The land subsidy policy for offshore wind power in Shandong has been implemented. The grid connected projects completed in 20222024 will be given local financial subsidies at the standard of 800 yuan, 500 yuan and 300 yuan per kilowatt respectively, which will directly boost the yield of offshore wind projects, stimulate the growth of installed demand, and is expected to promote the growth of offshore wind beyond expectations.
Shandong sea breeze land subsidy policy was issued, and the project was subsidized from 2022 to 2024. On April 1, Shandong Province announced that for the offshore wind power projects completed and connected to the grid in 20222024, local financial subsidies will be given at the standard of 800 yuan, 500 yuan and 300 yuan per kilowatt, with the subsidy scale not exceeding 2gw, 3.4gw and 1.6gw respectively; Moreover, offshore wind power projects completed and connected to the grid before the end of 2023 will be exempted from the construction or leasing of energy storage facilities.
The land subsidy policy promotes the project IRR, which is expected to stimulate the accelerated growth of Haifeng’s installed capacity. At present, the cost of offshore wind power projects in the northern sea area may be reduced to 1100013000 yuan / kW. If calculated according to the annual average utilization hours of offshore wind power in Shandong Province and the benchmark grid price of 0.3949 yuan / kWh, according to the local compensation scheme, we expect that the IRR of the corresponding whole offshore wind project in 20222024 is expected to increase by 0.9/0.6/0.3pct respectively; If the leverage ratio of 70% is considered, the IRR of capital fund is expected to increase by 2.1/1.3/0.7pcts respectively, and the economy and investment attraction of the project are significantly improved, which is expected to stimulate the accelerated growth of installed capacity.
The total installed capacity of Shandong Haifeng in the 14th five year plan is expected to reach about 10GW. In February 2022, Shandong issued the “14th five year plan” for renewable energy development in Shandong Province, specifying that 10GW of offshore wind power will be started and 5GW will be put into operation before 2025 On March 3, 2022, Shandong issued the guiding opinions on energy work in the whole province in 2022, which planned the total scale of offshore wind power to be 35gw, and comprehensively launched the development of sites in the sea areas under the jurisdiction of Bozhong and the south of the peninsula. It is planned to start more than 5GW within the year, and complete the grid connection of about 2gw, which has advanced the construction progress.
Considering that the total scale of offshore wind power projects in Shandong Province is expected to exceed 10 GW by the end of 2024, considering that the total scale of offshore wind power projects in Shandong Province is expected to be reduced by the end of 2024.
It is estimated that the annual installed capacity of offshore wind power in China during the 14th Five Year Plan period will reach about 11gw. In addition to Shandong, several other provinces have issued the “14th five year plan” for offshore wind power installation, including Guangdong (16GW +), Jiangsu (9.1gw), Zhejiang (4.5gw), Guangxi (3gw), Hainan (4.2gw +), and other provinces with project reserves but no specific planning, such as Fujian (5GW), Liaoning (0.5gw) and Hebei (0.5gw). Therefore, we expect that the new installed capacity of offshore wind power in China during the 14th five year plan is about 53gw, corresponding to an average annual installed capacity of about 11gw, and it is expected to continue to exceed expectations under the continuous increase of policies.
Risk factors: the implementation progress of subsidy policies related to offshore wind power is lower than expected; The cost reduction rate of offshore wind power is lower than expected; The installed capacity of offshore wind power is lower than expected.
Investment strategy: the introduction of Shandong sea wind land compensation policy is expected to bring more room for the growth of offshore wind power than expected. It is recommended that the leader of submarine cable Ningbo Orient Wires & Cables Co.Ltd(603606) , the manufacturer of wind power aerial operation equipment Ficont Industry (Beijing) Co.Ltd(605305) ; At the same time, considering that the sea breeze equipment is often limited by the supporting radius, which is good for local suppliers, it is suggested to focus on Dajin Heavy Industry Co.Ltd(002487) , Qingdao Hanhe Cable Co.Ltd(002498) , and Jinlei Technology Co.Ltd(300443) , Tongyu Heavy Industy Co.Ltd(300185) , Qingdao Tianneng Heavy Industries Co.Ltd(300569) .
