China's power producers recoup past losses on economic shifts

Beijing's efforts to rebalance the economy by boosting consumption and slowing the expansion of energy-intensive sectors have improved the financial health of power generators and made it easier for them to finance clean energy projects.

This was made possible by an earlier coal mine building boom and slower power demand growth from the economic rebalancing, which together brought down coal prices, said ratings agency Moody's.

Coal prices were expected to stay low in the next 18 months, it said.

"As China's economy rebalances and as the government strives to improve the country's air quality, capital expenditure for the country's power generating sector will shift from capacity additions to fuel mix optimisation," Moody's said in a report.

It noted that the nation's installed generating capacity growth had fallen to 10 per cent or less since 2008, compared with 10 to 20 per cent in the previous five years.

Coal-fired power capacity made up 39 per cent of new plant additions last year, down from 71 per cent in 2008, it added. Much of the decline took place last year largely due to growth in hydro and solar capacity.