The Zhitong Finance App learned that Ping An Securities released a research report saying that recently, the Shanghai Development and Reform Commission organized a 5.8GW offshore wind power project competition. The average unit size of the Shanghai competition this time is close to 1 GW. With the exception of standard section 5 (with a planned installed capacity of 650,000 kilowatts), the rest of the standard segments use DC unified transmission. This also reflects the domestic offshore wind power development trend, that is, large-scale development in the deep sea and uses centralized transmission methods. Ping An Securities believes that this trend is expected to drive the upgrading of the offshore wind power industry chain, and it is recommended to focus on beneficiary enterprises in key areas.

Recommended targets:

In terms of complete wind turbines: It is recommended to focus on Mingyang Intelligence (601615.SH) and Goldwind Technology (002202.SZ), which are leading in large-scale offshore fans.

In terms of submarine cables: It is recommended to focus on Dongfang Cable (603606.SH), Zhongtian Technology (600522.SH), and Hengtong Optoelectronics (600487.SH), which have obvious competitive advantages in high-voltage AC submarine cables and flexible straight submarine cables.

Basic aspects: It is recommended to focus on Tianshun Wind Energy (002531.SZ), which has extensive engineering performance in terms of four-pile conduit frames.

Furthermore, cost reduction in the delivery process is an important driver for reducing the cost of offshore wind power. Participants in high-voltage grade submarine cables may gradually increase in the future: it is recommended to focus on Baosheng Co., Ltd. (600973.SH), which have outstanding potential, and Qifan Cable (605222.SH).

The main views of Ping An Securities are as follows:

Shanghai Sea Breeze has welcomed large-scale development, and the price competition mechanism for electricity distribution is more reasonable

According to the announcement of the Shanghai Development and Reform Commission, there are 6 offshore wind power projects contested this time, with a total scale of 5.8 GW. According to the relevant time requirements, the projects in this competition are expected to be connected to the grid at full capacity by June 2027. Considering the offshore wind power distribution projects announced in 2022 and 2023, Shanghai will put into operation about 6.9 GW of offshore wind power projects between 2024 and 2027, corresponding to an average annual operating volume of about 1.7 GW.

Electricity prices are still an important scoring indicator for this competition. The electricity price range for the Hangzhou Bay offshore wind power project that was contested in 2023 is 0.207-0.247 yuan/kWh, and it is expected that the electricity price level for this competition project will be significantly higher; according to competition rules, when the declared feed-in price falls 5% (0.3947 yuan/kilowatt-hour) below the coal-fired benchmark electricity price, the bonus effect can be ignored (the rating increases by 0.005 points for every 0.001 yuan/kilowatt-hour reduction in electricity prices), which to a certain extent avoids disorderly competition at the feed-in tariff level to ensure reasonable competition. return on investment and Put into operation as scheduled.

Large-scale development and centralized delivery of contiguous seas are gradually becoming a trend

The average unit size of the Shanghai competition this time is close to 1 GW. With the exception of standard section 5 (with a planned installed capacity of 650,000 kilowatts), the rest of the standard segments use DC unified transmission. This also reflects the domestic offshore wind power development trend, that is, large-scale development in the deep sea and uses centralized transmission methods. In 2023, Guangdong completed the competition for 7GW offshore wind power projects under provincial administration, distributed in 5 large blocks, mainly using the model of unified centralized delivery of 1GW projects or unified centralized delivery of 2GW projects.

In addition, the Changle offshore D/E/K/J/I offshore wind power project planned by Fujian (total scale is about 2.2 GW) also uses a centralized and unified flexible delivery method. Under the model of continuous large-scale development and centralized delivery from the deep sea, wind turbines, submarine cables, infrastructure, etc. are all facing upgrades and iterations, which may affect the competitive pattern on the offshore wind power supply side to a large extent.

Offshore wind power main equipment is expected to accelerate upgrading and iteration

In terms of wind turbines, the pace of large-scale expansion is expected to accelerate. According to disclosed information, the main model used in the Guangdong 7GW provincial management project has a stand-alone capacity of 14 MW. Some projects plan to use units with a stand-alone capacity of 18 MW, while the main models in the new construction project in the Guangdong market in 2023 have a stand-alone capacity of 11 MW; Changle Waihai D and E zones plan to use units with a stand-alone capacity of 16-25 MW. In terms of submarine cables, the Shanwei Red Bay Area 3 and 4 total 1GW project has clearly planned to use 500 kV AC delivery. The Yangjiang Sanshan Island 1, 2, 3, and 4 projects plan to use flexible direct delivery. Ping An Securities estimates that the Guangdong 7GW provincial management project will mainly use 500 kV AC transmission, complemented by ±500 kV direct transmission.

As mentioned above, the current competition project in Shanghai mainly uses flexible direct delivery. Fujian, Shandong and other places have also introduced large-scale projects to use flexible direct delivery, and several large-scale projects in Zhejiang plan to use 500 kV AC delivery. Whether it is a 500 kV AC submarine cable or a flexible straight submarine cable, the current domestic application performance is relatively low, the technical threshold is relatively high, and the advantages of leading companies are obvious. On the basic side, the key construction projects promoted in the Guangdong market in 2023 mainly use the conduit rack model. According to disclosed information, the new 7GW provincial management project launched in 2023 also mainly uses conduit rack foundations. The number of newly launched seabreeze projects with a depth of more than 40 meters in other provinces has increased markedly, and it is estimated that the proportion of conduit rack applications will also increase markedly.

Risk warning

1) The pace and demand for offshore wind power fell short of expectations; 2) Competition in the industrial chain intensified and profit levels fell short of expectations; 3) the risk of new product quality accidents.