According to Zhitong Finance APP, Tianfeng Securities released a research report stating that since 2024, China's power system supply and demand has been generally balanced, but still faces issues such as regional misalignment between renewable energy generation and consumption, lagging construction of transmission lines, energy storage, and peak-shaving power sources. In response, power grid companies' investment amounts will maintain a relatively high scale in the coming period, with State Grid and China Southern Power Grid's power grid investments potentially exceeding 825 billion yuan in 2025, an increase of 220 billion yuan compared to 2024. Facing issues such as regional misalignment between renewable energy generation and consumption, and lagging construction of transmission lines, energy storage, and peak-shaving power sources, power grid capital expenditure will significantly accelerate in 2025. Meanwhile, it has been over two years since the first batch of renewable energy compliance list was released. Previous policies have clearly stated that subsidy gaps will be resolved through special financing methods. Tianfeng Securities is optimistic about the accelerated resolution of subsidy arrears issues.

Regarding specific targets, it is recommended to focus on renewable energy operators Longyuan Power (001289.SZ), DATANG RENEW (01798), CHINA SUNTIEN (00956), China Three Gorges Renewables (600905.SH), Huadian New Energy (600930.SH), JinkoSolar Holding (601778.SH), CECEP Wind-Power (601016.SH), SOLAR (000591.SZ), CGN New Energy (01811); thermal power companies transitioning to renewable energy operators China Resources Power (00836), Huaneng Power International (00902), GD Power Development (600795.SH); waste incineration power generation companies Hanlan Environment (600323.SH), China Green Electric (601330.SH), China Everbright Environment (00257).

Tianfeng Securities' main viewpoints are as follows:

State Grid Corporation of China and China Southern Power Grid undertake large-scale power grid construction tasks, such as ultra-high voltage projects, distribution network upgrades, and renewable energy consumption projects. Bond financing can quickly raise funds, alleviate funding gaps in project construction, and ensure project progress. We analyze the bond issuance differences of power grid companies in 2025 by reviewing the historical bond issuance situations of the two grid companies.

**2025 Medium- and Long-term Bond Issuance Scale of State Grid and Southern Grid Far Exceeds Historical Levels**

Since 2024, China's power system supply and demand has been generally balanced, but still faces issues such as regional misalignment between renewable energy generation and consumption, lagging construction of transmission lines, energy storage, and peak-shaving power sources. In response, power grid companies' investment amounts will maintain a relatively high scale in the coming period, with State Grid and China Southern Power Grid's power grid investments potentially exceeding 825 billion yuan in 2025, an increase of 220 billion yuan compared to 2024.

The bond issuance scale of both grid companies has increased significantly, and bond terms are generally longer. ① State Grid Corporation issued bonds worth 1.46 trillion yuan during the "14th Five-Year Plan" period (as of August 2025), exceeding the sum of the "12th Five-Year Plan" and "13th Five-Year Plan" periods. Meanwhile, State Grid's bond issuance scale from January to August 2025 (439.5 billion yuan) increased by 56% compared to the full year 2024, with bonds with terms of 5 years or more accounting for 51%, far exceeding historical levels. ② China Southern Power Grid cumulatively issued 968.8 billion yuan in bonds from 2002 to August 2025, with 406.3 billion yuan issued during the "14th Five-Year Plan" period (as of August 2025). Meanwhile, Southern Grid's bond issuance scale from January to August 2025 (92.9 billion yuan) approached the full year 2024 level, with bonds with terms of 10 years or more reaching 14 billion yuan.

**Financial Indicator Comparison: State Grid Has Lower Debt Ratio, Southern Grid Has Slightly Higher Profitability Quality**

Power grid asset scales accumulate upward year by year, with State Grid Corporation and China Southern Power Grid reaching asset scales of 5.96 trillion yuan and 1.39 trillion yuan respectively in H1 2025; their asset-liability ratios were 54.2% and 60.6% respectively during the same period. Comparing the operating indicators of both grids, State Grid Corporation's operating revenue and net profit in 2024 were 3,919.3 billion yuan and 77.3 billion yuan respectively, reaching 4.6 times and 3.9 times that of China Southern Power Grid in the same period. However, from a profitability quality perspective, China Southern Power Grid's ROA and ROE in 2024 were 2.9% and 3.8% respectively, both higher than State Grid Corporation's levels during the same period.

**Both Grids Establish Settlement Companies, Clarifying Special Financing to Resolve Subsidy Gaps**

The renewable energy subsidy gap problem is prominent. The Wind Energy Professional Committee of the China Renewable Energy Society estimated that cumulative subsidy arrears reached approximately 400 billion yuan by the end of 2021. In 2022, the National Development and Reform Commission, Ministry of Finance, and State-owned Assets Supervision and Administration Commission agreed to establish Beijing and Guangzhou Renewable Energy Development Settlement Service Co., Ltd. to comprehensively resolve renewable energy power generation subsidy issues. Subsidy funding gaps are resolved through special financing according to market principles, with special financing principal and interest listed in the renewable energy development fund budget.

**Investment Recommendations**

Facing issues such as regional misalignment between renewable energy generation and consumption, and lagging construction of transmission lines, energy storage, and peak-shaving power sources, power grid capital expenditure will significantly accelerate in 2025. Meanwhile, it has been over two years since the first batch of renewable energy compliance list was released. Previous policies have clearly stated that subsidy gaps will be resolved through special financing methods. We are optimistic about the accelerated resolution of subsidy arrears issues.

Regarding specific targets, it is recommended to focus on renewable energy operators [Longyuan Power] [DATANG RENEW] [CHINA SUNTIEN] [China Three Gorges Renewables] [Huadian New Energy] [JinkoSolar Holding] [CECEP Wind-Power] [SOLAR] [CGN New Energy], thermal power companies transitioning to renewable energy operators [China Resources Power] [Huaneng Power International] [GD Power Development], and waste incineration power generation companies [Hanlan Environment] [China Green Electric] [China Everbright Environment].