To build a new power system, the policy framework is slowly unfolding.

Under the 3060 double carbon strategy, the proportion of new energy in China's power supply structure will increase rapidly in the future. Compared with the traditional power supply structure, the main problem of new energy is instability, and supply and demand need to be matched in both directions. Therefore, under the traditional power supply structure, the electricity price system is mainly formulated around the power generation cost; in the power supply structure where the proportion of new energy continues to rise, the design of the electricity price system needs to take the consumption cost as the core. In March 2021, the General Secretary proposed for the first time to build a new power system with new energy as the main body at the ninth meeting of the Central Financial and Economic Committee. Under the guidance of the highest-level voice, the relevant policies of China's power system have been introduced intensively since March, which can be classified into three categories, namely, promoting new energy consumption, electricity price marketization reform and energy double control / carbon emission reduction. the three types of policies can be further divided into four quadrants of "source network load storage". Up to now, the new power system policy framework has been basically formed.

It is clear that the cost of peak regulation and energy storage is transmitted to the user side, and the market mechanisms of pumped storage, time-of-use electricity price and auxiliary services have been introduced one after another.

Aiming at the sharing of consumption cost, our country introduced the market mechanism of pumped storage, time-of-use electricity price and auxiliary service in April, July and December respectively, emphasizing that pumped storage implements two-part electricity price, in which the capacity electricity price is included in the recovery of transmission and distribution price; enlarge the peak-valley difference of time-sharing electricity price and link up with the spot market of electricity; the auxiliary service cost is apportioned according to the principle of "who provides, who benefits; who benefits, who bears" and is listed separately in the user electricity charge. The inherent logic of the three sets of documents comes down in one continuous line, emphasizing that the costs of peak regulation, energy storage and auxiliary services are transmitted downstream, and that power and power grids are no longer "voluntary services", greatly reducing the pressure on the transmission of consumption costs to upstream new energy operators. it is conducive to ensuring the consumption and rate of return of new energy projects in the era of parity.

Power restriction promotes electricity reform, and the country's attitude towards feed-in electricity price quietly changes.

Since 2018, China has experienced three consecutive years of electricity price reduction cycle, resulting in the market to a certain extent formed the inertia thinking that the feed-in electricity price can only go down. However, under the dual-carbon goal, with the new situation of energy conservation, emission reduction and industrial upgrading of the whole society, the state's attitude towards electricity price has quietly changed. The National Development and Reform Commission issued a document in August to strictly prohibit the implementation of preferential electricity price policies for the electrolytic aluminum industry; in September, the dual control of energy was determined to link up with green power, supporting an additional premium for green power; and coal electricity prices were allowed to rise by 20% in October. Electricity prices in high energy-consuming industries are not restricted. Recently, Jiangsu, Guangdong and Shaanxi have successively announced the results of the annual long-term Association transaction in 2022, and the increase in electricity price has greatly exceeded the market expectations. it is expected that with the tightening of power supply and demand and the severe situation of energy double control, China's on-grid electricity price will enter a rising cycle.

National Energy Administration 12 Announces "2022 Energy work Roadmap"

The National Energy Administration released the 2022 Energy work Roadmap on December 25, which puts forward seven key work directions in the energy field in 2022. Combined with the spirit of the document, we analyze that China has basically completed the construction of a new power system policy "framework" in 2021, more "content" is needed in 2022, and the rhythm of high-density policy is expected to continue. Standing at the current time, as the relevant policies of the new power system continue to increase, we believe that power operators are still one of the most deterministic and cost-effective industries in the field of new energy. Integrated group positioning, power supply and demand pattern, 14th five-year new energy development plan, regional resource endowment and valuation, the first are China Electric Power, China Resources Power Holdings, Guangdong Electric Power A, Inner Mongolia Huadian, Huaneng International.

Risk hint

The policy landing is uncertain, and the cost of wind power photovoltaic equipment is lower than expected; the fierce competition among operators leads to the mismatch between the new project IRR and the discount rate; and extreme coal prices make thermal power break through the cash flow equilibrium.

Conclusions and investment analysis

Standing at the current time, with the continuous increase of the relevant policies of the new power system, we believe that power operators are still one of the most deterministic and cost-effective industries in the field of new energy. At present, China's power sector, especially the high-quality leader of thermal power transformation of new energy, the market capitalization is in a state of overall undervaluation. Integrated group positioning, power supply and demand pattern, 14th five-year new energy development plan, regional resource endowment and valuation, the first are China Electric Power, China Resources Power Holdings, Guangdong Electric Power A, Inner Mongolia Huadian, Huaneng International.