In 2024, the net profit (loss) of each operating segment and their respective changes over the previous year were as follows:
As compared with 2023, the changes in net profit were mainly due to the following factors:
The revenue of the Group was primarily derived from the sales of electricity, provision of power generation and energy storage-related services. In 2024, the Group recorded a revenue of RMB54,212,792,000, representing an increase of 22.48% as compared to RMB44,261,767,000 of the previous year.
In 2024, the details of revenue of each operating segment are set out as follows:
Revenue from hydropower increased by RMB1,753,567,000, which was mainly attributable to the increase in electricity sales of hydropower during the year.
Revenue from wind power and photovoltaic power increased by RMB6,497,998,000 in total, primarily driven by the expansion of consolidated installed capacity through strategic mergers and acquisitions, as well as the commencement of commercial operation of various power generation projects during the year.
Revenue from thermal power experienced a moderate growth of RMB339,401,000, primarily benefited from higher demand for frequency-modulating and peak-shaving power sources within the power system.
Revenue from energy storage increased by RMB1,360,059,000, reflecting the consistent expansion of the Group’s energy storage business.
Operating costs of the Group mainly consist of fuel costs, repairs and maintenance expenses for power generating units and facilities, depreciation and amortization, staff costs, subcontracting costs, cost of sales of energy storage equipment, consumables, and other operating expenses. In 2024, the operating costs of the Group amounted to RMB45,319,966,000, representing a rise of 17.58% as compared to RMB38,544,960,000 in the previous year. The increase was primarily driven by the Clean Energy Acquisitions, the commencement of operation and consolidation of various clean energy projects, and the expansion of the energy storage business.
Total Fuel Costs
The total fuel costs decreased by RMB444,558,000 or 2.65%, primarily due to the year-on-year decrease in coal prices.
Unit Fuel Cost
The average unit fuel cost of the Group’s coal-fired power business was RMB270.58/MWh, representing a decrease of 5.23% as compared to RMB285.51/MWh in the previous year. The year-on-year increase in the amount of imported coal exerted downward pressure on thermal coal prices during the year. Meanwhile, in order to further reduce fuel costs, the Group continued optimizing its procurement structure to capitalize on falling coal prices, which allowed for increased purchases of market coal and imported coal to supplement or replace coal supply under long-term contracts. Furthermore, the Group conducted in-depth analysis of the preferential policies for railway transportation costs to secure railway transportation capacity and preferential measures, which further lowered the unit fuel cost.
Depreciation and Staff Costs
Depreciation of property, plant and equipment and the right-of-use assets and staff costs increased by RMB4,483,811,000 in aggregate, mainly due to the business expansion brought about by the Clean Energy Acquisitions and the large number of new power generating units that commenced commercial operation during the year.
Cost of Energy Storage Equipment Sales and Subcontracting Costs
The Group’s energy storage segment is principally engaged in sales of energy storage equipment and the provision of subcontracting services for the development and assembly of power stations integrated with energy storage. In 2024, the cost of sales of energy storage equipment and subcontracting costs amounted to RMB3,212,636,000, representing an increase of RMB963,197,000 or 42.82% as compared to the previous year. It was primarily benefited from the Group’s continuous expansion of its energy storage business in both domestic and overseas markets. The expansion resulted in a substantial year-on-year increase in business volume, which led to a significant rise in subcontracting and material costs.
Other Operating Expenses
Other operating expenses increased by RMB1,854,404,000, or 44.74%, year-on-year, primarily due to increased operating costs related to power generation, higher amortization of other intangible assets, and an increase in the provision for impairment of accounts receivable and other receivables.
The net gains from other gains and losses increased by RMB56,758,000, or 8.36%, year-on-year, primarily due to increase in profits derived from sales of heat, trading of coal, coal by-products, spare parts and others. Furthermore, a gain on recognition of negative goodwill and a gain on disposal of property, plant and equipment were also recorded. However, these net gains were mitigated by an increase in the impairment of property, plant and equipment in 2024.
In 2024, the Group’s operating profit was RMB12,167,191,000, representing an increase of 39.61% as compared to the operating profit of RMB8,715,187,000 in the previous year.
In 2024, the finance costs of the Group amounted to RMB5,043,066,000 (2023: RMB4,273,867,000). This represents an increase of RMB769,199,000, or 18.00%, as compared to the previous year. The increase in finance costs was mainly due to the Clean Energy Acquisitions made in the latter half of last year. Moving forward, the Group will continue to monitor market changes and take advantage of the opportunity presented by lower financing interest rates to actively optimize its debt structure by replacing the high-interest borrowings.
In 2024, the profits from the Group’s share of results of associates was RMB551,145,000, representing an increase of RMB46,290,000, or 9.17%, as compared to the previous year. The growth was primarily benefited from the increase in electricity sold from coal-fired power operations, along with a decrease in unit fuel costs, such as the average unit price of coal, which enhanced the profitability from coal-fired power operations and helped offset the decline in profits from wind power and photovoltaic power generation.
In 2024, the profits from the Group’s share of results of joint ventures was RMB181,455,000, representing a decrease of RMB19,839,000, or 9.86%, as compared to the previous year. The decline in profits was primarily due to a reduction in electricity sales from coal-fired power operations, driven by reduced demand in a specific region. While sales of electricity from wind power and photovoltaic power increased substantially, the related profits were insufficient to fully offset the drop in profits from coal-fired power operations.
In 2024, the income tax expense of the Group was RMB1,470,790,000, representing an increase of RMB578,155,000, or 64.77%, as compared to the previous year. The increase was primarily attributed to the hydropower segment’s turnaround from a loss to a profit year-on-year and rising profits from the thermal power, wind power and photovoltaic power segments.
At the Board meeting held on 20 March 2025, the Board recommended the payment of a final dividend for the year ended 31 December 2024 of RMB0.162 (equivalent to HK$0.1754 at the exchange rate announced by the People’s Bank of China on 20 March 2025) per ordinary share (2023: RMB0.132 per ordinary share), totaling RMB2,003,964,000 (equivalent to HK$2,169,724,000) (2023: RMB1,632,860,000), which is based on 12,370,150,983 shares in issue on 20 March 2025. This, combined with the special dividend of RMB0.05 per ordinary share distributed in celebration of the 20th anniversary of the Company’s listing on the Hong Kong Stock Exchange, brought the total dividends for the year to RMB0.212 per ordinary share.
The dividend payout ratio for 2024, calculated as dividend declared for the year (excluding the one-off special dividend), divided by profit attributable to ordinary shareholders, was 60% (2023: 61%). The Board confirmed that the dividend decisions made in 2024 were in accordance with the Company’s dividend policy, which mandates a minimum payout ratio of no less than of 50%, and the dividend payout ratio for 2024 remained relatively stable as compared to the previous year.
As at 31 December 2024, the carrying amount of equity instruments at FVTOCI was RMB5,091,105,000, accounting for 1.50% of total assets, including listed equity securities of RMB3,331,389,000 and unlisted equity investments of RMB1,759,716,000.
Listed equity securities represent the equity interests in Shanghai Power held by the Group. As at 31 December 2024, the Group held 12.90% (31 December 2023: 12.90%) of the issued share capital of Shanghai Power, the A shares of which are listed on the Shanghai Stock Exchange. They were categorized as level 1 financial assets of fair value measurements, and their fair values increased by 8.39% as compared with RMB3,073,452,000 as at 31 December 2023.
Unlisted equity investments represent the Group’s investment in equity of certain unlisted companies principally engaged in financial services, coal production and electricity trading services respectively. They were categorized as level 3 financial assets of fair value measurements, and their fair values increased by 4.32% from RMB1,686,892,000 as at 31 December 2023.
The valuation methods and key inputs used for measuring the fair values of the above level 3 financial assets were market approach, i.e. fair values of such equity instruments were estimated by calculating the appropriate value ratio based on market multiples derived from a set of comparable listed companies in the same or similar industries. Key inputs were (i) the market value of the said equity interests, (ii) price-to-book ratio (1.60-2.00) and price-earning ratio (9.70-12.60) of the comparable companies, and (iii) the discount for lack of marketability (29.69%-31.05%).
The fair value gain on equity instruments at FVTOCI (net of tax) for the year ended 31 December 2024 of RMB195,570,000 (2023: loss of RMB413,328,000) was recognized in the consolidated statement of comprehensive income.
On 30 September 2024, the Company received the Notice of Proposed Plan for Major Asset Restructuring Matters (the “Notice”) from SPIC. SPIC proposed the transfer of the Company’s controlling interests in its subsidiaries primarily engaged in hydropower business, including Wu Ling Power and Changzhou Hydropower, to Yuanda Environmental (a company listed on the Shanghai Stock Exchange), so as to subscribe for its allotment of new shares plus cash consideration (the “Proposed Asset Restructuring”). If the Proposed Asset Restructuring is executed, the Company is expected to become the direct controlling shareholder of Yuanda Environmental and the Company is expected to maintain its control over Wu Ling Power and Changzhou Hydropower through Yuanda Environmental.
To capitalize on the opportunities presented by the Notice, on 18 October 2024, the Company, Hunan Xiangtou International Investment Limited* (湖南湘投國際投資有限公司) (“Xiangtou International”) and Yuanda Environmental entered into Restructuring Framework Agreement I, pursuant to which the Company and Xiangtou International intended to transfer all their respective shareholding in Wu Ling Power to Yuanda Environmental in exchange for the new shares issued by Yuanda Environmental plus cash consideration. At the same time, Guangxi Company, a wholly-owned subsidiary of the Company, and Yuanda Environmental entered into Restructuring Framework Agreement II, pursuant to which Guangxi Company intended to transfer its 64.93% shareholding in Changzhou Hydropower to Yuanda Environmental in exchange for the new shares issued by Yuanda Environmental plus cash consideration. Prior to the implementation of the Proposed Asset Restructuring, Wu Ling Power and Changzhou Hydropower will undergo Proposed Asset Pre-Restructuring. Details of which were set out in the “Event after the Reporting Period” section below.
To unleash the advantages of “two joint operations” ( 兩個聯營 ) industrial models of “coal plus coal-fired power” and “coal-fired power plus new energy power”, on 6 December 2024, the Company, Huainan Mining and Pingwei Power (a 60%-owned subsidiary of the Company) entered into the Capital Injection Agreement. Pursuant to the Capital Injection Agreement, Huainan Mining agreed to acquire 11% equity interest of Pingwei Power at a consideration of RMB152,823,808.16 (equivalent to approximately HK$166,113,000) through an injection into the registered capital of Pingwei Power. The Completion of this transaction took place on 30 December 2024. Upon completion, the Company’s equity interest in Pingwei Power was diluted from 60% to 49%. As a result, Pingwei Power has ceased to be a subsidiary of the Company and has become an associate of the Company.
Save as disclosed above, the Group did not have any other material acquisitions and disposals during the year under review.
Prior to implementation of the Proposed Asset Restructuring, Wu Ling Power and Changzhou Hydropower will undergo Proposed Asset Pre-Restructuring. The Proposed Asset Pre-Restructuring consisted of three parts: (1) external acquisitions by Wu Ling Power; (2) formation of joint ventures; and (3) intragroup reorganization. On 17 January 2025, Wu Ling Power and each of the relevant sellers (being SPIC Associates and Beijing Xinying) entered into the Wu Ling External Acquisitions Agreements. On the same day, Wu Ling Power also entered into a sale and purchase agreement with Hubei Diantou to conditionally acquire 100% equity interest in Lanshanxian Zhuoyue New Energy Development Co., Ltd* ( 藍山縣卓越新能源開發有限公司 ) (“Lanshanxian Zhuoyue”). For further details on the Wu Ling External Acquisitions Agreements, acquisition of Lanshanxian Zhuoyue and matters in relation to the formation of joint ventures and intragroup reorganization, please refer to the announcement of the Company published on 17 January 2025. The transaction is currently in progress. The Company will timely publish updates regarding this transaction as and when appropriate.
Wu Ling Power successfully completed a debt refinancing after the end of the period, the details of which can be found in the section headed “Sci-Tech Note” under “Significant Financing” below.
As at 31 December 2024, cash and cash equivalents of the Group were RMB6,073,616,000 (31 December 2023: RMB5,738,815,000). Current assets amounted to RMB51,638,373,000 (31 December 2023: RMB45,642,151,000), current liabilities amounted to RMB93,182,359,000 (31 December 2023: RMB75,170,626,000) and current ratio was 0.55 (31 December 2023: 0.61).
As a result of the Clean Energy Acquisitions, on 17 August 2023, the Company entered into a supplemental agreement to the financial services framework agreement dated 6 May 2022 with SPIC Financial to revise the annual cap for the related financial services. Following the revision, the annual cap in respect of the maximum daily balance of deposit (including accrued interests) placed by the Group with SPIC Financial was increased to RMB9.0 billion, while other principal terms remained unchanged. Pursuant to the financial services framework agreement and its supplemental agreement, SPIC Financial will continue to provide the Group with deposit services, settlement services, loan services and other financial services approved by the National Financial Regulatory Administration on a non-exclusive basis. The financial services framework agreement and its supplemental agreement will expire on 7 June 2025. The Company proposes to renew the financial services framework agreement and will seek its independent shareholders’ approval. The Company will timely publish updates on the renewal of the financial services framework agreement as and when appropriate.
For the period between 1 January 2024 and 31 December 2024, the maximum daily balance of deposit (including accrued interests) placed by the Group with SPIC Financial was approximately RMB8.99 billion (31 December 2023: approximately RMB8.97 billion), which did not exceed the annual cap of RMB9 billion.
Pursuant to the aforementioned financial services framework agreement and its supplemental agreement, SPIC Financial provides the Group with an internal treasury management platform, a cross-border fund allocation platform and other financial services through its own financial resources, including the business information system and cross-border fund allocation channels. These platforms enable real-time monitoring of account balances, as well as income and expenditure, thereby safeguarding against funding risks. At the same time, they facilitate flexible and efficient fund allocation across borders, which gives rise to more flexible capital flow at home and abroad, broadens financing channels for domestic subsidiaries and reduces uncertainties in inbound and outbound capital flows due to changes in foreign exchange regulatory policies.
During the year under review, the Group recorded a net increase in cash and cash equivalents of RMB334,817,000 (2023: net increase of RMB1,511,664,000). For the year ended 31 December 2024:
net cash generated from operating activities amounted to RMB10,621,363,000 (2023: RMB9,903,018,000). The increase was mainly attributable to the year-on-year rise in operating profit.
net cash used in investing activities amounted to RMB35,172,389,000 (2023: RMB26,843,571,000). The increase in cash used was mainly attributable to the deferred effect of payments of consideration payable for acquisition of subsidiaries in prior years, and the year-on-year increase in payments for property, plant and equipment, and prepayments for construction of power plants.
net cash generated from financing activities amounted to RMB24,885,843,000 (2023: RMB18,452,217,000). The increase was mainly attributable to the year-on-year rise in net borrowings. However, such increase was partially offset by the redemption of perpetual debts and the payment of special dividends during the year.
The financial resources of the Group were mainly derived from cash inflow generated from operating activities, debt instruments, borrowings from banks and related parties, and project financing.
As at 31 December 2024, total debts of the Group amounted to RMB197,360,970,000 (31 December 2023: RMB168,714,840,000). Over 99% of the Group’s total debts are denominated in RMB.
As at 31 December 2024, the Group’s gearing ratio, calculated as net debt (being total debts less cash and cash equivalents) divided by total capital (being total equity plus net debt), was approximately 64% (31 December 2023: approximately 63%). The Group’s gearing ratio slightly increased due to new debts arising from financing activities, as outlined in the “Liquidity, Cash Flows, and Financial Resources” section above.
As at 31 December 2024, the amount of borrowings granted by SPIC Financial was approximately RMB11.03 billion (31 December 2023: approximately RMB8.24 billion).
The details of the Group’s debt as at 31 December 2024 and 2023 are set out as follows:
The above debts are repayable as follows:
Among the above debts, approximately RMB63,916,901,000 (31 December 2023: approximately RMB48,169,746,000) are subject to fixed interest rates, and the remaining debts denominated in RMB are subject to adjustment based on the relevant rules of the People’s Bank of China and bearing interest rates ranged from 1.00% to 4.95% (2023: ranged from 1.60% to 5.10%) per annum.
When there is any indication of asset impairment, the Group will conduct an impairment test on the assets to assess whether an impairment has occurred.
In 2024, the Group recognized an impairment of property, plant and equipment totaling RMB265,262,000 (31 December 2023: RMB66,964,000). The impairment was primarily due to the cancellation of development quotas for a photovoltaic power generation project during its construction phase and the impairment of scrap photovoltaic panels resulting from the demolition of a photovoltaic power generation project, both driven by changes in local and environmental policies. Additionally, the Group recognized an impairment of accounts receivable and other receivables amounting to RMB228,494,000 (31 December 2023: reversal of impairment of RMB2,328,000). The impairment was primarily due to the limited recoverability of certain recognized electricity tariff subsidies as a result of changes in local practices and policies on subsidies distribution.
The Company has obtained approval from the China Securities Regulatory Commission ( 中國證券監督管理委員會 ) for the public issuance of corporate bonds onshore of the PRC and to be listed on the Shanghai Stock Exchange, with an aggregate amount of not exceeding RMB3 billion and an effective registration period of 2 years which could be issued in tranches. The Company issued (i) the first tranche of the corporate bonds in a principal amount of RMB2 billion at the interest rate of 2.67% per annum and a maturity period of 3 years; and (ii) the second tranche of the corporate bonds in a principal amount of RMB1 billion at the interest rate of 2.39% per annum and a maturity period of 3 years, in March and April 2024, respectively.
Under the current registration with the NAFMII for issuing debt financing instruments, the Company issued (i) the first tranche of (sustainability-linked) green medium-term note in a principal amount of RMB2 billion at the interest rate of 2.12% per annum and a maturity period of 3 years, which is the first commercial note issued in the China’s bond market that linked its coupon rate with the issuer’s China Certified Emission Reductions ( 國家核證自願減排量 ) performance target; (ii) the second tranche of green medium-term note in a principal amount of RMB1.5 billion at the interest rate of 2.58% per annum and a maturity period of 10 years; and (iii) the third tranche of green medium-term note (Carbon Neutrality Bond) in a principal amount of RMB1 billion at the interest rate of 2.28% per annum and a maturity period of 5 years, in April, June and October 2024, respectively.
Wu Ling Power has obtained a “Notification on Acceptance of Registration” from the NAFMII, confirming the acceptance of its application for issuance of asset guaranteed debt financing instrument (the Sci-Tech Note) ( 資產擔保債務融資工具 ( 科創票據 )) in the PRC by tranches in an aggregate amount of RMB1 billion with an effective registration period of two years from August 2024. On 3 September 2024, Wu Ling Power issued its first tranche of the Sci-Tech Note, with a principal amount of RMB400 million, an interest rate of 1.97% per annum, and a maturity period of 181 days (“2024-first-tranche of the Sci-Tech Note”). Upon the maturity of this Sci-Tech Note, Wu Ling Power issued another tranche of the Sci-Tech Note, with a principal amount of RMB400 million, an interest rate of 1.90% per annum and a maturity period of 240 days, for the purpose of repaying the 2024-first-tranche of the Sci-Tech Note on 27 February 2025.
The proceeds from the above debt instruments were fully applied towards the repayment of the existing borrowings and the replenishment of working capital for daily operations.
The Company adopted the Share Incentive Scheme upon the approval by its shareholders at an extraordinary general meeting held on 15 June 2022. Under the Share Incentive Scheme, the Company granted a total of 103,180,000 share options in two tranches in July 2022. All the aforesaid grantees were employees of the Company or its controlled subsidiaries. As at 1 January 2024, there were 93,060,000 shares options granted but not yet lapsed or canceled. There were 34,394,800 share options lapsed during the year under review. Consequently, the Company had 58,665,200 share options outstanding under the Share Incentive Scheme as at 31 December 2024. Taking into account the leaving of grantees and based on the revised estimates of the number of share options that will lapse in the future, the Company recognized share-based payment expenses of RMB19,283,000 (2023: RMB7,422,000) during the year under review.
In 2024, the total capital expenditure of the Group was RMB28,212,560,000 (2023: RMB30,313,575,000). Among them, the capital expenditure for clean energy segments (hydropower, wind power, photovoltaic power and energy storage) was RMB24,583,792,000 (2023: RMB24,677,137,000), which was mainly applied for the engineering construction of new power plants and power stations, and the asset purchases related to the energy storage business; whereas the capital expenditure for thermal power segment was RMB2,872,444,000 (2023: RMB4,636,413,000), which was mainly applied for the engineering construction of new power generating units and technical upgrade for the existing power generating units. These expenditures were mainly funded by project financing, debt instruments, funds generated from business operations and borrowings from related parties.
As at 31 December 2024, certain bank borrowings, borrowings from related parties and other borrowings (31 December 2023: certain bank borrowings and other borrowings) totaling RMB1,546,617,000 (31 December 2023: RMB1,235,982,000) were secured by certain property, plant and equipment with a net book value of RMB632,581,000 (31 December 2023: RMB2,235,221,000). In addition, certain bank borrowings, other borrowings and lease liabilities totaling RMB31,911,780,000 (31 December 2023: RMB33,517,642,000) were secured by the rights on certain accounts receivable amounted to RMB9,576,998,000 (31 December 2023: RMB7,530,108,000).
As at 31 December 2024, the Group had no material contingent liabilities.
In February 2024, the NDRC issued the “Regulatory Measures for Fully Guaranteed Purchase of Electricity Generated from Renewable Energy (《全額保障性收購可再生能源電量監管辦法》)” (the “New Measures”), which officially took effect on 1 April 2024, and the “Regulatory Measures for Full Purchase of Electricity Generated from Renewable Energy by Power Grid Companies (《電網企業全額收購可再生能源電量監管辦法》)”, which took effect from 1 September 2007, was repealed at the same time. Pursuant to the New Measures, the on-grid electricity generated by renewable energy power generation projects are classified into two categories, namely guaranteed purchase electricity and market trading electricity. The State planned purchase is positioned as guaranteed consumption, which aims at guiding the relevant participants in the electricity market to proactively consume green electricity through the market, instead of relying on the traditional mode of passive consumption of green electricity by power grid companies.
With the wind-down of full purchase of electricity by power grid companies, some new energy power generation companies faced consumption issues and needed to generate revenue from surplus electricity through market trading. In this regard, China issued the New Rules (as defined below) to provide new energy power generation companies with the opportunity to participate in market trading. In April 2024, the NDRC issued the “Basic Rules for the Operation of the Electricity Market (《電力市場運行基本規則》)” (the “New Rules”), which took effect on 1 July 2024. The New Rules aims to establish a national unified trading system for the electricity market that breaks down cross-provincial and cross-regional trade barriers and promotes the balance of electricity nationwide. Following the implementation of the New Rules, power generation companies were able to flexibly adjust their production strategies to cater to market demand, thereby enhancing the efficiency and economic benefits of power generation and opening up new channels for power consumption.
In November 2024, the NEA issued the “Blue Paper on the National Unified Electricity Market Development Plan (《全國統一電力市場發展規劃藍皮書》)” (the “Blue Paper”). The Blue Paper specified the timetable and roadmap for the development of the national unified electricity market. By 2025, it is expected that the initial construction of the national unified electricity market will be completed for the standardization of basic trading rules and technical standards across the country. By 2029, it is planned that the national unified electricity market will be fully established to promote the fairness and standardization of basic market rules and market supervision. By 2035, the national unified electricity market will be further optimized to support the full establishment of a high-level socialist market economy.
The power grid system is the core aspect of the efficient transmission and consumption of new energy. With the large-scale grid connection of new energy, the demand for the construction of ancillary power grids has increased significantly. In May 2024, the NEA issued the “Circular on Making Effective Efforts in New Energy Consumption to Ensure the High-quality Development of New Energy (《關於做好新能源消納工作保障新能源高質量發展的通知》)” (the “Development Circular”), which highlighted that the power generation capacity had far exceeded the local demand for electricity in certain areas with uneven distribution of new energy consumption capacity. To this end, the Development Circular calls for breaking down barriers between provinces, prohibiting restrictions on cross-provincial new energy transactions and proposing measures such as accelerating the exploration of the establishment of regional power markets to further optimize the resource allocation capability.
In promoting the consumption of new energy, the green certificate system is considered to be an important tool to safeguard the consumption of electricity from renewable energy sources. It is also one of the most crucial approaches to support the green and low-carbon transformation of society and achieve the Dual Carbon Goals. In August 2024, the NEA promulgated the “Rules for Issuance and Trading of Green Power Certificate for Renewable Energy (《可再生能源綠色電力證書核發和交易規則》)”, which further standardized the issuance and trading of green certificates, and set out the specific requirements for the issuance, trading and transfer, validity period, information management and supervision of green certificates. These measures are of great practical significance in expanding the scale of green certificate trading and helping to boost green electricity consumption across society.
In July 2024, the NEA published the “Action Plan for the Low-carbon Transformation of Coal-fired Power Generation (2024–2027) (《煤電低碳化改造建設行動方案 (2024–2027 年 )》)” (the “Action Plan”) with the goal of transforming a number of low-carbon coal-fired power generation projects by 2027. Through the application of low-carbon power generation technologies in the relevant projects, the carbon emissions per unit of electricity will be reduced by approximately 50% as compared with 2023, so that it will be close to the emission level of natural gas power generating units. The Action Plan also proposed various support measures, including increasing government investment subsidies and encouraging eligible projects to be financed by way of, among others, real estate investment trusts (REITs), green bonds or green credits and will help broaden the path of low-carbon transformation for coal-fired power generation and support the clean and low-carbon transformation of coal-fired power generation projects.
In August 2024, the “Energy Law of the People’s Republic of China (《中華人民共和國能源法》)” (the “Energy Law”) was passed at the 12th meeting of the 14th Standing Committee of the National People’s Congress and came into effect on 1 January 2025. The Energy Law integrated multiple energy types and transformation objectives under the same framework. From a legal perspective, it specified the direction and path of transformation and development in the energy sector, and determined the positioning and development priority of each energy type. In terms of electricity generation, the Energy Law proposed to rationalize the development of coal-fired power generation, so that it can be further transformed to serve a supporting and regulating role and better cater to the demand for regulation of the power system. At the power grid level, the Energy Law specified that grid-source coordination should be strengthened by promoting the intelligent transformation of power grid infrastructure and the construction of smart microgrids, so as to improve the power grid’s capacity to accept, allocate and regulate renewable energy.
As the power reform continues, the increase in inter-provincial trading volume will benefit provinces with abundant new energy resources, where more high-quality green power resources can be externally distributed from these provinces to increase the consumption of green power. On the other hand, it is expected that the entry of new energy into the market may impose pressure on green power tariffs in most provinces in the short term, and undermine the overall profitability of the industry. However, in the long run, clearer price signals will help define the investment scope of the industry and guide its rational and healthy development in a more precise manner.
In addition, the market-oriented development of electricity purchase and power generation, especially the spot market, will reflect more clearly the supply and demand of power at different times and places. This will have a positive impact on more adjustable power sources, such as thermal power and large-scale hydropower. For green power with weaker regulation capabilities, the tariffs will face significant pressure. However, the price advantage of green power will also attract more users, thus increasing its consumption level. Looking ahead, China Power will continue to rationalize the allocation of different types of power sources to cope with the changing market environment.
| Address | Suite 6301, 63/F, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong |
| Phone | (852) 2802-3861 |
| Fax | (852) 2802-3922 |
| ir@chinapower.hk |
