China Southern Power Grid Energy Storage Plans to Invest 7.379 Billion Yuan to Build Xinfeng Pumped-Storage Power Station in Guangdong

Intern Reporter Yin Jingfei

A listed pumped storage platform under China Southern Power Grid has made another move. On March 16, China Southern Storage Energy (600995) announced plans to invest 7.379 billion yuan to build the Guangdong Xinfeng Pumped Storage Power Station project.

The announcement shows that the Guangdong Xinfeng Pumped Storage Project is located within Xinfeng County, Shaoguan City, about 120 kilometers straight-line distance from Guangzhou. The planned installed capacity is 1.2 million kilowatts, consisting of four 300,000-kilowatt units. The total investment for the project is approximately 7.379 billion yuan, with a capital contribution ratio of 20%, and the remaining 80% financed through bank loans. The project has been included in the National Energy Administration’s “Medium- and Long-Term Development Plan for Pumped Storage (2021–2035)” and received approval from the Guangdong Provincial Development and Reform Commission earlier this year.

As a “giant power bank” for the grid, pumped storage stations store water during low-demand periods and generate electricity during peak times, playing a key role in load balancing. However, this project’s positioning within Guangdong’s power grid is more special—it is located in western Guangdong, with a large reservoir capacity and the ability to provide weekly regulation, meaning it can support the grid continuously for several days or even a week.

It is reported that the site is close to the West Guangdong nuclear power base and wind power-rich areas. Once completed, it will facilitate the absorption of nuclear and wind power. The announcement states that the project can prevent shocks to the grid caused by faults in long-distance transmission of West Guangdong power, enhancing the grid’s emergency response capability. In the context of Guangdong being a major recipient of eastward power transmission from the west, this function is regarded as a “stabilizer” for the power system.

From a local economic perspective, with a single investment exceeding 7 billion yuan, the project is expected to generate stable tax revenue during operation and is also hoped to boost local economic growth and improve regional infrastructure.

According to the company’s estimates, over a 40-year operating period, the internal rate of return (IRR) on the capital investment is expected to be between 4.56% and 5.69%. The company notes risks, stating that Guangdong’s price regulators have not yet clarified the provincial-level capacity electricity price for pumped storage, and electricity market transactions are uncertain. The actual returns after project completion and operation may differ from the estimates.

According to the plan, the project is expected to be fully completed and put into operation during the “14th Five-Year Plan” period, around 2031. However, due to the long construction cycle and numerous influencing factors, the commissioning schedule is uncertain. Additionally, safety risks associated with large hydropower projects and the risk of exceeding investment estimates are key concerns.

It is noteworthy that after completion and commissioning, the project will have related-party transactions with Guangdong Power Grid. The company states that it will strictly follow review and disclosure procedures at that time.

This is not the first time China Southern Storage Energy has expanded into Guangdong’s pumped storage market. As one of the largest domestic investors and operators in pumped storage, the company already owns multiple operational and under-construction projects in Guangdong.

Analysts point out that as the share of new energy installed capacity increases, the regulation value of pumped storage is shifting from “ancillary services” to “system necessity.” Additionally, this move is also a proactive response to Guangdong’s efforts to build a new power system.