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The global energy industry is under extreme pressure to cut carbon emissions down to safe levels amid expediting climate change concerns.
The consumption of coal is under tight scrutiny as China’s heavy use of subcritical coal plants continues to exacerbate severe implications to the global environment, human’s health and its economy.
Even though China is currently leading world electricity production from renewable energy sources, it still accounts for 50% of the world’s coal production, which is slightly more than half of the nation’s energy demand at the moment.
In this article, we are going to find out why CR Power Holdings Co. (SEHK: 836) would be your next long-term investment.
Ahead of the pack
Among the six largest coal power companies in China, CR Power is currently the most efficient and effective integrated power company in China.
Renewable energy power generation has become a vital part to maintain the company’s future standing as one of the largest players in the energy sector.
In order to transform into a resource conserving and environmentally friendly enterprise, CR Power
has been working hard to practice the concept of green growth, and create a transition pathway to generating portfolios with cleaner characteristics.
As of today, its businesses cover thermal power, coal, wind-power, hydropower, and distributed energy, as well as strategic investments in R&D such as energy storage, nuclear power and PV power generation.
According to its latest annual report, the revenue generated from the renewable segment accounted for 41% of the total revenue, while the energy generated from wind, hydroelectric and photovoltaic (PV) power constituted approximately 23.3% of its total attributable operational generation capacity, which is relatively high when compared to other top five power companies in China.
Not only CR Power has a higher energy portfolio mix when compared to the other top five players in China’s energy industry, the greater profit margins generated from the renewable business also indicates its potential growth in the long term.
Strong position in wind power
Currently, CR Power’s renewable energy segment is dominated by wind power. In recent years, with the support from the Chinese Government, the company has been aggressively pushing forward the transition to wind power.
As one of the market leaders in the energy industry, the company has a competitive advantage over rivals for owning wind turbines in regions with less wind curtailment such as East China, Central China and South China. The higher utilization of wind turbines indicates greater amount of electricity generated, and thereby a greater return on investments.
Based on CR Power’s latest annual report, its average utilization hours for wind power generation units in China reached 2,082 hours and exceeded the national average by 119 hours.
Yet, the periodic nature of renewables has cast challenges such as electricity losses. Therefore, we should highlight the importance of energy storage technologies for wind power applications.
With that, CR Power has established a smart energy company in 2019 to expand its comprehensive energy business and work with China Resources Gas to accelerate the development of advanced technologies such as energy storage, hydrogen energy and energy conservation etc.
Together with continuous technological innovation that drives rapid decline in energy storage costs and increasing wind energy storage projects in the market, CR Power’s business is anticipated to grow sustainably in the future.
Renewable energy will be the most effective tool to fight against climate change and China has been putting a lot of effort into switching to cleaner alternatives. However, energy storage will remain as a crucial and inevitable part to ensure a comprehensive integration of renewable energy in the near future.
Although there is a recent cut in Chinese renewable power subsidy, the industry will continue to accelerate as increasing energy storage projects signals the direction for further development.
With CR Power’s outstanding operating efficiency and being one of the leading renewable energy generators in China’s energy industry, it will therefore be a suitable consideration for your long term investment.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Investor Z. doesn’t own shares in any companies mentioned.