Galaxy Securities in China: With the improvement of the capacity-based electricity pricing mechanism, regulating power sources are expected to see a reevaluation of their value.

The research report of China Galaxy Securities stated that the National Development and Reform Commission and the National Energy Administration recently issued a notice on improving the capacity electricity price mechanism on the generation side. The notice aims to improve the capacity electricity price mechanism for power sources, enhance the profitability stability of regulating power sources, and is expected to undergo a reevaluation of value. In addition, the capacity electricity price can enhance the construction enthusiasm and peak output capacity of regulating power sources by stabilizing their income expectations, providing stronger support for the integration of new energy and opening up space for new energy installation growth. At present, for thermal power: it is recommended to invest in nationally diversified companies and northern power plants with relatively small price reductions in 2026. For hydropower: the impact of the market-based price reduction in 2026 on performance is limited, and it is recommended to focus on companies with high dividend yields in the short term and large hydropower assets whose prices are relatively stable and whose assets are injected to open up medium to long-term growth space. For nuclear power: there is still pressure on market-based electricity prices in the short term, and it is hoped that the electricity price mechanism will be further improved, with relatively certain growth prospects in the medium to long term. For new energy: under the context of comprehensive market entry in 2026, there is still downward pressure on electricity prices, and it is advisable to selectively invest in wind power assets with strong support for consumption and electricity prices. It is also recommended to focus on companies that are strategically positioned in green hydrogen and ammonia, to create a second growth curve.