This week’s topic
Renewable energy development fund is an important link in the history of China’s renewable energy development. Its birth not only promotes the rapid development of China’s renewable energy scale, but also promotes the upgrading of manufacturing industry in the upstream of a large number of industries. This week we will look back on the development of China’s renewable energy subsidy fund.
Core view
In 2011, the renewable energy fund was established, and the additional collection standard of electricity price has been raised for many times. In 2011, the Interim Measures for the administration of the collection and use of renewable energy development fund was issued, the renewable energy development fund was officially established, and the on grid electricity price and full purchase system were successively implemented. China’s renewable energy has entered the golden development era of “quantity and price guarantee”. The renewable energy fund is mainly composed of two parts: the special fund arranged by the national financial public budget and the additional income of renewable energy electricity price levied on power users according to law. In order to meet the rapidly increasing demand for electricity price subsidies for renewable energy, the standard for additional collection of electricity price has been raised from 0.8 cents / kwh in 2011 to 1.9 cents / kWh at present.
The start of the verification of renewable energy subsidies is a positive signal to solve the subsidy gap in the future. With the rapid growth of China’s renewable energy installed capacity, it is difficult for the additional income of electricity price to cover the rolling renewable energy subsidies in stock. We calculate that the additional income of electricity price of renewable energy fund will only be about 95 billion yuan in 2021, The demand for renewable energy subsidies for high price scenery projects is as high as about 200 billion yuan / year.
We expect the cumulative subsidy gap of renewable energy to exceed 400 billion yuan by the end of 2021. In addition, the total sector of subsidy demand has been sealed. In September 2020, the Ministry of finance, the development and Reform Commission and the National Energy Administration jointly issued a document to promote the verification of renewable energy subsidies. We believe that the start of the verification of renewable resources subsidies is a positive signal for solving the subsidy gap in the future.
Investment advice
The total sector of subsidy demand has been sealed, but according to the current electricity price surcharge collection policy, the electricity price surcharge income is difficult to cover the rolling renewable energy subsidies for a long time, and the subsidy gap will continue to expand.
In 2020, the policy promotes the verification of renewable energy subsidies, which we believe is a positive signal to solve the subsidy gap in the future. In terms of specific targets, the proposal of thermal power transformation into new energy targets focuses on [ Huaneng Power International Inc(600011) (a + H)] [China Resources Power] [ Huadian Power International Corporation Limited(600027) (a + H)]. New energy operators suggest paying attention to [Longyuan Power] [ Nyocor Co.Ltd(600821) ] [ Jilin Electric Power Co.Ltd(000875) ] [ China Three Gorges Renewables (Group) Co.Ltd(600905) ] [ Fujian Funeng Co.Ltd(600483) ].
Risk tips: policy promotion is less than expected, macroeconomic changes, power demand is less than expected, and the calculation is subjective.
