Hydroelectric Power as a Stable and High-Yield Investment in China’s Energy Transition: China Yangtze Power’s H1 2025 Performance

China Yangtze Power’s first-half 2025 financial results underscore the resilience and profitability of hydropower in a rapidly evolving energy landscape. The company reported a 5.02% year-on-year revenue increase to RMB 36.587 billion and a robust 14.22% surge in net income attributable to shareholders, reaching RMB 12.984 billion [1]. This growth was driven by its six cascade hydropower stations, which collectively generated 126.656 billion kilowatt-hours in H1 2025, a 5.01% rise from the prior year [2]. While Q2 output dipped slightly due to seasonal water inflow fluctuations—most notably an 8.39% decline in the Three Gorges Reservoir [1]—the Baihetan Project offset this with a 16.24% generation increase, demonstrating the diversification of its asset base [1].

Hydropower’s strategic role in China’s energy transition is reinforced by government policies prioritizing renewable energy. The 14th Five-Year Plan aims for 20% non-fossil fuel share in primary energy consumption by 2025, a target within reach given that non-fossil fuels already accounted for 19.68% of consumption in 2024 [3]. Hydropower, with its geographical advantages and grid stability, remains a cornerstone of this strategy. Unlike intermittent solar and wind, which added 260 GW of capacity in H1 2025 [3], hydropower provides dispatchable energy critical for balancing the grid. This reliability is further enhanced by government initiatives such as the one-way bidding method in the national Emissions Trading System and the establishment of a unified power market [1].

Investor confidence in hydropower is bolstered by China’s “build first, break later” approach, which prioritizes renewable expansion while gradually phasing out coal [4]. This strategy enabled clean energy to meet over 80% of China’s electricity demand in 2024 [4], a feat that underscores hydropower’s scalability. For China Yangtze Power, the government’s focus on energy security—exemplified by projects like the new Xizang (Tibet) hydropower initiative [1]—creates long-term tailwinds. The company’s existing infrastructure, including the Three Gorges and Baihetan projects, positions it to capitalize on these trends while mitigating risks from short-term weather variability.

Challenges remain, particularly in carbon intensity reduction. China has only achieved a 7.8% reduction from 2021 to 2024, falling short of its 18% target from 2020 levels [3]. However, the government’s revised energy intensity calculations—excluding renewables and fossil fuel feedstock use—have made progress more achievable [3]. With $818 billion invested in its energy transition in 2024 [4], China’s commitment to decarbonization ensures that hydropower will remain a high-yield asset class, supported by both policy and capital.

For investors, China Yangtze Power’s H1 2025 performance illustrates the stability of hydropower in a diversified renewable portfolio. While solar and wind face intermittency and curtailment challenges, hydropower’s operational flexibility and government backing make it a compelling long-term investment. As China navigates its energy transition, companies like Yangtze Power are poised to deliver consistent returns while aligning with national decarbonization goals.

Source:
[1] China Energy Policy Newsletter - August 2025 [https://www.cet.energy/2025/08/04/china-energy-policy-newsletter-august-2025/]
[2] China Yangtze Power Co., Ltd. Reports Preliminary ... [https://www.marketscreener.com/quote/stock/CHINA-YANGTZE-POWER-CO-LT-6496632/news/China-Yangtze-Power-Co-Ltd-Reports-Preliminary-Production-Results-for-the-Second-Quarter-and-Firs-50522374/]
[3] China can meet most 2025 climate targets, except carbon intensity goal [https://www.spglobal.com/commodity-insights/en/news-research/latest-news/energy-transition/042425-china-can-meet-most-2025-climate-targets-except-carbon-intensity-goal-report]
[4] Powering China's New Era of Green Electrification | Ember [https://ember-energy.org/latest-insights/powering-chinas-new-era-of-green-electrification/]