In the context of carbon neutrality, the power sector has ushered in major development opportunities, and the scenery is the clear main line. According to the opinions and requirements of the State Council, the proportion of China’s non fossil energy consumption is expected to reach more than 20%, 25% and 80% respectively in 2025 / 2030 / 2060. Photovoltaic and wind power undertake important tasks in the process of realizing the dual carbon goal. As the key period of energy structure transformation, the overall power sector investment is expected to continue to rise in the “14th five year plan”. Scenery is the clear main line of carbon neutralization. During the 14th Five Year Plan period, China will focus on developing nine clean energy bases and five offshore wind power bases. The scale of wind power to the countryside reaches 50gw, and 676 counties are listed as the whole county to promote the pilot development of roof distributed photovoltaic.
Under the dual constraints of primary energy consumption and carbon emission, we predict that the cumulative installed capacity of wind power will increase from 280 million kW in 2020 to 550 million kW in 2025, 840 million kW in 2030 and 2.01 billion kw in 2050, and the CAGR will reach 6.8% from 2020 to 2050; The cumulative installed capacity of photovoltaic will increase from 250 million kW in 2020 to 710 million kW in 2025, 1.24 billion kw in 2030 and 3.06 billion kw in 2050. The CAGR will reach 8.7% in 2020-2050.
The cost reduction trend of scenery equipment remains unchanged, and the policy helps to reduce the financing cost. In terms of wind power, with the trend of large-scale units, onshore wind power has entered the era of parity, and the bidding price of wind turbine has dropped to 2000 yuan / kW (excluding tower); The era of sea breeze parity is gradually coming. The bid opening price of Zhejiang 680mw sea breeze project is about 40% – 50% lower than the average purchase price in 2020. With the trend of large-scale units superimposed on technological progress and industrial chain integration, there is still room for cost reduction of wind power in the future. In terms of photovoltaic, in recent years, the module technology has been upgraded, the battery conversion efficiency has been improved, and the driving cost has decreased rapidly. At the end of 2021, China’s silicon material added capacity exceeded 100000 tons, and the short-term added capacity was put into operation successively, which eased the high price of silicon material. The release of long-term polysilicon capacity exceeding 2 million tons will further alleviate the cost pressure. By 2025, the lcoe of photovoltaic power generation will fall to between 0.22-0.46 yuan / kWh. With the implementation of carbon reduction financing tools, the financing cost of new energy companies will be further reduced.
The new energy consumption demand is fully guaranteed, and the green power transaction premium continues to rise. The minimum consumption responsibility weight of non hydropower in various regions is increasing year by year. The national average consumption responsibility weight in 2021 is 13.38%, and the expected target in 2022 is raised to 14.63%. The energy dual control system will implement green power consumption exemption for excess consumption, so as to further enhance the demand for green power consumption. The green power trading mechanism monetizes the environmental protection attribute of new energy power. The transaction premium has increased from 0.03-0.05 yuan / kWh of the first batch of green power pilot transactions in September 2020 to 0.061 yuan / kWh of Zhejiang green power transactions, and then to 0.072 yuan / kWh of Jiangsu annual transactions in 2022. In January 2022, the national development and Reform Commission issued the implementation plan for promoting green consumption, pointing out to strengthen the connection between green power trading and carbon emission trading, and further clarify the demand for green power consumption. According to the carbon trading market price of 50-60 yuan / ton, the current green power premium is about 0.05 yuan / kWh. The IMF predicts that the carbon price will rise to US $75 or more per ton by 2030. According to this calculation, China’s green power premium space is expected to rise to 0.36 yuan / kwh in 2030.
With the acceleration of electricity price reform, the profit of thermal power is expected to return to the attribute of public utilities. The market-oriented reform of electricity price was accelerated, and the floating range of electricity price was adjusted to 20%, and the price formation mechanism was more flexible. In the annual long-term negotiation in 2022, the transaction price of Jiangsu thermal power increased by 19.4% compared with the benchmark, and the transaction price of Shaanxi bilateral negotiation rose by 20%. In addition, the electricity price reform requires the cancellation of industrial and commercial catalogue electricity price and takes “promoting industrial and commercial users to enter the market” as an important reform measure. With the influx of industrial and commercial users into the downstream market, the bargaining power of power enterprises is further enhanced. In December 2021, the coal 100% long-term association pricing measures were introduced, the policy setting continued to increase the proportion of coal to ensure supply, the coal power game was effectively resolved, and the degree price difference returned to stability. With the increasingly strong linkage between coal price and electricity price, thermal power is expected to return to the attribute of public utilities, and the valuation system is about to be reconstructed.
Industry rating and investment strategy: we are optimistic about the investment opportunities in the power sector. Thermal power is expected to benefit from the growth attributes brought by valuation repair and new energy transformation. New energy operators have the trend of simultaneous increase in volume and price, and give the industry a “recommended” rating.
Focus on individual stocks:
① it is suggested to focus on Huaneng Power International Inc(600011) (a + H), Huadian Power International Corporation Limited(600027) (a + H), Shanghai Electric Power Co.Ltd(600021) for the transformation of thermal power into new energy, and it is suggested to focus on China Power (H), China Resources Power (H), Fujian Funeng Co.Ltd(600483) , Guangzhou Development Group Incorporated(600098) , Guangdong Electric Power Development Co.Ltd(000539) , Gd Power Development Co.Ltd(600795) , Datang International Power Generation Co.Ltd(601991) (a + H) and Shenergy Company Limited(600642) ;
② renewable energy operators suggest to focus on Longyuan Power (a + H), Tianjin Guangyu Development Co.Ltd(000537) , China Three Gorges Renewables (Group) Co.Ltd(600905) , Jilin Electric Power Co.Ltd(000875) , Nyocor Co.Ltd(600821) , and Cecep Solar Energy Co.Ltd(000591) , Zhongmin Energy Co.Ltd(600163) and Jiangsu New Energy Development Co.Ltd(603693) .
Risk warning: macroeconomic downturn risk; Policy promotion is less than expected; The installation progress is less than expected; Lower cost of energy equipment than expected; The consumption of new energy is less than expected; Technological progress is less than expected, focusing on the company’s performance is less than expected, and there is no complete comparability outside China. The relevant materials and data of benchmarking are only for reference.
