China Southern Power Grid Energy Storage Plans to Invest 13.379 Billion Yuan to Build Guangdong Xinfeng Pumped-Storage Hydroelectric Station, Provincial Grid Unified Pumped-Storage Capacity Tariff Becomes Revenue Variable

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Daily Economic News Reporter | Cai Ding    Daily Economic News Editor | Huang Bowen

On the evening of March 16, Nanjing Grid Energy Storage (SH600995, stock price 14.88 yuan, market value 47.56 billion yuan) announced plans to invest in the construction of the Guangdong Xinfeng Pumped Storage Power Station. This project is a national energy bureau planning project, located in Xinfeng County, Shaoguan City, Guangdong Province, with a planned installed capacity of 1.2 million kilowatts. The total investment for the project is approximately 7.379 billion yuan, with 20% funded by project capital and 80% by bank loans.

According to the announcement, the investment proposal was unanimously approved at the ninth board of directors’ third meeting held on March 16, and still requires approval from the shareholders’ meeting. Additionally, this investment is not a related-party transaction and does not constitute a major asset restructuring. However, Nanjing Grid Energy Storage states that once the project is completed and operational, it is expected to generate related-party transactions with Guangdong Power Grid Co., Ltd.

The Daily Economic News reporter noted that this project is not an ordinary investment but is included in the National Energy Bureau’s “Medium- and Long-term Development Plan for Pumped Storage (2021–2035).” According to the announcement, the project is located within Xinfeng County, Shaoguan City, Guangdong Province, approximately 100 km from Shaoguan City and 120 km from Guangzhou City in a straight line. The planned capacity is 1.2 million kilowatts (4×300,000 kW), with Nanjing Grid Energy Storage responsible for investment and construction, expected to be fully completed and put into operation during the early stage of the 14th Five-Year Plan.

Nanjing Grid Energy Storage’s announcement states that the Guangdong Xinfeng Pumped Storage Power Station project has already received approval from the Guangdong Development and Reform Commission, along with several supporting documents such as resettlement plans and land pre-approval.

The project is located in the western part of Guangdong and boasts two major advantages: large station reservoir capacity and strong weekly regulation ability. Once completed, it will not only support the absorption of nuclear and wind power in western Guangdong but also effectively prevent grid shocks caused by long-distance transmission failures, enhancing the grid’s emergency response capability.

The announcement shows that, including this project (costing 7.379 billion yuan), the company has made five external investments within 12 consecutive months, totaling 17.0157 billion yuan, demonstrating a strong expansion willingness in the energy storage core business. This rolling investment exceeds 50% of the company’s latest audited net assets.

Image source: Nanjing Grid Energy Storage Announcement

According to the announcement, in accordance with the “Notice on Improving the Capacity Electricity Price Mechanism for Power Generation” (Fagai Jia Ge [2026] No. 114) issued by the National Development and Reform Commission and the National Energy Administration (hereinafter referred to as “No. 114 Document”), the project’s revenue will consist of “capacity electricity fee income” and “market-based trading income.” However, Guangdong’s price regulators have not yet clarified a unified capacity electricity price for pumped storage at the provincial grid level, and electricity market trading remains uncertain. Based on current conditions, research tools, and methods, the company has estimated the investment return rate for the Guangdong Xinfeng Pumped Storage Power Station project, with a 40-year operating period, internal rate of return (IRR) of 4.56% to 5.69%.

In response, Nanjing Grid Energy Storage states it will actively cooperate with the Guangdong provincial government to implement the “No. 114 Document” policies and will continue to strengthen research and pilot work on electricity spot markets and ancillary service markets.

Furthermore, given the long construction period of large hydropower projects, the company specifically highlights the “investment over-budget risk,” which refers to potential unforeseen circumstances during construction leading to costs exceeding the original budget. The company states it will strengthen cost control during the infrastructure phase, optimize project design and construction plans in a timely manner based on actual conditions, strictly control project costs, and ensure that project final accounts do not exceed the feasibility study budget.

Regarding the impact of this investment on the company, Nanjing Grid Energy Storage states that the construction of the Guangdong Xinfeng Pumped Storage Power Station aligns with the company’s strategic layout and planning goals, helps further expand core business, and enhances competitiveness. This investment will not have a significant impact on the company’s revenue or profits this year, nor will it harm the interests of the company and all shareholders, especially small and medium shareholders.

Cover image source: Daily Economic News Media Library