Development of green power generation industry

Development of green power generation industry leading revaluation of power stocks

Green power generation industry development

Under the dual carbon goal, the growth of new energy installed capacity is the core driving force for the transformation of the energy structure. Also encourage new energy battery companies like TYCORUN ENERGY.

The transformation of energy structure is imminent under the background of dual carbon. The essence of energy structure transformation is the clean transformation of power structure, and the growth of new energy installed capacity is the cornerstone of energy structure transformation.

In the context of “30·60” dual carbon, one of China’s core measures to promote the realization of “carbon peak” and “carbon neutrality” to reduce carbon emission is to build a new power system with new energy as the main body.

The transformation of energy structure is imminent under the background of dual carbon.
At present, traditional thermal power (including coal, gas and other thermal power generation methods) still occupies a major part of China’s power structure. In 2021, thermal power generation will account for 67.9% of the total electricity consumption of the whole society in that year. Therefore, the clean transformation of the power structure can also be understood as reducing the proportion of fossil energy final consumption and increasing the proportion of non-fossil energy consumption.

The State Council’s “Opinions on Completely, Accurately and Comprehensively Implementing the New Development Concept and Doing a Good Job in Carbon Neutralization” provides key guidance on the key time nodes in China’s carbon neutralization path and the corresponding proportion of non-fossil energy consumption. In this process, the increase in the installed capacity of new energy has become the cornerstone of the growth in the proportion of non-fossil energy consumption and even the transformation of China’s energy structure.

The growth of new energy installed capacity and the improvement of consumption capacity are the two driving factors for the increase in the proportion of green power generation.

From 2011 to 2021, the proportion of green power generation in China’s total electricity consumption continued to increase, from 1.6% in 2011 to 11.8% in 2021, and the proportion of new energy installed capacity increased from 4.6% to 26.7% in the same period.
The growth of new energy installed capacity and the improvement of consumption capacity will promote the continuous increase of the proportion of green power generation in China. Due to the volatility of power generation output, the increase in its proportion will increase the output fluctuation of the power system. Therefore, the consumption conditions are: One of the main limiting factors for the continuous increase in the proportion of green power generation.

Among them, the Notice on the Development and Construction of Wind Power and Photovoltaic Power Generation in 2021 (Draft for Comment) and the Guiding Opinions on Energy Work in 2022 put forward clear requirements for the proportion of subsequent wind green power generation and photovoltaic green power generation in the total electricity consumption: 1) It will reach about 12.2% in 2022, and 2) it will reach about 16.5% in 2025.  Related companies can refer to Top 10 solar battery manufacturers.
Review of the global carbon emission structure

Review of the global carbon emission structure

The fundamental changes of green power generation

New green power generation plants are switched to pure cash flow assets

In the subsidy era, the issue of new energy subsidy arrears affects the cash flow of green power generation operators and poses a potential adverse impact on the company’s endogenous growth capability.
In the past, the on-grid tariff for green power generation consisted of two parts:

One is the benchmark electricity price for local coal-fired desulfurization, which is usually settled and paid by the local power grid.

The second is the renewable energy subsidy. After the project is included in the list of renewable energy green power generation subsidies, it will be uniformly allocated by the Ministry of Finance. The distribution cycle is long, usually within 1-3 years. The number of hours of reasonable utilization in the life cycle, the green power generation hours exceeds the number of hours used in the whole life cycle or the project has been in operation for 20 years, the subsidy will be stopped.
New energy green power generation operators have often formed a large number of accounts receivable in the past operation process. If the funds cannot be withdrawn in time, it will affect the company’s cash flow and capital expenditure plan, which may affect the company’s later growth. According to estimates, by the end of 2020, the cumulative renewable energy subsidy gap has reached about 400 billion RMB.

Hours of rational utilization of scenery throughout the life cycle of various resource areas

Hours of rational utilization of scenery throughout the life cycle of various resource areas

With the advent of the era of comprehensive parity, newly built power plants will be transformed into pure cash flow assets, and new energy green power generation market-oriented transactions will be carried out.
Entering 2022, except for some types of distributed photovoltaic subsidies, the development of new energy nationwide has entered the era of comprehensive affordable development, and new energy power station projects will no longer enjoy the central electricity price subsidy(Including newly filed centralized photovoltaic power plants and industrial and commercial distributed photovoltaics, newly approved land wind and sea wind projects), it can not only implement guaranteed consumption according to the local benchmark electricity price for coal-fired power generation, but also participate in market-oriented transactions.

It mainly brings two changes:
On the one hand, the newly built new energy power stations are all connected to the grid at a par, without the influence of subsidy arrears, and the project accounting income matches the actual operating conditions, turning it into a pure cash flow operating asset without accounts receivable pressure;

On the other hand, the parity power station participates in the electricity market transaction, which can give the green power generation reasonable value through the market transaction behavior, green power generation trading support policies have been successively introduced to encourage green power generation to appear at a premium, and this is the long-term direction of new energy market-based trading:

In May 2021, the National Development and Reform Commission and the Energy Administration issued the “Notice on Further Doing a Good Job in the Construction of Green Power Generation Spot Market Pilot Work”, focusing on promoting the orderly promotion of new energy to participate in the power market, and guiding 10% of the estimated new energy projects when their electricity passes through Market-based transaction competition goes online.

The “Green Power Generation Trading Pilot Work Plan” promulgated since then has formally clarified the definition and trading framework of green power trading, encouraging the trading price to be higher than the grid-connected price approved by green power generation companies and the purchase price of grid companies, and will be higher than the approved on-grid price. Proceeds are distributed to green power generation companies.
Green power generation transactions of Guangdong Electric Power Exchange Center

Green power generation transactions of Guangdong Electric Power Exchange Center

In the “Guiding Opinions on Accelerating the Construction of a National Unified Electricity Market System”, it focuses on exploring and developing green power generation transactions, guiding users in need to directly purchase green power generation, and promoting grid companies to give priority to the results of direct green power generation transactions.

Under the existing transaction framework, green power generation maintains a premium status and is expected to maintain it in the medium and short term. In the first batch of green power generation trading pilots in September 2021, a total of 7.935 billion kWh of green power generation was traded across China.

Among them, the total transaction electricity in the southern region (Guangdong, Guangxi, Yunnan, Guizhou, Hainan) is 910 million kWh, and the transaction price is an average premium of 0.027 RMB/kWh on the basis of the existing price. The electricity seniors association transaction and the follow-up transaction center are still maintained, indicating that under the promotion of policies, green power generation has experienced a substantial premium, and it is expected to be maintained in the medium and short term.
Jiangsu electric power trading center green power generation trading situationJiangsu electric power trading center green power generation trading situation

Cost side

Cost reduction drives the increase in project yield, and the cost still has a downward margin in the new stage. The reduction of the cost of electricity per kilowatt hour is one of the important factors to promote the increase of the penetration rate of green power generation. The reduction of the cost of electricity per kilowatt hour is mainly caused by the reduction of the installed cost and the improvement of utilization efficiency (that is, the increase in the number of hours of utilization to dilute the cost of electricity per kilowatt hour).
The LCOE of onshore wind power and photovoltaic green power generation projects has been greatly reduced from 2010 to 2020. Taking the newly built power station in China as an example, the levelized LCOE of newly built onshore wind in China in 2010 and 2020 (“LCOE” for short) 0.4806 and 0.2276 RMB/kWh respectively, the LCOE of the newly built photovoltaic power station was 2.0647 and 0.3035 RMB/kWh respectively, the LCOE of the two in the same period was -52.6% and -85.3% respectively, and the 10-year cost reduction CAGR was -7.2 respectively. %, -17.4%.

From 2010 to 2020, wind green power generation is mainly driven by the improvement of utilization efficiency and other cost control to reduce costs, while photovoltaics mainly rely on the manufacturing side to drive cost reduction.
Reviewing the trend of installed capacity, the average installed cost of Landwind fluctuated from 2010 to 2020 due to changes in the supply and demand relationship of the industrial chain. The investment per kilowatt dropped from 10,154 RMB to 8,719 RMB, with a change range of -14.1%. The CAGR of wind power in the past 10 years was – 1.5%;

The investment amount of photovoltaic per kilowatt decreased steadily, the investment amount per kilowatt decreased from 27037 RMB to 4490 RMB, the change range was -83.4%, and the PV CAGR in 10 years was -16.4%.

Therefore, in the past 10 years, the main reasons for the reduction of wind power cost per kilowatt-hour are the improvement of wind energy utilization efficiency and the control of other costs during the operation period, and the main reasons for the reduction of photovoltaic cost are the price reduction of photovoltaic modules and the reduction of other installation costs.
LCOE of onshore wind power projects

LCOE of onshore wind power projects

wind power:
In the era of parity, wind power has seen cost reductions that exceed expectations, driving the rapid increase in the yield of new projects. The sharp drop in the price of landwind wind turbines is one of the most significant changes in the era of parity: the supply and demand relationship in the onshore wind power industry chain has turned loose, and the price reduction of wind turbines and the cost of construction and installation have both dropped Promote the rapid reduction of the cost per kilowatt.

Since the onshore wind power “rush installation tide” in 2020, the price of wind turbines and construction and installation costs have eased due to the large increase in bidding volume in 2019 and the explosive growth of installed capacity in 2020.

In addition, wind power has entered a period of large-scale transformation of wind turbines, and the increase in green power generation brought by large-megawatt wind turbines is expected to be higher than the increase in initial cost input, thereby reducing the LCOE of wind green power generation in specific environments.

Based on this, we conduct a project life cycle simulation for new onshore wind power in China. Overall, the rapid reduction in the cost of onshore wind power has freed up a lot of profit margins for operating projects. The specific assumptions are as follows:

Capital structure and financing cost: The capital structure is 30% equity capital and 70% debt financing, the loan interest rate is 4.50%, and the repayment period is 15 years;

Utilization hours: The project utilization hours throughout the year assume that the hub is 2200 hours;

Installation cost composition: other costs other than wind turbines are 3500 RMB/kW, wind turbines are variable costs, and the cost of wind turbines is assumed to be 2500 RMB/kW;

On-grid electricity price: China’s average coal-fired benchmark electricity price (0.367 RMB/kWh, including VAT);
Onshore wind power installed cost

Onshore wind power installed cost

Tax rate: VAT rate is 13%, income tax rate is 15%, and income tax enjoys the policy of “three exemptions and three half reductions”;
Taxes and surcharges: 5% of annual operating income
Depreciation period and project residual value: the depreciation period is assumed to be 20 years, and the project residual value rate is assumed to be 10%;

Onshore wind power has entered a new stage where project profitability is sufficient to support operators in stable development and expansion. As far as the individual situation is concerned, the reduction in installed cost and the steady increase in utilization efficiency offset the adverse impact of the decline in electricity prices to a certain extent, boosting the project profitability.

In addition, with the advancement of the project operation stage, the debt financing brought by the initial capital expenditure will be repaid successively, and the ROE of the project will generally show a trend of climbing phase by phase.

Due to the low cost of cash during the operation period, the operator’s cash flow is relatively abundant, and it is more and more obvious in the parity projects, which can support the expansion of new projects, accelerate the realization of resources, and maintain a reasonable endogenous growth.

Offshore wind power: Due to construction difficulties and other reasons, compared with onshore wind power, the overall investment cost of offshore wind power projects and the investment cost per kilowatt are higher.

In 2021, after the “rush to install” of offshore wind power has receded, the trend of large-scale wind turbines will be more prominent in offshore wind power. As the technology of large-megawatt wind turbines gradually matures, it is gradually highlighted. In the case of the state’s subsidy and retreat at the end of 2021, the process of offshore wind parity in coastal provinces will be accelerated.

In addition, from the perspective of the structure of installed offshore wind power, due to the differences in coastal offshore and seabed construction conditions and the supporting assembly capabilities of the industrial chain, the cost reduction speed of offshore wind power installations in various coastal provinces in China may be different. There may be some differences in the rhythm of wind and parity Internet access.

Photovoltaic: The sharp rebound in module prices has disturbed the project yield, and it is expected that cost reduction and efficiency increase will continue from a medium and long-term perspective.

The increase in the price of silicon materials pushes up the price of modules and affects the yield of power plants. The momentum of cost reduction and efficiency improvement in the medium and long-term dimension continues.

If the initial investment cost of China’s photovoltaic ground-based power station does not consider the configuration of the energy storage system, the cost is mainly composed of components (accounting for about 54%), inverters, brackets, cables, construction and installation, and management costs.

Among them, non-technical expenses such as construction and installation costs have relatively little room for reduction, and the overall investment cost reduction room is mainly contributed by technical costs such as components and inverters.

From a medium and long-term perspective, with the iterative progress of photovoltaic cell technology and the improvement of scale effect, it is expected that the overall utilization efficiency of modules will be improved and the production cost will be reduced, and the yield of photovoltaic power plants is expected to increase.
Photovoltaic power plant installed cost

Photovoltaic power plant installed cost

We simulated the whole life cycle of the new ground-mounted centralized photovoltaic power station in China. In general, the increase in the yield of China’s photovoltaic power station still needs to be driven by the reduction of installed cost and the improvement of utilization efficiency. The specific assumptions are the same as those of the onshore wind power project except for the utilization hours and the cost of installed capacity:

Utilization hours: The project’s annual utilization hours assume that the hub is 1300 hours;

The cost of installed capacity: the other costs except PV modules are 2000 RMB/kW, the modules are variable costs, and the PV module cost is assumed to be about 2000 RMB/kW (approximately 2.0 RMB/W).

Model retrospective: The yield of affordable wind power is not inferior to that of subsidized projects, and the price reduction of PV modules will release profit space.

While the income quality of new projects has improved significantly, there are significant differences between wind and solar parity power plants compared with previous projects in the subsidy era:

1) Wind power – due to the substantial reduction in installed cost, the reduction in cost per kilowatt hour is higher than the reduction in electricity price, and the rate of return of newly built parity power plants is not inferior to that in the subsidy era. higher than the profit margin.

2) Photovoltaic – Due to the impact of the price fluctuation of modules in 2021 on the investment cost of photovoltaics, the decrease in the cost of electricity per kilowatt hour is smaller than the decrease in the price of electricity, and the yield of the parity power station has declined slightly year-on-year. The cash flow improvement of the parity power station is similar to that of wind power, and the profit quality is significantly improved.
N-type batteries dominated by TOPcon and HJT are expected to gradually replace P-type batteries and become the mainstream technology route

N-type batteries dominated by TOPcon and HJT are expected to gradually replace P-type batteries and become the mainstream technology route

Energy storage configuration

Wind green power generation yields meet the cost of additional energy storage, and photovoltaics have a low tolerance for energy storage costs.

The policy side has gradually made guidelines for the configuration of energy storage on the power supply side, and some provinces require new projects with affordable prices to add energy storage systems. The addition of energy storage on the power supply side can help relieve the pressure of peak regulation and frequency regulation on the grid side, and promote the new energy power station to improve the prediction accuracy of its own output curve.

For affordable power stations in the same region, the energy storage configuration requirements of guaranteed grid-connected projects are usually lower than those of market-oriented grid-connected projects, which can be reflected in both the installed capacity of supporting energy storage and the duration of energy storage. It is about 15% of the installed energy storage capacity, and the energy storage capacity varies from 2 to 4 hours.

The energy storage configuration increases the cost of the power supply, and the categories generally include pumped storage, electrochemistry, and hydrogen storage. Taking electrochemical energy storage as an example, its cost generally includes four categories: initial investment cost of energy storage system, maintenance cost, charging cost, and replacement cost.

Therefore, looking at the LCOE of the energy storage system from the perspective of the entire life cycle of the energy storage system, the influencing factors generally include:

1) EPC cost of energy storage system
2) Times of charge and discharge (utilization rate)
3) Depth of discharge (affects the maximum charging capacity)
4) Battery replacement cost
5) External power purchase cost
6) Maintenance cost

The installed cost of wind power has been greatly reduced, and the current energy storage configuration will reduce the project income, but it is still within the scope of affordable development. The high cost of photovoltaic installations makes it less tolerant of the cost of energy storage systems.

We bring the energy storage system into the power station operation model. The basic assumptions are the same as the previous section on the calculation of the yield of the parity wind and solar power station, and the investment in the supporting energy storage system is added respectively. The relevant assumptions of the energy storage system include:

The installed capacity of energy storage configuration is 15%, 2 hours, the unit energy storage investment cost is 1.50 RMB/Wh, the charging and discharging depth is 80%, the number of charging and discharging times per year is 360, and 100% of the energy used for energy storage is self-generated by green power generation plants , the annual maintenance cost of the energy storage system is about 55 RMB/kW, and the replacement cost is about 850 RMB/kW. Based on this, we conducted a simulation of the profitability of green power generation plants with supporting energy storage systems.
Cost Analysis of Energy Storage Power Stations and Calculation Logic of Full Life Cycle LCOE

Cost Analysis of Energy Storage Power Stations and Calculation Logic of Full Life Cycle LCOE

Space prospect of green power generation industry

Analysis of new energy consumption improvement

The power grid accelerates the construction of UHV, and the focus of new energy installations is inclined to the load side.

The regional mismatch of resources and the characteristics of green power generation together lead to the problem of new energy consumption. Before the mid-term of the “Thirteenth Five-Year Plan”, China’s new energy consumption problems emerged from time to time, and the rate of curtailment of wind and solar remained at a high level. The main reasons include:

Mismatch between high-quality new energy resources and power load centers—China’s new energy high-quality resource endowments are mostly concentrated in the Three North Regions (Northeast, Northwest, and North China), where their own power consumption capacity is usually poor, while the power load centers Mainly located in the central, eastern and southern regions of China, there is a certain degree of mismatch between the focus of new energy installations and the power load center;

The output of wind green power generation is unstable, and the increase of the proportion increases the burden of peak regulation and frequency regulation of the system – wind power, photovoltaic and other green power generation have the characteristics of randomness, volatility, and unpredictability, and the peak and valley characteristics of daily output are more distinct.

Moreover, the output volatility is significantly stronger than that of traditional power sources such as thermal power and hydropower, and the power system needs to be balanced in real time. Therefore, while the proportion of new energy sources such as wind power and photovoltaics entering the power system increases, the demand for flexible power sources to provide peak regulation and frequency regulation increases. It will significantly increase the transmission and distribution cost of the power system and the system cost of ensuring system security.
Electricity generation and electricity consumption in major provinces

Electricity generation and electricity consumption in major provinces in China

During the 13th Five-Year Plan, the total investment in power grid infrastructure has increased substantially, and the focus of installed capacity has shifted to areas with low wind and solar curtailment. Since the mid-term of the “Thirteenth Five-Year Plan”, the problem of new energy consumption has been significantly improved, and the rate of abandoning wind and light has stabilized at a low level.

In addition to the successive policies issued by many ministries and commissions to promote local power grids to speed up the pace of thermal power flexibility transformation and increase peak shaving and frequency regulation services to ensure new energy consumption, the speeding up of the commissioning of the UHV transmission channel and the shift of the focus of new energy installations to the southern Middle East are important driving factors.

Among them, the construction of the external transmission channel mainly solves the problem of consumption in the power output side areas such as the Three North Regions, while the shift of the focus of new energy installations to the Middle East and southern regions means that the development of new energy during the “13th Five-Year Plan” period is inclined to high-quality resources in power load areas.

UHV lines show leap-forward growth during the “13th Five-Year Plan” period: UHV power grid lines can carry out long-distance point-to-point power transmission, of which long-distance power transmission is mainly DC UHV lines, and the “13th Five-Year Plan” period UHV grid production rhythm Speed ​​up.

From 2016 to 2020, a total of 18 UHV lines were put into operation by the State Grid and the Southern Power Grid, most of which were transmitted to the power load center in China, which led to a sharp increase in the total investment in power grid infrastructure.

Among them, during the “13th Five-Year Plan” period, the total basic investment in China’s power grid reached 2.59 trillion RMB, an increase of 29.3% compared with the “Twelfth Five-Year Plan” period. The total increase in the period was 195.1% higher.
The rate of abandoned wind and light in the country has stabilized at a low level

The rate of abandoned wind and light in the country has stabilized at a low level

Outlook for the 14th Five-Year plan

The large base and UHV drive the development together, and the CAGR of the installed capacity in 2022-2025 is expected to reach 15.6%-18.6%.

The “14th Five-Year Plan” development focus will return to resource endowment regions, and promote the construction of multi-energy complementary energy bases. Starting from 2021, the focus of green power generation installations will shift. Under the premise of optimizing the layout, the development ideas of developing concentrated new energy bases in the resource-advantaged regions of the Three North Regions have been clarified. The Guiding Opinions on Multi-energy Complementary Development” proposes to use the multi-energy complementary method on the power supply side to improve the level of new energy consumption.

It generally includes three integrated methods:

1) wind and wind storage

2) wind and wind water storage

3) wind and wind fire storage, while the inland clean energy base can provide other types of power supply bundled and connected to the Internet for wind and solar projects.

In addition, the nine identified clean energy bases are generally matched with the path of the UHV transmission channel. On the premise of maintaining stable consumption of large base projects, the construction progress of the transmission channel may play an important role in the growth of the industry’s installed capacity.

Base projects lead the growth of installed capacity, plan to put forward requirements for quality and quantity of projects, raise the threshold for application, and promote intensive and large-scale development. From the perspective of volume, according to the planning and layout plan of large-scale wind power photovoltaic bases focusing on desert, Gobi, and desert areas, the total installed capacity of wind and solar bases planned to be constructed by 2030 is about 455GW.

During the “14th Five-Year Plan” period, the planned construction installed capacity is about 200GW, including 150GW for external transmission and 50GW for local self-use; during the “15th Five-Year Plan” period, the planned construction and installed capacity is about 255GW, including 165GW for external transmission and 90GW for local use.  As of the end of February 2022, the provinces have completed the application of two batches of base projects.

Among them, 1) the total scale of the first phase of the project is 97.05GW, involving 19 provinces, according to the maturity of the project, the start sequence is reasonably arranged, and there is no rush to form the start scale, and the production time is in 2022-2023; In the declaration, on the one hand, it will increase the quality control of the project, on the other hand, it will increase the single development capacity of the project to 1GW, increase the investment threshold of the project, and at the same time require the project to be completed and connected to the grid no later than 2024.
The 13th five-year power grid basic investment total increased by 29.3% compared with the

Grid capital construction investment completed

The “14th Five-Year Plan” State Grid plans to add “24 delivery + 14 direct”, and the progress of UHV production will affect the growth of new energy installed capacity. From the perspective of power grid construction, the total investment in the 14th Five-Year Plan of State Grid and China Southern Power Grid is 2.23 trillion RMB and 670 billion RMB respectively, with a total of about 3 trillion RMB. It is expected to increase by 15.8% compared with the “13th Five-Year Plan” period.

In terms of China Network, the construction of its UHV network accelerated during the “14th Five-Year Plan” period, and the overall plan added UHV lines “24+14” to strengthen the base project delivery capacity:

1) The line under construction includes 3 UHVDC
2) In 2022, it plans to start construction of 13 UHV lines including “10 routes + 3 routes”, including the approved project “7 routes + 2 routes”, and the feasibility study project “3 routes + 1 route” will be completed.

3) Complete the pre-feasibility research project “3 straight”. Therefore, under the premise of ensuring the consumption of new energy, it is expected that the growth of installed capacity of clean energy bases in the middle and late period of the “14th Five-Year Plan” will be affected by the rhythm of the commissioning of UHV lines.

Considering the relevant plans for the growth of new energy in each province, the CAGR of new energy installed capacity in 2022-2025 is expected to reach the range of 15.6%-18.6%. Based on the planning level of each provincial-level unit, as of the end of March 2022, a total of about 22 provincial-level administrative units in China have issued the province’s “14th Five-Year” new energy installation plan or related guidelines, which will contribute about 600GW based on our estimates. of new energy installations.

Based on this, it can be estimated that the bottom line of new energy installed capacity in the “14th Five-Year Plan” is about 600GW. If factors such as the planning of other provinces, the acceleration of the construction progress of external transmission channels, and the transformation of power grid flexibility exceed expectations, the installed capacity increase in 5 years is expected to be based on this basis. There has been a further improvement in the above. If the 20% bottom line floating space is considered under the optimistic assumption, the newly installed green power generation capacity in 2021-2025 is expected to reach 720GW.

After deducting about 102.5GW of new energy installed capacity in 2021 (47.57GW of wind power, 54.93GW of photovoltaic power), the total newly installed capacity from 2022 to 2025 will be about 500-620GW, corresponding to a CAGR of 15.6%-18.6% ( During the “13th Five-Year Plan” period, the installed capacity of new energy CARG is about 25%).
Review of the newly added length of UHV lines of the State Grid

Review of the newly added length of UHV lines of the State Grid

Investment analysis

The essence of the revaluation of power stocks is to broaden the path of resource realization. The logic of value revaluation brought by green power generation is to broaden the new high-quality investment path for the stock funds, thereby enhancing the endogenous growth capability.

At the beginning of the era of parity, the release of new energy resources and the improvement of power station economy have led to a step-by-step growth in the installed capacity of the industry, which provides new energy operators with new space for capital proliferation.

Therefore, for all types of new energy operators, the core significance of the smooth growth of green power generation assets is to invest their own abundant cash flow into new high-quality operating assets, and due to the switching of industry development stages and the transfer of profits in the industry chain, etc. It has the characteristics of a significant improvement in cash flow and a marginal increase in the rate of return of new projects, and operators can realize the expansion of new projects and complete the endogenous growth of green power generation projects by quickly recovering the cash flow brought by the operation of the asset.
Therefore, one of the biggest advantages of green power generation operators is that they still have stable cash flow from operating assets when the scale of capital expenditure increases rapidly.

Analysis of the core elements of competition: resource expansion and large-scale operation bring stable endogenous growth capabilities. Therefore, the core elements for green power generation operators to maintain long-term stable growth can be roughly attributed to 4 points:

1) Continuous expansion of new energy project resources.
(Example: 1. Select an area with strong delivery capability or excellent local consumption;)
2. The “Notice on Encouraging Renewable Energy Green Power Generation Enterprises to Build or Purchase Peak Shaving Capacity to Increase the Grid-connected Scale” proposes to guide market entities to increase the grid-connected and absorbing capacity of renewable energy through multiple channels, purchasing thermal power, pumped storage, energy storage, etc. The peak shaving capability of the flexible power supply assists in consumption.

With the reduction of the consumption scale undertaken by the power grid, operators with stronger peaking capacity may have an advantage in the competitive allocation of affordable projects)
Funds on hand of major green power central enterprises at the end of the period

Funds on hand of major green power central enterprises at the end of the period

2) Project construction and development capabilities;
3) Project operation and maintenance capabilities;
4) Its own capital strength, multi-RMB and smooth financing channels, and low financing costs.
On the whole, its investment paths can be roughly divided into three categories:
1) New energy operators of central enterprises: The central enterprises can obtain high-quality project resources, strong financial strength, new energy development experience and capabilities by virtue of their advantages in group and size, so as to achieve stable expansion of the company’s installed capacity and performance growth;

2) Thermal power enterprises transforming into new energy:
On the one hand, the thermal power assets that have undergone flexibility transformation may provide auxiliary services for the company’s new energy assets and reduce overall operating costs when the power grid gradually reduces its responsibility for peak shaving.

On the other hand, with the gradual liberalization of coal-fired power market-oriented transactions, the transmission mechanism between thermal coal cost and thermal power price will gradually be opened up, and the cyclical nature of thermal power assets may be gradually eliminated. cash flow recovery;

3)Regional new energy operators: The regional new energy development enterprises represented by offshore wind power, relying on the advantages of resource acquisition and regional resource endowments, are expected to fully benefit from the process of gradually achieving grid parity and improving profitability of offshore wind power. Rapid growth in performance during the 14th Five-Year Plan period. Finally, if you want to know more about battery energy storage companies, you can look at Top 10 Energy storage battery companies.

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