Driven by high temperatures and demand recovery, residential and tertiary sector electricity consumption increased 18.0% and 10.7% year-over-year in July respectively, boosting overall electricity consumption growth to 8.6%. Monthly electricity consumption exceeded one trillion kilowatt-hours for the first time in history. Following the end of the installation rush, wind and solar installations declined significantly, with domestic photovoltaic installations falling below 10 million kilowatts for the first time in recent years in July. Supported by investments in thermal and nuclear power sources, power source investments maintained modest growth from January to July. Dry conditions in July led to weaker hydropower output compared to the same period last year, while photovoltaic monthly utilization rates improved month-over-month.
**High Temperature Drives Residential Electricity Demand, July Total Social Electricity Consumption Grows 8.6% Year-over-Year**
According to China Electricity Council data, July electricity consumption increased 8.6% year-over-year, with growth accelerating 3.2 percentage points from June's 5.4%. By sector, high temperatures drove residential electricity consumption up 18.0% year-over-year in July. Secondary industry electricity demand recovered to 4.7%, though its contribution to electricity consumption growth declined 4.7 percentage points month-over-month to 33.0%. The four major energy-intensive industries maintained subdued electricity consumption. By region, high energy-consuming areas achieved impressive 10.4% electricity consumption growth in July, while coastal regions saw year-over-year growth slow to 6.0%, likely due to extreme weather disrupting production.
**Wind and Solar Installation Growth Continues Declining After Installation Rush, Thermal Power Investment Maintains Strong Growth**
As new energy installation rush effects gradually fade, cumulative growth rates for new energy installations in July continued declining significantly. From January to July, domestic cumulative new wind and photovoltaic installations reached 53.67 million kW and 223.25 million kW respectively, representing year-over-year growth of 79.4% and 80.7%, with growth rates declining 19.5 and 26.4 percentage points respectively from the January-June period.
Affected by declining photovoltaic investment, power source investment from January to July totaled 428.8 billion yuan, up 3.4% year-over-year, with growth slowing 2.5 percentage points from the January-June period. Power source investment showed divergence, with thermal power source cumulative investment increasing 52.4% year-over-year, maintaining high-speed growth. Grid investment from January to July reached 331.5 billion yuan, up 12.5% year-over-year, continuing its growth trajectory.
**July Hydropower Output Weak, Photovoltaic Monthly Utilization Rate Improves Month-over-Month**
July average utilization hours for power generation equipment were 302 hours, down 7.9% year-over-year. Hydropower output was relatively weak year-over-year, with utilization hours declining 12.6% to 395 hours. Thermal power benefited from dry conditions, with utilization hours increasing 0.3% year-over-year to 399 hours. Wind power utilization hours decreased 10.1% year-over-year to 142 hours. Solar monthly utilization rates improved month-over-month, with utilization hours increasing 3.5% year-over-year to 118 hours.
In July, domestic wind power utilization rate was 97.0%, down 0.9 percentage points year-over-year. Domestic photovoltaic utilization rate was 96.4%, down 1.2 percentage points year-over-year. Wind and solar consumption rates maintained declining trends year-over-year, though the month-over-month decline narrowed.
**Risk Factors:** Electricity demand below expectations; significant decline in market trading electricity prices; substantial increase in fuel costs; rising wind and solar costs; intensified new energy consumption risks; water inflow below expectations.
**Investment Strategy:** Recommend allocating to long-duration assets such as hydropower and nuclear power, which offer operational stability and valuation expansion potential; H-share leading thermal power companies with both performance elasticity and low valuations; deeply discounted green electricity stocks whose valuations already reflect consumption pressures; beneficiaries of increasing integration between digitalization and new power systems through new scenarios and models such as virtual power plants, microgrids, integrated energy services, and power forecasting.