Investment Rating - The report maintains an "Overweight" rating for the utility sector [1] Core Insights - The implementation of a capacity price mechanism in Gansu Province at 330 CNY/KW·year, with a 100% recovery of fixed costs, exceeds market expectations and the national guideline of a minimum 50% recovery starting in 2026 [4] - The report highlights a reversal for green power operators due to the release of three major constraints: consumption, pricing, and subsidies, leading to a stable pricing mechanism for sustainable development [4] - The overall electricity consumption in the first five months of 2025 reached 3.97 trillion kWh, showing a year-on-year increase of 3.4% [13] - The cumulative power generation for the same period was 3.73 trillion kWh, with a slight year-on-year increase of 0.3% [20] Summary by Sections 1. Market Review - The SW utility index decreased by 1.37% from July 14 to July 18, 2025, with various sub-sectors showing mixed performance [9] - Notable stock performances included Min Dong Power (+6.7%) and Jiufeng Energy (+5.5%) [12] 2. Electricity Sector Tracking 2.1. Electricity Consumption - Total electricity consumption for January to May 2025 was 3.97 trillion kWh, up 3.4% year-on-year, with growth in all sectors [13] 2.2. Power Generation - Cumulative power generation for the same period was 3.73 trillion kWh, with fire power and water power showing declines of 3.1% and 2.5% respectively, while wind and solar power increased by 11.1% and 18.3% [20] 2.3. Electricity Prices - The average grid purchase price in July 2025 was 382 CNY/MWh, down 3% year-on-year and 1.4% month-on-month [38] 2.4. Coal Prices - As of July 18, 2025, the price of thermal coal at Qinhuangdao was 642 CNY/ton, down 24.11% year-on-year but up 10 CNY/ton week-on-week [43] 2.5. Hydropower - The water level at the Three Gorges Reservoir was 158.37 meters, with inflow and outflow rates showing significant year-on-year declines of 46.15% and 58.25% respectively [54] 3. Investment Recommendations - Focus on investment opportunities in solar energy and charging stations, with specific recommendations for companies like Nanfang Energy and Longxin Co [4] - Recommendations for thermal power investments include companies like Jingtou Energy and Beijing Energy [4] - Hydropower is highlighted for its low cost and strong cash flow, with a recommendation for Changjiang Power [4] - Nuclear power is noted for its growth potential, with recommendations for China Nuclear Power and China General Nuclear Power [4] - Green energy is expected to see a recovery in asset quality, with recommendations for Longjing Environmental Protection and others [4]