Review 2021: demand exceeds expectations, supply is limited, and "power shortage" reappears. Extreme weather in winter and summer and repeated global epidemics have driven China's power consumption growth to exceed expectations. However, the incoming water continues to be weak, the increment of nuclear power is limited, the dual control of energy consumption and the soaring coal price restrict the output of coal power, and the "power shortage" is staged again.
Outlook 2022: electricity price breaks through the threshold and starts the upward cycle. From September 2021, Shandong, Guangdong, Anhui, Fujian, Jiangsu and other places have redefined the terms of Document No. 1658, allowing the transaction price to rise by 10%; Document 1439 of October expanded the fluctuation range to ± 20%, reflecting the tolerance of the decision-making level for the breakthrough change of electricity price rise.
Water and electricity: wait for the tide to rise. In this round, the progress of Southwest hydropower investment and production period is accelerated, and the harvest period is correspondingly advanced. With a clear price mechanism and the demand for wind and solar energy distribution and storage, the competition for pumping and storage resources will become increasingly fierce. The strong cash flow of large hydropower can strongly support its participation in the upsurge of new energy construction.
Thermal power: "power shortage" forces policy reflection. The price of power coal is out of control and rising to an all-time high, and the cost side is under unprecedented pressure. Cop26 coal power has changed from "phase out" to "phase out". In 2021, the dilemma forced us to re-examine the role of thermal power in the future power system.
Nuclear power: if you want to exceed expectations, you still need to work harder. The annual investment in nuclear power reached the highest level in the same period of nearly six years, close to the peak level of nuclear power construction in the 12th Five Year Plan. However, in order to meet the market and industry expectations, it still needs the concerted efforts of policies, enterprises and industrial chains.
Scenery: in the new era of parity, assets have been revalued. Compared with water, wind and light, their cost structure and profit level are similar. After entering the era of parity, the "barrier lake" of accounts receivable is expected to gradually decline, and the huge profits of wind and light operation will become as strong cash flow as water and nuclear.
Investment suggestion: from the demand side, the tertiary industry will resume its high growth momentum in 2021. Although the demand for the secondary industry is also strong, the structural adjustment previously affected by the epidemic is back on track. From the supply side, water and fire are subject to "raw materials", and the proportion has declined, but the corresponding shares are filled by wind and light. Although the growth rate of investment in power supply has slowed down, the total amount is still at a new high, and the "rush to install" of wind and light still exists. From the perspective of policy orientation, the guiding role of price signal for investment and operation has been continuously improved. China Yangtze Power Co.Ltd(600900) is recommended for hydropower sector, and Sdic Power Holdings Co.Ltd(600886) , Huaneng Lancang River Hydropower Inc(600025) is recommended with caution; Recommended Shenergy Company Limited(600642) for thermal power sector; The nuclear power sector recommends China National Nuclear Power Co.Ltd(601985) and Cgn Power Co.Ltd(003816) with caution; Recommended China Three Gorges Renewables (Group) Co.Ltd(600905) for scenery operation section.
Risk tip: declining demand; Price reduction; Rising costs; Reduction of precipitation; Policy promotion lags behind.
