CLP Holdings (00002) Chief Executive Officer T.K. Chiang indicated that Hong Kong's data center sector experienced robust growth in the first half, aligning with Hong Kong's development as an innovation and technology hub, particularly with a significant number of data centers expected to commence operations in the Northern Metropolis area.

CLP Holdings anticipates that 18 data centers will be operational in Hong Kong from 2024 to 2028, with 6 data centers already commissioned to date. The company has made appropriate arrangements in grid planning, with the main backbone of the Northern Metropolis power grid already completed. The grid will be extended to suitable locations when appropriate to provide support.

Chiang noted that data center power demand increased by 6.7% in the first half, accounting for over 6% of CLP Holdings' total electricity sales, reflecting continued strong growth in power demand. The slowdown in electricity demand is primarily concentrated in the mainland China market business. For the Hong Kong market business, the company will continue to focus on supporting government policies, including providing adequate power for facilities such as the Northern Metropolis, data centers, and supercomputing centers.

Regarding the mainland China market, Chiang stated that while electricity demand in this segment continues to grow, the growth rate has been slower than expected. First quarter electricity sales grew approximately 2% to 3%, while second quarter growth recovered to 5%. He estimates that electricity demand will further increase in the second half, with full-year sales growth expected to reach 5% to 6%. He predicts that mainland China's electricity demand will continue to grow and help alleviate downward pressure on electricity prices.

Additionally, the revised electricity pricing mechanism by mainland China authorities requires renewable energy projects to fully participate in market transactions. The policy's impact on future market development will depend on local government implementation details and market environment changes.

Chiang stated that the new electricity pricing mechanism applies to renewable energy assets commissioned after June 1, with no impact on existing assets, meaning existing assets will continue to operate under the original mechanism. Therefore, the short-term impact on CLP Holdings' business is relatively minor. However, considering that many details of the new policy remain unknown, it creates uncertainty for the company's future asset investment decisions.

Before making investment decisions, CLP Holdings will be more selective in its decision-making, considering geographical locations with higher growth demand, higher electricity prices, and relatively lower power curtailment.

Regarding the Australian market, local electricity price volatility continues to increase, so CLP Holdings hopes to increase future investment in flexible generation capacity, such as gas-fired units and battery energy storage facilities. Chiang revealed that CLP Holdings has a series of future development projects, mainly focused on energy storage technology. For larger potential development projects, the company hopes to introduce investors through joint venture arrangements, deploying some funds in core markets to reduce the company's capital requirement pressure.

He also mentioned that Energy Australia's generation asset wholesale market performance has been quite good this year, but the retail market has been dragged down by intense competition, affecting profitability. Therefore, the company is currently implementing multiple deployments, including re-establishing new contracts with customers and compressing costs to enhance business performance.

He stated that global geopolitical uncertainties affect global commodity prices, with international fuel particularly impacted. Fuel prices have continued to decline since the beginning of the year, with August prices dropping from 46.3 Hong Kong cents to 43 Hong Kong cents. CLP Holdings will closely monitor fuel price trends and reflect price changes through mechanisms when appropriate.