The year 2026 marks the inaugural year of China’s “15th Five-Year Plan” for national economic and social development. According to data from the National Energy Administration, national total electricity consumption historically exceeded 10 trillion kWh, reaching 10.37 trillion kWh in 2025, making China the world’s first single economy to achieve this scale. Looking ahead to 2026, driven by the ongoing pro-growth policies and accelerated expansion of emerging industries, national total electricity consumption in China is projected to reach 10.9 trillion to 11 trillion kWh, representing a year-on-year increase of 5% to 6%. This trend underscores the continuous expansion of new energy power supply and the accelerating green and low-carbon transformation in China.

Amid accelerating marketization of power supply and demand, increased volatility in new energy power tariffs, and emerging bottlenecks in electricity consumption, the power industry is transitioning from an “installed capacity expansion phase” to a “competition phase centered on system capabilities.” In response to these evolving industry dynamics, the Company will prioritize high-quality development, continuously optimize its structural layout, enhance operational efficiency and risk management capabilities, and strengthen business stability and resilience against cyclical fluctuations, thus maintaining steady growth momentum in complex market conditions.

From the perspective of the policy environment, energy security and green transition will advance in tandem during the “15th Five-Year Plan” period. The State will continue to increase the proportion of new energy in supply while simultaneously promoting the orderly replacement of fossil fuels. On one hand, new energy will maintain its dominant role in building the national new power system. With new energy now fully marketized, despite that market-based trading may exert short-term pressure on new energy electricity tariffs, the proportion of electricity spot market transactions will continue to rise. On the other hand, the capacity tariff mechanism for traditional coal-fired power is gradually improving. This also helps better reflect the significant functional value of coal-fired power generating units in power system for energy security and load-regulation. The increasingly mature policy framework in the power industry will benefit enterprises with rational energy-mix structures, standardized governance, and advantages in economy of scale and management in achieving steady development. However, industry differentiation will also become more pronounced. In response to policy direction, the Company will accelerate the realization of coal-fired power’s capacity value, strengthen fuel cost management and control and market-based trading capabilities, while persistently selecting the best projects in the new energy sector to enhance project quality and consumption assurance levels. This will ensure the Company maintain the initiative amid policy adjustments.

From the perspective of industry development, the competitive focus of power enterprises is shifting. The sector is expected to transit toward technological innovation, enhanced operational capabilities, and improved marketing services. Corporate profit mix will also diversify, with revenue streams from electricity volume, electricity tariffs, capacity, and ancillary services collectively forming the operational foundation. Differences among enterprises will increasingly manifest in asset quality, system regulation capabilities, market responsiveness, and refined management levels. As power supply structures continue to be optimized with ongoing technological upgrades, the industry’s overall operational efficiency is expected to improve. Enterprises with comprehensive capability advantages will secure a more stable environment for development. Aligning with this trend, the Company will focus on optimizing its asset structure, strengthening lean operations and market responsiveness, and enhancing the overall profit resilience within a diversified revenue landscape.

From a sectoral perspective, both new energy and coal-fired power businesses are undergoing mechanism adjustments and structural restructuring. In the new energy sector, these businesses continue to play a vital role in the green and low-carbon transformation of the power system, driving national sustainable development. However, amid sustained growth in overall installed capacity, intensified competition on electricity tariffs and regional consumption disparities are expected to emerge. Project quality and operational efficiency will become key determinants of corporate returns. In terms of coal-fired power, it will serve as a foundational energy support in the future, with competitiveness gradually shifting toward enhancing peak-shaving capabilities under low-load operation and flexible on-off operational modes, and its integration with new energy output will become increasingly common. The value of coal-fired power capacity will gradually materialize, while stabilizing coal price benchmarks will further bolster revenue stability. The Company will adhere to a balanced focus on scale and profitability, optimizing the layout and construction pace of new energy and traditional energy projects. By enhancing lean operations, maintenance, and trading capabilities, the Company will sustain stable overall returns in the long run.

From the perspective of corporate synergy and platform development, the restructuring between the Company and SPIC Hydropower was successfully completed in October last year. The Company’s industrial structure has been further streamlined, further solidifying the foundation for its overall development. Upon completion of the restructuring, the concentration of the Company’s assets and synergistic effects have been enhanced, while the functionality of its listed platform continues to be strengthened. Pursuant to the letter of undertaking on non-competition issued by SPIC, SPIC pledges to actively facilitate the injection of its other hydropower assets into SPIC Hydropower within three years of completion of the transaction, subject to compliance with relevant laws and regulations as well as internal/external approval procedures. Moving forward, the Company will build upon its existing structure to continuously deepen internal synergies, enhance resource integration efficiency, steadily optimize its business layout, thereby expanding more resilient potential for long-term development.

Looking ahead, the Company stands at a pivotal turning point, transitioning from “leadership in scale” to “leadership in quality, leadership in capability, and leadership in return.” We remain unwavering in our commitment to clean development, steadfast in pursuing market-oriented reforms, and resolute in our goal of creating long-term value for shareholders. Amid the historic opportunity of profound energy structure transformation, we will steadily advance high-quality growth, continuously enhance our capital market returns, and repay the trust and support of the investors with outstanding performance.