But neither is there much upside given industry excess capacity, demand growth being constrained by slow growth in energy-intensive industries and the mainland's fight against air pollution.

Growth in the combined net profit of the four major Hong Kong-listed mainland coal-fired power producers is forecast by analysts in a Thomson Reuters poll to slow to 4.3 per cent this year from 19 per cent last year, 57 per cent in 2013 and 141 per cent in 2012.

Coal-fired plants accounted for about 90 per cent of Huaneng Power International's generating capacity in the middle of last year, compared with 83 per cent for Datang International Power Generation, 91 per cent for Huadian Power International Corp and 88 per cent for China Resources Power Holdings.

Spot market coal prices are estimated by Evan Li, Standard Chartered's head of renewables and utilities equities research, to rise 7 per cent by the middle of this year to 540 yuan (HK$683) a tonne from late November. Prices bottomed out at 479 yuan in August, as domestic output, inventory and imports shrank.

Li projected this year's average price to rise 5 per cent. Any power price rises will only be considered by Beijing if coal prices rise more than 5 per cent over a 12-month period. The last power price revision was in September.

This year's contract prices on coal with 5,500 kilocalories of heating value are likely to be agreed between power and coal producers at 520 yuan to 530 yuan a tonne, and prices are likely to be relatively steady throughout the year, trade portal Sxcoal cited traders as saying last month.

To stem oversupply, Beijing last year ordered an industrywide production cut, slapped import duties of 3 to 6 per cent on coal in October, and banned domestic production and the import of low-quality coal.

"China has already taken a strong stance on oversupplied market conditions, enforcing the closure of as much as 150 million tonnes, or about 4 per cent of total domestic coal supply," analysts at ANZ Bank said. "Sustainability of stronger prices will depend on the compliance of high-cost provincial government-supported suppliers."

Fuel costs accounted for about two-thirds of coal-fired electricity producers' total operating costs in last year's first half.

Besides higher fuel costs, these Hong Kong-listed firms also face the prospect of lower plant utilisation this year, after capacity grew, demand growth fell and competition from clean energy increased last year.

Lower utilisation raises fixed costs, such as depreciation and plant maintenance, per unit of output, which squeeze profit margins.

The mainland's power demand rose 3.9 per cent in the first 11 months of last year. The China Electricity Council, which represents power generators, said in November full-year demand growth would fall to between 3.5 per cent and 4 per cent, just half the 7.6 per cent growth seen in 2013 and the slowest since 1998, when demand grew 2.8 per cent.

For coal-fired plants, output fell 0.3 per cent year on year in the 11 months, partly due to a 22 per cent jump in hydropower output, but also because of competition from nuclear, wind and solar power output that has priority to be dispatched by the power grids.

Standard Chartered's analysts projected that the average utilisation of the mainland's coal-fired plants would fall 4 per cent this year, since their generation capacity was projected by the China Electricity Council to have risen by about 4.7 per cent last year while output was flat.

The competitive pressure for plants in coastal regions is especially acute as power plants in remote western and northern energy-rich but sparsely populated regions will increase their export to central and coastal regions.

So-called "ultra-high voltage" high-capacity long-distance power transmission lines scheduled to come on line between last year and 2017 are projected by Standard Chartered's analysts to be able to meet 27 per cent of power demand in eastern coastal regions by 2017, raising further downward pressure on plant utilisation there.

Rivalry among coal-fired plants operators themselves is also going to heat up in the longer term, as industry reform, which began with Shenzhen's new tariff setting mechanism for power transmission and distribution this month, will see more efficient operators gain market share from less efficient ones.

Reform on transmission and distribution tariffs, involving more transparent and scientific cost-plus-return based calculations, will be followed by a gradual liberalisation of on-grid and retail tariffs. The latter will be achieved by allowing large consumers to negotiate prices with generators and by introducing new entrants to the currently monopolised power retailing business.

Kim Eng Securities analyst Ricky Ng said that after the reforms, on-grid tariffs would become more volatile because of seasonal demand, and would probably drop amid ample power supply.

Lower tariffs were likely to be offset by higher sales volume among Hong Kong-listed mainland power producers, whose plants tended to be more efficient compared with plants held by their unlisted parents, he added.

Inner Mongolia, a net power exporter, was likely to follow Shenzhen, a net importer, with tariff and market structure reform, said Lin Boqiang, the director of Xiamen University's Centre for China Energy Economics Research.