CITIC Securities has released a research report noting that the growth rate of total electricity consumption in June slowed to 3.7% on a month-over-month basis, primarily due to weak demand from residential users and certain secondary industrial sectors like chemicals, while high-end technology industries such as electrical equipment and computers maintained strong growth momentum. The firm recommends investing in leading companies with high-quality underlying assets in hydropower, nuclear power, and coal-power integration; H-share thermal power and green power companies with attractive valuations and dividend yields; and emerging scenarios and models benefiting from digitalization and the integration of new power systems, such as virtual power plants and microgrids.
Key Insights from CITIC Securities
Demand: Weak residential electricity demand led to a marginal slowdown in total electricity consumption growth to 3.7% in June. According to data from the China Electricity Council, total electricity consumption in June 2026 reached 898.1 billion kWh, a year-on-year increase of 3.7%, but the growth rate dropped 3.2 percentage points from May. Growth rates across all industrial sectors declined month over month, with secondary and tertiary industries growing by 4.7% and 5.6%, respectively, remaining relatively stable. Due to the high base of consumption from last June's heatwave, residential electricity use fell 3.1% year-on-year, contributing -0.5% to the overall growth rate, becoming the primary drag. Manufacturing electricity consumption grew 4.9% in June, with high-tech and equipment manufacturing up 10.3%, and electrical machinery and computer communications manufacturing posting strong growth of 16.5% and 11.0%, respectively. Chemical and rubber product sectors saw electricity growth of 0.4% and 8.6%, continuing a downward trend. Regionally, electricity consumption growth in coastal areas slowed by 4.0 percentage points to 4.6% in June, with the Yangtze River Delta experiencing a notable decline in growth compared to the prior month.
Supply: Investment growth in both generation and grid sectors slowed month over month. In the first half of 2026, new installed capacity reached 158.7 GW, a year-on-year decrease of 46%, primarily due to the high base from the previous year, which led to a significant decline in new renewable energy installations. Power generation investment in the first half of the year fell 3.2% year-on-year to 363.7 billion yuan, shifting from growth to decline, with investment growth rates for hydropower, thermal, nuclear, and wind power all slowing compared to the January-May period. Grid investment totaled 302.7 billion yuan, up 4.0% year-on-year, maintaining growth but at a gradually decelerating pace.
Utilization: Wind power remained weak while solar improved, and hydropower output growth moderated. In June, the average utilization hours of power generation equipment nationwide were 230 hours, down 7.1% year-on-year. By source, hydropower utilization hours fell 2.5% year-on-year to 346 hours, slowing the cumulative growth rate for the first half of the year. Nuclear power generation remained stable, with utilization hours up 0.5% year-on-year. Under pressure from lower demand and new capacity, thermal power utilization hours dropped 4.3% year-on-year, continuing a downward trend. Wind power utilization hours declined 14.8% year-on-year, remaining weak, while solar utilization hours rose 3.0% year-on-year. In terms of electricity prices, the benchmark price in Guangdong Province fell to 0.414 yuan/kWh in August, a discount of 39 yuan/MWh from the reference price, while prices in Jiangsu Province edged up to 0.363 yuan/kWh in August, maintaining an upward trend since February.
Risk Factors: Lower-than-expected electricity demand; significant declines in market trading electricity prices; substantial increases in fuel costs; rising costs for wind and solar installations; heightened risks of renewable energy curtailment; and lower-than-expected water inflows.
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