China Southern Power Grid Energy Storage Invests 17 Billion Yuan Annually to Boost Energy Storage; Benefits from Increased Power Generation with Pre-tax Profit Expected to Exceed 1.6 Billion Yuan

Yangtze Business Daily News ● Yangtze Business Reporter Shen Yourong

Southern Power Grid Energy Storage (600995.SH) is increasing its investments in energy storage.

Recently, Southern Power Grid Energy Storage announced that it plans to invest in the construction of the Guangdong Xinfeng Pumped Storage Power Station (hereinafter referred to as the “Guangdong Xinfeng Pumped Storage Project”), with a total estimated investment of about 7.379 billion yuan.

The announcement states that once the Guangdong Xinfeng Pumped Storage Project is completed, it will help accommodate nuclear and wind power in western Guangdong, and prevent disruptions to the grid caused by long-distance transmission faults, enhancing the grid’s emergency response capabilities. Its construction is deemed necessary.

Yangtze Business Daily found that over the past year, Southern Power Grid Energy Storage has disclosed five major external investments, totaling over 17 billion yuan. Almost all of these investments are for energy storage projects.

Southern Power Grid Energy Storage is a listed company under China Southern Power Grid, mainly engaged in pumped storage, new energy storage, and peak regulation hydropower. In recent years, besides actively developing its core energy storage business, the company has also extended along the industry chain to create a second growth curve.

The company’s profitability remains generally stable. Since 2022, benefiting from increased power generation, its annual profits have exceeded 1 billion yuan. By 2025, the company expects profits to surpass 1.6 billion yuan, a year-on-year increase of about 50%.

Southern Power Grid Energy Storage’s financial structure is relatively sound. Although the company has a large total debt, short-term debt is low, and there is no immediate debt repayment pressure.

Planning to invest over 7.4 billion yuan in energy storage projects

Southern Power Grid Energy Storage has announced another energy storage project with an investment exceeding 7 billion yuan.

According to the announcement, on March 16, the company’s board of directors approved the proposal to invest in the Guangdong Xinfeng Pumped Storage Power Station, but this investment still requires approval from the company’s shareholders’ meeting.

The proposal indicates that the company plans to invest in the Guangdong Xinfeng Pumped Storage Project, with a total estimated investment of about 7.379 billion yuan, of which 20% will be equity capital and 80% will be bank loans.

The announcement states that the Guangdong Xinfeng Pumped Storage Project is part of the National Energy Administration’s “Medium- and Long-term Development Plan for Pumped Storage (2021–2035).” It is located in Xinfeng County, Shaoguan City, Guangdong Province, approximately 100 km from Shaoguan and 120 km from Guangzhou. The planned installed capacity is 1.2 million kW (4×300,000 kW), with Southern Power Grid Energy Storage responsible for investment and construction. The feasibility study report has been approved, and supporting documents such as resettlement plans, land pre-approval, and social stability risk assessments have been obtained.

Southern Power Grid Energy Storage states that the project is necessary. The Guangdong Xinfeng Pumped Storage Project is situated in the western part of Guangdong, with a large reservoir capacity and the ability for weekly regulation. Once completed, it will facilitate the absorption of nuclear and wind power in western Guangdong, prevent grid shocks caused by long-distance transmission faults, and improve the grid’s emergency response. It plays an important role in ensuring the safety of Guangdong’s power system and supporting the construction of a new power system. Additionally, the project involves significant investment and stable tax revenue during operation, which can effectively boost local economic growth, improve infrastructure in surrounding areas, and promote high-quality regional development.

Initial estimates suggest that the project’s internal rate of return (IRR) over a 40-year operation period will be between 4.56% and 5.69%.

Yangtze Business Daily found that over the past year, Southern Power Grid Energy Storage announced five major external projects (including the above investment), with a total investment of 17.016 billion yuan. The largest project is the Yunnan Xichou Pumped Storage Power Station, with a total investment of 8.035 billion yuan.

On the evening of April 28, 2025, Southern Power Grid Energy Storage announced that the Yunnan Xichou Pumped Storage Project, located in southern Yunnan, will undertake peak regulation, valley filling, energy storage, frequency regulation, reactive power compensation, and emergency backup tasks after commissioning, further enhancing Yunnan’s power grid regulation capacity, supporting renewable energy absorption in southern Yunnan, and ensuring grid safety and stable operation.

Southern Power Grid Energy Storage’s core business is energy storage, and it continues to ramp up energy storage construction, making its main business more prominent.

Profitable for four consecutive years

By continuously expanding energy storage projects, Southern Power Grid Energy Storage is planning for the future.

The predecessor of Southern Power Grid Energy Storage was Wenshan Electric Power. In 2022, the company completed a major asset restructuring, divesting its local transmission and distribution assets and acquiring 100% equity of Southern Power Grid Peak Regulation and Frequency Regulation Power Generation Co., Ltd., owned by China Southern Power Grid, achieving a comprehensive transformation of its main business. The company was renamed Southern Power Grid Energy Storage.

In recent years, the company has maintained profitability. From 2022 to 2024, its operating revenues were 8.261 billion yuan, 5.63 billion yuan, and 6.174 billion yuan, respectively; net profits attributable to parent company shareholders were 1.663 billion yuan, 1.014 billion yuan, and 1.126 billion yuan.

In 2023, net profit attributable to parent shareholders declined mainly due to reduced water inflow at Lubuge Hydropower Station, leading to decreased power generation, and policy-driven reductions in revenue from pumped storage.

In 2024, revenue and net profit rebounded, and performance is expected to further grow in 2025.

According to earnings forecasts, in 2025, Southern Power Grid Energy Storage expects net profit attributable to parent company shareholders to be between 1.667 billion and 1.727 billion yuan, an increase of 541 million to 601 million yuan from the previous year, representing a year-on-year growth of approximately 48% to 53%. Using the median estimate, the growth rate would be about 50%.

This marks four consecutive years of annual profits exceeding 1 billion yuan.

Regarding the expected growth in 2025, the company states that it is mainly due to better water inflow at peak regulation stations, increased power generation, and higher electricity sales revenue and profits.

The increase in power generation is partly related to weather conditions affecting water inflow, and partly related to capacity.

In its mid-year report for 2025, Southern Power Grid Energy Storage noted that it is actively developing pumped storage and new energy storage to seize the opportunities of “dual carbon” goals, consolidating its industry leadership.

The company believes that to maintain safe, reliable, efficient, and stable operation, the demand for regulating power sources such as pumped storage and new energy storage continues to grow. It is accelerating the development of pumped storage and new energy storage, with 10 projects under construction progressing in an orderly manner. The company has fully commissioned three demonstration projects: the Wenshan Qiubei project in Yunnan, Hainan’s first independent shared energy storage project in Lingao, and a storage project at Zhongnan Cement Factory in Hunan.

In recent interviews, company officials indicated that the newly operational energy storage stations mainly use lithium-ion technology. The company is also actively researching and tracking other emerging storage technologies such as flow batteries, compressed air, and liquid metal, and will consider applying these new technologies in suitable scenarios once mature. The Lijiang Huaping energy storage project, currently under construction, plans to adopt flow battery technology.

It is worth noting that Southern Power Grid Energy Storage is also accelerating the development of emerging businesses and international markets along the energy storage industry chain, aiming to build a second growth curve, optimize its business structure, and enhance operational resilience.

While increasing energy storage projects puts financial pressure on the company, its debt structure remains reasonable. As of the end of September 2025, short-term debt was only 686 million yuan, far below the 5.361 billion yuan in cash and equivalents.

Editor: ZB