Zhong Guo Zheng Quan Bao·2026-02-27 20:43Core Viewpoint - The electricity sector has shown strong performance since the beginning of the Year of the Rabbit, driven by policy reforms and improving fundamentals, indicating significant growth potential and investment opportunities in the sector [1][2]. Policy Developments - The State Grid Corporation plans to invest 4 trillion yuan during the 14th Five-Year Plan, a 40% increase compared to the previous plan [2]. - The State Council issued an implementation opinion to establish a unified national electricity market system by 2030, with full completion by 2035 [2]. - The new policy emphasizes a market-oriented approach to electricity pricing for various energy sources, including hydropower and nuclear power, which may enhance their revenue through mechanisms like green certificates and capacity pricing [2]. Profitability Improvements - The electricity sector is transitioning from a phase of declining prices and revenues to one of stable prices and increased income, with coal prices decreasing and capacity pricing mechanisms being implemented [2][3]. - Companies like Jinko Power and Jiantou Energy are forecasting significant profit increases for 2025, driven by lower coal prices and improved operational efficiencies [3]. Investment Opportunities - The electricity demand is shifting from traditional industries to residential and emerging sectors, with renewable energy sources like wind and solar expected to dominate new installations [4]. - The investment logic in the electricity sector is evolving towards growth driven by AI and energy transition, moving away from traditional cyclical patterns [4][5]. - Short-term investment opportunities include coal power and energy storage, while mid-term focuses on cross-regional trading and long-term on low-cost hydropower and nuclear power [5]. Sector Focus - The firepower sector should concentrate on the stability of earnings post-market reforms, while the hydropower sector should monitor hydrological data improvements during peak flood periods for performance expectations [5].