Hong Kong Stock Concept Tracking | “Basic Rules for the Electric Power Auxiliary Service Market” Released to Comprehensively Accelerate the Construction of the Electricity Spot Market (with concept stocks)

The National Development and Reform Commission and the National Energy Administration issued the “Basic Rules for the Electricity Auxiliary Service Market”.

Among them, it is proposed that agencies dispatched by the National Energy Administration, together with provincial price and energy authorities, should promptly organize market operating agencies to revise the auxiliary service market implementation rules in accordance with relevant regulations such as the “Rules” and the Development and Reform Price (2024) Document No. 196, maintain a unified fair competition system, and ensure consistency with the requirements of the “Rules”.

In regions where the electricity spot market operates continuously, it is necessary to improve spot market rules, relax market price limits appropriately, and guide the implementation of peak shifting functions. Markets with similar functions such as peak shifting, peak shifting, and peak shifting capacity should no longer operate.

The General Office of the National Development and Reform Commission and the General Department of the National Energy Administration issued a notice on comprehensively speeding up the construction of the electricity spot market. The Hubei electric power spot market will be officially put into operation by the end of June 2025, the Zhejiang electric power spot market by the end of 2025, and Anhui and Shaanxi will strive to enter official operation by the end of June 2026.

By the end of 2025, Fujian, Sichuan, Liaoning, Chongqing, Hunan, Ningxia, Jiangsu, Hebei South Network, Jiangxi, Henan, Shanghai, Jilin, Heilongjiang, Xinjiang, Mengdong, and Qinghai will launch continuous settlement trials in the spot market.

By the end of 2025, the southern regional electricity spot market will begin continuous settlement trial operation, the Beijing-Tianjin-Hebei electricity market will create conditions to start simulated trial operation, the interprovincial spot market will enable power generation companies to participate in interprovincial spot electricity purchases, and step up research on mechanisms for electricity sales companies and electricity users to directly participate in interprovincial spot trading.

Market construction should fully take into account the reasonable demands of each region, speed up the formation of joint efforts, and better promote the optimal allocation of resources on a large scale.

According to a research report released by GF Securities, the electricity consumption growth rate of the whole society rebounded to 4.8% in March, the decline in thermal power consumption narrowed, and the contribution of clean energy increased. Currently, the fundamentals of the electricity sector continue to improve, the decline in coal prices is compounded by the optimization of the capacity electricity price mechanism, the certainty of profit recovery for thermal power companies has increased, and hydropower and green power also have structural opportunities. It is recommended to focus on three major investment portfolios: (1) robust and defensive hydropower and regional energy; (2) flexible thermal power targets; and 3) policy-driven green power offensive portfolios.

Guosheng Securities released a research report saying that the countercyclical nature of electricity is prominent, style changes resonate with fundamental support, and emphasis is placed on layout opportunities. The bank believes that the collective actions of electricity central enterprises to increase their holdings show shareholders' confidence. Under short-term market fluctuations, market style preferences declined, and the countercyclical nature of electricity became prominent.

Hong Kong stock companies related to power grids:

Huadian International Power Co., Ltd. (01071), Huaneng International Power Co., Ltd. (00902), China Power International Development Co., Ltd. (02380), China Resources Electric Power (00836), Datang Power (00991), CGN Power (01816), etc.