Guoxin Securities: Electricity prices are beginning to show signs of a cycle reversal, and power companies are expected to usher in value revaluation

The Zhitong Finance App learned that Guoxin Securities released a research report saying that in January-May 2026, wind power added 24 million kilowatts of installed capacity, a year-on-year decrease of 48.2%, and PV added 60 million kilowatts of installed capacity, a year-on-year decrease of 69.7%. The bank believes that electricity prices in the market are beginning to show signs of a cycle reversal. The collaborative computing and electricity project is expected to usher in large-scale development opportunities under the dual demand of green power consumption and reduction in computing power costs. The revaluation of the green power environment will become a core variable to improve the economic efficiency of the project. Profits on the power generation side may have bottomed out, free cash flow is improving, and power companies are expected to experience a revaluation.

Guoxin Securities's main views are as follows:

Electricity consumption is rising, the growth rate of new energy installations is slowing down, and marginal electricity supply and demand are evolving into a tight balance

From January to June 2026, the total electricity consumption of the entire society was 5099.9 billion kilowatt-hours, an increase of 5.3% over the previous year. Among them, the growth rate in 10 provincial regions exceeded 6%, and electricity consumption in data centers and charging and switching increased dramatically. Affected by factors such as the full entry of new energy into the market, new energy feed-in tariffs have declined, project yield has declined, and the growth rate of some installed capacity has slowed. From January to May 2026, wind power added 24 million kilowatts, a year-on-year decrease of 48.2%, and PV added 60 million kilowatts of installed capacity, a year-on-year decrease of 69.7%.

Electricity price reversal signals have appeared, and the power generation side's bargaining power has increased

On June 11, the US National Oceanic and Atmospheric Administration announced that an El Niño phenomenon had formed in the tropical Pacific Ocean and issued an El Niño warning. Forecasts indicate that the El Niño phenomenon is likely to increase to a moderate or strong level this fall. In the El Niño incident, high temperatures in summer may increase the air conditioning load, electricity demand will rise further, and the electricity price game is intense. Electricity prices in Guangdong surged in May and July. Among them, electricity prices in Guangdong rose sharply in May and July. Among them, monthly medium- to long-term electricity prices rose by 483.4 yuan/MWh from month to month, rebounding 82.0 yuan/MWh month-on-month, up 111.2 yuan/MWh from the annual Changxie Conference; Zhejiang, Jiangsu and other provinces also showed an upward trend in electricity prices. The bank believes that electricity prices in the market are beginning to show signs of a cycle reversal.

Clean energy consumption and computing power demand are driven in both directions, and the collaborative model is being implemented at an accelerated pace

The explosive growth of AI computing power is driving the demand for electricity in data centers to continue to rise, and electricity collaboration has become a key path for coordinating the digital economy and renewable energy consumption. At the policy level, “computing and electricity collaboration” has been included in the government work report, and multiple departments have provided multi-dimensional support in terms of green power transactions, integration of source networks and load storage, and direct connection to clean energy. At the industrial level, the demand for highly stable electricity in data centers complements the characteristics of the low marginal cost of new energy sources and long-term consumption. Models such as green power trading, direct green power connection, and integrated source network load storage and calculation have been implemented at an accelerated pace. Many listed companies such as Datang Group, Jinkai Xinneng, Yuneng Holdings, Jingke Technology, Shaoneng Co., Ltd., and Gansu Energy have begun to deploy. At the economic level, typical project estimates show that under 80% clean energy coverage and PPA electricity price of 0.29 yuan/kilowatt-hour, the data center saves about 70 million yuan in electricity costs per year. The project has no IRR leverage of about 5.5%, and the equity IRR is about 7.5%, which is already initially commercially attractive. However, the current green license market is oversupplied and environmental value is seriously underestimated. The direct green power connection model also faces policy blockages such as backup fees and restrictions on the amount of electricity returned. Project returns are sensitive to PPA electricity prices and initial investment. Looking forward to the future, as data center electricity consumption jumps from 19.6 billion kilowatt-hours in 2025 to 800 billion kilowatt-hours in 2030 (about four-fold growth space), superimposed green power costs continue to decline and power market-based reforms are deepening. Cooperative computing projects bound to stable loads are expected to usher in large-scale development opportunities under the dual needs of green power consumption and computing power cost reduction. Green power environmental value revaluation will become a core variable to improve project economy.

Green electricity consumption and shipping fuel substitution are expected to open up space for green methanol growth

Since 2025, the country has intensively issued documents to promote the consumption of green electricity. Consumption has become the focus of renewable energy development. Green methanol is an important way to consume green electricity locally. At the same time, IMO's promotion of a net zero framework is the general trend, which will open up demand for green methanol fuel in shipping. According to statistics, as of 2025, 173 domestic green methanol projects have been contracted/registered, with a production capacity of 53.46 million tons/year, and the number and scale of production capacity have increased rapidly. Currently, electric methanol is the green alcohol route with the most room for development. With the reduction in green power costs and the promotion of nearby consumption models, it is expected that the cost of electric methanol will drop significantly. It is estimated that when the cost of green electricity falls below 0.1 yuan/kWh, electric methanol can be economically competitive with traditional coal-to-methanol.

Profit on the power generation side may have bottomed out, free cash flow is improving, and power companies are expected to usher in a revaluation

At the same time that spot and monthly electricity prices showed signs of reversal, coal prices rebounded steadily, underpinning the rebound in China and Changxie electricity prices. It is anticipated that the 2027 Changxie electricity prices are expected to bottom out and rebound, and the profitability of thermal power companies that are marginal clearing units in the electricity market is expected to bottom out and rebound. In terms of hydropower, in the El Niño incident, there was a high probability that precipitation in the southwest would increase. Precipitation increased dramatically during the year, and most hydropower companies generated a marked increase in power generation, which led to an increase in performance. In terms of green electricity, due to the reduction in the scale of some capital expenditure and the issuance of renewable energy subsidies, the free cash flow situation of enterprises has improved, and the valuation level is expected to increase. In terms of nuclear power, the sustainable electricity pricing mechanism first announced by Liaoning and Guangxi is expected to be popularized. In addition, nuclear power companies have already entered a period of intensive commissioning, and performance is expected to bottom out.

Investment advice

Electricity supply and demand have been marginally tightened, and electricity prices have shown signs of reversal. It is recommended to focus on thermal power leaders Huadian International and Guodian Electric Power; hydropower supply is abundant; hydropower is recommended to focus on Changjiang Electric Power; computational electricity collaborative bidirectional drive+green methanol to promote green power consumption. It is recommended to focus on China Power Investment Green Energy, Computing and Electricity Cooperation, Jinkai Xinneng, and Jingke Technology; China Nuclear Power and China General Nuclear Technology, which are the targets of scarce nuclear power.

Risk warning: risk of policy changes; project construction and operation falling short of expectations; lower electricity prices; declining macroeconomic growth rate.