SDIC Power Holdings Co.,Ltd. (ASX: 600886) announced that its controlling subsidiary, Yalong River Hydropower Development Co., Ltd., plans to establish a joint venture with Contemporary Amperex Technology Co.,Ltd. (CATL) to invest in and construct the Yagen II Hydropower Station, with a total dynamic investment of approximately 33.394 billion yuan.
The project company, tentatively named Yagen Hydropower Development Co., Ltd., will be responsible for building the station on the main stream of the Yalong River in Sichuan Province. It is designed with a total installed capacity of 2.4 million kilowatts and an estimated annual electricity generation of about 8.645 billion kilowatt-hours. While necessary support documents for site selection, environmental impact, and land use have been obtained, the project still awaits final approval from China's National Development and Reform Commission.
Project Investment and Timeline
The total investment of 33.394 billion yuan includes 6.679 billion yuan in capital, representing 20% of the total. The construction period is projected to be 101 months, with the first power unit expected to commence operation in 2035 and the entire project to be completed by 2036.
Ownership Structure
The joint venture will be 90%-owned by Yalong River Hydropower and 10%-owned by CATL. Given that Yalong River Hydropower is itself owned 52% by SDIC Power and 48% by Sichuan Chuantou Energy, the ultimate ownership in the project company breaks down to approximately 46.8% for SDIC Power, 43.2% for Sichuan Chuantou Energy, and 10% for CATL. The investment plan has been approved by SDIC Power's board of directors, pending the aforementioned regulatory approval.
Strategic Significance for SDIC Power
The successful implementation of the Yagen II project is poised to significantly enhance the profitability of SDIC Power's key subsidiary. By the end of 2025, clean energy accounted for 72.12% of SDIC Power's total installed capacity, with hydropower making up 45.43% of that. The Yalong River basin, developed primarily by this subsidiary, is a major national hydropower base with substantial development potential. The new station is noted for its large scale, favorable economic indicators, and operational flexibility. Once operational, it is expected to optimize the power structure in Sichuan and boost the profitability of the Yalong River hydropower assets.
Strategic Rationale for CATL
For the global battery giant CATL, this investment extends beyond a financial stake, representing a multi-faceted strategic move. It follows a similar pattern from late 2025, when CATL took a 10% stake in another hydropower project on the Dadu River.
Industry analysis points to three primary motivations for CATL's foray into hydropower. First, it secures a stable supply of green electricity, which is crucial for reducing the carbon footprint of its energy-intensive battery manufacturing processes. CATL's major production base in Yibin, Sichuan, already sources over 80% of its power from hydropower. Second, it strengthens the company's competitiveness in international markets, particularly in Europe, which is implementing strict carbon border taxes and new battery regulations requiring detailed carbon footprint disclosures. Third, it allows CATL to explore synergies between hydropower and its energy storage technologies, facilitating the development of a complementary clean energy system that integrates wind, solar, hydro, and storage.
This 33.4-billion-yuan investment marks a further step in CATL's strategic transition from a pure-play battery manufacturer to a comprehensive energy solutions provider, building a green energy ecosystem that spans power generation, storage, and consumption.
In the stock market, shares of SDIC Power closed at 14.95 yuan, up 1.29%, giving it a market capitalization of 119.7 billion yuan. Shares of CATL closed at 376.43 yuan, rising 4.56%, for a market value of 1.74 trillion yuan.
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