New energy big players out of the water

CNOOC, one of China's largest oil companies, is making a vigorous shift to power generation, which is not its main business.

On August 19, CNOOC said at its mid-term results conference that it would select the best development of land scenery projects. In the first quarter of this year, CNOOC proposed that it will continue to increase investment in offshore wind power in the next few years, and strive to use more than 5% of the annual investment for the acquisition of wind farm resources.

CNOOC is just the tip of the iceberg.

Few people have noticed that the State Power Investment Corporation (i.e., the State Power Investment Group Co., Ltd.), which has only been established for 6 years, has become the world's largest new energy power company.

Its total installed capacity of photovoltaic power generation is 33.03 million kilowatts, ranking first in the world; the total installed capacity of wind power is 32.01 million kilowatts, ranking second in the world。 In 2020 alone, SPC will add 11.58 million kilowatts of new wind power installed capacity, and the scale of wind power production exceeds the total of the previous four years.

The world's largest wind power installed company is another central enterprise in China: the National Energy Group.

Listed in November 2017, the National Energy Group was formed by the merger and reorganization of guodian group and Shenhua group, with 8 industrial sectors, including coal, thermal power, new energy, hydropower, transportation, chemical industry, science and technology environmental protection, and finance. Originally, its main energy business was coal and thermal power, but after a few years, the company's installed wind power capacity was 46.04 million kilowatts, accounting for 19.6% of the country, ranking first in the world.

Longyuan Power, a listed company on the Hong Kong Stock Exchange under the National Energy Group, is a large-scale comprehensive power generation group mainly based on new energy, and at present, it has more than 300 wind farms in the country, as well as power generation projects such as photovoltaic, biomass, tidal, geothermal and thermal power.

In addition, many central enterprises such as Three Gorges Energy, Huaneng, Datang, and CECEP are also rapidly expanding their layout in the field of new energy, including investment in self-construction, mergers and acquisitions, and restructuring. All this has happened in a new energy development cycle since 2011.

The industry will take 2011 as the beginning of the rapid development cycle of China's new energy industry, during which top-level design, policy encouragement, market environment, international climate environment and many other aspects have formed a synergy, giving birth to China's most powerful new energy transformation. At the end of October 2020, China's proposed 3060 carbon peak carbon neutrality action plan further provides acceleration.

However, not all new energy players can get to where they are today. While large central enterprises are marching forward, many of the original small and medium-sized new energy enterprises continue to go out, some bankruptcies and bankruptcies, some sell assets, becoming the lonely backdrop of The new pattern of China's new energy that is forming.

Now, large players have formed, and the new energy pattern is still accelerating its evolution.

Grab the first echelon of the beach

Large power generation groups represented by the traditional "five major power generation giants" are still hungry for high-quality wind and solar resources.

On August 26, a person engaged in the financial leasing of new energy power plants told the Economic Observer, "Power generation central enterprises and local energy state-owned enterprises are seeing the same project between the merger and acquisition of power stations, and even the secondary units of the same enterprise, and there will be competition between the two, and it can be seen that the demand for new energy power plants is more and more intense than in previous years." ”

The competition for high-quality wind and solar resources is not limited to the five major power generation groups, and the participation of other state-owned comprehensive energy enterprises and private enterprises has gradually increased in recent years.

In June this year, three gorges energy (600905. SH) successfully went public, and its initial public offering prospectus revealed that the installed capacity has grown rapidly since entering the field of new energy power generation. The installed capacity of power generation projects has increased rapidly from 143,000 kilowatts at the end of 2008 to 11,898,000 kilowatts at the end of September 2020, with a compound annual growth rate of 45.69%, and the installed capacity is 83 times that of 12 years ago. At present, the New Energy Business of the Three Gorges has covered 30 provinces, autonomous regions and municipalities directly under the Central Government, and the installed capacity and profitability have ranked among the first echelons of domestic new energy enterprises.

In the field of new energy power generation, after years of mergers and acquisitions and self-construction, the five major power generation groups (Huaneng Group, Datang Group, National Energy Group, Huadian Group and State Power Investment) are still the main force of the first echelon.

According to the development performance - environmental responsibility performance data disclosed on Huaneng's official website, the proportion of low-carbon clean energy has gradually increased from 2016 to 2020, with 29%, 31%, 33.18%, 33.72% and 36.61% respectively.

Among them, the installed capacity of photovoltaics has jumped significantly, from 1.57 million kilowatts to 6.45 million kilowatts in five years, an increase of 311%; the installed capacity of wind power is larger than that of photovoltaics, with an installed capacity of 16.32 million kilowatts in 2016, and has reached 25.3 million kilowatts last year, an increase of 55%.

On August 12, Huaneng Group announced that its installed power capacity exceeded 200 million kilowatts, an increase of 2% over the end of the previous year, of which the installed capacity of clean energy accounted for 37.25%, an increase of 0.64% over the end of the previous year.

Looking at China Datang, its publicly disclosed data shows that as of March 31, 2020, its wind power holding capacity was 17.28 million kilowatts, and the installed capacity of photovoltaic and other clean energy holdings was 1.15 million kilowatts. According to huadian group data, at the end of 2019, its installed capacity of other energy sources such as wind power has reached 17.44 million kilowatts.

Zang Ningning, deputy director of the research institute of Yingda Securities Co., Ltd., believes that the reason for large power generation groups to focus on the development of wind and photovoltaic assets first needs to start from the original development basis, first, the supply and demand of coal power is loose, the utilization hours are declining year by year, the loss surface is large, and the profitability of new energy projects can be expected. Second, from the perspective of development, under the energy transformation, the development of coal power has peaked, and more stock transformation and upgrading will be carried out in the future, and the new energy will be added to the huge space, and if the new energy is not developed, it will be overtaken by the curve. Third, the arrears of new energy subsidies lead to the lack of cash flow of new energy power plants in private enterprises, such as GCL, while power generation enterprises have financial advantages and can achieve rapid development through mergers and acquisitions, such as Huaneng.

In addition, in the future, under the framework of energy transformation, high-carbon assets such as coal chemical industry will need to be withdrawn for a long time, such as coal-to-hydrogen substitution through renewable energy hydrogen production, or supporting CCUS technology (CarbonCapture, Utilization and Stor-age, that is, carbon capture, utilization and storage technology), which has also played a role in promoting the traditional thermal power giants to force new energy.

Among the central enterprises other than the five major power generation groups, they also do not cut new energy newcomers, such as CECEP, China Resources, CGN, and Three Gorges Energy. These central enterprises have entered a "period of rapid expansion" together with the new energy industry.

The Economic Observer reporter noted that in the prospectus of Three Gorges Energy, it said, "The rapid increase in the company's power plant projects and asset scale have put forward higher requirements for the company's development, finance, manpower, compliance and other aspects of management, if the business quality and management level of the company's management cannot meet the needs of the rapid expansion of the company's scale, the organizational model and management system have not been adjusted and improved in time with the expansion of the company's scale, which will bring greater management risks to the company." ”

In the "risk of talent shortage", China Three Gorges Energy said, "As a strategic emerging industry strongly encouraged by national policies, the wind and photovoltaic power generation industry has a high dependence on senior talents with relevant knowledge and skills, and talent barriers are also one of the main obstacles to entering the industry." Due to the late establishment of the industry's talent training system, limited investment in related education and training, and a serious shortage of professionals, especially management talents, the wind and photovoltaic power generation industries are in a stage of rapid development, and the competition for outstanding talents in various companies is gradually fierce, and the demand for management talents with long-term work experience has increased. ”

This situation has also been confirmed by the above-mentioned person, who told the Economic Observer, "I am usually mainly responsible for the civil marketing owners and developers, the talent is lacking, we are also recruiting new energy leasing people, it is not good to recruit." ”

Giant expansion logic

Among the rapid expansion paths of these big players, mergers and acquisitions are still preferred.

A photovoltaic industry practitioner said that for these companies, whether it is mergers and acquisitions or self-construction, the main reason behind it is the demand for energy transformation, the reason for the preferred merger and acquisition is "to come faster", the challenge is that "there are not many good and selling photovoltaic power station assets on the market, and everyone is grabbing." ”

The characteristics of the industry provide a unique comparative advantage for the big players. New energy power generation is a capital-intensive industry, technical barriers and capital barriers are relatively high, new energy development enterprises need to have the corresponding project development capabilities and financial strength, so the competitive advantage of large central enterprises and state-owned enterprises is relatively obvious.

It is understood that in the current legal and regulatory environment, there is no substantive competition in the operation stage of domestic new energy power generation projects. The reason is that power grid companies in various regions need to purchase all the power generation of new energy projects within their coverage at prices determined by the government, and provide grid-connected access to local new energy projects. Therefore, at present, the main direction of competition for new energy power generation enterprises is the development of projects in areas with better wind and photovoltaic resources and greater feed-in tariff benefits.

In addition to the long-term goal of energy transformation, energy central enterprises have accelerated their grabs for the new energy industry, which is also related to the carbon peak carbon neutrality strategy proposed by China since the end of last year.

In the eyes of industry insiders, the current situation of some large power generation companies is that high carbon assets and low carbon assets are double high. For the carbon reduction of existing assets, the acquisition of new energy assets cannot eliminate the impact of the former in the short term.

The National Energy Group is quite typical: on the one hand, it is the world's largest coal production enterprise, the largest thermal power generation enterprise, the largest wind power generation enterprise, on the other hand, it is also the largest coal-to-oil and coal chemical enterprise. Therefore, while increasing the proportion of new energy assets, it is also necessary to do a good job in the management of carbon assets.

On August 25, Wei Zijie, chairman of National Energy Group Longyuan (Beijing) Carbon Asset Management Technology Co., Ltd., said at the "When Finance Meets Carbon Neutrality" seminar held by Hang Seng Electronics that carbon asset management is a very critical factor for the transformation and even survival of enterprises.

Wei Zijie said, "From the pilot carbon market to the national carbon market, the awareness of carbon emission management of large energy groups has gradually improved, and in the pilot market, some high-energy thermal power units will surplus some quotas every year, and they will also pay a certain amount of carbon asset costs for units with low energy efficiency and high coal consumption." ”

Wei Zijie introduced the experience of Longyuan Carbon Asset Company: to consolidate the carbon emission data base, find out the bottom of carbon assets; study emission reduction and low-carbon technology, reduce the number of absolute emissions, practice has proved that China's thermal power units are more advanced in the world, the management level is relatively high, only through the means of energy conservation and emission reduction, it is very difficult to reduce the consumption of thermal coal by one gram, or through the vigorous development of new energy, renewable energy, including hydropower, the future may also have nuclear power, reduce high carbon emissions, is to reduce the number of absolute emissions. At the same time, it is also necessary to establish market analysis models to improve carbon price prediction capabilities; build a team of professional talents to manage transaction risks.

Wei Zijie believes that the CCER (National Certified Voluntary Emission Reduction, ChineseCertified EmissionReduction) offset mechanism should be introduced as soon as possible for implementation. "Quota prices are high, energy companies with coal power as the main body bear very great pressure, in fact, there is a high pressure on quota prices, on the other hand, there is pressure on enterprises to fulfill their social responsibilities, such as some northern thermal power enterprises, its power supply emission intensity is high, the carbon market has to pay the cost, but for winter supply, local economic growth, but also power generation, heating, what to do in this case? It is not to close it and crush it with the 'last straw' of the carbon market, but to break it according to the market development situation. ”

The layout of large players does not mean that large central enterprises and state-owned enterprises are the only protagonists of the future new energy market.

According to the observation of the above-mentioned new energy power station financial leasers, in the centralized large-scale ground power station project, central enterprises and state-owned enterprises must have advantages, but they also need to see the future development space of distributed photovoltaics.

According to data from the National Energy Administration, in the first half of 2021, the new installed capacity of photovoltaics in the country was 13.01 million kilowatts, of which 5.36 million kilowatts of photovoltaic power plants and 7.65 million kilowatts of distributed photovoltaics, accounting for 58%.

In June this year, the National Energy Administration issued the "Notice on Submitting the Pilot Program for the Development of Distributed Photovoltaics on rooftops in whole counties (cities, districts)" to further strengthen the construction of distributed photovoltaics on rooftops in whole counties (cities and districts), and said that this is conducive to integrating resources to achieve intensive development, is conducive to reducing power peak loads, is conducive to saving and optimizing distribution network investment, and is conducive to guiding residents' green energy consumption. The growth of distributed photovoltaics has been pressed the "acceleration button".

The above-mentioned people believe that at this stage, private enterprises to develop power stations can be understood as separating from the heavy assets held by the power station and doing a good job in energy services. However, it is not ruled out that there will be periodic fluctuations, such as the rise in material prices will directly affect the profitability of the project, and the pressure will be transmitted upwards, resulting in a corresponding reduction in the profits of development, construction and other links.

He said, "With the improvement of cash flow, private enterprises can also hold." The possible future model is: state-owned enterprises holding, private enterprise development. ”

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