CLP Power Hong Kong Limited: Strong growth in electricity demand at Hong Kong data centers in the first half of the year, with 12 new data centers to be commissioned in the coming years.

CEO Dongqiang Jiang of CLP Holdings (00002) stated that the growth of data centers in Hong Kong was strong in the first half of the year, in line with Hong Kong's goal of developing as a center for innovation and technology. Particularly, there will be a certain number of data centers put into operation in the northern metropolitan area. CLP expects that by 2024 to 2028, there will be 18 operating data centers in Hong Kong, with 6 data centers already in operation. As a result, the company has made appropriate arrangements in the power grid planning, with the backbone of the grid in the Northern District already laid out, and the grid will be extended to suitable locations at the appropriate time. Jiang mentioned that the electricity demand of data centers increased by 6.7% in the first half of the year, accounting for over 6% of CLP's total electricity sales volume, reflecting a strong growth in electricity demand. The slowdown in electricity demand is mainly concentrated in the Mainland China market business. As for the Hong Kong market business, the focus will continue to be on supporting the government's policies, including providing sufficient electricity for facilities in the Northern District, data centers, supercomputing centers, etc. Regarding the Mainland China market, Jiang pointed out that although there is continuous growth in electricity demand in this sector, the growth rate has slowed down compared to expectations. Electricity sales in the first quarter increased by approximately 2% to 3%; and in the second quarter, it rose to 5%. It is estimated that electricity demand will further increase in the second half of the year, with sales growth expected to reach 5% to 6% for the whole year. He predicted that electricity demand in Mainland China will continue to grow and can alleviate the downward pressure on electricity prices. In addition, the revised electricity price mechanism by the relevant authorities in Mainland China requires renewable energy projects to fully participate in market transactions. The impact of the policy on future market development will depend on the details of implementation by local governments and changes in the market environment. Jiang stated that the new electricity price mechanism applies to renewable energy assets commissioned after June 1, and does not affect existing assets, which will continue to be operated under the original mechanism, thus having a relatively minor impact on CLP's business in the short term. However, considering that many details of the new policy are still unknown, there is uncertainty about asset investment decisions in the company's future. Before making investment decisions, CLP's decisions will be more selective, considering geographic locations with high demand for growth, high electricity prices, and relatively low electricity constraints. In the Australian market, the continued increase in electricity price fluctuations has prompted CLP to increase investments in flexible generation capacity in the future, such as gas units, battery energy storage facilities, etc. Jiang disclosed that CLP will have a series of development projects in the field of energy storage technology. If potential development projects are large in scale, the company hopes to introduce investors through joint ventures, investing some of the funds in core markets to ease the pressure on the company's funding requirements. He also mentioned that Energy Australia's performance in the wholesale market for generating assets this year has been quite good, however, the retail market is dragging down profits due to intense competition. Therefore, the company is currently making multiple deployments, including renegotiating new contracts with customers, cost compression, etc., to improve business performance. He stated that global geopolitical uncertainties are impacting global commodity prices, with international fuel facing significant impacts. Fuel prices have been continuously declining from the beginning of the year to now, with the price dropping from 46.3 Hong Kong cents in August to 43 Hong Kong cents. CLP will closely monitor the trends in fuel prices and timely reflect prices through mechanisms.