Huaneng Power International has set up three new branches in one go, deploying both the "tourniquet" for coal power operations and the "scalpel" for new energy development at the same time.
Huaneng Power International has established three new branches to reduce costs and expand new energy business, whose effect remains to be verified.
Energy Foresight learned that a resolution passed by the board of directors of Huaneng Power International on September 22 and announced on September 23 has caused a moderate stir in the power generation industry.
The announcement itself is unremarkable: three new branches have been set up, namely Gansu New Energy Branch, Eastern Yunnan Branch and Fuel Branch. No investment amount is disclosed, no management personnel changes are involved, and there is not even a single explanatory note. In the context of the five major power generation groups that often make tens of billions of yuan-level project investments, this is almost a piece of news that most investors will skip over.
But it is precisely this understatement that conceals a harsh arithmetic problem. Huaneng Power International's total profit from coal power in the first half of 2026 was 5.925 billion yuan, down 19% year on year, and the total profit in the second quarter plummeted by 52% year on year. In the same period, the price of 5500 kcal thermal coal at Qinhuangdao has climbed all the way from 682 yuan/ton at the beginning of the year, exceeded 977 yuan/ton in September, and rose sharply year on year. Coal prices are rising while electricity prices are falling, and the profit statement of coal power is like a rubber band pulled from both ends.
Huaneng Power International chose to adjust its organizational structure at this time, not as a passive remedy after problems broke out, but to put on a hemostatic bandage before profits are completely eroded.
The bet of the Fuel Branch: turning the "ballast stone" of long-term contract coal into a "weapon"
Among the three branches, the strategic intention of the Fuel Branch is the most likely to be underestimated.
Huaneng Power International's fuel cost in the first half of the year was 54.795 billion yuan, down 6.02% year on year, which benefited from the 2.84% year-on-year drop in the unit price of standard coal to 891.02 yuan/ton. However, the decline is narrowing. The average purchase price of coal fell by as high as 12.5% for the whole year of 2025, and the decline was only 2.84% in the first half of 2026. The price advantage of imported coal is disappearing — the CECI Import Index comprehensive CIF unit price of standard coal has risen to 1252 yuan/ton, and the space for power plants to use imported coal to replace high-priced domestic coal has been sharply compressed.
The problem that the Fuel Branch needs to solve is not "whether coal can be purchased", but "in the upward cycle of coal prices, who is qualified to get cheap coal". As the unified supplier of seaborne coal for coastal power plants, Huaneng Group Fuel Co., Ltd. manages 16 subsidiaries, 4 shipping companies and 4 port companies, with a total transport capacity of 1.98 million deadweight tons and an annual throughput of 110 million tons. It should be noted that China Huaneng Group Fuel Co., Ltd. is a joint venture platform held 50% by Huaneng Group and 50% by Huaneng Power International. The fact that the fuel function is further delegated from the group level to the branch under the listed company is essentially to convert the scale advantage of long-term contract negotiation into the independent cost control capability of Huaneng Power International — but the functional coordination and power and responsibility boundary between this measure and the group's fuel company still need to be adjusted in practice.
This is a bet on "certainty". Against the background of passive rise in coal prices and weakening supplementary role of imported coal, whoever locks the volume and price of long-term contract coal locks the core profit variable of the coal power sector. The establishment of the Fuel Branch means that Huaneng Power International hopes to build a more direct fuel cost control mechanism within the listed company, and how to achieve differentiated positioning and efficient coordination with the group's fuel company is the key to the effectiveness of this mechanism.
Gansu and Eastern Yunnan: the two "blades" of new energy cut into different pain points
Huaneng Group's layout in Gansu has gone beyond the conventional scope of regional investment.
The 6 million kW new energy project of the Longdong Energy Base has been fully completed and connected to the grid in February 2026, with a total investment of over 40 billion yuan. The 2×1 million kW peak-shaving coal power project of Zhenning Power Plant is equipped with the world's largest 1.5 million tons/year CCUS demonstration project, and the onshore CO₂ saline aquifer storage project with the largest single well scale in China has been completed and put into operation. Huaneng Group plans to invest an additional 150 billion yuan in Gansu during the 15th Five-Year Plan period, and the installed power capacity in Gansu will exceed 40 million kW by 2030.
However, separating the Gansu business from the regional comprehensive management framework and setting up a dedicated new energy branch means that Huaneng Power International's role in Gansu has been upgraded from "participating in construction" to "independent operation". In the complex "wind-solar-thermal-storage" integrated system such as the Longdong Base, it is difficult for the traditional regional company structure to simultaneously manage three parallel business lines: new energy development, coal power peak shaving, and CCUS carbon capture. An independent branch provides organizational focus.
In Yunnan, Huaneng Xiaowan Water-Solar Complementary Project has been put into operation in Yunnan in April, with a total installed capacity of 5.43 million kW, including 4.2 million kW of hydropower and over 1.23 million kW of photovoltaic, with an annual power generation of 20 billion kWh. The new energy installed capacity of Huaneng's clean energy base in Yunnan has exceeded 10 million kW, and more than 2.6 million kW of new energy projects have been included in Yunnan's 2026 construction list, ranking first in the region.
The establishment of the Eastern Yunnan Branch is very likely to build a more flexible organizational carrier for the integrated operation of hydropower, wind power and solar power and the market-oriented power trading in Yunnan region. Yunnan is rich in hydropower resources and its new energy is expanding rapidly, but the game between power transmission channels and local consumption has never stopped. The establishment of an independent branch gives Huaneng Power International's assets in Yunnan more direct decision-making power in market transactions.
The "intermediate state" of organizational restructuring: neither a business division nor a subsidiary
If we place this adjustment of Huaneng Power International in the organizational reform map of the five major power generation groups, a clear trend emerges.
The head office structure of China Energy Investment Corporation has been adjusted from 17 departments to a "1+22" pattern, with an independent hydrogen energy business division established; State Power Investment Corporation has set up a number of new project companies through joint ventures in Inner Mongolia; China Huadian Corporation has established 39 new secondary subsidiaries in 2026, while China Huaneng Group and China Datang Corporation have set up 21 and 19 respectively. The five major power generation groups are collectively shifting from the extensive structure of "group headquarters managing regional companies" to the matrix structure of "headquarters + professional units + regional platforms".
However, the path chosen by Huaneng Power International has its own characteristics. It has neither set up an independent business division at the headquarters level like China Energy Investment Corporation, nor integrated regional coal power assets into independent legal entities like Ningxia Power Co., Ltd. of China Energy Investment Corporation. It has chosen the branch — an intermediate state that is not legally independent and does not conduct independent financial accounting, but can have an independent assessment system and operational autonomy in management.
The advantage of this "intermediate state" is flexibility. The branch does not involve equity change and asset restructuring, and the decision-making chain is short. The disadvantage is also obvious: The branch does not have an independent balance sheet, and its operating effect is finally reflected in the consolidated statements of the listed company, which will make internal transfer pricing and cost collection more complicated. The boundary of project development rights between the new energy branch and regional companies, as well as the division of powers and responsibilities between the Fuel Branch and the original fuel departments of each power plant, all need to be adjusted in practice. If the coordination is not smooth, "dual-track management" will instead increase coordination costs.
The feedback from the capital market is as follows — the day after the announcement, the A-share of Huaneng Power International closed down 0.59%, and its H-share closed down 0.63%. The divergence of institutional ratings is also significant: Fitch has upgraded Huaneng Power International's long-term foreign currency issuer default rating from "A-" to "A" with a "stable" outlook. Citi maintains a "sell" rating with a target price of HK$4.6, and its core concern is that earnings per share and dividends will decline from 2026 to 2027. Bank of America Securities has also lowered its 2026-2027 profit forecast by about 4%.
The essence of the divergence is an arithmetic problem without a standard answer: Is the improvement of coal power profits a phased dividend from the downward cycle of coal, or the result of a substantial improvement in fuel cost control capabilities? The establishment of the Fuel Branch is an organizational answer given by Huaneng Power International. It tries to turn the coal power profit that "depends on the weather" into the coal power profit that "depends on management". Whether this answer is valid needs to be verified for at least two to three financial reporting cycles.
The most critical point of this organizational adjustment of Huaneng Power International lies in the timing selection. Coal prices are rising, electricity prices are falling, and coal power profits have been halved in the second quarter, but the company has not chosen to cut capital expenditure or shrink the new energy business to maintain profits. On the contrary, it is accelerating the layout of new energy in Gansu and Yunnan, and strengthening the fuel cost defense line on the coal power side at the same time. This is a "both ends" strategy — using the installed capacity growth of new energy to hedge the cyclical decline of coal power profits, and using centralized fuel management to hedge the trend rise of coal prices.
The direction is correct, but the adjustment of organizational structure will never automatically translate into financial performance. Whether the three branches can maintain or even increase Huaneng Power International's coal power profit per kWh from the 2.1 cent level in the second quarter in the next upward cycle of coal prices is the real question that this organizational restructuring needs to answer. Before that, all analyses are just speculations.