Huaneng Power Reports 29% Profit Decline as Renewables Squeeze Coal Generation
China's largest power producer saw first-half net income fall to CNY 6.59 billion amid lower tariffs and rising renewable capacity, though clean energy now accounts for 42% of its portfolio.
Profit Pressures Mount
Huaneng Power International, Inc. reported a 28.89% year-on-year decline in net profit attributable to shareholders for the first half of 2026, reaching CNY 6.59 billion on revenue of CNY 106.9 billion, which fell 4.58% from the prior year period (earnings call, 2026-08-19). Earnings per share came in at CNY 0.35.
The decline was driven by a combination of lower electricity output and falling tariffs. Domestic on-grid power sales decreased 2.97% to 199.78 billion kilowatt hours, while the average tariff dropped 4.59% to CNY 463.02 per megawatt hour (earnings call, 2026-08-19). President Liu Ancang attributed the volume decline to renewable energy's expanding share of China's energy mix, which is displacing coal-fired generation.
Clean Energy Transition Accelerates
Despite near-term profit headwinds, the company made significant progress on its low-carbon transformation strategy. Huaneng added 2.55 gigawatts of renewable capacity in the first half, representing the majority of its 3.04 gigawatts total new installations. Combined with 490 megawatts of new gas-fired units, the company's total controlled capacity reached 159 gigawatts, with low-carbon clean energy now comprising more than 42% of the portfolio (earnings call, 2026-08-19).
The photovoltaic segment showed strong sequential growth, with second-quarter earnings of CNY 989 million—a quarter-on-quarter increase of CNY 756 million. PV on-grid power sales reached 7.65 million kilowatt hours, up 40% from the first quarter, equivalent to an additional 2.19 million kilowatt hours (earnings call, 2026-08-19). Management attributed the improvement to both expanded installed capacity and higher seasonal utilization rates.
Singapore Operations Face Headwinds
Huaneng's Tuas Power subsidiary in Singapore saw earnings before interest and taxes decline by CNY 618 million year-on-year to CNY 745 million, despite a modest 49 million kilowatt hour increase in generation to 5.32 billion kilowatt hours (earnings call, 2026-08-19).
Three factors drove the profit decline: a 6.3% depreciation in the Singapore dollar against the renminbi reduced earnings by approximately CNY 90 million; Singapore's carbon tax increase from CNY 25 to CNY 45 added CNY 24 million in costs; and profit margins compressed by CNY 22 million (earnings call, 2026-08-19).
Management explained that 70% of Tuas Power's contracts are long-term retail agreements with margins tied to gas contracts and financial instruments, while 20% are stable government contracts and 10% are settled on the spot market. Although spot electricity prices rose from CNY 181 to CNY 240 per megawatt hour in the first half, gas prices increased simultaneously, squeezing margins. The company is pursuing new contracts with higher profitability to improve second-half performance.
Coal Cost Management
On fuel procurement, Huaneng's standard coal price decreased 2.8% year-on-year to CNY 891.02 per tonne (earnings call, 2026-08-19). The company managed costs through enhanced long-term contract execution, strategic spot market purchases, and optimized inventory management across domestic and international sources.
Looking ahead, management emphasized maintaining efficiency and quality while optimizing power generation and asset portfolios to meet full-year targets amid what it described as a "complex market horizon."
This article was generated by MarginX from the earnings call on 2026-08-19. It is not investment advice.