China Galaxy Securities (CGS) released a research report stating that energy consumption targets in the final year of the 14th Five-Year Plan are expected to drive green power demand. Additionally, the establishment of a sustainable pricing mechanism for renewable energy has clarified future profit expectations for the sector, presenting a turning point for investment opportunities.

Regarding electricity prices, annual long-term contract pricing for 2026 is set to begin, with northern provinces likely to maintain relatively stable rates. In a declining interest rate environment, hydropower and nuclear energy—both offering strong dividend attributes—hold long-term investment value. Nuclear energy, in particular, benefits from high long-term growth potential.

**Key Views from CGS:** - **Q3 Performance:** Thermal power posted earnings growth, while nuclear and wind power faced pressure. In the first three quarters of 2025, thermal, hydropower, nuclear, wind, and solar sectors reported net profits of RMB 69.69B, RMB 51.32B, RMB 16.58B, RMB 12.91B, and RMB 2.57B, respectively, with year-on-year growth rates of 16.8%, 3.3%, -12.4%, -16.4%, and 86.0%. In Q3 alone, thermal, hydropower, nuclear, wind, and solar sectors recorded net profits of RMB 36.01B, RMB 28.29B, RMB 8.45B, RMB 2.45B, and RMB 1.35B, with growth rates of 34.3%, -1.6%, -16.5%, -35.6%, and 169.5%, respectively.

- **September Power Generation:** Industrial power output reached 826.2B kWh, up 1.5% YoY, though growth slowed by 0.1 percentage point (pct) from August. Thermal and wind power shifted from growth to decline, while hydropower rebounded. Nuclear power growth decelerated, and solar power accelerated. Specifically, thermal, hydropower, nuclear, wind, and solar generation in September changed by -5.4%, +31.9%, +1.6%, -7.6%, and +21.1% YoY, respectively, with shifts of -7.1pct, +43.0pct, -5.9pct, -27.8pct, and +5.2pct from August. The surge in hydropower was attributed to improved water inflows in major river basins and a low base effect. For example, inflows and outflows at the Three Gorges Reservoir surged 93.6% and 187.9% YoY, respectively, in September 2025, partially displacing thermal generation.

- **September Electricity Consumption:** Total power consumption reached 888.6B kWh, up 4.5% YoY, slowing by 0.5pct from August. Consumption in primary, secondary, tertiary industries, and households stood at 12.9B kWh, 570.5B kWh, 176.5B kWh, and 128.7B kWh, respectively, with YoY changes of +7.3%, +5.7%, +6.3%, and -2.6%. Growth in tertiary and residential sectors slowed due to milder temperatures compared to 2024. Data from the National Climate Center showed average September temperatures in 2024 and 2025 were 18.8°C and 18.2°C, 1.7°C and 1.0°C above historical averages, respectively.

**Risk Warnings:** - Potential shortfall in installed capacity - Significant rise in coal prices - Intensified industry competition