GF SEC: Guangdong spot electricity prices surge, focus on thermal power first-quarter earnings exceeding expectations

GF SEC published a research report stating that the average spot electricity price in Guangdong reached 0.524 yuan per kilowatt-hour in April, with the highest exceeding 1 yuan per kilowatt-hour, far exceeding the annual long-term contract price. Since April, the national temperature has been higher compared to the same period last year, with an expected 1-2 increase in temperatures across the country this summer, which is expected to drive an increase in electricity consumption. The China Electricity Council predicts a 5%-6% growth in total electricity consumption for the whole society by 2026, with stable demand growth in the electricity industry. The quarterly reports of thermal power companies have been gradually released, with initial expectations of a pessimistic market due to the decline in electricity prices at the beginning of the year. However, some companies have announced better-than-expected declines in electricity prices and it is expected that the performance of thermal power companies will exceed expectations. GF SEC's main points are as follows: Guangdong spot electricity prices surged, cost increases effectively transmitted, focusing on the stability and rebound of electricity prices In April, the average spot electricity price in Guangdong reached 0.524 yuan per kilowatt-hour, with the highest exceeding 1 yuan per kilowatt-hour, far exceeding the annual long-term contract price. The core reason for this surge in spot electricity prices is the combined effect of short-term supply and demand tightness and a significant increase in primary energy prices. In the short term, the high temperatures in Guangdong in April, coupled with economic recovery, led to a rapid increase in load, and due to seasonal maintenance, weak water supply, and fewer photovoltaics, the supply was tight. Under the tight supply and demand conditions, gas-fired power plants were activated, making gas-fired power the marginal pricing power source. This year, energy prices continue to rise, with coal prices increasing from 682 yuan per ton at the beginning of the year to 775 yuan per ton. Since the conflict between the US and Iran, LNG prices have risen rapidly, leading to an increase in costs for thermal power plants and directly affecting Guangdong spot electricity prices. The changes in electricity prices in Guangdong are representative, with higher frequency cost increases reflected in monthly and spot electricity prices. Monthly long-term contract prices in Jiangsu have increased for thre...