Decreased wind power generation and increased wind and solar abandonment: Yunnan Energy Investment's net profit to plummet by 2025

Due to the decrease in “incoming wind” and the increase in “wind and solar abandonment,” as well as the divestment of Yunnan Natural Gas Company, Yunnan Energy Investment (002053.SZ), a leading wind power company in Yunnan Province, is expected to see a 64.99% year-on-year decline in net profit attributable to shareholders in 2025.

On March 26, after the market closed, Yunnan Energy Investment released its 2025 annual report, stating that the company achieved an annual operating income of 2.495 billion yuan, a year-on-year decrease of 27.75%; net profit attributable to shareholders was 236 million yuan, down 64.99%; basic earnings per share were 0.26 yuan. The company plans to distribute a cash dividend of 1.3 yuan (including tax) for every 10 shares to all shareholders.

Yunnan Energy Investment’s main business covers three major sectors: renewable energy, salt, and natural gas. Its scope of operations includes the production and sales of wind power generation, photovoltaic power generation, as well as various products like table salt, industrial salt, and mirabilite, as well as the construction and operation of natural gas pipelines, natural gas sales, and home installation services. In recent years, Yunnan Energy Investment has actively expanded its renewable energy business, making it a significant source of the company’s performance, but “the weather did not cooperate,” and rare weather conditions significantly impacted the company’s wind power operations in 2025.

According to the annual report, the Yunnan Climate Center reported that the average precipitation in Yunnan Province in 2025 was the second highest since 1961, and the increase in precipitation led to a decrease in incoming wind. The average wind speed in the company’s wind farms fell by 0.86 m/s compared to the previous year, resulting in an increase in renewable energy installed capacity year-on-year, but electricity generation dropped from 3.814 billion kWh in the previous year to 3.359 billion kWh. Additionally, the impact of wind and solar abandonment and the decline in market electricity prices led to a revenue decrease of 292.5706 million yuan in the renewable energy sector.

It is estimated that the decrease in incoming wind, wind and solar abandonment, and falling electricity prices, along with the expansion of the company’s renewable energy installed capacity leading to increased depreciation and other fixed costs, resulted in a year-on-year decline of 445.3515 million yuan in net profit attributable to shareholders in the renewable energy sector.

Furthermore, Yunnan Energy Investment completed a capital increase to Yunnan Shale Gas Exploration and Development Co., Ltd. by transferring shares of its controlling subsidiary, Yunnan Natural Gas Co., Ltd., which will no longer be included in the consolidated financial statements of the listed company starting April 30, 2025, leading to a year-on-year decrease in operating income of 612.9984 million yuan.

As the “main force” in the investment, development, and operation of wind power generation in Yunnan Province, Yunnan Energy Investment previously focused on salt and natural gas. In March 2019, the listed company completed the issuance of shares to purchase assets from Yunnan Energy Investment New Energy Investment and Development Co., Ltd. This expansion further increased the company’s share of clean energy business, extending from the natural gas sector into the renewable energy sector. As of the end of 2025, the company’s total installed capacity for renewable energy reached 2.59486 million kilowatts, of which wind power accounted for 2.41886 million kilowatts, or 93.22%; photovoltaic power accounted for 176,000 kilowatts, or 6.78%.

The wind power-dominated business structure also puts Yunnan Energy Investment in a position of being “dependent on the weather.”

According to the annual report, in normal years, the period from June to October in Yunnan is typically a small wind season, while the period from November to the following May is a large wind season. Wind resources also fluctuate from year to year, usually alternating between “wind-rich years” and “wind-poor years,” but this variation cannot be quantified. During the reporting period, the incoming wind conditions were best in the first quarter, gradually weakened in the second and third quarters, and slightly rebounded in the fourth quarter, but remained weaker than the fourth quarter of the previous year.

Against this backdrop, Yunnan Energy Investment is actively laying out energy storage projects to explore new business growth points. The company is currently advancing the 350MW compressed air energy storage demonstration project in Anning, Kunming, and has proposed opportunistic configurations of other types of energy storage projects, focusing on extending the industrial chain, accelerating incubation in new tracks like green hydrogen and integrated energy, and cultivating new momentum for green development.

Looking at the national level, China’s wind power industry is undergoing a strategic transformation from “scale expansion” to “efficient consumption and market competition,” driven by national policies, market mechanisms, and technological innovation. According to a report by Science and Technology Daily, the National Energy Administration clearly pointed out in its interpretation during the 2025 Beijing International Wind Energy Conference that as the market-oriented reform of renewable energy grid connection prices advances, wind power projects will no longer rely on full “bottom-line” purchases but will fully enter the electricity market to compete with other energy sources. The industry is shifting from “policy-driven” to “market-driven,” from “power generation capacity” competition to “power generation value” competition.

This transformation will be accompanied by short-term fluctuations in earnings and adaptation pains, but in the medium to long term, it will guide the industry back to high-quality development, including reducing “internal competition” in the industry, promoting large-scale and intelligent wind power, facilitating local consumption of green electricity and inter-regional mutual aid, and supporting “dual carbon” goals and the construction of a new power system. In the future, wind power companies need to strengthen their market trading capabilities and industrial chain collaboration to achieve value enhancement in competition.