Core Viewpoint - The coal power sector is transitioning from being the "main force" in electricity generation to becoming a "regulator" that ensures system stability, driven by the integration of large-scale renewable energy and carbon reduction goals [3][5]. Group 1: Transition of Coal Power - The role of coal power is undergoing a profound restructuring, shifting from providing electricity to ensuring the stability of the power system [3][4]. - The installed capacity of coal power has decreased from 57.33% in 2016 to an expected 35.7% in 2024, while the absolute capacity remains over 1.2 billion kilowatts [5]. - The increasing volatility of the power system due to the explosive growth of renewable energy sources necessitates coal power's reliable output as a last line of defense against extreme weather [5][6]. Group 2: Challenges in Transition - Coal power faces multiple challenges, including market reforms that lead to fluctuating coal prices and insufficient auxiliary service revenues, resulting in some units operating at a loss [5][13]. - Stricter carbon emission constraints require the coal power industry to peak carbon emissions by 2030 and reduce carbon intensity by over 65% compared to 2005 levels [5][13]. Group 3: New Generation Coal Power - The concept of "new generation coal power" has emerged, focusing on clean carbon reduction, safety, reliability, efficient regulation, and intelligent operation [6][10]. - The industry is moving towards optimizing existing units through parameter upgrades to meet the demands of the new power system [8][10]. Group 4: Flexibility and Clean Energy - The flexibility of coal power is being enhanced through systematic upgrades, addressing challenges such as low-load stability and high-efficiency operation across a wide load range [11][12]. - The coal power sector is exploring dual pathways for clean carbon reduction, including the elimination of outdated units and the promotion of ultra-supercritical units, alongside the adoption of carbon capture, utilization, and storage (CCUS) technologies [11][12]. Group 5: Policy and Market Mechanisms - The transition of coal power requires not only technological breakthroughs but also collaborative efforts in policy mechanisms and market environments [13]. - The capacity price policy is crucial for supporting coal power, allowing recovery of fixed costs and reducing investment pressure during the upgrade period [13]. - A comprehensive market system that includes energy, auxiliary services, and capacity markets is recommended to reflect the regulatory value of coal power [13]. Group 6: Future Outlook - The coal power sector is expected to experience a development path of "increasing capacity while controlling output" leading to a plateau and gradual decline in the future [13]. - The future of coal power is not about exiting the market but rather about "rebirth" through technological upgrades and innovative models, positioning it as an indispensable stabilizer in the new power system [13].

Investment Rating - The report maintains an "Outperform" rating for the industry [6] Core Insights - The National Energy Administration has initiated the first batch of pilot projects for the construction of a new power system, focusing on seven key directions to enhance the integration and consumption capacity of renewable energy [3][19][20] - Zhejiang Province has released a demand-side management plan for summer peak electricity demand in 2025, aiming to reduce peak load by over 1GW through various measures including time-of-use pricing and encouraging user-side energy storage participation [4][27][28] Summary by Sections Market Review - From June 3 to June 6, the gas and water sectors increased by 1.15% and 0.64% respectively, while the environmental and power sectors decreased by 0.07% and 0.60%, with the Shanghai and Shenzhen 300 Index rising by 0.88% during the same period [12][10] Industry Perspectives - The pilot projects for the new power system will explore new technologies and models, addressing bottlenecks in renewable energy development and enhancing the reliability of power supply [3][19][20] - The pilot focuses on seven areas: grid-structured technology, system-friendly renewable power plants, smart microgrids, collaboration between computing power and electricity, virtual power plants, large-scale high-proportion renewable energy delivery, and new-generation coal power [19][20][24] Investment Recommendations - The report recommends specific companies within various sectors: - For thermal power: Jiangsu Guoxin is recommended, while Sheneng Co. and Zhejiang Energy Power are given cautious recommendations [4] - For nuclear power: China National Nuclear Power and China General Nuclear Power are cautiously recommended [4] - For hydropower: Changjiang Power is recommended, with cautious recommendations for Huaneng Hydropower and Qianyuan Power [4] - For green energy: Attention is suggested for Three Gorges Energy and Jiangsu New Energy, with cautious recommendations for Longyuan Power and Zhejiang New Energy [4] - For environmental protection: Yongxing Co., Huaguang Huaneng, and Xuedilong are recommended, with cautious recommendations for United Water and attention for Fuzhi Environmental Protection and Dayu Water Saving [4]

Core Viewpoint - The National Energy Administration has initiated the first batch of pilot projects for the construction of a new power system, focusing on seven key areas to drive innovation and breakthroughs in technology and operational models [1][2][3]. Group 1: Overall Requirements - The pilot projects will focus on cutting-edge directions related to the new power system, utilizing typical projects for single-direction trials and typical cities for multi-direction comprehensive trials [3][4]. - The seven key areas for initial pilot work include grid-structured technology, system-friendly renewable power plants, smart microgrids, collaboration between computing power and electricity, virtual power plants, large-scale high-proportion renewable energy delivery, and new-generation coal power [3][4]. Group 2: Pilot Directions - **Grid-Structured Technology**: Focus on weak grid areas with high renewable energy integration, applying new energy/grid control technologies to enhance stability and supply security [5]. - **System-Friendly Renewable Power Plants**: New or upgraded renewable power plants will be built in areas with tight supply or high consumption pressure, improving system friendliness and output reliability [6]. - **Smart Microgrids**: Development of smart microgrid projects to enhance self-regulation and balance capabilities, increasing the proportion of self-consumed renewable energy [6]. - **Collaboration Between Computing Power and Electricity**: Planning and layout of computing power and electricity projects in resource-rich areas to increase the proportion of green electricity for data centers [7]. - **Virtual Power Plants**: Establishing various types of virtual power plants to aggregate distributed energy resources and enhance flexibility in power supply [8]. - **Large-Scale High-Proportion Renewable Energy Delivery**: Focus on developing renewable energy bases in northwest and southwest regions, optimizing transmission systems to increase green electricity delivery [9]. - **New-Generation Coal Power**: Promoting pilot projects for existing and new coal power units to meet clean carbon reduction and efficient regulation standards [9]. Group 3: Implementation Organization - **Pilot Application**: Provincial energy authorities or central enterprises will organize the submission of pilot applications, with specific requirements for new-generation coal power projects [10]. - **Pilot Review**: The National Energy Administration will establish a review process to select projects for the first batch of pilots based on feasibility and technical-economic criteria [12]. - **Project Implementation**: Local energy authorities and project units must adhere to the approved pilot plans, with any significant changes requiring approval [13]. - **Support Policies**: Various levels of energy authorities will work to create a favorable policy environment for pilot projects, including financial support for eligible projects [13]. - **Evaluation and Promotion**: The National Energy Administration will conduct comprehensive evaluations of pilot projects and promote successful technologies and models [13].