Zhejiang Wanliyang Co.Ltd(002434) energy technology: a leader in the commercialization of power auxiliary services
Founded in 2019, the company is a high-tech enterprise focusing on providing flexible power regulation capability. The company is mainly engaged in energy storage power station investment and operation, spot trading in power market, power security testing and other businesses. It is committed to providing panoramic technical support for new energy, flexible regulation capability for power system and zero carbon energy consumption solutions for users, It endows power regulation with new ways to realize and further improves the business model of energy storage. In November 2021, Zhejiang Wanliyang Co.Ltd(002434) announced that it planned to acquire 51% equity of Zhejiang Wanliyang Co.Ltd(002434) energy technology in cash and based on net asset pricing, become the controlling shareholder of the company, and create a dual main business model of “independent gearbox” and “energy storage business” of the listed company.
Power industry: from “planning” to “marketization”, the evolution of China’s power system
Building China’s new power system: the proportion of renewable energy power generation has increased, and the power system has ushered in challenges. The proportion of new energy power generation continues to increase, while the installed capacity of new energy continues to increase. In the future, with the continuous high proportion of new energy access, the randomness and volatility of new energy such as wind power and photovoltaic will bring challenges to the consumption capacity and operation stability of the power grid.
Improve China’s power marketization mechanism: promote the marketization of auxiliary services and improve the business model of energy storage. Since 2021, the CPC Central Committee and the State Council have successively issued relevant important documents on promoting the marketization of power, which clearly requires to improve the connection mechanism between the medium and long-term market, the spot market and the auxiliary service market, vigorously improve the comprehensive regulation capacity of the power system, promote the construction of the power market mechanism suitable for the transformation of energy structure, and gradually establish the marketization mechanism of auxiliary services, The business model of energy storage was further improved.
China’s auxiliary market process: from “None” to “have”, from “plan” to “market”. The auxiliary service market under the new power system has defined its basic principle: “who provides, who profits; who benefits, who bears”. According to international experience, the cost of power auxiliary services is generally more than 3% of the total electricity cost of the whole society. It is estimated that the scale of China’s auxiliary market will reach 41.6/54.6/68.8 billion yuan in 2021, 2022 and 2023 respectively.
Competitive advantage: first mover advantage + technology advantage + operation advantage
First mover advantage: the company has been engaged in flexible power regulation business for many years. As a pioneer in participating in the auxiliary market with new energy storage subjects, the company has significant first mover advantages in terms of geographical location and customer resource accumulation. Zhejiang Wanliyang Co.Ltd(002434) several power generation side energy storage power stations have been put into operation in Guangdong, Gansu and other provinces, and they are the first projects in local regions,
Technical advantages: technical advantages are the core of flexible power regulation capability. The company is based on the power market panoramic simulation decision-making system, new energy storage system integration and market operation integration platform based on the self-developed “power big data platform + market mirror simulation engine + artificial intelligence prediction engine” (one platform and two engines), Reliable control and revenue maximization of the new energy storage system can be realized through “intelligent economic optimization scheduling engine” and “cloud edge collaborative control technology”.
Operation advantages: the company has put into operation four power generation side energy storage power stations in Guangdong, Gansu and other provinces, with a total installed capacity of about 40mW and rich operation experience; Meanwhile, the total installed capacity of the energy storage power station to be invested and constructed under the signed agreement is about 1GW. With the first mover advantage and technical advantage, in the power system, the company can effectively and efficiently operate in terms of power price prediction, power market transaction, operation strategy optimization, power grid frequency and peak shaving and power grid stability control, and finally form a Trinity and form a three-dimensional comprehensive competitive advantage.
Investment suggestions:
Considering only the transmission business, we expect the company to achieve a revenue of RMB 7.25/87.0/10.49 billion and a net profit of RMB 7.3/9.2/1.16 billion in 21 / 22 / 23, maintaining the “buy” rating. At the same time, after the company completed the acquisition of Zhejiang Wanliyang Co.Ltd(002434) energy technology energy storage business, its new energy industry layout will be further widened. The leapfrog development of energy storage business in the future will bring significant performance flexibility to the company, and significantly improve the overall anti risk ability of the company while forming a new growth point for the company.
Risk warning: risk of supply and price fluctuation of main raw materials and spare parts; Market competition risk; The risk of further spread of the epidemic; Customer concentration risk and order less than expected risk.
