Fangzheng Securities: The power industry is weak and looking for structural α

The Zhitong Finance App learned that Fangzheng Securities released a research report saying that currently, during the year-end electricity price negotiation period, Guangdong, Anhui, Hebei South Grid, Shaanxi and other places have successively introduced zero-price spread restriction policies, which are expected to curb the arbitrage model where electricity sales companies gambled on a one-sided decline in the past, and form some support for the 26-year long-term electricity price agreement. Furthermore, due to the linkage of price systems such as coal and electricity, next year's electricity price decline may be less than market expectations in the context of supply-side control of coal prices; compounded by the general increase in capacity electricity prices in various regions starting next year, the bank believes that the negative impact on the price side of thermal power will be mitigated to a certain extent. In terms of new energy, the current bidding results for new energy incremental projects in some regions have been released. Overall, the price of electricity auctioned has decreased compared to electricity prices for existing projects. Among them, considering that wind power prices are generally high, and the consumption conditions for seabreeze projects are relatively excellent, with the introduction of seabreeze construction plans in many places, there is great potential for future development.

The main views of Fangzheng Securities are as follows:

Thermal power: coal price stability support, focus on regions and growth α

In 2025, the downward pressure on electricity prices in many places has received high-level attention. With Guangdong and other places introducing policy combinations such as zero price difference restrictions to curb irrational competition, and a general increase in the compensation ratio for capacity electricity prices starting in 2026, the biggest disadvantage of the unilateral decline in electricity prices is gradually being cleared. At the same time, the “anti-domestic volume” policy for coal strengthens supply constraints, and the cost side tends to be manageable. The industry is shifting from a “double kill in price and volume” to a new stage of “stabilizing prices and increasing revenue,” which is expected to drive sector value revaluation.

Hydropower: Profit resilience and cost improvement, highlighting the scarce value of high dividends

In 2025, China's hydropower generation capacity rebounded steadily. In particular, in September-October, there was a month-on-month year-on-year increase of nearly 30%, showing a marginal improvement. Looking ahead, the profitability of hydropower companies is expected to increase further as depreciation of existing units expires and financial expenses are reduced. At the same time, in the context of scarce assets, major hydropower companies have high-ratio and sustainable dividend policies, making their defensive attributes outstanding and investment value prominent.

New energy: falling electricity prices suppress short-term growth and do not change long-term growth space

In 2025, the new energy sector showed a pattern of “short-term pressure, long-term improvement”. The decline in electricity prices in the nuclear power market has suppressed revenue growth, and policy adjustments in Guangdong and other places and the decline in value-added tax concessions for new units have had a structural impact. However, accelerated long-term approval and technological breakthroughs have consolidated the room for growth. Scenery installed capacity continues to rise, but consumption pressure is increasing. Although policies such as “Document No. 136” put pressure on the price of incremental projects, the underpinning of green power consumption policies and marginal improvements in cash flow for some enterprises have provided support for the healthy development of the industry.