Event:
On March 24, 2022, the Ministry of Finance released the expenditure budget table of central government funds in 2022, in which the expenditure of renewable energy electricity price additional income project is expected to exceed 450 billion yuan. On the same day, the three ministries and commissions carried out self inspection on grid connection subsidies for photovoltaic and wind power before the end of 2021, and the report is expected to be completed on April 15.
Comments:
Subsidies have been in arrears for a long time, and the coverage rate of centralized photovoltaic subsidy directory is only 52.6%
In 2018, the application for renewable energy subsidies ended abruptly after the seventh batch. In September 2019, the Ministry of Finance delegated the application, review and issuance of subsidy funds to the corresponding power grid enterprises. In 2020, the State Grid officially began to enter the grid connection projects before 2020 in the list mode, but the entry speed decreased significantly. The proportion of centralized photovoltaic installed capacity included in the subsidy catalogue gradually decreased from 99.5% at the end of March 2016 to 52.6% at the end of 2021. The receivables of a large number of new energy projects are increasing, and the tight cash flow affects the normal operation.
In 2022, renewable energy subsidies will be paid more than 450 billion yuan at one time
In 2022, the expenditure of other government funds was 459447 billion yuan, with a net increase of more than 360 billion yuan year-on-year in 2021. According to our calculation, the cumulative gap of subsidies will reach 465.6 billion yuan by the end of 2021. The amount of new energy subsidies is much higher than expected, which can cover almost all subsidy arrears. The problem of subsidy arrears will be solved, which will greatly release the development willingness and financial vitality of new energy operators.
Subsidies will greatly release the development willingness of new energy operators
We believe that the settlement of subsidy arrears has the following positive effects on the industry:
1. Improve the financial situation of operators: the recovery of subsidies will significantly reduce accounts receivable, improve cash flow, reduce corporate financing pressure and enhance the asset value of power stations.
2. The subsidy is used as the capital of new projects to expand the project scale: according to the 30% capital of single projects and the 3.3 times leverage ratio, the 450 billion subsidy can leverage the project investment of 1.35 trillion yuan. Calculated according to the median construction cost of 4 yuan / W for photovoltaic and 6 yuan / W for wind power, it can support the construction of 270gw scenery projects.
Investment advice
We believe that the settlement of the problem of subsidy arrears will greatly improve the financial status and asset value of new energy operators. We recommend Cecep Solar Energy Co.Ltd(000591) , a photovoltaic operator with high proportion of subsidies and great flexibility, China National Nuclear Power Co.Ltd(601985) , which is transforming from nuclear power business to comprehensive green power operator, and pay attention to the leader in the field of distributed photovoltaic Jiangsu Linyang Energy Co.Ltd(601222) .
Risk tips
The expenditure of financial subsidies is lower than expected, the review of subsidies for new energy projects is stricter, and the calculation is subjective, which is for reference only
