial thermal power/water power/nuclear power/wind power/solar power in January-February was -5.8%/+4.5%/+7.7%/+10.4%/+27.4%, with year-on-year changes compared to December being -3.2 pct/-1.0 pct/-3.7 pct/+3.8 pct/-1.1 pct From January to February, the decline in thermal power generation expanded compared to December, mainly due to the high base from last year's leap year and the impact of a warm winter. Excluding the leap year factor, the national average daily power generation in January and February 2025 was 25.29 billion kilowatt-hours, a year-on-year increase of 0.4%. According to meteorological department monitoring, the national average temperature in January this year was 1.5°C warmer than the multi-year average and 0.4°C warmer than the same period last year; in February this year, the national average temperature was the same as the same period last year, with central regions such as Hubei, Hunan, Henan, and Anhui, which have a relatively high proportion of residential electricity consumption in winter, being more than 1°C warmer than the same period last year.

The growth rate of electricity consumption slightly increased from January to February, with rapid growth in electricity consumption in industries such as information technology and wholesale retail.

In January and February 2025, the total electricity consumption of society was 1,556.4 billion kilowatt-hours, a year-on-year increase of 1.3%, with electricity consumption for the primary/secondary/tertiary industries and residential life being 20.8/963.6/298.0/274.0 billion kilowatt-hours, representing year-on-year growth of 8.2%/0.9%/3.6%/0.1%, respectively. Driven by policies such as "two heavies" and "two news," some industries still maintained rapid growth in electricity consumption. From January to February, the average daily electricity consumption of the information transmission/software and information technology service industry nationwide increased by 13.5% year-on-year; among them, driven by the rapid development of AI, big data, cloud computing, and 5G, the average daily electricity consumption of the internet and related services nationwide increased by 25.2% year-on-year. From January to February, the average daily electricity consumption of the wholesale and retail industry nationwide increased by 9.0% year-on-year; among them, driven by the rapid development of electric vehicles, the average daily electricity consumption of the charging and swapping service industry nationwide increased by 40.1% year-on-year.

Risk Warning: Risks of installed capacity not meeting expectations; risks of significant coal price increases; risks of reductions in on-grid electricity prices; risks of intensified industry competition, etc