China Energy Weekly: Unified Power Market Reform Launched, Nuclear and Clean Energy Construction Accelerates Comprehensively

Bottom Line

This week's policy and industry developments clearly point to a structural long position in China's energy sector. Investors should focus on increasing allocations to targets related to grid intelligence, energy storage, and power trading that serve new energy integration; simultaneously, pay attention to the nuclear power construction chain (operators, engineering, and equipment) and hydrogen/wind power equipment exporters with global competitiveness. The core logic is: the implementation of unified power market reform policies will systematically enhance the return on new energy assets, while the acceleration of nuclear power approvals and construction, along with strong export data, provides clear growth pathways for related fields.

Key Developments

1. State Council Issues Document to Promote Construction of a Nationwide Unified Power Market — On February 11, the General Office of the State Council issued the "Implementation Opinions on Improving the Nationwide Unified Power Market System," aiming to deepen power system reform, build a market mechanism adapted to the new energy system, and explicitly support new energy participation in market transactions under the premise of ensuring safety. Portfolio Implication: This is a fundamental institutional benefit for improving the economics of new energy projects, activating the ancillary services market, and enabling energy storage business models. Increase holdings in grid intelligence, virtual power plants, power trading software, and flexible resource (e.g., energy storage) solution providers. Avoid thermal power operators primarily reliant on traditional planned generation quotas and with weak regulation capabilities.

2. First GW-Scale Alkaline Electrolyzer Export Production Line Rushes for Delivery — During the Spring Festival, at Huagong Tech's Intelligent Manufacturing Future Industrial Park in Wuhan, China's first GW-scale automated alkaline electrolyzer production line for export is undergoing intensive debugging to ensure timely delivery to overseas clients. Portfolio Implication: This confirms that China's hydrogen equipment manufacturing has achieved scaled export capability, marking the industry's transition from domestic demonstration to global commercial competition. Focus on electrolyzer and key component manufacturers with core technology and scaled production capacity, whose growth logic has expanded from domestic policy-driven to global green hydrogen demand.

3. Nuclear Power Project Approvals and Construction Intensively Advance — Frequent activity in the nuclear sector this week: On February 14, the National Energy Administration approved the construction of the Shandong Haiyang Nuclear Power Unit 5 (using AP1000 technology, total investment approx. 15 billion yuan); On February 12, the National Nuclear Safety Administration approved the fuel loading outline for Haiyang Units 3 and 4; On February 10, Sanmen Nuclear Power Unit 3 completed its primary circuit hydrostatic test; Additionally, Ningde Nuclear Power Unit 6 (Hualong One) commenced construction in December 2025. Portfolio Implication: The pace of nuclear power approvals and construction has clearly accelerated, forming a clear long-term project pipeline. This directly benefits nuclear power operators (certain installed capacity growth) and the nuclear power construction industry chain (engineering companies, key equipment suppliers). Investors should assess related companies' order backlogs and technology route alignment (AP1000 vs. Hualong One).

4. Strong 2025 Renewable Energy Data, Wind Power Installations and Exports Surge — Data from the National Energy Administration shows renewable energy generation reached 3.99 trillion kWh in 2025, a year-on-year increase of 15%. According to industry reports, China's new wind power installations in 2025 were 130 GW, surging 49.9% year-on-year, hitting a record high; simultaneously, wind turbine exports also increased nearly 50% year-on-year. Portfolio Implication: The data verifies high domestic demand vitality and successful overseas market expansion. Against the backdrop of intense competition in the turbine segment, greater focus should be placed on leading enterprises with technological barriers and smooth overseas channels, as well as key component (e.g., bearings, blades) suppliers with more favorable supply-demand dynamics. Be cautious of companies whose valuations already fully reflect growth expectations and face margin pressure.

5. Multiple Provincial 2026 Government Work Reports Specify Renewable Energy Targets — As of February 10, 26 provinces nationwide have released their 2026 Government Work Reports, specifying concrete new energy development targets and projects. For example, Henan Province plans to complete a batch of integrated source-grid-load-storage projects and strive for renewable energy installed capacity to exceed 100 GW. Portfolio Implication: Provincial planning provides implementation guarantees for national targets, forming coherent policy support from central to local levels. This helps lock in visibility for new energy installations over the next 1-3 years. Investors should analyze provincial planning priorities to identify regional new energy development and operation enterprises with rich project pipelines in target provinces and good local government relations.

Sector Pulse

Risk Watch

• Power Market Reform Implementation Risks — Building a nationwide unified power market involves complex interest coordination and technical support. Progress may fall short of expectations or face local implementation deviations in areas like spot market promotion, inter-provincial barrier removal, and price mechanism formation. Probability: Medium. Impact: High.

• Clean Energy Growth Squeezes Traditional Energy — Clean energy contributed over one-third to 2025 economic growth, with continued policy and investment tilt. This may accelerate the stranding of traditional fossil fuel power generation assets and bring long-term revenue and profit pressure to traditional energy enterprises that have not successfully transitioned. Probability: High. Impact: Medium (High for specific sub-sectors).

Outlook

Key Events & Indicators to Monitor Next Week:

• Monitor whether the National Energy Administration or major power groups issue further interpretations or supporting rules regarding the "Implementation Opinions on Improving the Nationwide Unified Power Market System."
• Pay attention to other provinces' 2026 Government Work Reports as they are released, particularly specific content on nuclear power projects and hydrogen industry planning.
• Track the stock price performance and trading volume changes of major nuclear power operators (e.g., China National Nuclear Power) and wind turbine manufacturers to verify if the market's reaction to this week's news persists.

Allocation Considerations: Maintain an overweight rating on the energy sector, but shift the allocation focus from broad new energy concepts towards sub-sectors with "high certainty of policy benefit" (grid reform, nuclear power) and "proven global competitiveness" (high-end equipment exports), while avoiding traditional thermal power assets with impaired growth logic.