Huaneng Power International Inc

SSE:600011

Earnings Call Analysis

Huaneng Power 2024 Interim Performance & Strategic Focus

In the first half of 2024, Huaneng Power International achieved a consolidated operating revenue of CNY 118.8 billion, a 5.73% decrease year-over-year. Net profit attributable to shareholders rose by 18.16% to CNY 7.45 billion, with earnings per share at CNY 0.38. Despite a slight dip in domestic on-grid power sales and average tariffs, the company effectively controlled costs, reducing unit fuel costs by 11.18%. Emphasizing green energy, it added 3,102.2 megawatts in wind, solar, and gas-fired power, marking significant progress in clean energy and maintaining strategic focus on future profitability.

Overview of Huaneng Power's Interim Results

In the first half of 2024, Huaneng Power International, Inc. focused on achieving its annual targets. Despite facing a 5.73% decrease in consolidated operating revenue, down to CNY 118.8 billion, the company managed an 18.16% improvement in net profit attributable to shareholders, reaching CNY 7.45 billion. This translates to earnings per share of CNY 0.38. The company recorded a very slight decrease in domestic on-grid power sales by 0.22%, totaling 210.678 billion kilowatt hours.

Power Generation and Capacity Expansion

During the peak seasons, Huaneng Power ensured adequate power supply through well-researched market operations and maintenance strategies. Although the overall power generation declined, the company saw significant contributions from wind and solar power, thanks to increased installed capacity. By the end of June, the installed capacity reached 138.57 gigawatts, with wind and solar making up 31.6 gigawatts. Low carbon clean energy now constitutes 32.78% of the total capacity.

Revenue Trends and Tariff Insights

The average tariff for domestic power generation in the first half of 2024 was CNY 498.7 per megawatt hour, a reduction of 3.21% from the previous year. This quarter saw some increase in tariffs due to a structural adjustment and fixed capacity payments, helping counterbalance the lower power generation in certain periods. The company's efforts in fuel cost management led to a unit fuel cost of CNY 300.51 per megawatt hour, an 11.18% decrease year-on-year. Specifically for coal units, the unit tariff for the first half of the year was CNY 483.52 per megawatt hour, showing a 2.7% decrease.

Operational Performance and Overseas Ventures

Huaneng Power's overseas operations saw mixed results. In Singapore, Tuas Power's profit before tax fell by CNY 1.166 billion but still stood strong at CNY 1.724 billion. The Singaporean government introduced a temporary pricing cap and improved natural gas supply, which stabilized market fluctuations. In Pakistan, the Sahiwal power plant delivered its best performance to date, contributing a profit before tax of CNY 429 million, an increase of CNY 117 million.

Investment in Clean Energy and Development

Huaneng Power continued to prioritize clean energy development, adding 3,102.2 megawatts of new capacity, predominantly in wind and solar sectors. Despite regulatory changes and tightening policies, the company remains committed to its 10-gigawatt annual target for renewable capacity expansion. The strategy includes close monitoring of policy shifts, optimized resource allocation, and enhanced operational efficiency through advanced maintenance and accurate power generation forecasts.

Coal and Gas Unit Performance

In the first half of 2024, Huaneng Power's blended unit fuel costs stood at CNY 297.08 per megawatt hour for coal and CNY 411.7 for gas in the first quarter. These rose to CNY 295.7 and CNY 433, respectively, in the second quarter. Despite these increases, operational adjustments and strategic procurement helped manage costs effectively. The overall coal consumption rate was 297.98 grams per kilowatt hour in the first half, with a notable dip during the heating season.

Dividend Policy and Market Outlook

The company upholds a shareholder-friendly dividend policy, pledging a payout ratio of at least 50% provided the financial conditions permit. For 2023, the payout ratio is expected to approach 60%, driven by robust operating cash flow. Looking forward, Huaneng Power is cautiously optimistic about maintaining stable tariffs and confident in its ability to balance renewable investment with sustainable returns.

Earnings Call Transcript 2024-Q2

[Operator]

Good afternoon, ladies and gentlemen. On behalf of Huaneng Power International, Inc., I would like to welcome you all to the conference call regarding the interim results announcement of 2024.

Now may I introduce the management of the company today. The Chairman of the company, Mr. Wang Kui.

[Kui Wang, executive]

[Foreign Language]

[Operator]

Vice Chairman of the company, Mr. Wang Zhijie.

[Zhijie Wang, executive]

[Foreign Language]

[Operator]

The Independent Director of the company, Ms. Dang Ying.

[Ying Dang, executive]

[Foreign Language]

[Operator]

The Vice President of the company Mr. Qin Haifeng.

[Qin Haifeng, executive]

[Foreign Language]

[Operator]

The Vice President and Board Secretary to the company, Mr. Huang Chaoquan.

[Chaoquan Huang, executive]

[Foreign Language]

[Operator]

The Vice President of the company, Mr. Du Canxun.

[Canxun Du, executive]

[Foreign Language]

[Operator]

The Chief Accountant of the company, Mr. Zhu Daqing.

[Daqing Zhu, executive]

[Foreign Language]

[Operator]

People in charge of the related departments are also joining us in this meeting.

First of all, the Chairman of the company, Mr. Wang will review the business performance for the interim results of the 2024 followed by the Q&A session.

May we have the honor to invite Mr. Wang to review the business performance, and Ms. [indiscernible] will conduct the English interpretation.

[Kui Wang, executive]

[Interpreted] Ladies and gentlemen, good afternoon. Welcome to the interim results conference call of Huaneng Power International, Inc. Yesterday, the company has released its interim results. Please let me give a brief introduction.

In the first half of the year, the company centered on the annual target seized the market opportunities, pushed forward operation and development and achieved good operating results.

Under the Chinese accounting standards, the company achieved a consolidated operating revenue of CNY 118.8 billion, decreasing by 5.73%. Net profit attributable to company's shareholder was CNY 7.45 billion, increasing by 18.16%. The earnings per share was CNY 0.38.

In terms of power generation, the company researched the power market and arranged proper operation and maintenance to ensure the power supply in peak season. The power generation of wind and solar increased along with the growth of installed capacity and contributed to a narrowing of the decline in generation.

In the first half of the year, the company's domestic on-grid power sales was 210.678 billion kilowatt hour, decreasing by 0.22%. The average tariff was CNY 498.7 per megawatt hour, decreasing by 3.21%.

In terms of the coal supply, the company seized the opportunity, utilized contracted coal to ensure the supply and control cost, optimize imported coal and inventory structure when the market was relatively sufficient. The company's fuel control has been effective.

The unit fuel cost of the first half of the year was CNY 300.51 per megawatt hour, a year-on-year decrease of 11.18%.

In terms of the development, the company continues to pay attention and actually respond to the policy of energy transition and push forward clean energy development.

In the first half of the year, the company added 3,102.2 megawatts of units, including 1,054.5 megawatts of wind power, 1989.7 megawatts of solar power and 58 megawatts of gas-fired power.

By the end of June, the company's installed capacity reached 138.57 gigawatts. Wind and solar capacity reached 31.6 gigawatts. Low carbon clean energy accounts for 32.78% of total capacity.

In terms of overseas operations, in the context of a [ plentiful ] powerful power supply in Singapore and the year-on-year decline in wholesale and retail tariffs, in the first half of the year, the profit before tax of Tuas Power was CNY 1.724 billion, decreasing by CNY 1.166 billion.

Tuas Power [ researched ] the power and fuel market, actively responded to the market change, continued to refine management and strive, when appropriate, gross profit. The operating performance stands at a relatively high level among the historical performance.

The performance of Sahiwal power plants in Pakistan reached a record high. The profit before tax was CNY 429 million, increasing by CNY 117 million.

In the second half of the year, the company will implement the spirit of the Third Plenary Session of the 20th Central Committee and policies of building a new power system, continue to focus on the 14th Five-Year Plan and the company's development strategy, push forward the green transition and upgrade the asset structure by deepening the reform and operations, further drive the performance to a new level.

The company will continue the green energy development and accelerate the transition, analyze the supply and demand of power market, seize the chance of peak seasons and optimize the timing and structure to strive for possible power generation.

The company will track the coal market and develop procurement strategies, optimize the supply structure and control the fuel cost, expand access to finance, make use of green financial policies to reduce cost and improve efficiency.

Now my colleague and I would like to answer your questions. Thank you.

[Operator]

[Operator Instructions] Your first question comes from Tony Fei of BOCI.

[Yunqing Fei, analyst]

[Interpreted] I have two questions. First, related to the company's renewable sector. In the second quarter, the company's renewables capacity as well as the generation volume have a rapid increase. However, the profit has decreased. So could you talk about the wind and solar tariffs and curtailment issue in the first half of the year? And what policies may the government have to help tackle this issue.

Second is about the government with -- currently releasing working plan of the coal power units decarbonization, renovation and construction. Does the company have a statistic that how many of our projects may have to have this renovation? And as the government has set the 50% decarbonation goal and 3 pathways towards the decarbonization, we think the investment and operating costs will be relatively high. However, the return cannot meet our requirements. So what is the company's capacity plan? And how will the company balance between the renewable energy capacity and the renovation to the thermal units?

[Unknown Executive]

[Interpreted] Please, first, let me answer your questions about the wind and solar curtailment. In the first half year 2024, the wind curtailment of the company was 5.56%, increasing by 1.6 percentage points. The curtailment of solar was 6.05%, increasing by 3.42 percentage points.

In the first half of the year, the average tariff of our wind sector was CNY 511.89 per megawatt hour, decreasing by 6.04%. The average tariff of our solar sector in the first half of the year was CNY 426.98 per megawatt hour, decreasing by 9.77%.

As for the consumption issue, at the beginning of the year, a series of documents has been released by the government. First is to add some consumption facilities to the power system. And the document has required that the curtailment should not be higher than 10%. The company have our operation in line with the government's request.

[Unknown Executive]

[Interpreted] Please let me answer your questions about the working plan of the de-carbonization of our coal units. As the NEA have released this working plan, the company have contact the authorities at the first time to see whether -- to see the government policy's trend.

The government goal is to cut our carbon emission for the coal units to about the same level to the current existing gas units.

There are three main pathway, first is to blend the biomass resources. Second is to blend the green ammonia. Third is to apply CCUS. However, those three pathway won't have a sound return to the company. That's why the document for now is out for public opinion. And for the company, we need to have some subsidies to ensure our profit.

The company have reserved some projects in different pathway. We are planning to report to the authorities. However, we will have further development to see the detailed policy situation.

The company has also explored other ways such as the industrial sludge to -- in our blending. And our target and our goal is in line with the government that is to decarbonize the coal units emission.

[Operator]

The next question comes from Huang Xiujie of Guosen Securities.

[Xiujie Huang, analyst]

[Interpreted] I have two questions. First, could you talk about the company's unit fuel cost divided into coal units and gas units and the company's combined unit fuel costs in the second quarter alone. And could you talk about why the company's standard coal price in the second quarter is significantly higher than the first quarter?

Second, about the company's tariff. Could you talk about the company's thermal, wind and solar tariff as well as the market-based tariff. What is the proportion of the market-based tariff in each energy types? And what is the market-based tariff and what is the decrease comparing to the benchmark? And could you talk about the capacity payment situation for the company?

[Unknown Executive]

[Interpreted] First, please let me give you the unit fuel cost of the company in the first quarter. The blended unit fuel cost of the company was CNY 297.08 per megawatt hour. For coal, it was CNY 288.08. For gas, it was CNY 411.7.

And in the second quarter, the unit fuel cost of our blended fuel was CNY 304.6 megawatt hour. For coal, it was CNY 295.7; gas, CNY 433.

About the coal price increasing. First, please let me give you the standard coal price of the company. The standard coal price in the first quarter was CNY 1,038.25 per ton. For coal, it was CNY 978 per ton. Gas, CNY 2322.6.

For the second quarter, the blended standard coal price was CNY 979.7 per ton. For coal, it was CNY 933.6. For gas, it was CNY 1,038 per ton. So the standard coal price have a 10% quarter-on-quarter decrease.

The main reason is the end of the heating season. The company's core consumption rate in heating season is usually [ 20 grams ] lower than the coal consumption rate in non-heating season.

[Unknown Executive]

[Interpreted] First, let me give you the average tariff of the coal sector. In the first half of year 2024, the tariff of coal was CNY 483.52 per megawatt hour, decreasing by 2.7%.

The power purchase agreement that's settled yearly, the average tariff was CNY 452.45 per megawatt hour. For the power purchase agreement settled monthly, the average tariff was CNY 432.03 per megawatt hour.

About the spot market trading volume. In the continuous run, spot market, that, in total, have 5 regions. The company operates in 4 regions, including Shanxi, Shandong, Guangdong and Gansu. In those areas, the spot market volume was about 5% to 6% of our total power sales.

The average tariff of the spot market trading was [ CNY 452.89 ] per megawatt hour.

[Xiujie Huang, analyst]

[Interpreted] Which is the proportion of the company's market-based volume in the first half of the year?

[Unknown Executive]

[Interpreted] The market-based volume settled yearly accounts for 67.2%.

[Operator]

The next question comes from Li Yalin of Huatai Securities.

[Yalin Li, analyst]

[Interpreted] I have three questions. First, as the company announced in the previous conference call that 15% of our units will enter a life extension progress, could you talk about the timing of this issue? And what will be the CapEx the company approved into the life extension for our units? And could you talk about the difference of the profit from the life extension and the power generation -- power peak adjustment generation?

Second about the company's tariffs. The -- could you talk about the company's expectation of the signing of the power purchase agreement in 2025 as the monthly bidding price have dropped rapidly. What will be the company's judgment in the tariff next year? Or could you talk about in which provinces that will have a higher decrease of the tariff?

Third, could you talk about the coal consumption rate for our coal units in first quarter and second quarter?

[Unknown Executive]

[Interpreted] About the last extension of our thermal units. For now, the company has 51 units that operating more than 25 years, including 49 coal units and 2 gas units. So that is to say for all the life extension units, they are all old, outdated units that may -- operating for more than 30 years. For now 17 units have been approved by the local government and 11 units are now under approving process.

For the units that have already being approved by the government, including [indiscernible]. And for our units, the units in [indiscernible] and number 3, number 4 in [ Yangguang ] and [indiscernible] and [indiscernible] and for those units that are under the approving process.

For those units that we -- approved by the life extension by the government, they have no difference to our other units in power generating and profit.

According to the difference between provinces policy, some units may get 5 years life extension, some 10 years.

[Unknown Executive]

[Interpreted] About the company's tariff in next year. Usually, when we talk about the tariff, we think about the supply-demand in power market as well as the coal price However, because of the introduction of the capacity payment for now the power generation, highly correlated to the tariff.

For now the company hasn't had any assignment for the next year's power purchase agreement. The work usually begins in the first quarter. The company's principle is to have more profitable power signed and being stable in the tariff, unless there is a great drop in the carbon -- in the coal price, the company's tariff, we would like it to stay stable.

[Unknown Executive]

[Interpreted] In the first half of the year, the company's coal consumption rate for coal units only was 284.28 grams.

[Yalin Li, analyst]

[Interpreted] So could you talk about the CapEx we need in the life extension renovation?

[Unknown Executive]

[Interpreted] There's no great expenditure for the life extension other than the evaluation fee that's paid to our evaluator.

[Operator]

The next question comes from Li Xiang of Citic Securities.

[Xiang Li, analyst]

[Interpreted] I have three questions. First about the renewable development of the company. So in the whole industry as well as in our company, the return rate of renewables have decreased. How will the company balance between the company's development and the return of our renewable? As the company has set a 10-gigawatt target in the beginning of the year, will the company continue to achieve for this target? And under what circumstance will the company address the company's target of renewable development?

Second, about the coal consumption rate. Could you talk about difference quarter-on-quarter? And could you give us the number of our coal consumption rate for the first quarter and second quarter last year?

Third, could you talk about the hydro output influence to our thermal units? As this year, we have great hydro output, it has dampened our thermal generation. And -- so will this situation continue in the third quarter that will lead to increase in our depreciation? And how does the company view about our unit cost considering the generation decline?

[Unknown Executive]

[Interpreted] This year, in the first half of the year, the government renewable energy policy had some changes. The company keeps a close track to the policy changes.

From what we see that in -- for the first half of the year, the renewables decision-making process, the newly installed renewable capacity have remained -- a very stable return.

Currently, the government haven't released any policies in the relevant issue. And the detailed policy for the government -- for the provincial government also haven't been released yet. Therefore, the company's target haven't been changed under the current circumstance of carbon peak and carbon neutrality and current profit level.

Next, the company will have the following measures taken according to the government and provincial government policy release: First, the company will keep close track on the policy release of the government -- of the provincial government. For now we can see the great impact will be taken in the Northwest area that was different from the company's geographic layout.

Second, the company will insist on our standard -- our investment hurdle rate of renewables, and ensure our efficiency and profitability. Third is to optimize our layout. The company will select from the resources that have [ grid ] consumption or [ grid ] connection.

Fourth is to strengthen the refined management and operation to have a more accuracy forecast for our power generation and to have intellectual maintenance and operation to increase the efficiency of our operations and the -- decrease the consumption.

This is to keep close contact to the grid company, to have synergistic work with the grid company to tackle the issue together, to diminish the risk we face.

[Unknown Executive]

[Interpreted] About the coal consumption rate in the first half of year, the coal consumption rate for power supply was 297.98 gram in the first half of year and 287 grams in the first quarter. The number in the second quarter will release after this meeting.

[Unknown Executive]

[Interpreted] As you just said, yes, because in the first half of year, the grid output of the hydropower have dampened the power generation for the thermal in the first half of the year. The water resources is relatively good, and that dampens the power growth rate for the thermal -- for our thermal units.

However, we can take the following measures to help tackle this problem: First, the capacity payment system will help us to maintain a stable profit. The company has a certain stable revenue if we can maintain a healthy availability ratio.

Second is the company can have some gain from the ancillary services market because for now, the thermal units still being the most economical and useful way of ancillary services. Third is the company will seize the opportunity in the peak season such as wind supply demand, it was in the tight balance. The company can make some gain in the -- across regional spot market.

[Operator]

The next question comes from [indiscernible] Securities.

[Unknown Analyst]

[Interpreted] I have three questions. First about the company's coal power tariffs in the second quarter, the company has just announced the tariff was CNY 480 per megawatt hour. We think it has some increase comparing to the first quarter. So could you talk about the reason for that? And what is the company's guidance of coal tariff for the third quarter and fourth quarter?

Second, we noticed that in the second quarter, the R&D and administration expense of the company have increased year-on-year. So could you talk about the reason? Is there any particular project that we should take into notice?

And third, about the company's Tuas Power. As the company's -- Tuas power's capacity, what proportion is coal and what proportion is gas? And we can see that the company's profit have exceeded CNY 700 million for continuous quarters. So could you please give us the reason for that? And will the company -- the Tuas Power maintain such level -- such high level of profit in the following quarters?

[Unknown Executive]

[Interpreted] First, let me correct your number, the CNY 483 per megawatt hour tariff is for the first half of the year. And -- but you are correct that the second quarter, the tariffs have increased quarter-on-quarter. The most important reason for that is comparing to the first quarter, the power generation has declined in the second quarter. However, the company received a fixed capacity payment. So the average tariff have increased.

About this company's tariff guidance for the third and fourth quarter because in last year, the capacity payment have been introduced to the market. But if we see from the historical data, the first quarter's tariffs have been usually higher than the tariff in third quarter. However, because the lack of capacity payment implementation, it's very hard for the company to anticipate the tariffs in the second half of the year.

[Unknown Executive]

[Interpreted] About the company's R&D expense. In the second quarter, some of our research projects have been implemented. So the fees have been paid then -- leads to an increase in the R&D expense.

About the capacity mix in Singapore Tuas Power in our [ 2,010 megawatts ] of units, 93% are gas and others are coal.

About the continuous 7 quarter of great profit for Tuas, we can see from 2 tiers. First from the 2022 -- fourth quarter of 2022, the natural gas supply was -- entered into a fluctuated trend. And there is tightness in the power market, our gross margins have increased. The tariff in the spot market also increased. So entering the third quarter 2023, the policy environment as well as market environment have changed for Tuas.

From the policy side, the government have introduced a temporary pricing cap for the power market to smoothing out the tariff. It is introduced by the energy authority in Singapore.

And from July 2023, the supply of natural gas was more sufficient because some suppliers have additional supply to the power producer.

Affected by the above factors in the third quarter, the fluctuation in the wholesale market has been smoothing out. And the tariff in the wholesale market have decreased to a proper level. That also leads to a decrease in the retail tariff.

In the context of the certain circumstance of this market, Tuas have actively adjust the strategy and optimize our management in -- after the second half of year 2023, Tuas have achieved a stable operation.

Next, the company will enhance our competitor competitiveness and to ensure a profitable power generation, strive for a better operating results in the current circumstance.

[Unknown Analyst]

[Interpreted] So could you talk about the power tariff excluding the capacity payment for our summer units in the second quarter?

[Unknown Executive]

[Interpreted] The unit tariff -- capacity tariff in second quarter was CNY 25.8 per megawatt hour. You can exclude that from the CNY 483 per megawatt hour tariff.

[Operator]

The next question comes from [indiscernible] Securities.

[Unknown Analyst]

[Interpreted] I have two questions. First about the market participation of our wind and solar capacity. So could you talk about the proportion of the market participation of our capacity? And by what percent involved in the green market? And could you talk about the green premium for our renewables in the second quarter? And what's the year-on-year change?

Second, about the power generation in different provinces. Could you -- as we can see that in Jiangsu and Shanghai, they all have some decrease -- decline in the power generation. So could you talk about in which regions it is because the maintenance or renovation that happened in which regions, it's because the hydro output increase that dampens the generation?

[Unknown Executive]

[Interpreted] Firstly, please let me give you the number of the market-based power sales for the renewables. For wind sector, the market-based volume was 6.62 billion kilowatt hour. It accounts for 35.07% our wind power sales. For solar sector, the market-based volume was 2.648 billion, accounts for 32.3% of our solar generation.

In the first half of year of 2024, the volume that participated in the green market amounted to 2.2 billion kilowatt hours, increasing by 86 million kilowatt hour.

The average tariff of the green market was CNY 441.68 per megawatt hour. The green premium comparing to the benchmark of our coal units was about CNY 50 per megawatt hour.

[Operator]

The next question comes from Wu Jie from Haitong Securities.

[Jie Wu, analyst]

[Interpreted] I have three questions. First, about the capacity tariffs, you just said, the unit capacity tariff was around CNY 25.8 per megawatt hour. Could you divide it into the first quarter and second quarter? And in my calculation, if we exclude the impact brought by the capacity payment, the second quarter's tariffs have also increased comparing to the first quarter. So could you talk about in which provinces our tariff have increased? Or it's just structural adjustment of this tariff?

Second, could you talk about the loss situation of our coal units?

Third, in the second quarter, some other companies have some asset impairment. What is the company's consideration of the company's assets impairment? Will the company smooth out the asset impairments in the whole year?

[Unknown Executive]

[Interpreted] The CNY 25.8 per megawatt hour capacity tariffs was for the first half of the year, the capacity tariffs for the first quarter was CNY 24.4 per megawatt hour. For the second quarter, it was CNY 28.6 per megawatt hour.

So we will have some follow-up information after this meeting. Thank you.

[Unknown Executive]

[Interpreted] Please let me give you some information about our loss situation of the coal units. The company had 71 power plants -- coal power plants that -- being operated and 20 of them made loss in the first half of the year, 28% of our power plants made loss.

About the company's asset impairment, the company have always attached great importance to the asset impairment. The company will follow the request of the accounting standard as well as the request from the -- from our listed authorities that the company will strictly control the asset impairment and have -- evaluate the size of impairment in a very prudent measure.

The company will evaluate all of our assets in the end of each quarter. And if there's impairment signed, the company will have asset impairment accordingly. In the third quarter and fourth quarter in 2023, the company had made some asset impairment based on the asset status.

In the third quarter and fourth quarter this year, the company will continue the asset impairment manner and combining the policy arrangement by the government, both on the coal side and renewable side and see through our changes in operation and strictly implement all the requests by relevant authority to have asset impairment.

[Jie Wu, analyst]

[Interpreted] Will the asset impairment be better comparing to last year in our judgment?

[Unknown Executive]

[Interpreted] And if we see the last year's impairment, there are some impairments for the small units at under 300 megawatts that have a greater possibility than other units to have asset impairment.

What I mean is that our asset impairment were based on the authority documents that whether units shutting down or backing up. And our operational performance this year will -- determined by each units. So it's very hard for us to predict now what asset impairment we will have this year.

[Operator]

Due to time constraints, we invite the last investor to ask. The last question comes from Liu Jiani of CICC.

[Jiani Liu, analyst]

[Interpreted] I have two questions. First about the company's carbon market trading. So as the government has released document that we'll begin a new cycle of carbon trading quota allowance allocation. And what will be the company's profit based on the new allocation? Because as we see, there might be some fulfillment pressure for the company, the quota might shrink in the future. And does the company have any research on that? At the same time, would the company have any CCER or green markets-related certificates applied by our wind and solar projects?

Second, in the first half of the year, the company operating cash flow have great performance. What will be the company's guidance for our dividend payout? Will the company have any interim dividend payout in the future? And what is the company's view on the market value management?

[Unknown Executive]

[Interpreted] Please let me answer your questions about the carbon trading. And first, about the policy situation. The government have released certain notice to have -- add punishment to those who cannot fulfill their obligation and manipulate the market.

And the policy has been out for public opinion. And in our estimation, the quota has been -- keep shrinking and the gap will be enlarged. And for the power industry, in 2023, the quota gap will be around 25 million tons. And in 2024, it will enlarge to 50 million tons.

The working plan also have some requirements for the fulfillment cycle. It changes the cycle to once a year and also have some restrictions on the further allocation for the quota.

Under the current policy, the carbon trading was around 25 million tons. And -- the volume was around 25 million tons and trading number was about CNY 220 million with an average price of CNY 87.8 per ton. And currently, the price was around CNY 91 per ton.

For the CCER, the government have launched the trading this year, the relevant methodology and some agencies have been established by the government. For now, we think in this year, we are able -- the government may be able to launch and issue the CCER in this year. And if it is launched, we think it will help with the carbon trading. Currently, the thermal power plants may face great pressure to fulfill the contract.

Now the company have kept close track on the supply and demand as well as the carbon price. The company is working on the plan for the trading and organize our subsidiaries to actually participate in the market.

Currently, the company's 600 megawatts units, may still have this specific quota. It's breakeven for the company's 300 megawatts units. And from the current capacity structure, the company still may -- lack of quota this year, and it may bring some pressure for the company's carbon trading and cost control.

About the company's participation in the green market, we just announced that 14 of our [ partners ] have participated in the green market. The total volume was about 2.2 billion kilowatt hour. The company subsidies, including [ Jiuquan ], [ Liaoning ] [indiscernible] and [indiscernible] have a trading volume exceeding 100 million-kilowatt hour.

The company's average trading price of green certificates was CNY 7.6 per certificate in -- and it's all issued in 2023.

For now, only the company's offshore wind can apply for the CCER, and the company has completed all the evaluation for our units and with the compound consideration of profit, the company will optimize our management in the CCER application and try to have a more premium in the environmental area and try to control our costs.

[Unknown Executive]

[Interpreted] About the company's dividend policy, the company has always attached with importance to the dividend payout and try to have a stable increasing return for our shareholders. And from 1998 the company has paid out dividends amounted to CNY 62.7 billion.

In the company's dividend policy, if the company has profit this year and the undistributed profit is positive, and the company's operating cash flow can meet the requirements of the company's operation and development, the company will pay out pay our dividend in cash from. The payout ratio will be not less than 50%. In 2023, after considering the company's current operating status, the company's payout ratio is higher than 50%, near 60%.

And after the authorities have released some regulation in the dividend the company will further keep close attention to the dividend payout and try to push forward the changes in multiple dividend payouts in 1 year and have some research on that and also a study from our peer company that have already paid out interim dividends.

The company now is under the research of the dividend payout policy. However, the company will insist on our current dividend payout policy and some of our work has been already exposed in our notice.

Following information will be provided if there are any update, the company will strive for a reasonable return to our shareholders and have a positive arrangement on the dividend payout. Thank you.

[Operator]

Thank you so much for all of the questions and the participation today. Finally, Mr. Wang would like to give us a summary.

[Kui Wang, executive]

[Interpreted] Thanks for participating in the conference call. Thank you for your continued support. Thank you for your questions raised, and thank you -- thanks to our colleagues that have that accuracy in the answers.

Here, we come to the end of today's conference call. Please contact our IR department if you have any further questions. Thank you.

[Operator]

Thanks again for your attendance of the conference call regarding the interim results announcement of 2024. We are looking forward to meeting with all of you in our next results announcement. Thank you.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]