Comparative Analysis of China's Power Industry: Hydroelectric Profitability Advantages Stand Out

This analysis is based on the comparative analysis report published by Xueqiu.com [1] on November 13, 2025, which compared the operating data of four major power companies—Yangtze Power, Huaneng Hydropower, SDIC Power, and Chuanyou Energy—over the past decade. The analysis shows that hydroelectric assets have significantly better profitability than other energy forms, with Yangtze Power leading the industry in both power generation and gross margin due to its absolute scale advantage [1].

From the market data of the past 30 trading days [0], the four companies showed obvious differentiation:

• SDIC Power (600886.SS) performed best with an increase of +6.18%
• Yangtze Power (600900.SS) rose steadily by +4.15%
• Chuanyou Energy (600674.SS) rose moderately by +2.16%
• Huaneng Hydropower (600025.SS) remained basically flat at +0.42%

In terms of valuation, Yangtze Power has a market capitalization of 693.43 billion yuan and a P/E ratio of 21.31x, solidifying its leading position in the industry; while Chuanyou Energy has the lowest valuation with a P/E ratio of only 16.65x [0].

According to industry research data [1], as of the end of 2024:

• Yangtze Power’s domestic hydroelectric installed capacity reached 71.695 million kW, leading absolutely
• Huaneng Hydropower’s installed capacity was 27.3058 million kW
• SDIC Power’s installed capacity was 21.3045 million kW

2024 power generation data shows [1]:

• Yangtze Power: 295.904 billion kWh, up 7.11% year-on-year
• Huaneng Hydropower: 112.012 billion kWh, up 4.62% year-on-year
• SDIC Power: 104.085 billion kWh, up 10.49% year-on-year

The hydroelectric industry has outstanding overall profitability. In 2024, the gross margin and net margin of hydroelectric power were 54.41% and 38.16% respectively, up 1.38 percentage points and 2.71 percentage points year-on-year; ROE reached 13.85%, up 1.59 percentage points from the same period in 2023 [3]. Huaneng Hydropower’s gross margin forecast shows 57.30% in 2024 and 56.91% in 2025, maintaining a high level, reflecting the stability of hydroelectric business [2].

The analysis reveals that wind and solar businesses are facing dual pressures of declining electricity prices and narrowing gross margins. According to the latest market data [4]:

• Longyuan Power’s average on-grid price for wind power in the first half of 2025 was 422 yuan/MWh, down 16 yuan/MWh year-on-year
• The average on-grid price for photovoltaics was 273 yuan/MWh, down 5 yuan/MWh year-on-year
• Shandong Province’s 2025 new energy mechanism electricity price bidding results show: wind power 0.319 yuan/kWh, photovoltaics 0.225 yuan/kWh, both lower than historical benchmark prices

Document No.136 promotes the full marketization of new energy electricity prices, putting higher requirements on the operational capabilities of new energy power generation enterprises [4].

According to research institution forecasts [1][3], hydroelectric installed capacity is expected to grow in the future:

• Yangtze Power plans to increase installed capacity by 3.9 million kW through capacity expansion
• Huaneng Hydropower’s under-construction projects include Tuoba and Yingliangbao hydropower stations
• SDIC Power has 3.72 million kW of under-construction and approved hydroelectric installed capacity

1. Continuous Decline in New Energy Electricity Prices
   : The advancement of market-oriented reforms may continue to put pressure on electricity prices [4], which may become a key variable affecting the future profitability of companies like SDIC Power and Huaneng Hydropower [1].

2. Uncertainty in Water Inflow
   : Hydroelectric business is greatly affected by climate factors, and fluctuations in water inflow directly affect power generation.

3. Policy Change Risk
   : Adjustments to power marketization reform policies may affect the industry pattern.

4. Increased Competition
   : Large-scale grid connection of new energy installed capacity intensifies market competition.

1. Stability Advantage of Hydroelectric Power
   : In the electricity price downward cycle, the stable profitability of hydroelectric power has more investment value.

2. Multi-Energy Complementarity Development
   : The progress and synergy effect of hydroelectric + new energy project development are worth paying attention to.

3. Stability of Dividend Policy
   : The sustainability of dividends of hydroelectric companies as dividend assets.

Based on comprehensive analysis, hydroelectric assets show strong investment value under the current background of power marketization reform due to their stable profitability and scale advantages. As an industry leader, Yangtze Power leads the industry in both power generation and gross margin, highlighting the stable investment value of hydroelectric power [1].

However, investors need to pay attention to the potential impact of the downward trend of new energy electricity prices on related power companies. Historical laws show that the electricity price downward cycle usually leads to valuation restructuring in the power industry. It is recommended to focus on leading hydroelectric enterprises with cost advantages, large installed scale and stable cash flow, while carefully evaluating the profit pressure of companies with high proportion of new energy business.

Key attention points include: the implementation effect of Document No.136, differences in electricity price policies among provinces, the progress of multi-energy complementarity development and the stability of dividend policies. These factors will jointly affect the future development pattern and investment value of the power industry.