Event description
On March 5, Premier Li Keqiang delivered the government work report, and the national development and Reform Commission issued the report on the implementation of the 2021 national economic and social development plan and the draft 2022 national economic and social development plan (hereinafter referred to as the plan).
Event review
Economic expansion ensures the demand for electricity, and the construction of scenery improves the power supply capacity. According to the government work report, the expected target of China's economic development in 2022 is about 5.5% GDP growth. As the core variable of power demand, steady economic growth will provide strong support for China's power consumption growth. We expect that the growth rate of power consumption in China will remain between 5% ~ 5.5% in 2022. At the same time, the expansion of power demand puts forward higher requirements for power supply. In order to further ensure the improvement of power supply capacity, it is planned to promote the planning and construction of large-scale wind and solar power bases and their supporting regulatory power supply, comprehensively promote the flexible transformation of coal motor units, and improve the power grid's consumption capacity of renewable energy power generation. Under the background of the overall construction of wind power supply and supporting regulation capacity, China's power supply capacity will be effectively guaranteed.
We will continue to rationalize the electricity price mechanism and steadily promote market-oriented reform. The plan proposes to accelerate the construction of a unified national power market, promote the reform of the formation mechanism of on grid electricity prices for gas-fired power generation and nuclear power generation, improve the price formation mechanism of new energy for wind power and photovoltaic power generation, and improve the stepped electricity price policy for energy consuming industries. In 2021, China's coal power market-oriented reform made a major breakthrough, which formed a good demonstration for the next step of the reform of the electricity price formation mechanism of other power sources. Although there is no clear detailed rules for the time being, we expect to comply with the general direction of the electricity price reform of cost transmission and rationalization of the price mechanism. In terms of nuclear power, under the background of the successive service of three generations of nuclear power units, document 1130 may be difficult to objectively give reasonable benefits to nuclear power operation. The blocking point between cost and benefit creates the possibility for the introduction of policies. In addition, the policy orientation of reducing industrial and commercial electricity prices for five consecutive years has been changed in the government work report to clean up unreasonable price increases in power transfer links, and support local governments to implement phased preferential policies for power consumption in industries with special difficulties. The correlation between the power transfer link and the power generation side is limited, so the pressure on the power generation side will be reduced. At present, under the background of tight power supply and demand, the power generation side electricity price may be able to obtain continuous support.
Comprehensively promote the goal of energy consumption intensity, and new renewable energy will not be included in the assessment of total energy consumption. In 2021, power rationing occurred successively in many places in China. Although there are factors affecting the energy supply shortage, there are also some power rationing caused by the double control pressure of energy consumption. The government work report emphasizes that the target of energy consumption intensity shall be comprehensively assessed within the 14th Five Year Plan period, and appropriate flexibility shall be reserved. It will be conducive to the stable power supply of power users, and the reduction of assessment pressure is also conducive to the expansion of power demand to a certain extent. In addition, the policy continues to emphasize that the new renewable energy and raw material energy consumption will not be included in the total energy consumption control, indicating that the policy level will continue to encourage green power consumption, which is beneficial to green power and achieve a sustained premium.
Investment advice
The call of "carbon neutrality" era and the reform of power marketization will run through the whole "14th five year plan" period. We believe that the internal value of power operators will be comprehensively revalued. In this context, the reform and improvement of power price formation mechanism is expected to catalyze the improvement of thermal power operation margin. It is recommended to pay attention to high-quality transformation thermal power Huaneng Power International Inc(600011) , Guangdong Electric Power Development Co.Ltd(000539) and Fujian Funeng Co.Ltd(600483) ; With the rapid growth of new energy installed capacity and the increasingly prominent value of green power, China Three Gorges Renewables (Group) Co.Ltd(600905) , Longyuan Power and China National Nuclear Power Co.Ltd(601985) ; The hydropower sector recommends industry leaders China Yangtze Power Co.Ltd(600900) with clear growth space and Huaneng Lancang River Hydropower Inc(600025) with improved supply and demand; The power grid sector recommends that the Three Gorges group is expected to develop an electricity distribution pioneer with comprehensive energy services Chongqing Three Gorges Water Conservancy And Electric Power Co.Ltd(600116) .
Risk tips
1. The risk of deterioration of power supply and demand, and the policy promotion is less than expected; 2. There is a non seasonal risk in coal price and the risk of continuous decline of incoming water.
