This week's topic
On December 21, 2021, the National Energy Administration issued the regulations on the management of power grid connection operation and the measures for the management of power auxiliary services. This week, we combed and calculated the development process, costs and benefits of the power auxiliary service market, and prospected the subsequent development of the market.
Core view
The high installed capacity of new energy brings consumption demand, and the importance of power auxiliary services is highlighted
By the end of October 2021, the cumulative installed capacity of renewable energy power generation in China had reached 1.002 billion kw, accounting for 43.5% of the total installed capacity of power generation in China. New energy power generation has the characteristics of randomness and volatility. Power auxiliary service is becoming more and more important in ensuring the stable and safe operation of the system.
A variety of power auxiliary services to escort the safety of the power grid
Power auxiliary services are mainly divided into active power balance services, reactive power balance services and accident emergency and recovery services. Active power balance services include frequency modulation, peak shaving, standby, moment of inertia, climbing, etc; Reactive power balance services include automatic voltage control and phase modulation operation; Accident emergency and recovery services include stable machine cut-off service, stable load cut-off service and black start. At present, peak load regulation, frequency regulation and reserve are the most important types of China's power auxiliary service market, accounting for over 90%.
Review on the development of China's power auxiliary service market
The development of China's auxiliary service market has experienced four stages: free service before 2006, planned compensation from 2006 to 2014, marketization exploration from 2015 to 2017 and acceleration of marketization after 2017. By the end of 2020, except Tibet, 6 regional power grids and 30 provincial power grids had started the power auxiliary service market. The national energy administration expects to increase the system peak shaving capacity by 90 million KW nationwide in 2021, increase power generation space for clean energy by nearly 80 billion kWh and reduce carbon dioxide emissions by nearly 100 million tons.
Income cost calculation and scale estimation of China's auxiliary service market
In terms of peak shaving revenue and cost sharing, according to the auxiliary service market data of Shaanxi and Ningxia from January 2020 to June 2021, the peak shaving revenue of Shaanxi is about 0.36 yuan / kWh and that of Ningxia is about 0.56 yuan / kWh. The sharing cost of wind power and photovoltaic power in Shaanxi is about 0.008 yuan and 0.014 yuan; The sharing cost of wind power in Ningxia is about 0.0176 yuan, and the sharing cost of photovoltaic power is about 0.026 yuan.
The release of the new regulations on the management of power grid connected operation and the measures for the management of power auxiliary services has supplemented and deepened the providers of auxiliary services, the classification of transaction varieties, the sharing mechanism of power users, etc. the scale of the auxiliary service market is expected to further expand. We estimate that the scale of China's power auxiliary service market is expected to reach 116.09 billion yuan in 2025.
Investment suggestion: under the background of carbon peaking and carbon neutralization, in order to accelerate the construction of a new power system suitable for the development of high proportion of renewable energy and ensure the stable, efficient and safe operation of the system, the importance of power auxiliary services has become increasingly prominent. At present, China's auxiliary service market is still dominated by peak shaving, frequency modulation and standby. After the introduction of the new version of the "two rules", the market-oriented reform of auxiliary services will be accelerated. It is estimated that the scale of China's auxiliary service market will reach about 116.09 billion yuan in 2025. Specific subject matter, specific subject matter, suggestions on the subject matter of thermal power transformation into new energy focus 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, power demand is less than expected, electricity price reduction risk, coal price fluctuation risk, etc
