Good afternoon, ladies and gentlemen. On behalf of Huaneng Power International, Inc, I would like to welcome you all to the conference call regarding the first quarterly results announcement of 2026. [Non-English content] Now, may I introduce the management of the company today. [Non-English content] Executive Director and the President of the company, Mr. Liu Ancang. [Non-English content]
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[Non-English content] Independent Director of the Company, Mr. He Qiang [Non-English content]
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[Non-English content] Vice President, Mr. Du Canxun [Non-English content]
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[Non-English content] Chief Accountant, Board Secretary, Mr. Wen Minggang [Non-English content]
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[Non-English content] People in charge of the related departments are also joining us in this meeting. [Non-English content] 2026 [Non-English content] First of all, the President of the company, Mr. Liu, will review the business performance for the first quarterly results of 2026, followed by the Q&A session. [Non-English content] Now, may we have the honor to invite Mr. Liu to review the business performance and Mr. [Li Guoyun] to conduct the English interpretation.
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Ladies and gentlemen, good afternoon. Welcome to the first quarter results conference of Huaneng Power International.
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We have announced the operating results for the first quarter of 2026 yesterday. Now I'd like to give a brief introduction.
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In the first quarter, we actively respond to the change of the policy and challenges on the market. Our business maintains stable while witnessing progress. As the electricity spot market mechanism was introduced in more and more provinces and regions and the power supply demand is in a loose state, the company's total power production and tariffs went down continuously.
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Calculating under China's accounting principle, in the first quarter of 2026, the company has realized a consolidated operating revenue of CNY 56.8 billion, decreasing by 5.89% year-on-year. The net profit attributable to the company's shareholders scaled CNY 4.48 billion with a year-on-year decrease of 9.83%.
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In terms of the power production, we actively promote the low- carbon green energy transformation. The overall installed capacity of the company's photovoltaic and wind power plants have shown a consistent growth, while the on- grid power sold has shown a year-on-year decrease. As the capacity renewables grow rapidly nationwide, taking share of coal-fired units in the energy mix.
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In quarter one, the company's domestic on-grid power sales decreased by 4.82% at 101.48 billion kilowatt- hours. The average tariff was CNY 460.73 per megawatt-hour, decreasing by 5.63%.
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In terms of coal supply, the company swiftly responds to the landscape of both the domestic market and overseas market, optimizing our strategy for coal procurement timely, and attaching greater importance to long- term contracted coal as a cost and supply stabilizer, while optimizing our fuel supply structure via seizing opportunities on the spot market.
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The standard coal price of quarter one decreased by 9.39% at CNY 874.24 per ton.
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In terms of business transformation, we spotlight the strategy of low- carbon transformation while balancing the quantity and quality of renewable projects, promoting the development and construction of renewables based on the policy and market dynamics.
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In the first quarter of 2026, we have added 1.1 GW capacity in total, including 610 MW of renewables and 490 MW of gas- fired units. By the end of this quarter, the total input capacity of the company scaled 157 GW. Low- carbon clean energy now takes 41.42%.
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In terms of business overseas, we swiftly optimize our market bidding strategy based on the solid research of both Singapore's electricity market and fuel market, pursuing the best performance at our current conditions.
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In the first quarter of this year, Tuas Power has realized an earning before tax of CNY 381 million and Sahiwal Plant in Pakistan keeps a stable operation as well, earning CNY 225 million this quarter.
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Going forward, during the rest of this year, we'll actively promote the construction of renewable projects while coordinating the pace and performance of development. We'll focus not only on the scale of projects, but also on investment efficiency and building a better energy mix.
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The company aims to optimize its bidding strategy based on in-depth research of the policy and the supply-demand relations to improve the efficiency of power production.
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We'll also follow tightly the dynamics of fuel markets, optimizing the signing and automation of high- quality long- term contracts, while keeping flexibility in our core procurement, taking every effort to control our fuel cost.
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Keeping carbon peaking and carbon neutrality goals in mind, aimed at the complex market horizon, we'll firmly focus on improving business performance and cement a solid foundation for high- quality transformation.
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My colleagues and I are willing to take your questions. Thank you.
[Non-English content] Thank you, Mr. Liu. Here we come to the Q&A session. [Non-English content] To register your questions, please press star followed by one on your telephone keypad. Thank you. [Non-English content] Please state your name and your organization before raising the questions. [Non-English content] The first question comes from Liu Xianda of Citibank. Please go ahead.
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I have three questions. The first question is that in the quarter one report, we have seen a 5.63% decrease in the company's tariffs. Recently in some southern areas in China, southern provinces, we have seen an increase of the tariffs on the stock market of electricity. What is the expectation of the company towards the tariffs going forward?
The second question is towards the unit fuel cost of the company. In the first quarter, we have seen a 10% decrease in the unit fuel cost comprehensively. Does the company believe that the Middle East contradictions between the U.S., Israel, and Iran will have an impact towards the company's unit fuel cost in the next quarter? The third question goes to the profits of the company. In quarter one, we saw a year-on-year decrease for the company's profit in wind power generators and photovoltaic. What's the company's expectations towards the wind and PV sectors and the utilization hours and a year-on-year change? Thank you.
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The reason that in the first quarter, the company's tariffs have decreased by 5.63%, especially in some southern areas of China. By the end of March, the five provinces in Southern China areas have shown a spot market price rise, especially the clearance price. It has been consistent for more than a month. That is because of the imbalance in the demand and supply relation in this area. From the horizon of the whole country, we have monitored the spot market price in many provinces from February to March to April. The settlement tariffs was around CNY 300 per megawatt-hour. The reason that caused the high spot market tariffs in the southern China areas is because we do not have enough water resources in the Mekong River areas and some requirements to deliver the preparation for summer peak seasons, and also the degenerating of the hydropower generations.
Also, in Guangdong province, the spot market of electricity has seen a growth in its prices because the marginal cost for gas-fired units have seen a rise as the gas price is increasing in the international market. The spot market price in Guangdong province has seen a surge. As in that province, the electricity load is comparatively huge, so it also has an impact towards the neighboring provinces. We believe that the spot market price rise in Southern China areas is just a regional problem, and it's caused by the peak season in summer and the marginal cost of gas.
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Going forward, we expected that the demand and supply on the spot market of electricity will tend to be balanced, and the power price on the spot market will decrease in the future. As you may know, that in Liaoning province in Northeastern China, it has introduced a policy that including the capacity-based subsidy, the ancillary services, as well as the operational subsidy for the power generators. We believe that under these regulations, the total settlement price will be stabilized in the future, and it also rely on the generators to deliver ancillary services to secure its profit. For the renewable sectors, including the wind power generation and photovoltaic, it depends on the resources and other related reasons. Thank you.
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I will answer your second question. Towards the geopolitical conflicts in the Middle East area, and in the coal market around the world, we have seen that the cost of maritime fee has seen an increase dramatically. Secondly, the gas price across the world is also dramatically increased. They may constitute a phenomenon. The first one is, in the worldwide electricity market, more producers want to replace their coal-fired units with the gas-fired unit, and they tend to use the higher- calorific value coal. The second part, the chemistry industry will also be activated to use coal. The third reason is the transportation fee. Domestically, we also see a surge. The first one is the transportation via road and expressway will be increased, and that will deliver this kind of demand to railway transportation and also increase the preoccupation in the market.
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In terms of profitability this year, we have seen this year's profitability in wind power generation. The quarter one is CNY 1.8 billion, the first quarter of 2025 is CNY 2.25 billion, and we have seen a CNY 444 million decrease, which is equivalent to 90%. In photovoltaic power generation, we have a profit of CNY 233 million. In last year, CNY 564 million, we have shown a decrease of CNY 331 million, which is equivalent to 58%.
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In terms of the utilization hours, in the first quarter of this year, the wind power has a utilization hour of 523 hours, which is a year-on-year decrease of 71 hours. For PV sector, 215 hours, year-on-year decrease of 35 hours.
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Could you please tell us the on-grid power settlement price of the wind sector and PV sector and what is the year-on-year change? Thank you.
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In the first part of the year, the wind power has a settlement price of CNY 472.90 per megawatt-hour, which is a year-on-year decrease of CNY 15.07, equivalent to 3%. For the photovoltaic, the settlement price was at CNY 369.76 per megawatt-hour, a year-on-year decrease of CNY 30.40 per megawatt-hour and 7.6%.
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[Non-English content] The next question comes from Li Yalin of Huatai Securities. Please go ahead.
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I also have three questions. My first question goes to the coal price for the first part of the year. What's the company's long-term contract coal price in the first quarter and its year-on-year change? Also, the spot market coal and its year-on-year change. The second is, we have heard on the market that the power generators of coal-fired dominance does not have a willingness to expand its inventory before the peak season. What's the company's schedule for expanding inventory? Does that expanded inventory have an impact towards the market price of coal?
My second question is, we have seen in the quarter one report that the gas-fired units have increased significantly in its profit. Is that because of the increase of the capacity-based subsidy? Or in which provinces this increase is bigger, and is that because of the peak load management or other ancillary services? My third question is, could the company give us a net income broken down by different energy types? Thank you.
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In terms of the first question, in the first quarter of the year, the domestic long-term coal contract has a standard coal price of CNY 871.15 per ton and a year-on-year decrease of 7.15%. On the spot market, the price was CNY 832.91, year-on-year decrease of 12.23%. As far as we know, many power generators also have a schedule to expanding the inventory before the peak seasons in summer. In accordance with our schedule, we will expanding our inventory from April to June and to reduce the impact towards the entire coal-fired market. Thank you.
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In terms of the profits of gas-fired units of the company. As you can see that in this quarter, we have a significant increase in the profits of gas-fired units. In the quarter one of 2026, gas-fired units has made a profit of CNY 941 million. In the quarter one of last year, it was CNY 753 million, which has a 24% increase.
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The reasons for the increase of this profitability are because of the following three reasons. The first one is we have seen that in our company, the gas-fired units having decreased in its on-grid power sales. In quarter one, we have an on-grid power sales in the gas-fired units of 68.04 billion kilowatt-hours, which saw a decrease of 796 million kilowatt-hours year-on-year. On its tariff, on- grid, we have an on-grid settlement tariff at CNY 805.06 per megawatt-hour, increasing by CNY 36.51 per megawatt-hour, which is about 5% increase. Thirdly, it also affected by the unit fuel cost decrease. In the first quarter of the year, the gas-fired units have a unit fuel cost of CNY 375.41 per megawatt-hour, which has seen a decrease of CNY 41.39 per megawatt-hour. Thank you.
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We have seen a comparatively larger increase in its profitability in Dongshan gas-fired units and Dongguan gas-fired units, and that is because the increase of the recovery rates of capacity-based subsidy and the heat supply subsidy. Thank you.
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In terms of the [net profits] by energy types, the coal-fired units have a profit of CNY 3.67 billion, which is an increase of CNY 335 million. Gas-fired units, CNY [739 million], increasing by CNY 175 million. Wind power, wind sector, CNY [1.61 billion]. Photovoltaic, CNY [193 million], decreasing by CNY 330 million. The hydropower sector and the biomass sector of the company are break even. Thank you.
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I want to ask what's the reason for the increase in the heating supply subsidy of gas-fired unit?
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We have a consistent subsidy in Dongshan gas-fired units, but the pace has become quicker, faster in this quarter.
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[Non-English content] The next question comes from Sun Huixian of Orient Securities. Please go ahead.
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I have three questions. My first is the on-grid tariffs of coal-fired units, of gas-fired units in the first quarter of the company. And what is the per megawatt-hours capacity- based subsidy in the first quarter of the year? The second question is we have seen the profitability has decreased year-on-year in Tuas Power in Singapore. What is the reason? And does that because of the gas unit, the gas price has been increased in the worldwide market since March? And what's the expectation from the company towards the profitability to Tuas Power? And the third question is, in which companies and which funds of the wind power generator and PV generators have a loss in Q1?
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In terms of the on-grid tariffs of coal-fired and gas-fired units. In the first quarter, the company's coal-fired units have an on-grid power tariff of CNY 435.04 per megawatt-hour, year-on-year decrease by CNY 32.27 per megawatt-hour. Gas-fired units CNY 805.06 per megawatt-hour, year-on-year increase of CNY 36.51 per megawatt-hour.
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For the capacity-based subsidy broken down by every megawatt, for coal-fired units, we have a capacity- based subsidy of CNY 47 per megawatt-hour. The gas-fired units, as it has generated less power compared with the coal-fired units, we have a subsidy of CNY 134 per megawatt-hour. Thank you.
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In the first quarter, Tuas Power has generated power of [2.579 billion] kilowatt-hours, which saw an increase of [10 million megawatt-hours] and a year-on-year increase of [0.78%]. It also generated a profit of CNY 381 million, which saw a decrease of CNY 296 million.
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In terms of the reason, since we have entered the year of 2026, the Singaporean spot market of electricity has been stabilized in demand. But as the government has introduced some transformation in its regulations and articles, and other power generators have also introduced their new power generators, the supply has become loose. It triggers the spot market price decrease in Singapore's spot market of electricity in quarter one.
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In the Singaporean electricity market, we formally signed the agreements of electricity with higher marginal contribution, but those agreements had already expired by the end of this quarter. The newly signed agreements on the spot market of Singapore's market, based on the pressure of the decrease of the spot market price, have also threatened our profitability in Tuas Power.
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In terms of the carbon tax in Singapore's market, formerly, the Singaporean government has allocated the carbon dioxide tax for SGD 25 per ton, and this year it has increased to SGD 45, which has saw a quarter- on- quarter, year-on-year increase, and that has also threatened the profitability of Tuas Power by CNY 40 million.
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Since the end of February, the contradiction between Iran and the U.S. has also triggered the increase in the coal market worldwide. The deal agreement of gas in Tuas Power that was signed is based on a long-term contract, so that does not have any larger impact towards our Tuas Power profitability. Thank you.
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As for the Singaporean government towards this situation, also introduced some regulations and articles to safeguarding the backup of LNG and also the policies towards the pricing cap. We estimated that the Singaporean electricity market would become stable in the future. And if the contradiction in the Middle East areas could end soon, we estimated that in the year of 2026, the power generation and profitability of Tuas Power will keep stable as well. Thank you.
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In terms of the power plants that have a loss in the first part of the year, we calculated based on the equity that we hold in the company. In the first quarter in 2026, we have 10 power plants of wind power generation have a loss, and 111 plants of PV sectors have a loss.
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I want to further ask, how many plants do we have in PV and wind power generations respectively? Thank you.
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The company boasts 122 wind power turbines, and among those, 8.2% of those plants have made a loss. For the PV sector, we have 383 power plants of photovoltaic and 28% have made a loss.
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[Non-English content] The next question comes from Song Yingying of China Merchants Securities. Please go ahead.
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I have two questions. In the first quarter, we have seen that our financial expense has seen a decrease. What is the expectation towards the full- year financial expense? And do we have any extra spaces for improve our financial expense? And my second question goes to the tax refunds for VAT of the inland wind power generators. Does that have an estimated profitability impact? Thank you.
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In the first quarter of 2026, the company has faced the advantages and opportunities on the financial market, and to use the market-based tools and optimize the strategies to optimize our financial cost in this quarter.
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In order to meet the needs for the future development and sustainability of development, we have optimized our structure of financial by mid and long- term debentures and to optimizing our financial expenses.
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In the first quarter of the year 2026, on the consolidated balance sheet, we have a financial expense of CNY 1.73 billion, which has saw a CNY 10 million decrease equivalent to 0.04%. Going forward, we will seize the opportunities and the atmosphere for both the financial market domestically and across the world to seize the opportunities of the policy changing and actively optimizing our financial expense.
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By the end of the first quarter, the comprehensive rate of interest-bearing debt of the company was 2.36%, which has saw an 8 basis point decrease compared with the beginning of the year 2026.
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In terms of the value added tax refund, in October of 2025, the Head of Customs, the Ministry of Finance and the State Taxation Administration of China have introduced this policy. We have ended the tax refund for VAT of inland wind power plants since November of last year. For the offshore power generators, we still have the 50% of tax refund for VAT credit carried forward until the end of 2027.
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This policy change does have some impact towards the company's profitability, but it does not have the major impact towards our profitability. In the year of 2025, the company's inland wind power turbine was entered the catalog, which has a VAT refund of CNY 137 million.
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In the first quarter of 2026, the offshore power turbine has a VAT refund of CNY 18 million.
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Going forward, we encourage our plans of offshore power turbine to fully use this kind of policy. Thank you.
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[Non-English content] The next question comes from Jiang Tao of Guojin Securities. Please go ahead.
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I have three questions. The first, in some provinces, especially in Northern China provinces, we have introduced a higher recovery ratio of the capacity-based subsidy. That's because the optimization of the demand and supply relation and in which provinces this change is bigger and higher. The second question is in the first quarter of the year, we have write-offs of CNY 13.1 billion of the perpetual bonds of the company. What is the pace in the future? My third question is in the coal-fired units, what is the profit generated by the coal-fired units in the market-based electricity? Thank you.
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In terms of the capacity-based subsidy, in previous year, the country announced the Document No. 1501. This year it further introduced Document No. 114. It aims to improve the capacity-based subsidy recovery ratio to 50% at the country level. According to Document No. 1501 that was introduced in the year 2024, in some areas and provinces where the utilization rate is comparatively low, it has a standard of CNY 165 per megawatt-hour per year. In some northern areas in China, the standard was CNY 100 per megawatt-hour per year. Going forward to the year 2026, the policy is targeting to improve the recovery ratio for those provinces that have a capacity-based subsidy recovery ratio of CNY 100 per megawatt-hour per year, and all those provinces should receive CNY 165 per megawatt-hour per year. Except for Hainan province, all the provinces in China have raised the standard of recovery ratio to CNY 165. Thank you.
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According to the policy of Document No. 114, we are introducing a new mechanism for the capacity-based subsidy recoveries. For those areas, the capacity-based subsidy is higher and it also boasts a looser supply. The looser supply means that in that area, the utilization of our coal-fired units will decrease at a faster pace. It is also impacted by the renewable installed capacity and coal-fired installed capacity as well. The capacity-based subsidy is connecting tightly with the utilization of coal-fired units of the company. Thank you.
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For the further introduction of the policy of capacity-based subsidy, you can look up the documents introduced by Liaoning government and Gansu province government. In Liaoning province, the capacity-based subsidy this year will be CNY 370 per megawatt-hour per year. In Gansu province, the number will be CNY 330. That is all beyond the limitation and requirements according to Document No. 1501 [Non-English content]. That is also connected tightly the ancillary services and the power generation to the electricity market by the coal-fired units. Thank you.
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By the end of this quarter, the equity-based financing has decreased by CNY 12.3 billion. That is because we rescheduled the issuance of the perpetual bonds and we will deliver further schedule for the issuance. Thank you.
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In terms of the market-based tariffs increase and in the first part of the year, our daily clearance price on the spot market has increased by CNY 15 per megawatt-hour comparing with the already signed long-term contracts of electricity. Thank you.
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The CNY 15 per megawatt-hour increase of the profitability from the market of electricity has the consistency or stability. Thank you.
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It's also based on the coverage for the mid and long-term contract. We optimize our mid and long-term assignments based on the curve of supply and demand, and delivering better storage of the mid and long-term contract. Thank you.
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Towards those coal-fired units that could deliver ancillary services, we have a lower price at the spot market when the output was low, and we also have a higher price on the spot market when the output is high. We also have the confidence and capability to maintain the comparatively low price, just like at the beginning of this year. Thank you.
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[Non-English content] The next question comes from Zhang Zhuoran of Guosheng Securities. Please go ahead.
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I have three questions. The first question is about the coal procurement structure of the company. In what proportion of the company's long-term contracted coal and those coal from the spot market, as well as those coal from the overseas market and its year-on-year change? The second question is, we have a larger capital expenditure plan on the wind power sector, and what is the IRR threshold for the company's wind power generators and photovoltaic projects? And how does the company expect the investment and installation from the year of 2026 to the year of 2028 in terms of PV sectors and the wind sectors? The third question is, we know that the company has both a compute center in Qinghai as well as in Shanghai, and does that become the company's consolidated balance sheet, or what about its profitability anticipation? Thank you.
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In the year of 2026, we have an anticipated coal consumption of 181 million tons, and the long-term coal contract assigned 100 million tons. The covered ratio is 80%, and we cannot give you an actual or real proportion for the spot market coal and those coals from the international market as the market dynamics is changing continuously. In general, the proportion of the company's long-term contract portfolio will keep similar compared with the year 2025, which is around 80%. But as the international market horizon is changing gradually, we believe that the import proportion of the coal will see a year-on-year decrease and those from the spot market will see a year-on-year increase. Thank you.
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About your second question. In the first part of the year, our newly installed capacity of wind is larger than newly installed capacity of photovoltaic. That is inverse compared with the trends of year 2025. By the end of March, we have a project under construction, and those in wind power generation is 7.2 GW in total, and the photovoltaic 4.3 GW in total. In general, we estimated that the threshold has never been changed, but the profitability is changing because of that electricity spot market was already introduced. Now we are spotlighting the investment in wind power generators. Thank you.
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We still keep the IRR threshold for renewable projects at 6% and that hasn't been changed.
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Going forward to the 15th Five-Year Plan period, we still spotlighting the installed capacity growth of renewable power generations. During the 15th Five-Year Plan, we still highlighting the two carbon goals, and we insist that for the main direction of developing the renewable energy and to optimizing the company's energy mix. The outline of the 15th Five-Year Plan of the company is still based on the country's goal for development and other relevant conditions. Thank you.
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As for the two specific projects, we do not have any further information to deliver as they are still in the early stage of research and development. We will timely deliver the further information when it is ready for disclosure. Thank you.
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[Non-English content] Here comes the last question. The last question comes from Wu Jie of Haitong Securities. Please go ahead.
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I have four questions. The company has said that the coal-fired unit of the company has a net profit of CNY 3.67 billion. Is that right? The second question is for the coal-fired unit, the coal price by the end of the first half of April, what is the change compared with the price right now and the price of the first quarter of the year? As the market horizon has been changed, then long-term coal has already been changing as well.
The third question is in the period in last year, according to the company's annual report, wind power plants have a tariff of CNY -40 per megawatt-hour. What is the reason that driven this negative tariff? The fourth question is, the management has mentioned that we have a CNY 15 per megawatt-hour decrease comparing with the long-term contract, and that's from the market-based tariff. That's all. Thank you.
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You are right. The net profit to the coal-fired unit of the company in the first part of the year is CNY 3.667 billion.
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In Shanxi province, in the fourth quarter of last year, we've written off some renewable subsidies and that triggered the negative tariff. Thank you.
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In terms of supply, the country has delivered the inspection of security for production. The relevant administrations have also introduced the relevant regulations to curb the production capabilities of the mines. In the domestic market, we have a limitation of supply growth. In the overseas market, the price of the coal market is comparatively high, and some restrictions have also added the uncertainty, including the regulations introduced by the government of Indonesia. We believe that the tight supply will continue.
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In terms of the demand, April was a slack season, and the hydropower and the renewable sectors will deliver the better power output. So the daily consumption by the power generators will see a decrease. the international market, the gas price has been seen a dramatic increase, and we believe that the tightened demands will still keep for a little while. In Hainan province, high temperature triggered by the El Niño effect has also delivered the higher demands of coal. That also delivers the increase of the coal price of the market. Thank you.
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We believe the supply and demand curve is still tightening. In March, the company's standard coal price for coal purchase was CNY 862 per ton, which is an increase of CNY 10 per ton. By the first half of April, we have seen another CNY 50 per ton increase, and that is also significant. Thank you.
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To your question about the increase in tariffs of the market-based tariffs towards the overall tariffs. We have a benchmark of annually signed long-term contracts as well as the monthly contract, weekly contract, as well as the daily clearance. So we are holding different kind of settlements and the improvements of CNY 15 per megawatt-hour is the clearance price on the spot market comparing with the medium and long- term contract price. Thank you.
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Besides those electric market-based tariff, we still have a revenue from the ancillary services as well as the operation fee on the spot market. That has also narrowed the overall divide between those two tariffs. Thank you.
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For the company's coal-fired units, the net profit you have said is CNY 3.667 billion and the equity-based profit is CNY 2.57 billion. The percentage of the equity-based profit has shown a year-on-year increase. What is the reason? Thank you.
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The equity-based profit of the coal-fired units have shown a CNY 145 million increase compared with the same period last year, scaling CNY 2.566 billion. The percentage of net profit is because the fraction of minority interest divided by the profit of different power plants, and we have no issuance of new REITs program. Thank you.
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[Non-English content] Thank you so much for all the questions and participation today. [Non-English content] Finally, Mr. Liu would like to give us a summary.
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Thanks for joining us today in this conference call. We appreciate your long-term support to Huaneng Power International. This marks the end of today's conference. For any further inquiry, please feel free to contact with our IR team. Goodbye.
[Non-English content] Thanks again for your attention of the conference call regarding the first quarterly results announcement of 2026. We are looking forward meeting with all of you in our next results announcement. Thank you.