Core Viewpoint - The recent notification from the National Development and Reform Commission and the National Energy Administration aims to improve the pricing mechanism for nearby consumption of renewable energy, which is expected to create new opportunities for green electricity direct connection projects starting from October 1, 2025 [1][2][3]. Group 1: Policy and Mechanism - The notification clarifies the economic responsibilities between nearby consumption projects and the public grid, allowing renewable energy projects to pay for supply reliability based on their needs [3][4]. - The new pricing mechanism is designed to enhance the willingness of the grid to provide stable supply services, facilitating the implementation of projects like waste incineration and green electricity direct connections [4][5]. Group 2: Project Requirements - Projects must have a clear interface, with power sources, loads, and storage connected as a whole to the public grid, ensuring safety and responsibility [3][4]. - Projects are required to have a self-consumption ratio of at least 60% of total available generation and 30% of total consumption, with new projects starting from 2030 needing a minimum of 35% [4][5]. Group 3: Economic Advantages - The economic feasibility of projects increases with higher load rates and smaller capacities connected to the public grid, as projects not connected to the grid are exempt from certain fees [4][5]. - For example, in Guangdong Province, the average market transaction price in 2025 is projected to be 0.3910 yuan per kWh, while the costs associated with grid connection and operation total 0.2721 yuan per kWh, leading to a total of 0.6631 yuan per kWh. Direct supply from waste incineration can offer a price advantage of 0.05 to 0.08 yuan per kWh compared to using grid electricity [5]. Group 4: Recommended Companies - The notification is expected to benefit companies involved in green electricity direct supply projects, with specific recommendations including Huanlan Environment, Yongxing Co., Conch Venture, Green Power Environmental Protection, Junxin Co., and Weiming Environmental Protection, while also suggesting attention to Wangneng Environment [5].

Investment Rating - The report maintains an "Overweight" rating for the environmental protection industry [1] Core Views - The improvement of the near-consumption pricing mechanism for renewable energy will facilitate the direct connection of green electricity, benefiting waste-to-energy projects [9][10] - The price of Sustainable Aviation Fuel (SAF) has reached a new high in Europe, positively impacting UCO and SAF producers in China [11][12] - The solid waste sector has seen significant acceleration in national subsidies for recycling, leading to improved cash flow and dividend payouts [15][16] Summary by Sections Industry Trends - The environmental protection industry is experiencing a positive trend with the implementation of new pricing mechanisms for renewable energy, which will enhance the economic viability of waste-to-energy projects [9][10] - The SAF market in Europe is tightening, leading to increased prices and benefiting UCO and SAF producers in China [11][12] Solid Waste Sector - National subsidies for recycling have accelerated significantly, with a reported 2.064 billion yuan received in July-August 2025, surpassing the previous year's figures [15] - The solid waste sector is seeing improvements in return on equity (ROE) and cash flow, with a focus on operational efficiency and reduced financial costs [15][16] Water Sector - The water sector is poised for growth with expected improvements in cash flow and dividend payouts, similar to trends observed in the waste-to-energy sector [19][20] - Recent water price reforms in cities like Guangzhou and Shenzhen are anticipated to drive further growth in the sector [19] Sanitation Equipment - The sales of sanitation vehicles have increased, with a notable rise in the penetration rate of new energy sanitation vehicles, reaching 16.14% [22][23] - The market for electric sanitation vehicles is expanding rapidly, with sales growth of 77.55% in the first seven months of 2025 [22][23] Biofuel Sector - The average price of waste cooking oil has decreased, leading to an increase in profit margins for biofuel producers [32] - The biofuel market is expected to remain stable, with ongoing demand for waste oils and limited supply growth [32] Lithium Battery Recycling - The profitability of lithium battery recycling is improving as the prices of lithium carbonate and other materials decline [33][34]

Core Viewpoint - The notification emphasizes the importance of promoting the development and utilization of renewable energy resources, particularly wind and solar energy, to achieve green and low-carbon energy transformation and meet carbon peak and carbon neutrality goals [2]. Group 1: Stable Supply Assurance - The public grid will provide stable supply assurance services for nearby consumption projects, ensuring reliable power supply and safety [2]. - Renewable energy projects must have a self-consumption ratio of at least 60% of total available generation and 30% of total consumption, increasing to 35% for new projects starting in 2030 [2]. Group 2: Cost Sharing for Supply Assurance - Nearby consumption projects will bear the costs of stable supply services based on the principle of "who benefits, who bears" [3]. - Transmission and distribution fees will be calculated based on capacity, with no system standby fees for exported electricity [3]. Group 3: Equal Market Participation - Nearby consumption projects will have equal market status with other power generation companies and users, participating in the electricity market as a unified entity [4]. - Projects must directly engage in market transactions without being represented by grid companies and will bear line loss costs for exported electricity [4]. Group 4: Implementation and Monitoring - Provincial price authorities are tasked with monitoring and summarizing implementation experiences, providing policy interpretations, and responding to social concerns [4]. - Project owners must file with local authorities and apply for grid connection, determining their own capacity and signing contracts with grid companies [4]. Group 5: Implementation Date - The notification will take effect on October 1, 2025, with prior projects needing coordination from local price authorities [5].

Summary of Key Points from the Conference Call Industry Overview - The conference call focused on the **electric power industry** in China, particularly regarding the recent policies released by the National Energy Administration and the National Development and Reform Commission aimed at promoting market-oriented electricity systems and new energy systems [1][2][3]. Core Insights and Arguments - **Policy Initiatives**: The government has introduced several policies, including the establishment of an electricity spot market, near-consumption of new energy projects, and large-scale construction of new energy storage systems. These policies are seen as a continuation of previous initiatives rather than standalone measures [1][2][3]. - **New Energy System Characteristics**: The new energy system is centered around load, emphasizing interaction between sources and networks. It is characterized by being clean, low-carbon, safe, abundant, economically efficient, and flexible [6][8]. - **Near-Consumption Pricing Mechanism**: This mechanism applies not only to distributed photovoltaic projects but also to large wind power bidding projects, encouraging the use of cheap and clean new energy to meet demand [7][8]. - **Market Mechanisms for Profitability**: The government aims to ensure profitability for all parties involved through market mechanisms, including capacity pricing policies and the encouragement of emerging business entities [10][13]. - **Emerging Business Entities**: New business models such as green electricity direct connection and zero-carbon parks are encouraged, but these entities must also bear costs such as transmission and distribution fees [5][13]. Important but Overlooked Content - **Storage's Role in New Energy**: Storage plays a crucial role in the new energy market, allowing for the storage of energy during low-price periods and selling it during high-price periods, thus enhancing overall profitability [19][20]. - **Projected Growth of Storage Capacity**: By the end of 2024, the total installed capacity of new storage is expected to reach 74 GW, increasing to 180 GW by the end of 2027, indicating a significant growth trajectory [18][22]. - **Challenges in Large-Scale Projects**: The development of large-scale renewable energy bases in regions like Northwest China faces challenges such as slow construction of ultra-high voltage transmission lines and insufficient power delivery capacity [47][49]. - **Impact of Spot Market on Profitability**: The establishment of the electricity spot market is expected to significantly influence the profitability of power generation and consumption entities, with an increasing demand for auxiliary services as renewable energy penetration rises [50]. Conclusion The conference highlighted the ongoing transformation in China's electric power industry, driven by new policies aimed at enhancing market efficiency and promoting renewable energy. The emphasis on storage solutions and the establishment of a spot market are critical for the future profitability and stability of the energy sector.

Investment Rating - The report maintains a positive outlook on the power and gas sectors, recommending various companies within these industries for investment [5][14]. Core Insights - The report highlights the competitive results of the electricity pricing mechanism in Shandong, indicating that wind power is favored over solar power, with wind power pricing at 0.319 CNY/kWh and solar at 0.225 CNY/kWh [9][10]. - A new pricing mechanism for nearby consumption of renewable energy has been established, clarifying economic responsibilities and allowing renewable projects to pay for supply reliability [12][13]. - Global gas prices are showing mixed trends, with European and Asian prices rising while U.S. prices are declining, reflecting varying supply and demand dynamics [15][20]. Summary by Sections 1. Electricity: Shandong Pricing Mechanism and New Renewable Energy Policies - Shandong's first competitive pricing results show wind power projects with a total capacity of 3.5911 GW and a mechanism electricity price of 0.319 CNY/kWh, while solar projects have a capacity of 1.265 GW and a price of 0.225 CNY/kWh [9][11]. - The new pricing mechanism for nearby consumption aims to enhance the utilization of renewable energy and reduce the pressure on the power system [12][13]. 2. Gas: Global Price Variations - As of September 12, U.S. Henry Hub spot prices are at $2.94/mmBtu, down 3.61% week-on-week, while European TTF prices are at €32.00/MWh, up 1.27% [15][16]. - The report notes that U.S. gas production remains high despite a slight decline, while European prices are influenced by supply constraints and increased heating demand due to cooler temperatures [15][20]. 3. Weekly Market Review - The gas sector outperformed the Shanghai and Shenzhen 300 index, while the public utilities, power, and environmental sectors underperformed [36]. 4. Company and Industry Dynamics - Recent announcements include the implementation of market-oriented pricing reforms for renewable energy in Jiangxi province, effective from October 2025 [40]. - The report also discusses various company announcements, including operational updates and financial instruments [43]. 5. Key Company Valuation Tables - The report provides valuation metrics for key companies in the public utility sector, highlighting buy and hold recommendations for several firms based on their earnings and price-to-earnings ratios [45][46].

Investment Rating - The report maintains an "Overweight" rating for the electricity sector [2] Core Views - The new pricing policy for nearby consumption of renewable energy is expected to balance cost sharing and catalyze the development of green electricity direct connection projects. The policy will be implemented on October 1, 2025, requiring that renewable energy self-consumption accounts for at least 60% of total available generation and 30% of total consumption [5][10] - The recent surge in storage policies indicates a growing recognition of the value of regulatory power sources, with a target of adding over 100 million kilowatts of new storage capacity by 2027, leading to direct investments of approximately 250 billion yuan [5][10] - The implementation of AI in the energy sector is anticipated to create investment opportunities, with a focus on establishing a collaborative mechanism between computing power and electricity by 2030 [5][10] Summary by Sections Industry Views - The new policy for nearby consumption of renewable energy is expected to promote green electricity direct connection and address cost-sharing issues [5][10] - Storage policies are being introduced to enhance the value of regulatory power sources, with significant investment expected in new storage capacity [5][10] - The integration of AI in the energy sector is set to improve operational efficiency and create new investment avenues [5][10] Market Review - The Shanghai Composite Index closed at 3,870.60 points, up 1.52%, while the CSI 300 Index closed at 4,522.00 points, up 1.38%. The CITIC Power and Utilities Index closed at 3,077.52 points, up 0.90%, underperforming the CSI 300 Index by 0.49 percentage points [55][56] Key Company Recommendations - Recommended stocks include New天绿色能源 (H), 龙源电力, 中闽能源, and 吉电股份 in the green electricity sector, and 华能国际, 华电国际, and 宝新能源 in the thermal power sector [6][7]

Core Insights - The article discusses the significant achievements and challenges faced by China's renewable energy sector, emphasizing the need for new consumption models to address increasing difficulties in energy absorption and power system regulation [1] Policy Developments - In February 2025, the National Development and Reform Commission and the National Energy Administration issued a notice aimed at market-oriented reforms for renewable energy grid pricing to tackle consumption issues [1] - In May 2025, a notice was released to promote green electricity direct connection projects, introducing new consumption scenarios [1] - On September 12, 2025, a further notice was published to refine pricing mechanisms for local consumption of renewable energy, providing clear guidelines for project investors [1] Project Construction Requirements - The notice outlines specific technical requirements for renewable energy local consumption projects, clarifying the rights and obligations of project participants [2] - It emphasizes the importance of establishing clear physical and safety responsibility boundaries to mitigate risks and operational disputes [2] Consumption Ratio and Weighting - The notice mandates that the annual self-consumed electricity from renewable sources must account for at least 60% of total available generation and 30% of total electricity consumption, with a minimum of 35% for new projects starting in 2030 [3] - This high self-consumption ratio aims to reduce the pressure on public grids and ensure alignment with user electricity demands [3] Economic Feasibility Assessment - Investors must evaluate the feasibility of projects based on their ability to reduce electricity costs, focusing on energy costs, transmission and distribution fees, and system operation fees [4] - A comparison between public grid purchasing costs and self-consumption costs is essential for determining economic viability [4] Transmission and Distribution Fee Considerations - The notice introduces a reform in transmission and distribution fees, shifting from a volume-based to a capacity-based charging model [5] - This change may lead to increased costs for projects with low load factors compared to provincial averages, while potentially reducing costs for those with higher load factors [5][6] Market Participation Pathways - Renewable energy local consumption projects can also generate revenue through "excess power grid connection," but this is highly dependent on the local electricity market's structure [7] - In regions with continuous spot markets, projects face both higher revenue opportunities and increased risk management requirements [7] - Conversely, in areas without continuous spot markets, projects are generally not allowed to send power back to the grid, limiting revenue generation opportunities [8] Overall Impact - The introduction of these policies provides investors with clear guidelines for assessing project feasibility, addressing challenges in local consumption, and promoting renewable energy absorption, ultimately benefiting the renewable energy sector and the broader electricity system [8]

Core Viewpoint - The National Development and Reform Commission and the National Energy Administration have issued a notice to improve pricing mechanisms to promote the local consumption of renewable energy, emphasizing the importance of developing wind and solar energy for achieving carbon neutrality goals [1] Group 1: Policy Implementation - The notice aims to enhance the local consumption of renewable energy resources, which is crucial for meeting the green energy demands of enterprises and supporting the transition to a low-carbon economy [1] - Public power grids are required to provide stable supply assurance services for local consumption projects, ensuring that renewable energy accounts for at least 60% of the total available generation and 30% of total consumption, increasing to 35% for new projects starting in 2030 [1][2] Group 2: Cost Sharing and Fees - Local consumption projects will bear the costs of stable supply services based on the principle of "who benefits, who bears," including transmission and distribution fees and system operation fees [2] - The calculation of capacity fees will be based on existing policies and the average load rate, with specific formulas provided for determining these costs [2] Group 3: Market Participation - Local consumption projects will have equal market status with other power generation companies and users, participating in the electricity market under unified rules [3] - Projects must engage directly in market transactions without relying on grid companies for purchasing electricity, and they will be responsible for line loss costs associated with their electricity generation [3] Group 4: Implementation and Monitoring - Provincial pricing authorities are tasked with monitoring the implementation of these policies, providing guidance, and ensuring that project owners understand the policy intentions [3] - The notice will take effect on October 1, 2025, with existing projects needing to align with the new regulations through local pricing authorities [3]

Core Viewpoint - The release of the "Notice on Improving Price Mechanisms to Promote Local Consumption of Renewable Energy" aims to clarify the economic responsibilities and boundaries of renewable energy projects, facilitating their development and integration into the power system [1][2]. Summary by Sections Price Mechanism Improvement - The notice establishes a "who benefits, who bears" principle for local consumption projects, mandating fair payment of transmission and distribution fees, and system operation fees [3][4]. - Projects not connected to the public grid are exempt from stability supply guarantee fees [3][4]. Project Requirements - Local consumption projects must have clear physical and safety responsibility interfaces, with at least 60% of their annual self-consumed electricity coming from renewable sources and at least 30% of total electricity consumption [2][6]. - From 2030 onwards, new projects must have at least 35% of their total electricity consumption from renewable sources [2]. Economic Responsibilities - The notice introduces the concept of "stability supply guarantee fees" to reflect the value of backup services provided by the grid, promoting fairness in cost-sharing among users [5][6]. - Projects will pay transmission and distribution fees based on their capacity rather than actual electricity consumption, which aims to prevent cost burdens from being shifted to other users [6][7]. Incentives for Development - The new pricing mechanism encourages projects to enhance their self-balancing capabilities and reduce grid connection capacity, thereby alleviating pressure on the power system [7][8]. - Projects with higher load factors than the average will benefit from lower transmission and distribution costs, incentivizing efficient use of grid resources [8][9]. Future Trends - The integration of distributed generation and user-side storage is expected to evolve into a unified investment and operational model, promoting the development of distributed energy resources [9].

Core Points - The National Development and Reform Commission and the National Energy Administration have issued a notice to enhance the local consumption of renewable energy [1] - The notice emphasizes the role of public power grids in providing stable supply services for renewable energy projects [1] - Local consumption projects must ensure that renewable energy self-consumption accounts for at least 60% of total available generation and 30% of total consumption, with new projects starting from 2030 required to have at least 35% [1] Summary by Sections - **Policy Implementation** - The notice aims to promote higher levels of local consumption of renewable energy [1] - It outlines the responsibilities of public power grids in ensuring reliable supply for renewable energy projects [1] - **Technical Requirements** - Local consumption projects must connect to users and public grids at the property boundary [1] - Renewable energy self-consumption must meet specified thresholds to qualify for local consumption [1] - **Cost Sharing** - Local consumption projects are required to fairly bear the costs associated with stable supply services based on the principle of "who benefits, who bears" [1] - Projects not connected to the public grid are exempt from paying stable supply guarantee fees [1]