Event: on December 22, 2021, the National Energy Administration revised and issued the regulations on the management of power grid connection operation (hereinafter referred to as the "Regulations") and the measures on the management of power auxiliary services (hereinafter referred to as the "measures").
The "Regulations" and "measures" are to cope with the rapidly growing proportion of wind and solar new energy power sources in China's power system, dredge the transmission of power system service costs to the downstream, promote the joint development of network source, load and storage, support the construction of new power system with new energy as the main body, and give full play to the supporting role of power auxiliary service market in clean and low-carbon energy transformation.
The main contradiction between power supply and demand has changed, and the importance of power auxiliary services has increased. By the end of October 2021, the installed power generation capacity in China has reached 2.3 billion kw. After nearly two decades of great development of power construction, the problem of power generation capacity restricting economic development has been completely solved, and there has been power surplus in some areas in some years; However, in the second half of 2021, 18 provinces and regions across the country successively issued power restriction measures, including some large long-term power transmission provinces. The sudden large-scale power shortage, in addition to the soaring power coal and dual control of energy consumption, we think it also shows that the main contradiction between power supply and demand has quietly changed, that is, from the contradiction of power balance to the contradiction of power balance.
In recent years, China's clean energy has developed rapidly. By the end of October 2021, the installed capacity of wind power is 300 million KW and the installed capacity of Cecep Solar Energy Co.Ltd(000591) power generation is 280 million KW. The proportion of unstable power supply has reached 25%. The complexity of power system operation and management has increased significantly, and the demand for auxiliary services has increased significantly. It is impossible for the power generation side to bear the cost unilaterally. In short, the main body of power auxiliary services needs to be expanded; The varieties of power auxiliary services need to be rich; The cost of power auxiliary services needs to be conducted; The pricing of power auxiliary services needs to be market-oriented. In this way, the power auxiliary service market can become a strong starting point to promote the low-carbon transformation of power system.
Under the dual carbon target, the peak shaving capacity is scarce, and the role of thermal power has changed functionally. According to the statistical data of China Power Council, the average utilization hours of thermal power have decreased from 5305 hours in 2011 to 4216 hours in 2020. Referring to the view of Wang Zhixuan, full-time vice president of China Power Union, we also believe that in the process of power cleaning transformation, we should not shut down the cease-fire motor units in a large area, but gradually reduce the average utilization hours, so as to make room for the development of new energy and avoid the sudden power shortage to the greatest extent. During the "14th five year plan" period under the guidance of the dual carbon strategy, with the continuous rise of new energy installed capacity, the average utilization hours of thermal power in China will continue to decline.
In the traditional power system, thermal power plays the dual role of electricity and electricity. With the promotion of double carbon strategy, it is bound to lose the role of electricity; However, we believe that the peak shaving response capacity of thermal power units can be hot standby and have significant comparative advantages over new energy such as moment of inertia, which can make up for the instability and uncertainty of new energy and become an effective supplement and support for new power system.
The "Regulations" and "measures" will promote the cost transmission and pricing marketization mechanism of power auxiliary services. We believe that it will help to complete the goal of 200 million KW thermal power flexible transformation during the 14th Five Year Plan period, and further release the thermal power peak shaving and frequency modulation capacity to support the power system to absorb new energy. At the same time, according to the requirements of 5% - 20% capacity flexibility required for the current new energy installation, we believe that the flexibility of thermal power units can be regarded as the capacity resources of new energy installation. Therefore, under the condition that the current electrochemical energy storage cost is significantly higher than the flexibility transformation of thermal power units, enterprises with a large number of high-quality thermal power resources have the advantages of new energy transformation.
The profit of pumped storage is icing on the cake. The profit expectation of electrochemical energy storage is improved. Pumped storage is the absolute energy storage form of the power system at present. Electrochemical energy storage is the energy storage form of the power system to be vigorously developed in the future planning. The "Regulations" and "methods" have changed the service cost of the power system according to the power sharing mode at the power generation end and improved the user sharing mechanism.
On the basis of a relatively complete price formation mechanism for pumped storage, we believe that the introduction of "Regulations" and "measures" will further improve its revenue acquisition ability. Moreover, the vast majority of pumped storage power stations are built and held by power grid companies, which are more closely related to power grid dispatching and operation, and are expected to become the best power service auxiliary resources in provincial areas.
The electrochemical energy storage power station on the grid side was previously included in the transmission and distribution cost, and it can even be considered that it does not belong to the category of power auxiliary services. We believe that the introduction of "Regulations" and "measures" has dredged the market-oriented cost recovery mechanism, effectively promoted the enthusiasm for investment and construction of large-capacity energy storage power stations, and is expected to accelerate the decline of the cost of energy storage power stations, Further stimulate the planning and construction of high-capacity energy storage power station projects, which is also expected to stimulate key enterprises related to the industrial chain.
Investment suggestion: it is recommended to focus on new energy operators with regional centralized high-quality thermal power generation resources: Huadian Power International Corporation Limited(600027) , Gd Power Development Co.Ltd(600795) , China Resources Power (H). It is recommended to pay attention to hydropower operators with pumped storage resources or rich hydropower resources to cooperate with the power grid for Pumped Storage Transformation: Sdic Power Holdings Co.Ltd(600886) , China Yangtze Power Co.Ltd(600900) .
It is recommended to focus on the core suppliers of large electrochemical energy storage power stations: Sunwoda Electronic Co.Ltd(300207) , Contemporary Amperex Technology Co.Limited(300750) .
Risk tip: macroeconomic downside risk, policy implementation is less than expected, and the installed capacity is less than expected.
（ China Greatwall Securities Co.Ltd(002939) ）
