CompanyGraph
Zhejiang Zheneng Electric Power Co., Ltd.
600023 · SSE · China
Combined heat-and-power plants in Zhejiang Province pipe steam directly into adjacent industrial manufacturing zones and feed the East China Grid under State Grid dispatch.
Zhejiang Zheneng's coal-fired units run on schedules set by State Grid dispatch orders rather than plant economics, because those units must satisfy both the East China Grid's baseload requirement and the process-heat demand of adjacent industrial zones through fixed steam pipelines — meaning generation cannot be curtailed without cutting the heat supply that manufacturers in Hangzhou, Ningbo, and Wenzhou depend on for continuous production. That dual obligation makes coal allocation certificates issued by the National Development and Reform Commission the single binding constraint: a certificate shortfall compresses electricity output and starves the steam network at the same time, and neither CNPC gas pipeline capacity nor the wind fleet can substitute for the thermal mass the heat distribution system requires. The industrial manufacturers anchoring that heat load also anchor the dispatch priority State Grid extended on the assumption of firm demand, so if those facilities shut down or relocate, the combined-cycle units revert to electricity-only operation at materially lower efficiency, dissolving the cost basis that justified the capital configuration. Physical steam pipelines, multi-year coal supply contracts, and State Grid dispatch software certification each independently raise the cost of replacing any part of this configuration, locking the system into a coal-dependent structure that China's 2060 carbon neutrality target and competing Belt and Road supply-chain claims are already beginning to erode.
How does this company make money?
Electricity is sold wholesale at dispatch prices set by East China Grid's merit order system (the sequence in which generators are called upon to supply power, based on cost). Heat is sold to industrial customers at negotiated rates based on steam volume and temperature specifications. Capacity payments are also received for maintaining grid reliability reserves.
What makes this company hard to replace?
Switching is made difficult by three specific mechanisms: the physical steam pipelines and hot water distribution networks that connect the power plants to particular industrial facilities, multi-year fuel supply contracts with state-owned coal enterprises that include delivery logistics, and the State Grid dispatch software integration that requires extensive technical certification before any replacement generator can be accepted into the system.
What limits this company?
Coal import quotas and domestic allocation certificates set by China's National Development and Reform Commission cap the fuel volume available to the coal-fired baseload units. Because those units are the primary source of both grid baseload and industrial process heat, a certificate shortfall compresses electricity output and starves the steam network at the same time. Neither the gas pipeline capacity through CNPC's East China network nor the wind fleet can substitute for the thermal mass the heat distribution system requires.
What does this company depend on?
The plants depend on thermal coal from Shanxi Province mines, natural gas pipeline access through China National Petroleum Corporation's East China pipeline network, maintenance contracts with specific wind turbine manufacturers, grid interconnection capacity allocated by State Grid Corporation of China, and environmental discharge permits from Zhejiang Provincial Environmental Protection Department.
Who depends on this company?
Zhejiang industrial manufacturers in the electronics and textiles sectors would face production shutdowns during power shortages. State Grid Corporation's East China regional dispatch center relies on this capacity for load balancing. Municipal heating systems in cities including Hangzhou depend on waste heat recovered from the combined heat-and-power units.
How does this company scale?
Additional generation units can be replicated at relatively low incremental cost once grid interconnection rights are secured and fuel supply contracts are in place. Grid access points and transmission capacity into high-demand industrial corridors do not scale in the same way: expanding them requires State Grid Corporation approvals and is physically constrained by existing transmission infrastructure that cannot be independently expanded.
What external forces can significantly affect this company?
China's carbon neutrality target for 2060 is forcing accelerated coal plant retirements across the sector. Belt and Road Initiative infrastructure projects compete for the same coal and gas supply chains the plants depend on. U.S.-China trade tensions affect the availability and cost of imported natural gas.
Where is this company structurally vulnerable?
If Zhejiang's electronics or textiles manufacturers shut down or relocate, heat offtake from the steam network collapses. Without the heat load that the combined cycle units are sized around, those units revert to electricity-only operation at materially lower efficiency, undermining the cost basis that justified the capital configuration and the dispatch priority that State Grid awarded on the assumption of firm industrial heat demand.