Along with the country's “dual carbon” energy transformation, green electricity and green computing power are developing collaboratively, and we are optimistic about the long-term growth space of new energy installations; the digital economy empowers spot electricity transactions to help power companies reduce losses and increase profits.
The Zhitong Finance App learned that China Galaxy Securities released a research report saying that the digital economy is accelerating electrification, and infrastructure construction such as data centers and 5G base stations is releasing massive electricity demand. Along with the country's “dual carbon” energy transformation, green electricity and green computing power are developing collaboratively, and we are optimistic about the long-term growth space of new energy installations; the digital economy empowers spot electricity transactions to help power companies reduce losses and increase profits. As electricity spots expand across the country and electricity price fluctuations expand significantly, power companies need to use digital transformation to meet the challenges and opportunities brought about by the spot market. Leading power generation companies with strong operation and management capabilities are expected to benefit.
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The main views of China Galaxy Securities are as follows:
Renewable energy accounts for more than 50% of installed capacity, and the energy transition accelerates market-based reforms
By the end of 2023, the country's total installed renewable energy generation capacity reached 1,516 billion kilowatts, an increase of 25% over the previous year, accounting for 51.9% of the country's total installed capacity. The acceleration of energy transformation requires market mechanism innovation adapted to new power systems. In terms of electricity prices, electricity prices for coal capacity have been implemented, and the price mechanism for auxiliary services has been improved; in terms of electricity volume, basic spot rules have been implemented and the progress of spot market construction in each province has been clarified.
Electricity reform is speeding up, and electricity spot coverage continues to expand
The second electricity reform clearly proposed the establishment of a medium- to long-term and spot electricity market. In recent years, the acceleration of electricity reform has driven the continuous expansion of spot electricity coverage. By the end of 2023, of the first batch of 8 pilot regions, Shanxi and Guangdong had entered official operation; of the second batch of 6 pilot regions, 5 had entered long-term settlement and trial operation; all remaining non-pilot regions had entered the trial operation stage. China Galaxy Securities predicts that the scale of the electricity spot market will expand, and the spot electricity volume is expected to reach 650 billion kilowatt-hours and 1.3 trillion kilowatt-hours in 2025 and 2030. The share of electricity in the new energy market is close to 50% in 2023. It is expected to fully participate in the electricity spot market in 2030 to promote priority consumption of new energy with lower variable costs through a market approach.
The digital economy stimulates massive demand for green electricity and opens up a new era of new energy development
The digital economy is highly compatible with electrification, and the explosion of the digital economy will bring about a significant increase in electricity demand. Taking data centers alone as an example, China Galaxy Securities estimates that domestic data center electricity consumption in 2025, 2030, and 2035 will be 0.51 trillion kilowatt-hours, 1.27 trillion kilowatt-hours, and 2.90 trillion kilowatt-hours, respectively, accounting for 5%, 9.8%, and 17.6% of the electricity consumption of the entire society. China Galaxy Securities has built a “data center - power system demand model” and estimated that in 2026-2030, the average annual installed capacity of photovoltaics and wind power generated only to meet the electricity consumption needs of data centers will reach 64 GW, 28 GW, and 20335. Ascended to 137 GW, 60 GW; Scenery installation drives energy storage facilities. By 2030 and 2035, it is estimated that the total installed capacity of energy storage could reach 350.9 GWh and 1926.6 GWh.
The digital economy empowers spot electricity transactions to help power companies reduce losses and increase profits
As the electricity spot market unfolds across the country, power companies need to face challenges such as fluctuations in spot electricity prices, operational flexibility requirements, and technical and talent reserves. For new energy companies, digital and intelligent analysis models can help improve the accuracy of power prediction and reduce the risk of biased assessments caused by random output; for other power companies or electricity sales companies, automatic algorithm trading based on artificial intelligence and machine learning technologies is expected to increase profit levels. At present, automated trading has dominated the European electricity market. In 2022, Europe's largest short-term electricity exchange, EpexSpotSE in Paris, accounts for about 60% of automated trading, and some electricity trading companies rely on automated trading to obtain high profits.