China’s leading economic province, Guangdong, is currently facing multiple challenges in its export, domestic consumption, and real estate markets. In the first half of this year, nearly 60% of electricity sales companies in Guangdong operated at a loss, with wholesale-retail price differentials almost approaching zero, and some enterprises even being owed rebates by power plants.
According to a report by “First Financial,” the “2026 Guangdong Electricity Market Semi-Annual Report” recently released by the Guangdong Power Trading Center shows that from January to June this year, a total of 298 electricity sales companies in Guangdong accumulated losses, with loss-making enterprises accounting for 59.6%, close to sixty percent.
During the same period, direct electricity trading volume in Guangdong reached 241.3 billion kilowatt-hours, while the total electricity consumption of the whole society was 471.48 billion kilowatt-hours, yet the profit margins for electricity sales companies have significantly shrunk. The report indicates that the average profit margin for the electricity sales industry in the first half of the year was only 0.0039 yuan per kilowatt-hour, or 3.9 cents.
An article by Netease under the title “Global Zero Carbon” pointed out that this number is merely the book result of the electricity trading system. If operational costs, market development, and other expenses are considered, the actual number of electricity sales companies operating at a loss may be even higher.
The traditional profit model for electricity sales companies involves purchasing electricity wholesale from power generation companies and then selling it to industrial and commercial users at market prices to profit from the price difference.
Affected by factors such as rising coal and natural gas procurement costs, changes in electricity demand, fluctuations in renewable energy output, and concentrated maintenance of generating units, the spot electricity price in Guangdong surged significantly in the second quarter.
By the end of March, the spot electricity price in Guangdong had shot up from around 0.31 yuan to 0.678 yuan per kilowatt-hour; and in April, it even surpassed 1 yuan at certain times. Meanwhile, from April to June, the comprehensive prices of monthly and long-term electricity trades in Guangdong reached 0.37245 yuan, 0.48343 yuan, and 0.40134 yuan per kilowatt-hour, respectively.
The analysis of the semi-annual report by Guangdong YueTou Energy Development Co., Ltd. indicated that the average settlement price of electricity for retail customers in the first half of the year was approximately 0.3746 yuan per kilowatt-hour, while the total settlement price for electricity users was about 0.3749 yuan per kilowatt-hour, nearly eliminating the wholesale-retail price difference.
The pressure on independent electricity sales companies is particularly evident. The report shows that 456 independently backed electricity sales companies accounted for over 90% of the total number of electricity sales companies, but they only made a profit of 0.0002 yuan per kilowatt-hour; in contrast, 32 generation-backed electricity sales companies made a profit of 0.0066 yuan per kilowatt-hour.
Furthermore, some electricity sales companies are facing another significant challenge in that the previously promised rebates are proving difficult to fulfill.
According to the aforementioned “Global Zero Carbon” article, some electricity sales companies in Guangdong demanded backdated rebates from power generation enterprises in August this year under offline rebate agreements signed at the end of 2025. Some companies claimed that certain power plants had only paid rebates for the first few months of this year, with tens of millions of yuan remaining unpaid. One electricity sales company stated that the total annual rebates agreed upon with multiple power plants exceeded 100 million yuan. Industry insiders estimate that the off-the-books rebates between Guangdong power plants and electricity sales companies could reach billions of yuan.
This practice stems from past low-price competition. Some electricity sales companies reduced end-user prices by signing contracts according to on-site rules and then returning part of the electricity fees off the books. However, with this year’s reversal in electricity prices and generation costs, the willingness of upstream power generation enterprises to provide rebates has decreased.
As China’s largest economic province, Guangdong has been facing a combination of pressures in recent years, including export, domestic demand, and downward trends in the real estate market.
Chinese issues expert Wang He previously analyzed in an article on Dajiyuan that Guangdong’s economy has long relied on globalization, exports, industrialization, and urbanization, which are undergoing changes. Shifts in the foreign trade environment, insufficient domestic demand, imbalances in industrial structure, uneven regional development, and the downturn in the real estate sector all contribute to the pressure on Guangdong’s economic transformation.