Core Insights - The report maintains a positive investment rating for the power industry, highlighting a shift from energy generation to capacity support, with a projected decline in utilization hours for coal-fired power plants [1][8] - The short-term catalyst is identified as the near-bottom point of the ignition price difference, indicating potential profitability recovery for coal power companies [5][40] - Long-term trends suggest a revaluation of coal power's regulatory value, with improved profitability stability and shareholder returns expected as the industry transitions [6][7] Group 1: Industry Overview - The power supply structure is undergoing a transformation, with coal power's share in installed capacity and generation steadily declining, as renewable energy sources gain prominence [21][22] - By May 2025, coal power's installed capacity reached 1.457 billion kilowatts, accounting for 40.4% of the total power generation capacity, a decrease of 16.2% from the end of 2020 [21][22] - The report anticipates a wide supply-demand balance for energy and a tight balance for power during the "14th Five-Year Plan" period, driven by rapid growth in renewable energy installations [33][34] Group 2: Short-term Catalysts - The ignition price difference, which is the difference between after-tax electricity prices and fuel costs, is expected to improve, particularly in northern coal-producing regions [5][40] - The report forecasts that the utilization hours for coal-fired power will remain stable or slightly increase in regions with tight supply-demand conditions, while areas with excess capacity will see a decline [41][42] - The number of coal power projects under construction or planned across 29 provinces indicates a continued focus on maintaining a balanced supply-demand scenario [46][48] Group 3: Long-term Trends - The transition from energy generation to capacity support is expected to reduce the sensitivity of coal power profitability to upstream coal prices and downstream electricity prices [6][16] - The capacity price mechanism, set at 330 yuan per kilowatt annually, is projected to cover fixed cost recovery, with a recovery rate of at least 50% expected by 2026 [15][14] - As the auxiliary service market matures, coal power's revenue from these services is anticipated to provide stable returns, especially as many existing coal power units approach their depreciation limits [6][16][19]