CLP to tap more nuclear power to meet Hong Kong’s climate goals amid profit growth
CLP Holdings, which runs the larger of Hong Kong’s two power utilities, said it will put more emphasis on nuclear energy to meet the city’s climate action goals as it reported first-half profit growth in line with expectations.
Earnings rose 17.6 per cent to HK$5.95 billion (US$762 million) for the first half, from HK$5.06 million in the same period in 2023, the company said in an exchange filing on Monday. Revenue rose 1.8 per cent to HK$44.08 billion, it added.
To reach the city’s goal of net zero electricity generation by 2050, the government has set a target to increase the share of zero-carbon energy in the energy mix to 60 to 70 per cent by 2035.
“Hong Kong’s zero carbon resources are very limited, so [CLP’s] goal is to achieve that by regional collaboration and bring zero-carbon energy to Hong Kong,” CEO Chiang Tung-keung said at the company’s interim results briefing on Monday. “Zero carbon energy refers to nuclear power and renewable energy. So we will identify opportunities and bring them to Hong Kong.”
Nuclear power will account for a bigger share, he said, because it is more stable than renewable sources such as solar energy.
CLP, which has significant operations in Australia and India, said improved earnings at subsidiary EnergyAustralia more than offset lower generation volumes at its two nuclear power plants in mainland China because of planned outages, according to its interim filing.
CLP reported HK$611 million in earnings from its Australia business in the first half, reversing from a HK$590 million loss in the same period last year. This takes into account the unrealised fair value gain for EnergyAustralia’s forward energy contracts. Margins for EnergyAustralia’s energy business improved thanks to higher realised prices for electricity from its power stations.
CLP’s profits from its mainland China business fell 28 per cent to HK$988 million. CLP attributed this to lower nuclear earnings because of the planned outages at the Daya Bay and Yangjiang power stations.
In mainland China, CLP reported slightly higher output from its existing renewable energy portfolio in the first half, as the utilities firm strengthened its position in the mainland’s renewable market and moved forward with a stream of new wind and solar projects.
Work on 300 megawatts (MW) of new projects also started, bringing the company’s total capacity of wind and solar energy projects under construction in the country to 450MW, according to the filing.
“In the first half of 2024, the CLP team worked diligently to meet the growing energy needs across our markets, while actively pursuing our decarbonisation opportunities,” Kodoorie, CLP’s chairman, said in the filing on Monday. “Our focus on investing in low-carbon energy solutions reflects our intent to both proactively mitigate climate change as well as to capture the significant opportunities presented by a net-zero future.”
As international fuel prices continued to soften, CLP Power reduced its average net tariff by 1.6 per cent during the first half. It maintained a strategy of prudent cost controls and diversified fuel sources to try to keep energy costs for customers at a reasonable level.
The company announced a second interim dividend payment of HK$0.63 per share, the same as the year before.
CLP’s results were in line with Citigroup’s estimate of HK$6 billion in first half profits for 2024.
“The Hong Kong business is the company’s cash cow, sustaining its dividend payment, which looks sustainable despite CLP’s volatile earnings from overseas, though with slow increments,” Pierre Lau, head of Asian utilities and clean energy research at Citigroup, said in a report on Monday.
CLP Power supplies electricity to Kowloon, the New Territories and most of Hong Kong’s outlying islands, while the city’s other power utility, Hong Kong Electric, supplies Hong Kong Island and Lamma Island.
