event
On December 23, Jiangsu Electric Power Trading Center Co., Ltd. released the annual trading results of Jiangsu electric power market in 2022. The document shows that in 2022, a total of 1239 transactions were completed, with a total transaction power of 264.729 billion kWh and an average transaction price of 466.69 yuan / MWh. Among them, the green power transaction volume is 924 million kwh, and the average transaction price is 462.88 yuan / MWh.
Comments:
The tight balance between supply and demand superimposed on the high expectation of coal price, and the market-oriented electricity price rose by nearly 20% compared with the benchmark. Compared with 230.554 billion kwh in the previous year, the total transaction power of Jiangsu Province increased by 34.2 billion kwh. We expect that the proportion of market-oriented power will increase from 36.1% in 2021 to 40.2% in 2022, with a year-on-year increase of 4.1%; The average transaction price in 2022 was 466.69 yuan / MWh, a year-on-year increase of 28% compared with 364.59 yuan / MWh in 2021, Compared with the benchmark price of 391 yuan / MWh of coal power in Jiangsu Province, it increased by 19.35% (although there is no breakdown data, we expect the average transaction price of coal power to be 120% of the benchmark price, and less than 20% is mainly affected by the green power price), which not only reflects the expectations of both the supplier and the demander for the tight balance of power and the central high level of coal price in 2022, but also reflects the promotion of power marketization to transmit the cost of coal power to downstream users.
The rise of coal power price center promotes the high price sale of green power, and the transaction scale may exceed 50 billion kwh in 2022. The emerging green power transaction presents the following characteristics: 1 The increase of coal power price drives the green power premium, which not only reflects the market supply and demand, but also reflects the affordability of users. Since this year, we have repeatedly stressed that “after the coal power center of marginal cost pricing increases, the market-oriented new energy electricity price will also rise to a certain extent”. The current green electricity prices are rising all the way, which positively confirms our view. At the same time, the market price of Jiangsu green power also reflects the psychological affordability of market users. When the price of coal power is lower than the benchmark price, Green electricity shows a premium of 1-2 points higher than the basic standard electricity (i.e. green power floor price), and after the coal power price increases significantly, green power users can also accept the green power per kilowatt hour premium of 7 cents. 2. The green power agreement does not have a load curve, which improves the transaction enthusiasm of power producers. Without a load curve, green power operators do not need to consider the peak shaving cost caused by the fluctuation of new energy power generation. Users are no different from coal power in power quality experience, which greatly promotes users’ purchase The enthusiasm to buy green power further ensures the premium range of green power compared with the benchmark price. 3. The price rise is expected to promote the future green power transaction or show a multi-year contract trend. Green power transactions are mainly long-term bilateral transactions. The first transaction information of green power indicates that about two-thirds of users have signed long-term power purchase contracts for 3-5 years, which fully reflects users’ expectations of price rise. We believe that due to the influence of carbon neutralization on capacity development, the long-term high price of fossil energy makes it difficult to callback the price of coal and electricity, or promotes users’ enthusiasm for signing multi-year long-term agreement. 4. Green power transactions are mainly parity projects, and the transaction scale may exceed 50 billion in 2022. Different from the annual signing of conventional power trading, many provinces organize transactions on a monthly / quarterly basis, so the green power trading volume continues to rise throughout the year. We expect that the installed capacity of renewable power will exceed 100gw and the new power generation will be about 160 billion in 2022. Due to the large supply of green power in renewable rich provinces, poor user affordability and small trading volume, we expect that green power transactions will mainly focus on the new growth in the central and Eastern regions in that year. In addition, a small number of inter provincial transactions are mainly purchased by power grid agents, Therefore, we expect that the scale of green power transaction may be about 50 billion in 2022.
The green power transaction price promoted the substantial increase in the profits of parity projects and promoted the accelerated development of new energy. Since September 7, 2021, the first green power trading pilot in China was officially launched, many places including Jiangsu, Zhejiang, Guangdong, Shandong, Hebei and Gansu have organized green power trading for many times. Affected by the increase of coal power central price, the average transaction price of green power in Jiangsu Province in 2022 was 462.88 yuan / MWh, which was basically close to the average market price of coal power in 2022. Compared with the guaranteed purchase price of power grid of 391 yuan / MWh, it increased by 71.88 yuan / MWh, and the pre tax profit of kWh increased by 18.38%, which effectively improved the investment return of green power operators. The establishment and implementation of green power trading mechanism has greatly improved the investment enthusiasm of operators by effectively improving the rate of return, hedged the operation risk of high cost of investment or purchase of peak shaving capacity, and vigorously promoted the rapid development of new energy.
Investment advice
Benefiting from the substantial increase in prices brought about by the upward movement of the coal power center and promoting the simultaneous rise in negotiated prices of new energy operators, it is recommended that thermal power transformation new energy operators Huaneng Power International Inc(600011) , China Resources Power, Shanghai Electric Power Co.Ltd(600021) , An Hui Wenergy Company Limited(000543) and pure new energy operators Longyuan Power.
Risk statement
The risk that the policy implementation is less than expected; The economic downturn leads to reduced power consumption and the risk of reduced user affordability.
