The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that since 2026, the performance of the electricity index has been at a good level in various industries. Since 2026, fluctuations in the international energy market have been compounded by restrictions on domestic raw coal production. As a result, primary energy prices have continued to rise, thermal coal and natural gas prices have risen year-on-year, thermal power generation costs have risen significantly, and average monthly prices in some regional markets have continued to rise to convey the impact of coal prices. In this context, considering the cyclical slowdown in electricity installations, the bank expects the national annual Changxie electricity price to rise in 2027. Among them, electricity price elasticity in regions such as Guangdong, Jiangsu, and Zhejiang is high and the installed capacity growth rate is clearly slowing down, which may be higher than the national average. At the same time, fluctuations in the international energy market have driven LNG prices to continue to rise, and unconventional gas sales prices have risen year-on-year.
CITIC Construction Investment's main views are as follows:
The power industry outperformed the market, and the hydropower industry saw a high increase
Since 2026, the performance of the electricity index has been at a good level in various industries. As of October 29, 2026, the Wind power sector has risen 5.2% since this year; the Shanghai and Shenzhen 300 Index fell 12.7% during the same period, and the power sector has outperformed the market by 17.9 percentage points. Looking at the molecular industry, the fire electronics sector rose 5.2%, outperforming the Shanghai and Shenzhen 300 index by 17.9 percentage points; the water electronics sector rose 15.4%, outperforming the Shanghai and Shenzhen 300 index by 28.1 percentage points; and the gas sector fell 9.4%, outperforming the Shanghai and Shenzhen 300 index by 3.4 percentage points.
The slowdown in installed capacity is compounded by high coal prices, and electricity prices in Guangdong, Jiangsu and Zhejiang regions are more flexible
The increase in installed capacity along the southeast coast in 27-28 is expected to decrease compared to 25-26. According to the existing plan for the construction and approval of thermal power plants, the growth rate of installed thermal power plants will decline during the “15th Five-Year Plan” period compared to the “14th Five-Year Plan,” and the growth in thermal power supply will slow down cyclically. In terms of new energy, in 2026, against the backdrop of increased pressure on new energy consumption and an overall decline in market electricity prices, the country's installed energy growth rate slowed year on year. In the first three quarters of 2026, the country added 170 million kilowatts of new energy installed, a year-on-year decrease of about 45%. Since 2026, fluctuations in the international energy market have been compounded by restrictions on domestic raw coal production. As a result, primary energy prices have continued to rise, thermal coal and natural gas prices have risen year-on-year, thermal power generation costs have risen significantly, and average monthly prices in some regional markets have continued to rise to convey the impact of coal prices. In this context, considering the cyclical slowdown in electricity installations, the bank expects the national annual Changxie electricity price to rise in 2027. Among them, electricity price elasticity in regions such as Guangdong, Jiangsu, and Zhejiang is high and the installed capacity growth rate is clearly slowing down, which may be higher than the national average. On the Jiangsu side, from October to December 2026, the average monthly centralized transaction price in the Jiangsu Electric Power Market was 395.3, 415.7, and 398 yuan/megawatt-hour, up 53.4, 60.6, and 58.8 yuan/megawatt-hour, with an average value of 403.0 yuan/megawatt-hour, with a year-on-year increase of 57.6 yuan/megawatt-hour. On the basis of rising thermal coal prices, high monthly electricity prices, and limited thermal power growth in 27 years, the bank believes that Jiangsu's annual Changxie electricity prices are expected to rise in 2027. The increase is about 40 to 50 yuan/megawatt-hour, and the corresponding price is 384 to 394 yuan/megawatt-hour. On the Guangdong side, electricity consumption growth in 2026 led the country. Monthly electricity prices rebounded significantly year-on-year in the fourth quarter. Taking into account factors such as rising thermal coal prices, high monthly electricity prices, and high electricity consumption growth rates, the bank believes that Guangdong's 27-year-old electricity prices are expected to rise, with an increase of about 50 to 80 yuan/megawatt-hour. On the Zhejiang side, electricity consumption is growing at a high rate in 2026, and spot market prices are showing an upward trend. New thermal power installations are limited in 2027, and electricity prices are expected to rise by 30 to 50 yuan/megawatt-hour for 27 years. On the Anhui side, the decline in residents' demand for electricity in the third quarter suppressed the increase in electricity consumption. In the middle of the year, the Shaanxi and Anhui DC was officially put into operation. Against the backdrop of rising thermal coal prices, the bank believes that Anhui's 27-year long-term electricity prices are expected to rise by 20 to 40 yuan/megawatt-hour.
Electricity: Q1 thermal power generation increased year-on-year, and consumption of new energy sources was under marginal pressure
In terms of thermal power, due to restrictions on raw coal production and fluctuations in the international energy market, the overall price of thermal coal has shown an upward trend since 2026, and the cost of coal-fired power generation has increased significantly. Against this background, monthly electricity prices in Jiangsu and Guangdong both rose markedly year-on-year in the fourth quarter, and monthly electricity prices in regions such as Shandong and Mengxi also showed an upward trend. Overall, the rise in monthly electricity prices hedged the rise in fuel costs to a certain extent. At the same time, it also provided support for the 2027 Changxie electricity price negotiations at the end of the year. In terms of hydropower, hydropower generation was abundant year-on-year in January-August, and hydropower generation increased year-on-year; in September, precipitation was low across the country, and autumn rain was late in western China. The national average rainfall was 50.2 mm, 17.1% less than in the same period of the year, leading to a significant year-on-year decline in hydropower generation. Overall, in the fourth quarter of 2026, incoming water withered year-on-year, and hydropower generation may have declined year-on-year. In terms of new energy, due to the large increase in installed wind capacity, since 2026, the overall consumption of new energy sources has been under pressure, and the consumption utilization rate has declined marginally. In terms of electricity prices, along with the implementation of Document No. 136, new energy feed-in electricity has fully entered the market. Market supply and demand are biased towards relaxed operation, and the average feed-in tariff for new energy sources is under downward pressure. Since 2026, the growth rate of new energy installed capacity across the country has slowed year-on-year, and the construction of superimposed power grid lines and adjustable power supplies continues to advance, and consumption is expected to gradually improve in '27. Overall, in terms of electricity, the bank continues to be optimistic about Huaneng, Jiangsu Guoxin, and Shenneng shares, which are expected to continue with regional thermal power profitability; the prudential targets recommend cogeneration and Funeng shares, a high-quality regional seafreeze operator; China's nuclear power, which has strong certainty and is expected to benefit from mechanized electricity prices; Changjiang Electric Power, a global hydropower leader; and Sichuan Investment Energy, which benefits from rising electricity prices in the province; in terms of new energy, the bank recommends Longyuan Electric Power, a leading enterprise in the green power industry, where new energy capacity is expected to improve.
Gas: Geopolitical conflicts affect the global market, and sales volume and price of unconventional gas have risen sharply
Since the beginning of the year, due to frequent global geopolitical conflicts, the international oil and gas market has fluctuated greatly. Taking into account the changes in imported gas prices and the three-barrel oil contract pricing situation, the bank believes that the overall fluctuation in the gas costs of the Urban Fuel Company is manageable. At the same time, fluctuations in the international energy market have driven LNG prices to continue to rise, and unconventional sales prices have risen year on year. In terms of production capacity, during the “15th Five-Year Plan” period, the country focused on increasing the storage and production of coalbed methane in the eastern region of the Ordos Basin, requiring a sharp increase in production capacity and output at coalbed methane bases in the Edong region, and the scale of unconventional gas production and sales is expected to continue to grow. In terms of gas, the bank focuses on recommending the growth of two-wheel drive performance, China Gas with high dividends, Shouhua Gas, which has an upstream unconventional gas extraction business and is expected to continue to grow in the “15th Five-Year Plan”. Xinao shares, which have diversified gas source advantages and LNG receiving station layout, have ushered in a gas development window in the province, and gas sales volume is expected to grow rapidly. Furthermore, in terms of environmental protection, along with the recent advancement of the government's debt conversion policy, the accounts receivable and cash flow turnover of some environmental protection enterprises are expected to improve, and the quality of profits is expected to improve. In terms of environmental protection, the bank recommended Zhongshan Public Works, the leading water service provider in Zhongshan City, Everbright Environment, a leading waste incineration company in the country with steady growth in business performance, and Jinlan Environmental Protection, which continues to grow in incineration production capacity and continuous improvement in its business layout, and Zhongke Environmental Protection, which has been put into operation one after another and the heating business continues to expand.
Risk analysis: risk of electricity consumption growth falling short of expectations; risk of changes in electricity price policies; risk of fluctuating hours of use; risk of rising coal prices.