Review of important information in this issue:
Green power:
Event: Longi Green Energy Technology Co.Ltd(601012) issued an announcement on April 6, saying that the company received the letter of Yunnan development and Reform Commission on clarifying Longi Green Energy Technology Co.Ltd(601012) relevant electricity price on April 1, 2022, informing that the preferential electricity price policies and measures enjoyed by the company in Yunnan Province have been cancelled according to the requirements of relevant national departments to clean up the preferential electricity price policies. Since September 1, 2021, all electricity prices of the company have been formed through electricity market trading, Direct settlement with power grid enterprises.
Background for the introduction of preferential electricity price in Yunnan Province: in the early stage of the 13th five year plan, there was an oversupply of hydropower and the abandonment rate was high. The vast majority of power supply in Yunnan province comes from hydropower. Hydropower construction takes a long time and the single scale is large. Centralized operation has a great impact on the pattern of power supply and demand. During the 12th Five Year Plan period, hydropower in Yunnan Province ushered in the largest round of production peak in history, and the growth rate of installed capacity once exceeded 20%. However, on the demand side, on the one hand, the economic volume in Yunnan Province is difficult to absorb the huge power supply, on the other hand, the construction of export channels lags behind, and Guangdong province carried out the supply side reform at that time, and the power demand is relatively weak, resulting in a serious surplus of power supply and high water abandonment rate in Yunnan Province, At the peak, the waste water exceeded 30 billion kwh in 2016.
The introduction of high energy consumption + export channel has been put into operation, and the power supply and demand pattern in Yunnan Province has tightened rapidly. In order to solve the problem of water waste and drive the economic development in Yunnan Province, during the 13th Five Year Plan period, Yunnan Province introduced a large number of high energy consuming industries through preferential electricity prices, most typically electrolytic aluminum and polysilicon ( Longi Green Energy Technology Co.Ltd(601012) the cooperation agreement was signed in 2016), driving the growth of power demand in Yunnan Province to achieve a "V" rebound. However, unlike other provinces with thermal power / new energy as the main power supply, the increment of hydropower supply is strictly restricted by natural resource endowment. Since 2017, the growth rate of power consumption in Yunnan Province has exceeded the growth rate of supply. At the same time, as Jinzhong DC and Northwest Yunnan Shenzhen UHV transmission lines have been put into operation one after another, the power generation problem caused by insufficient channels has been solved, the power supply and demand pattern in Yunnan Province has deteriorated irreversibly on the user side, and the water abandonment rate has plummeted to zero in 2019.
Under the dual carbon target, with the situation of energy conservation and emission reduction and industrial upgrading in the whole society, the state's attitude towards electricity price has changed. Affected by the new macroeconomic normal, China has experienced a three-year electricity price reduction cycle since 2018. Provinces generally implement electricity price concessions for high energy consuming industries. However, in 2021, with the implementation of the dual carbon target and the tightening of dual energy control, the national development and Reform Commission issued the notice on improving the step price policy of electrolytic aluminum industry in August before the state allowed the coal power price to rise by 20% in October, proposing that preferential price policies for electrolytic aluminum industry are strictly prohibited, and the implemented policies need to be cancelled to encourage electrolytic aluminum to use non-aqueous renewable energy, with a rare degree of strictness. Compared with electrolytic aluminum (traditional high energy consumption industry), the Longi Green Energy Technology Co.Ltd(601012) announcement that Yunnan province cancels the preferential price of polysilicon quite exceeds the market expectation, indicating that the price has entered an era of comprehensive marketization. Our analysis of the impact on the power industry includes:
1) directly benefit the target Huaneng Lancang River Hydropower Inc(600025) .
2) long term benefit the whole industry chain of the power industry. Throughout the 13th Five Year Plan period, China's electricity price showed a downward trend, far lower than CPI. The downward trend of electricity price is more the result of policy repression than the decision of market supply and demand. We believe that in the future, with the tightening of power supply and demand pattern, power marketization will probably continue to rise with electricity price, opening up the profit space of the whole power industry chain.
3) limited impact on green power investment cost. According to the announcement of Longji, the electricity charge accounts for about 15% of the processing cost of the whole process of silicon wafer. It is expected that the impact of electricity price rise can be controlled with the transmission range of the industrial chain, and the impact on the investment cost of green power is limited.
Environmental protection:
In the first quarter, several listed companies arranged hydrogen energy, and the prosperity of the industry is expected to continue to improve. In March this year, the national development and Reform Commission successively issued the "14th five year plan" for modern energy system and the "medium and long term plan for the development of hydrogen energy industry (20212035)", which strategically made it clear that hydrogen energy is an important part of the future national energy system. As of April 8, 2022, according to the statistics of high tech hydrogen power, 30 listed companies have arranged the hydrogen energy industry by setting up hydrogen energy subsidiaries / joint ventures, hydrogen energy industry funds, and jointly investing in hydrogen energy projects. We believe that with the gradual improvement of the top-level design of the hydrogen energy industry, more social resources are accelerating the layout of the hydrogen energy industry, and the prosperity of the industry is gradually improving.
Risk warning: the change of coal electricity price is less than expected
