In the first three quarters of this year, the gross profit of the five major power generators in China was only 25.8 billion yuan ($3.9 billion), the news site thepaper.cn said on Sunday.
In 2015, the five power generation groups' profit was 109.8 billion yuan, exceeding the average level of central SOEs, according to the news report.
The five companies account for half of the power-generation capacity in China, Chen Zongfa, director of the enterprise management and legal affairs department in China Huadian Corp (CHD), told a forum in Shanghai.
He said two-thirds of enterprises in the thermal-power industry nationwide are losing money, and 88 percent of those companies located in North China's Shanxi Province are reporting losses, according to the news report.
From 2018 to 2020, power enterprises will face rising challenges, Chen said.
The power generation industry expanded at an average annual rate of about 20 percent from 2003 to 2008, Chen said.
At the planning stage, the benchmark was set at annual growth of 12 percent, but growth has since dropped to 6 percent, and such market dynamics will inevitably lead to overcapacity, Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, told the Global Times on Sunday.
As for solutions, Lin said if the government could increase electricity rates in January, the burden for enterprises may be reduced.
"Meanwhile, it is necessary to keep power demand level stable while the companies are working on efficiency improvement and cost reduction," Lin stressed.
During the expansion stage, power generation groups including CHD, China Huaneng Group and China Guodian Corp met market demand for power, but they have structural problems.
They are also affected by conflicts of interest between coal providers and power generation companies, as well as having high debt ratios, Chen noted.