GF Securities: Transmission and distribution prices have been implemented in the fourth regulatory cycle, and the distribution network investment curtain will begin

The Zhitong Finance App learned that GF Securities released a research report saying that the distribution network upgrade and transformation is becoming more and more urgent, and the bank expects that the distribution network reinforcement will become the focus of the “15th Five-Year Plan” construction. The 26H1 performance of power distribution equipment companies is still under pressure due to many factors such as the delivery of low price orders in the early stages and the maintenance of a high level after the 25Q4 copper price surge, but 26H2 is expected to face a systematic reversal. It is recommended to focus on power distribution companies with a multi-point layout of in-grid, off-grid, overseas, and AIDC power supply.

The main views of GF Securities are as follows:

Distribution network upgrades are becoming more and more urgent, and the importance attached to the “15th Five-Year Plan” has increased markedly

Distribution grids are the “last mile” of electricity supply. The development of new loads such as distributed new energy sources and charging piles is driving the transformation of distribution networks from unidirectional radiation networks to intelligent systems with active two-way interaction. At the policy level, the “15th Five-Year Plan” State Grid and the Southern Grid all emphasize “micro-collaboration of main distribution”, superimposing document No. 187, which proposed basically completing the flexible, intelligent, and digital transformation of distribution grids by 2030. The bank expects that the strengthening of distribution networks will become the focus of the “15th Five-Year Plan” construction.

The fourth round of transmission and distribution price adjustments has been implemented, which is expected to open a new round of distribution network investment

On July 10, the Development and Reform Commission issued the transmission and distribution price policy for the fourth supervision cycle. The transmission and distribution prices for each voltage level were measured separately. The distribution network increased significantly. The <1kV class electricity price increased 6.6%, the 10kV class increased 3.2%, the 35kV class increased 1.4%, and the 110kV class decreased 4.4%. The bank believes that the rise in electricity prices of 35 kV and below is a precursor to the expansion of distribution network investment. The new supervision cycle will rationalize the distribution network price mechanism and provide financial support for expanding distribution network investment. The “15th Five-Year Plan” distribution network investment curtain is about to begin.

In-network investment grew faster, and off-net investment bottomed out and recovered

In the network, the bank expects the “15th Five-Year Plan” State Grid investment growth rate to be about 6.5%, and is expected to increase further; if 35 kV and below distribution network investment accounts for 50% of grid investment, the corresponding investment amount is expected to exceed 1.9 trillion yuan, an increase of 74% over the “14th Five-Year Plan” period, and a CAGR of about 12.5% from 2025 to 2030. Outside of the Internet, Document No. 136 promoted the popularity rush in 2025, and the number of new installations declined somewhat in 2026. In the medium to long term, factors such as energy security, accelerated electrification, AI, and increased electricity consumption driven by industrialization will drive a steady recovery in new energy installations. The bank expects the global power distribution market for wind power generation to be about 380 billion yuan in 2026, and is expected to grow to 518.7 billion yuan by 2030, with a CAGR of about 8.1% in 4 years. At the same time, emerging distribution markets such as AIDC are rapidly emerging. It is estimated that global investment demand for power distribution will be driven by about 72.9 billion yuan in 2025, and is expected to increase to 236.8 billion yuan by 2030, or about 27% in 5 years.

The tender price reversed in a V-shape, and the market share of leading companies increased

In February 2025, the State Grid implemented joint regional procurement, and the prices of the first batch of distribution network materials were clearly under pressure in '25. As “anti-internal roll” continues to advance, prices have continued to rise steadily since the 2nd batch in '25: the average pre-bid price of 10kV column transformer equipment in the 1st batch (excluding Northeast China) was 1.154,000 yuan/set, +9% month-on-month and +54%; 10kV transformers 72,500 yuan/set, +18% month-on-month and +33%; the average winning bid price for primary and secondary integrated circuit breakers and ring network boxes was +24% and +26% year-on-year, respectively. In terms of the industry pattern, the distribution network regional joint procurement model uses a system design of “joint pre-qualification examination+regional centralization+unified standards”, raising the threshold from the entry side, releasing large-scale effects from the demand side, and superimposing bid evaluation “weakens low prices, strengthens technical performance” and sampling stops and clean-up mechanisms will accelerate the exit of small and medium-sized production capacity that is weak in technology and dependent on price wars, and the industry will move from fragmentation to concentration. Take the first and second integration columns as an example. The number of successful bidders in the 25B1, 25B2, and 26B1 auctions was 161, 74, and 86, respectively. The winning number of CR10 was 21%, 34%, and 31%, and the winning bid amount was 23%, 35%, and 32% of CR10.

Risk Alerts

Distribution network investment scale falls short of expectations; competition in distribution network industry intensifies; new energy installation and AIDC construction fall short of expectations; promotion of new technology and overseas market expansion fall short of expectations