Event:
On April 1, the Shandong provincial government said that it would give subsidies of 800 yuan, 500 yuan and 300 yuan per kilowatt to the offshore wind power projects completed and connected to the grid in 20222024, with the subsidy scale not exceeding 2gw, 3.4gw and 1.6gw respectively. Meanwhile, for the Haifeng project completed before the end of 2023, it is exempted from or equipped with or leased energy storage facilities.
Key investment points:
The subsidy is slightly higher than expected, and the cost impact is about 6%. Previously, the market expectation of subsidies for coastal provinces was weak. Only Guangdong Province issued a subsidy policy in September 2021, and the subsidy intensity is 1500, 1000 and 500 yuan / kW from 2022 to 2024, which is only limited to the projects approved before 2018. Taking Guohua Bozhong I site and Shandong energy Bozhong a as examples, the investment intensity is 12700 yuan / kW and 12800 yuan / kW respectively. If the construction is completed in 2022 (800 / kW subsidy), the investment can be reduced by about 6%.
The implementation of offshore wind power subsidies will promote the early completion and operation of projects. According to the plan of Shandong Energy Bureau, 35gw will be planned in 2022, more than 5GW will be started, and 2gw will be connected to the grid. At present, it is clear that 2.1gw projects under construction are planned to be connected to the grid with full capacity from 2022 to 2024. According to the planning, the grid connection time of most projects will be significantly advanced, and the offshore wind power subsidy will also play a great incentive role.
In 20222024, the installation cycle of Haifeng will be strengthened. Previously, the market expected that only projects in Guangdong Province would rush to install. It has been clear that at least 9.7gw projects are planned to be connected to the grid at full capacity in 20222024. This time, the total installed capacity of Shandong Haifeng subsidy from 2022 to 2024 reached 7gw. If all the subsidies are used, the grid connection capacity of only two provinces can reach 17gw. From 2019 to 2021, China will add 22gw of offshore wind power grid connection capacity. Therefore, the grid connection capacity from 2022 to 2024 will significantly exceed that of the previous cycle.
It is estimated that the installed capacity of sea breeze in China will be more than 9gw in 2023. At present, we expect that China’s full capacity will be connected to the grid for 3 ~ 4gw in 2022 and more than 9gw will be newly connected to the grid in 2023. In the amount of grid connection in 2023, part of the total capacity is connected to 6.8gw, of which Shandong is expected to reach the maximum subsidy scale of 3gw in 2023, Guangdong 2.5gw, Jiangsu 1GW and Shanghai 0.3gw. On the other hand, considering that the scale of full capacity grid connection project has been determined to be 9.2gw in 2024 (6.6gw in Guangdong and 2.6gw in Jiangsu), the partial grid connection volume in 2023 is expected to be 2 ~ 3gw.
Industry rating and key recommended stocks we believe that offshore wind power will enter a new round of development cycle from 2022 to 2024, and give the offshore wind power industry a “recommended” rating. Starting from the discussion on the implementation of Shandong offshore wind power subsidy and the strengthening of offshore wind power installation cycle in this report, we suggest to pay attention to the companies related to Shandong offshore wind power, such as Baosheng Science And Technology Innovation Co.Ltd(600973) , Shandong local submarine cable enterprise Qingdao Hanhe Cable Co.Ltd(002498) , tower enterprise Dajin Heavy Industry Co.Ltd(002487) and Ming Yang Smart Energy Group Limited(601615) , Xinjiang Goldwind Science And Technology Co.Ltd(002202) and so on.
Risk tip: in 2022, the bidding volume of offshore wind power is lower than expected. The promotion speed of relevant statistical projects was lower than expected. The price of upstream bulk raw materials, such as copper and pig iron, has increased too much, resulting in an increase in the production cost of submarine cables and castings. The policy of offshore wind power industry has changed, and the objectives of the 14th five year plan of each province have been lowered. The cost reduction rate of offshore wind power industry chain was lower than expected, and the development progress of wind resources in the whole sea area was delayed without subsidies. Focus on the company’s performance less than expected.
