The Zhitong Finance App learned that Cinda Securities released a research report stating that under the tense situation of electricity supply and demand, the peak value of coal and electricity is prominent; with the continuous advancement of market-based electricity reforms, the electricity price trend is expected to rise steadily and slightly, the electricity spot market and auxiliary service market mechanisms are expected to continue to be promoted, and the capacity electricity pricing mechanism is officially introduced to clarify the cornerstone position of coal and electricity. The construction of new power systems under the dual carbon target may continue to rely on the abundance and investment of system regulation methods. Furthermore, as the Development and Reform Commission increases the electricity and coal commissioner's guarantee and supply efforts, the actual compliance rate of the Electricity and Coal General Cooperation is expected to rise marginally, judging that the cost side of coal power companies is relatively manageable. Looking ahead, the performance of power operators is expected to improve significantly.
The main views of Cinda Securities are as follows:
What does it mean when the landscape consumption rate falls below 95%?
1) Source and implementation status of the 95% consumption rate requirement: Around 2015, the abandonment of new energy sources in China was quite serious. In order to solve the problem of new energy consumption, the Development and Reform Commission issued the “Clean Energy Consumption Action Plan (2018-2020)”, which proposes the goal of controlling the abandonment rate of wind and light of less than 5% by 2020. At the same time, the National New Energy Consumption Monitoring and Early Warning Center began publishing monthly national consumption data by province. As of January 2024, the new energy consumption rate had never fallen below 95%.
2) Changes in consumption policies: New energy sources are entering the market at an accelerated pace, and the concept of consumption continues to change. The concept of new energy consumption changed from “fully guaranteed consumption” in the early days to “guaranteed acquisities+market-based transactions” in '16, and “acquisitions affected by market prices are not included in the scope of fully guaranteed acquisitions” in '24. A “policy-side exemption” for new energy consumption brought about by market-based transactions has officially been implemented. Furthermore, as the marketization of electricity progresses, the share of new energy electricity through market-based transactions will gradually increase, and the portion of guaranteed purchases and consumption may gradually narrow.
3) Disruption and interpretation of the consumption situation: By speeding up market entry and breaking the red consumption line, the installed potential of new energy sources is expected to be further unleashed. In February 2024, for the first time, the officially announced new energy consumption rate showed that the scenery both fell below 95%, and the “95% consumption red line” has actually broken through. Due to the relaxation of new energy consumption policies, the installed potential of new energy is expected to be released, and the forecast for new energy installed capacity may be raised to 300-320 GW in 2024. At the same time, with the continuous promotion of spot markets across the country, the price of electricity traded on the Internet for PV entering the market may gradually drop, which in turn will affect the comprehensive electricity price and actual revenue of new energy projects.
Monthly sector and key listed company performance:
The electricity and utilities sector rose 3.6% in March, outperforming the market; the Shanghai and Shenzhen 300 rose 0.6% to 3537.5 in March; the top three industries were non-ferrous metals (12.5%), petroleum and petrochemicals (6.0%), and general (5.5%).
Monthly electricity demand analysis:
The growth rate of electricity consumption continued to be high year-on-year in the beginning of 2024. From January to February 2024, the electricity consumption of the entire society increased by 10.95% year-on-year. By industry: The growth rate of residents' electricity consumption surged month-on-month, and the year-on-year growth rate of electricity consumption in the tertiary generation decreased slightly: from January to February 2024, the electricity consumption in the first, second, and tertiary industries grew 11.11%, 9.73%, and 15.66%, respectively, and the electricity consumption of residents increased 10.51% year on year.
Subsector: The high-tech equipment manufacturing sector has maintained a steady year-on-year growth rate, and the growth rate of electricity consumption in consumption and high-energy industries has narrowed. Looking at the molecular industry, computer communication equipment manufacturing, metal products, and electrical machinery manufacturing industries account for the top three electricity consumption sectors in the high-tech equipment manufacturing sector. The top three consumer sectors are wholesale and retail, transportation, warehousing and postal services, and real estate. The top three of the six energy-intensive sectors are electric heat production and supply, non-ferrous metal smelting and rolling processing, and ferrous metal smelting and rolling processing.
By region, the eastern coastal provinces lead in electricity consumption, while the western provinces lead in electricity consumption growth.
Monthly electricity production analysis:
The overall increase in power generation continues to be high, and the growth rate of thermal power generation continues to grow. From January to February 2024, the country's electricity generation increased by 8.30%. In terms of unit types, thermal power increased 9.70% year on year; hydropower increased 0.80% year on year; nuclear power rose 4.20% year on year; wind power increased 5.80% year on year; and solar power increased 15.40% year on year. In terms of new installed capacity, from January to February 2024, the country added a total of 52.72 million kilowatts of installed capacity, including 5.08 million kilowatts of thermal power, 1.03 million kilowatts of hydropower, 9.89 million kilowatts of wind power, and 36.72 million kilowatts of photovoltaics. In terms of power generation equipment utilization, the average number of hours used by power generation equipment nationwide from January to February 2024 was 563 hours, a decrease of 1.05% over the previous year.
Among them, the average utilization hours of thermal power were 763 hours, up 6.11% year on year; the average number of hours used for hydropower was 369 hours, up 1.37% year on year; the average number of hours used for nuclear power was 1,216 hours, up 0.58% year on year; average number of hours used for wind power was 373 hours, down 6.98% year on year; and the average number of hours used for photovoltaics was 168 hours, down 7.69% year on year. In terms of coal stocks, daily consumption, and shipping conditions in the Three Gorges, inland coal stocks rose month-on-month, and daily consumption rose month-on-month; coastal coal stocks rose month-on-month, and daily consumption declined month-on-month; and the water level of the Three Gorges and the amount of water stored in reservoirs both declined year-on-year.
Monthly electricity market data analysis:
The average price of electricity purchased by agents fell year on year in April, and there was a slight increase from month to month. The average monthly electricity purchase price in April was 411.83 yuan/MWh, up 0.68% month-on-month and 5.34% year-on-year. Monthly trading prices in Guangdong continued to fall month-on-month in April; electricity prices in the spot market fell significantly month-on-month in March; spot trading prices in Shanxi fell significantly month-on-month in March; the average spot price in Shandong continued to decline in March.
Industry news:
(1) The National New Energy Consumption Monitoring and Early Warning Center announced the grid consumption of new energy in each provincial region in February 2024; (2) the National Energy Administration issued guidance on energy work in 2024; (3) Qinghai Province publicly solicited opinions on optimizing and improving peak and valley timeshare electricity price policies.
Power operators are expected to benefit from the following targets:
1) National coal power leaders: Guodian Electric Power (600795.SH), Huaneng International (600011.SH), Huadian International (600027.SH), etc.; 2) Regional leaders with tight electricity supply: Anhui Electric Power (000543.SZ), Zhejiang Electric Power (), Shenneng Co., Ltd. (USD), Guangdong Electric Power A (000539.SZ), etc.; 3) Hydropower operators: Changjiang Electric Power (Chengdu), SDIC Power (Airport), Sichuan Investment Energy (600674) 600023.SH 600642.SH 600900.SH 600886.SH .SH), Huaneng Hydropower (600025.SH); 4) Equipment manufacturers and flexibility transformation are expected to benefit targets: Dongfang Electric (600875.SH), Qingda Environmental Protection (688501.SH), Huaguang Huaneng (), etc. 600475.SH
Risk factors: The macroeconomic downturn has caused the growth rate of electricity consumption to fall short of expectations; market-based electricity reforms are being promoted.