China Galaxy Securities released a research report stating that rising coal prices combined with high temperatures have reversed pessimistic expectations on electricity prices. The latest monthly long-term agreement prices in Jiangsu and Guangdong have already exceeded their annual long-term agreement prices. The National Climate Center predicts that an El Niño state will emerge in May, developing into a moderate or stronger El Niño event during the summer and autumn. Attention is drawn to the recovery of electricity consumption given the low base from the previous year. The implementation of mechanism-based electricity pricing in Liaoning and Guangxi has stabilized pricing expectations. The market is watching for follow-up actions from other provinces. Coupled with a dense phase of new capacity units coming online, the sector is poised for a dual boost in both performance and valuation. The near-term fundamentals for new energy appear weak; focus is on the catalytic effect of policies and project implementations related to computing-power synergy. The main views of China Galaxy Securities are as follows:

Event: The National Bureau of Statistics released energy production data for April 2026, and the National Energy Administration released electricity statistics for April.

In April, driven by high temperatures, the growth rate of total electricity consumption in society increased sequentially. In April 2026, total electricity consumption reached 820.5 billion kWh, a year-on-year increase of 6.0%, a significant improvement from the 3.5% growth in March. By sector, electricity consumption for the primary, secondary, tertiary industries, and residential use was 11.2, 558.4, 151.7, and 99.2 billion kWh, representing year-on-year growth of 2.0%, 5.3%, 8.9%, and 6.0% respectively. The growth rates changed by -4.7, +3.3, +1.2, and +0.8 percentage points compared to March, which is primarily attributed to the impact of high temperatures. According to news reports, from April 1 to May 7, the national average temperature was 13.3°C, 1.1°C higher than the historical average for the same period, ranking as the fifth highest since 1961. From January to April 2026, cumulative electricity consumption in society was 3,334.5 billion kWh, a year-on-year increase of 5.4%, with the growth rate rising by 0.2 percentage points compared to January-March. Electricity consumption for the primary, secondary, tertiary industries, and residential use was 44.9, 2,156.9, 635.1, and 497.6 billion kWh, with year-on-year growth of 5.8%, 4.9%, 8.3%, and 3.9% respectively.

In April, nuclear and wind power generation growth remained under pressure, while thermal and solar power growth decelerated, and hydropower growth accelerated. In April 2026, power generation from industrial enterprises above a designated size was 744.0 billion kWh, a year-on-year increase of 2.6%, accelerating by 1.2 percentage points from March. By source, thermal, hydro, nuclear, wind, and solar power generation from these enterprises increased by +3.1%, +12.2%, -8.7%, -5.0%, and +7.1% year-on-year respectively. The growth rates changed by -1.1, +1.4, +3.1, +12.3, and -2.9 percentage points compared to March. The nuclear power decline is likely due to major maintenance, while wind power was affected by resource conditions. From January to April 2026, power generation from industrial enterprises above a designated size was 3,123.7 billion kWh, a year-on-year increase of 3.3%. By source, thermal, hydro, nuclear, wind, and solar power increased by +3.6%, +9.9%, -4.8%, -3.5%, and +9.8% year-on-year respectively.

Against a high base, new solar installations in April fell sharply year-on-year. From January to April 2026, newly added power generation capacity nationwide was 106.24 GW, a year-on-year decrease of 38.46 GW or -27%. Newly added capacity for hydro, thermal, nuclear, wind, and solar power was 2.45, 28.00, 3.62, 21.26, and 50.91 GW respectively, representing year-on-year changes of -0.20, +11.62, +3.62, +0.97, -54.47 GW or -8%, +71%, N/A, +5%, -52%. In April 2026 alone, newly added power generation capacity nationwide was 22.42 GW, a year-on-year decrease of 32.68 GW or -59%. Newly added capacity for hydro, thermal, nuclear, wind, and solar power was 1.03, 3.97, 2.41, 5.49, and 9.52 GW respectively, representing year-on-year changes of +0.51, +0.25, +2.41, +0.14, -36.00 GW or +98%, +7%, N/A, +3%, -79%. The sharp monthly decline in new solar installations is likely primarily due to the base effect from a rush to install distributed solar projects in the same period last year following new regulations.

Risk warnings include the risk of natural resource conditions falling short of expectations and the risk of significant increases in raw material prices.