Core Viewpoint - The Qinghai Provincial Energy Bureau has issued the "Implementation Plan for Green Power Direct Connection," aiming to promote the integration of renewable energy production and consumption, enhance the utilization of green energy, and meet the green energy needs of enterprises [6][8]. Summary by Sections Project Types and Scope - Four types of green power direct connection projects are to be promoted: 1. New loads that can be matched with renewable energy projects. 2. Existing loads that can develop green power direct connections after paying the renewable energy development fund, reducing output from self-supplied coal and gas power plants. 3. Export-oriented enterprises with rigid carbon reduction demands utilizing surrounding renewable resources for existing load direct connections. 4. Renewable energy projects that have not yet connected to the grid or are limited by renewable energy consumption can develop direct connections after completing necessary procedures [3][8]. Technical Requirements - Green power direct connection projects must clarify investment entities, optimize internal resource coordination, and adhere to the principle of "load determining source" for grid-connected projects. The annual self-generated electricity should account for at least 60% of total available generation and 30% of total electricity consumption, with a target of 35% by 2030. The proportion of grid-connected electricity should not exceed 20% [11][9][10]. System Flexibility Enhancement - Projects should enhance flexibility through reasonable energy storage configuration and load adjustment potential, minimizing system adjustment pressure. The maximum load peak-to-valley difference should be reasonably determined [2][13]. Key Work Tasks - Strengthening overall planning and project reserve, establishing a project reserve library, and accelerating the organization of demonstration projects that promote renewable energy consumption and meet enterprise needs [14][15]. Implementation Organization - Local energy departments are responsible for organizing the implementation of demonstration projects, ensuring quality and timely completion, and providing fair access to grid services for projects meeting connection conditions [15][16].

Investment Rating - The report maintains an "Increase" rating for the environmental protection industry [1] Core Viewpoints - The national green electricity direct connection policy opens up cooperation space for waste incineration power generation and IDC [9][12] - The solid waste sector is expected to increase dividends and improve ROE through heat supply and IDC expansion [1][14] - The industry is entering a mature phase, leading to reduced capital expenditures and improved free cash flow, which enhances dividend payouts [14][17] Summary by Sections Industry Trends - The environmental protection sector is experiencing a decline in capital expenditures, leading to a significant improvement in free cash flow and increased dividends [14] - The waste incineration sector is seeing a trend towards cost reduction and efficiency improvements, which enhances ROE [14][15] Key Recommendations - Strongly recommended companies include: Huanlan Environment, Green Power, Yongxing Co., China Everbright Environment, Junxin Co., Yuehai Investment, and others [1] - Companies to watch include: Lian Tai Environmental Protection, Wangneng Environment, and Beikong Water Group [1] Policy Tracking - The green electricity direct connection policy requires new projects to have over 80% green electricity usage, which is expected to drive the integration of waste incineration power generation with data centers [12][13] - The policy aims to facilitate the supply of green electricity to high-energy-consuming industries, enhancing economic efficiency and stability [10][12] Financial Performance - The water service sector is projected to see stable growth and high dividends, with water price reforms expected to reshape growth and valuation [17][19] - The report highlights specific dividend payouts for companies like Junxin Co. (5.07 billion CNY), Green Power (4.18 billion CNY), and Huanlan Environment (6.52 billion CNY) for 2024 [14][17] Market Performance - The environmental protection and public utilities index rose by 3.53%, outperforming the broader market indices [50] - Notable stock performances include Yuhua Tian (up 55.7%) and Boschke (up 42.56%) [51]