What China’s big, green plans mean for utilities: Given President Xi Jinping’s commitment to reach carbon neutrality by 2060, we expect the upcoming Five-Year Plan (FYP) to put more focus on renewable energy and its integration into the power grid. While this won’t be easy or cheap, the net result is we now expect a faster transition to green energy. We forecast that nonfossil fuels will account for 20% of primary energy consumption by 2025, five years ahead of the official target for 2030. We believe China’s CO2 emissions from electricity could peak in 2025. In the long term, if thermal power drops in half by 2060, wind capacity will need to jump by 12x and solar capacity by 22x. If thermal power totally disappears then expect even more. Reality and challenges: Many hurdles remain for a major uptake in solar and wind energy. The most pressing is the power grid’s struggle to integrate renewable energy given the high costs of energy storage. Other problems include the decentralisation of the power market and the creation of a spot electricity pricing market which is vital to growing renewable energy usage. Pricing and regulatory risks: We believe government would continue to phase out controlled pricing and push for further liberalisation through market behaviour. Fortunately, we see fewer pressure to utility operators from this point forward, after some serious suppression and reforms on electricity and gas prices since 2017, plus grid parity coming into play.