Investment Rating - The report indicates a positive outlook for the electricity industry, suggesting it is entering a phase of high prosperity due to policy catalysts and fundamental improvements [2][11]. Core Insights - The implementation of the capacity price mechanism starting in 2024 is expected to restructure the revenue model for coal power companies, reducing reliance on energy sales and stabilizing income expectations [11][21]. - The auxiliary service market mechanism has been officially released, accelerating the construction of the spot market, which will support high-quality development in the electricity sector [12]. - Overall electricity demand is recovering, with a reported increase in national electricity consumption of 4.28% year-on-year as of March 2025, indicating a positive trend for the industry [13]. - Hydropower generation is expected to improve due to favorable water conditions, while coal-fired power plants are experiencing reduced fuel cost pressures, enhancing profitability [15][17]. Summary by Sections 1. Policy Catalysts and Fundamental Resonance - The capacity price mechanism will optimize the profit model for coal power, ensuring sustainable operation [11]. - The auxiliary service market will provide new revenue channels for electricity companies, enhancing income diversity [12]. - Electricity demand is on the rise, supporting industry prosperity [13]. 2. Investment Value Analysis of the CSI All-Share Power Index - The CSI All-Share Power Index consists mainly of stocks from the power utility sector, with 98.92% of its components in power generation and grid industries [3][29]. - As of April 30, 2025, the index's P/E ratio is 16.65 and P/B ratio is 1.69, indicating relatively suitable valuation levels [31]. - The index has shown strong profitability and a high willingness to distribute dividends, with a 12-month dividend yield of 2.80% [35]. 3. Analysis of the GF CSI All-Share Power Utility ETF - The GF CSI All-Share Power Utility ETF was established on December 29, 2021, and aims to closely track the CSI All-Share Power Utility Index [45]. - As of May 14, 2025, the ETF has a scale of 3.489 billion yuan and a daily average trading volume of 193 million yuan, indicating good market liquidity [45]. - The fund is managed by an experienced manager with over 25 years in the securities industry [46].

Investment Rating - The report maintains a "Recommended" rating for companies such as China Nuclear Power, Funiu Co., and Huaneng Hydropower, while giving a "Cautious Recommendation" to companies like China General Nuclear Power and Longyuan Power [23][3]. Core Insights - The electricity sector outperformed the market this week, with the public utility sector rising by 2.22% and the electricity sub-sector by 2.21%, both exceeding the Shanghai and Shenzhen 300 index [1][7]. - Shandong Province has established a mechanism electricity price that aligns with the benchmark price for coal-fired power, which is expected to stabilize investment returns for renewable energy projects [2][24]. - The report highlights the significant drop in coal prices, which has led to steady growth in thermal power performance in Q1, with expectations for continued improvement as the peak electricity consumption season approaches [3][20]. Summary by Sections Weekly Market Review - The public utility sector index closed at 2,377.21 points, up 51.64 points, while the electricity sub-sector closed at 3,171.91 points, up 68.52 points [1][7]. - The sub-sectors showed varied performance, with solar power up 4.01%, thermal power up 4.00%, and wind power up 1.78% [12][19]. Special Topic - Shandong's new pricing mechanism for renewable energy projects is set at 0.3949 yuan per kWh, matching the coal-fired benchmark price, which is expected to mitigate revenue volatility for existing projects [2][24]. - The competitive bidding for new renewable projects starting from June 1, 2025, will determine the mechanism price, enhancing investment predictability [2][24]. Investment Recommendations - The report suggests focusing on companies with strong growth potential in the thermal and hydropower sectors, particularly Funiu Co., Gansu Energy, and Huaneng International [3][20]. - It also emphasizes the stability of large hydropower companies in a declining interest rate environment, recommending companies like Yangtze Power and Chuanwei Energy [3][20]. Key Company Earnings Forecasts - The report provides earnings per share (EPS) forecasts for several companies, with China Nuclear Power expected to have an EPS of 0.46 yuan in 2024, while Funiu Co. is projected at 1.07 yuan [23][3].

Group 1: Policy Background and Market Environment - The release of the "Basic Rules for the Electricity Auxiliary Service Market" aims to accelerate the construction of a unified national electricity market system and ensure stable operation and energy supply [2][4] - The auxiliary service market is crucial for the safe and stable operation of the electricity system and the promotion of renewable energy development [3][4] Group 2: Significance of the Rules - The rules address the increasing demand for auxiliary services due to changes in the power industry and the rapid development of clean energy [4][5] - The implementation of the rules will enhance the operational management of the auxiliary service market and clarify the roles and responsibilities of various stakeholders [4][5] Group 3: Promotion of Unified Electricity Market Development - The rules fill the gap in the basic rules for market-based trading of auxiliary services, providing a solid institutional foundation for the development of a unified electricity market [5] - The rules emphasize the coordination between the auxiliary service market and long-term and spot markets, improving overall operational efficiency [5] Group 4: Enhancing Renewable Energy Market Integration - By the end of 2024, the total installed capacity of electricity in China is expected to exceed 3 billion kilowatts, with renewable energy surpassing coal power for the first time [7] - The rules promote the establishment of market-based mechanisms for renewable energy consumption and price formation [7][8] Group 5: Improving Power System Security and Supply - The rules establish a fee transmission mechanism for auxiliary services, ensuring fair cost-sharing among stakeholders [9] - The implementation of the rules will enhance the rapid adjustment capabilities of the power system, allowing for better response to fluctuations in renewable energy output [9][10] Group 6: Highlights of the Rules - The rules represent the first national-level basic rules for the electricity auxiliary service market, enhancing top-level design and market management [11] - The inclusion of new market participants such as energy storage companies and virtual power plants will increase market vitality [11] - The rules clarify the trading varieties of auxiliary services and establish a market-based price formation mechanism [11][12]

Core Viewpoint - The 13th Energy Storage International Conference and Exhibition (ESIE 2025) will be held from April 10-12, 2025, in Beijing, focusing on the theme "Digital Intelligence Empowering Industrial Transformation, Energy Storage Reshaping Energy Landscape" [1][16]. Group 1: Event Overview - The conference will feature an opening ceremony, five high-level dialogues, eight thematic salons, over 40 thematic forums, more than 50 business exchange activities, and over 500 new product launches [1]. - The exhibition area will exceed 160,000 square meters, hosting over 800 leading energy storage companies, and is expected to attract more than 200,000 participants from various sectors [2][32]. Group 2: Thematic Focus - The conference will address the integration of new energy storage into the electricity market, with discussions on market mechanisms, prospects, and operational practices [3][28]. - A specific forum will focus on the opportunities and challenges of AI models in the energy storage sector [10][11]. Group 3: Exhibition Highlights - Six major themed exhibition halls will cover the entire energy storage industry chain, including upstream materials, midstream technologies, and downstream applications [16][18]. - Key topics will include the latest energy storage policies, market operation mechanisms, and innovative applications in energy storage [28][29]. Group 4: Participation and Collaboration - The event will feature participation from government agencies, regulatory bodies, research institutions, and energy operators, fostering collaboration across the industry [1][32]. - International participation will include over 50 countries, enhancing global networking opportunities for Chinese enterprises [31][36].