GTHT: Power Demand Remains on Upward Trend, Long-Term Bullish on Thermal Power

Stock News12-23 19:54

Industrial power generation in November reached 779.2 billion kWh, up 2.7% year-over-year (YoY), though slowing from October's 7.9% growth. By source, thermal power fell 4.2% YoY (vs. +7.3% in October), while hydro surged 17.1% (+28% in October), nuclear rose 4.7% (+4.2%), wind jumped 22% (-12%), and solar climbed 23% (+6%). Cumulative January-November generation hit 8.8567 trillion kWh, up 2.4% YoY (vs. 2.3% in Jan-Oct). Power demand maintains its upward trajectory, with long-term optimism for thermal power. Key insights from GTHT:

1. **Regulatory Actions & Pricing Strategy**: The Energy Bureau penalized five thermal plants for colluding on bids, signaling tighter oversight. Against Beijing's anti-internal competition push and coordinated price hikes in coal/silicon/lithium sectors, GTHT argues: - Downstream power-intensive industries (e.g., polysilicon, cables, machinery) face global demand, with exports driving record trade surpluses. Passing partial costs overseas benefits China. - Moderate electricity price hikes could accelerate energy storage adoption, supporting carbon neutrality goals. - Cutting tariffs contradicts both decarbonization and anti-competition policies, potentially missing export pricing opportunities.

2. **Auction Trends**: Second-round market-based power tariffs are softening. Examples: - Jiangxi’s December 15 auction saw wind tariffs at ¥0.365/kWh (vs. ¥0.375 in Round 1) and solar at ¥0.379 (vs. ¥0.330). - Jilin’s 2026 targets: wind ¥0.25/kWh, solar ¥0.33, reflecting wind oversupply.

3. **Sector Performance**: - Fixed-asset investment fell 2.6% YoY Jan-Nov, with private investment down 5.3%. Power/utilities grew 10.7%, while manufacturing edged up 1.9%. - Anhui’s retail power market averaged ¥0.4182/kWh (¥0.3970 wholesale), maintaining a ¥0.0211 spread.

4. **Regional Challenges**: Qinghai’s draft spot-market rules cap prices at ¥0.65/kWh (floor: ¥0.08), with secondary limits at ¥0.30, potentially stifling storage projects.

**Risks**: Economic/monetary policy volatility and uncertain power market reform timelines.

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