Real estate and development zones have passed out, and new energy development has become a "shot in the arm" for the western economy

Text: Huaxia Energy Network

Traveling to Xi'an by car, on the Xianyang Expressway, which is still thirty or forty kilometers away from Xi'an, as far as the eye can see, one after another unfinished buildings on both sides of the road come into view. After a field trip into Xianyang City, there is no shortage of Evergrande and Sunac projects in these unfinished buildings, most of which are twenty or thirty floors, and they have just been capped due to the rupture of the developer's capital chain.

Hongye Renhe Tiandi, is the most famous "unfinished building" in Xianyang, which was sold in 2014 with a drawing, priced at 4,000 yuan per square meter. Across the road is the famous Xianyang Middle School, many owners rushed to this middle school to close their eyes and "get on the bus", but now, the children are about to graduate, and the building has not yet been built.

Xianyang is just a microcosm. In the last round of investment in real estate and development zones, many western provinces were disgraced, returned home, or even mired in mud. With the retreat of real estate to the silver and bronze ages, the western cities are pinning their hopes on real estate to recover again, which may be a long way off.

The "large-scale development of the western region," which began in the new millennium, has been carried out for more than 20 years, and the development upsurge has been rising wave after wave. In the era of economic downturn and real estate contraction, the development of the western region urgently needs a strong new investment hand, which has become a good solution that the western provinces are eagerly looking for.

At the critical moment, the central authorities made clear the issue and sent "tips" for the large-scale development of the western region. On April 23, a symposium on promoting the large-scale development of the western region in the new era was held in the mountain city of Chongqing. General Secretary Xi Jinping said at the meeting that to promote the large-scale development of the western region, it is necessary to "accelerate the construction of a new energy system and expand and strengthen a number of important national energy bases".

As early as when Zhu Rongji was premier of the State Council, one of the ideas for the large-scale development of the western region was to make good use of the advantages of the western region's energy resources. The western region is rich in coal, oil, and natural gas resources, and it was envisioned that if the primary energy price could be effectively raised, the economic development of the western provinces would be greatly improved.

The ideas mentioned at the Chongqing meeting have been upgraded in light of the specific conditions of the new era. The same is to make a fuss about the endowment of energy resources, kerosene and gas also need to rely on the price and the transportation of energy channels, and there is always a time when kerosene and gas are depleted, and it is very different to make a fuss about wind, solar and new energy, it is renewable, inexhaustible, and the future prospects are unlimited.

At present, the western provinces, including Qinghai, Gansu, Ningxia, Xinjiang, Shaanxi and Inner Mongolia, have launched a new energy development competition, and will make new energy a new investment-driven growth point in the post-real estate era. The implementation of these ideas not only brings new hope to the revitalization of the western economy, but also drives the development of the new energy industry.

The curtain of new energy investment opened

At a time when economic growth is sluggish, local governments are willing to promote a large number of such projects, which brings not only GDP performance, but also the reputation of green development.

Taking Xinjiang as an example, in the first half of 2023 alone, its investment in new energy power sources and power grids will reach 36.4 billion yuan, directly driving local economic growth by about 1.85 percentage points and providing about 2,700 new jobs. In 2023, Xinjiang's GDP will grow by 6.8%, driven by new energy investment at nearly two points.

Taking Mengxi Alxa League as an example, Huadian, China Resources and other central enterprises participated in the development of the Tengger Desert New Energy Base in Inner Mongolia, and signed an investment agreement in February 2023, with a total investment of about 86 billion yuan, which is the largest single investment project in the history of Alxa. The project can not only stimulate economic growth, but also develop the new energy equipment manufacturing industry, and drive the construction of railways, highways and other infrastructure.

In Hainan Prefecture, Qinghai Province, for example, a new energy base has sprung up on the Gobi Desert, covering an area of 600 square kilometers, and has built a 15 million kilowatt photovoltaic "glass sea", which is said to be the "world's largest photovoltaic base". In the future, new installed capacity will be launched one after another, and the cumulative investment of the new energy base will exceed 250 billion yuan.

Xinjiang is vast and sparsely populated, and the coal, cotton, melons and fruits here are famous all over the country, but due to inconvenient transportation and long transportation distances, it is extremely difficult to sell out of Xinjiang. In the late Qing Dynasty, Zuo Zongtang entered Xinjiang, feeling the thousands of miles of desert in Xinjiang, and planted "Zuo Gongliu" to lead the spring breeze to Yuguan. Nowadays, the spring breeze of new energy is blowing green a large area of land here.

Xinjiang has outstanding advantages in scenery and resources. In terms of wind energy, the average wind speed of more than 5 meters per second accounts for more than 70% of the total area in Xinjiang, especially in Burjin, Tiemenguan, Yili and other places, where the annual average wind speed exceeds 7 meters per second; In terms of solar energy, Xinjiang has more than 2,700 hours of sunshine and more than 220 days of sunshine throughout the year, especially in Bortala, Tacheng, Changji and other places, where solar radiation can reach more than 1,900 kcal per square meter per year, making it one of the best solar energy resource areas in the country.

Losing no time and effectively building a large-scale new energy base as soon as possible, a western province like Xinjiang is uniquely blessed.

Judging from the total amount of investment, the opportunities facing the western region are in the trillion-yuan range.

At present, the state-level new energy investment projects, including the wind power and photovoltaic bases in batches and the "Shagehuang" base, have a total planned new energy plan of more than 600 million kilowatts, which is equivalent to 30 Three Gorges hydropower projects. These wind and solar projects will basically be completed and connected to the grid by 2030.

So, how big is the total investment of this 600 million kilowatt wind power project? According to the estimation of a number of industry insiders, according to the calculation of the investment of 4 billion to 5 billion yuan in a million-kilowatt wind and solar project, the total scale of investment in new energy power sources in the wind and solar base and the "Shagehuang" base alone is about 3 trillion yuan.

This 3 trillion does not include UHV. Assuming that 600 million kilowatts of wind and solar power base and "Shagehuang" base project need to be delivered, then at least 20 or 30 UHV projects need to be built, and according to the investment of nearly 20 billion yuan per UHV, the UHV investment will be at least 500 or 600 billion yuan.

In other words, the total investment in the construction of this wave of new energy bases in the west will be close to 4 trillion yuan, which is really "rich and rich".

And it doesn't stop there. According to the figures recently given by Shu Yinbiao, an academician of the Chinese Academy of Engineering, carbon neutrality will be achieved by 2060, when wind and solar new energy will reach 5 billion kilowatts, of which 20% will be distributed in the central and eastern regions, that is, 1 billion kilowatts. Then, the centralized new energy in the west, including wind power and photovoltaics, must have at least nearly 3 billion kilowatts.

From these perspectives, the upsurge of "large-scale development of new energy" in the western region has just begun, and massive investments are coming one after another.

Heaven and earth are all working together

Although the western region has superior wind and solar resources that cannot be compared with the central and eastern regions, local governments are extremely eager to invest in new energy. However, it is very difficult for new energy to take over the real estate and development zones to provoke the economic pillars, without the maturity of various conditions, and it is very difficult to rely on the governments of the western provinces and districts alone.

First of all, it is necessary to rely on the boost of the central government's "dual carbon" decision, as well as the resulting centralized development of new energy in the western region.

Three years ago, in September 2020, at the 75th session of the United Nations General Assembly, China solemnly pledged to the world the ambitious goal of "carbon peak by 2030 and carbon neutrality by 2060". For a large developing country like China, it is not easy to make such an advanced "dual carbon" decision.

After the release of the "dual carbon" goal, China has significantly increased its efforts in the development of renewable energy, accelerated the planning and construction of large-scale wind power and photovoltaic projects in deserts, Gobi and desert areas, and plans to increase the total installed capacity of wind power and photovoltaic power generation to more than 1.2 billion kilowatts by 2030. More than half of such a large-scale installation of scenery is located in the western region.

The symposium on promoting the large-scale development of the western region in the new era proposed to "make a number of important national energy bases bigger and stronger", which means that the central government has once again expressed its firm support for the vigorous development of new energy in the western provinces from the perspective of promoting the large-scale development of the western region.

In addition to the support of the central government, the influx of central power enterprises is also the most basic condition for the western provinces and regions to expand and strengthen the new energy base.

The wind and solar base project starts at 1 million kilowatts (equivalent to 1 gigawatt), and the investment is at least four or five billion; The "Shagehuang" base starts at 10 million kilowatts, and the investment is at least 40 to 50 billion yuan. In addition, new energy projects are not like real estate development, where money can be collected with a drawing, and funds can be withdrawn when the house is delivered, and the return period of new energy projects is much longer.

Because of this, the investment in large-scale new energy projects is basically based on central enterprises, and private enterprises do not have the full driving force and financial resources to do this.

One of the major advantages of central enterprises is lower financing costs and higher financing credit. Even if the proportion of self-owned funds of central enterprises is only 20%, they can also get low-interest loans from banks, and credit and renewal loans are worry-free. Because of this, if the central enterprise requires a 6% rate of return on new energy projects, as long as there is a difference between the interest rate and the loan interest rate, it can cover basic operating costs such as labor.

Under the instructions of the corresponding central policies, the main investors led by the five major power generation central enterprises have quickly fallen out of the market and become the "main force" in the large-scale development of new energy in the western region.

At present, the wind and solar base and the "Shagehuang" base project have been identified and started to be built, and the national energy group has reached 40 million kilowatts; State Power Investment Corporation and Huaneng each exceeded 20 million kilowatts; The Three Gorges Corporation is close to 20 million kilowatts; Datang Group exceeds 10 million kilowatts; CGN and Jingneng Group both exceeded 5 million kilowatts.

The large-scale development of new energy in the western region of central enterprises has contributed GDP, employment, tax revenue, and industry to the local government. Many central enterprises have built some supporting industries to build scenery projects in local areas, and some have donated public welfare projects to local governments, such as building roads and schools.

In all these things, the development of new energy by central enterprises in the western region has brought economic vitality to the western region, and is a powerful driving force for the western region to transform its resource advantages into economic advantages.

Looking forward to the "play" of industrial relocation

The construction of new energy bases in the western provinces and regions can be called "everyone picks up firewood and the flame is high", but the new energy construction itself is not a panacea, and the energy transition is a world-class problem.

At the symposium on promoting the development of the western region in the new era, while proposing to "expand and strengthen a number of important national energy bases", General Secretary Xi Jinping also pointed out that it is necessary to "strengthen the interconnection of pipeline networks and enhance the ability of 'west-to-east power transmission'". That is to say, after a large number of new energy bases are built in the western region, it is necessary to solve the problem of consumption and give full play to the benefits of the project.

By 2030, the scale of new energy in the western region will exceed 600 million kilowatts, and in the long term, this scale is expected to reach 3 billion kilowatts in 2060. How can such a large-scale green electricity be consumed?

In fact, how to solve the problem of consumption in the next step means greater opportunities for the western provinces and autonomous regions.

The traditional solution to the problem of consumption is to rely on ultra-high voltage to achieve "west-to-east power transmission". However, as previously reported by Huaxia Energy Network, "State Grid Invests 500 Billion to Build a "New Power Grid": How Does the Large Power Grid Match the Requirements of the New Power System? |Depth" mentioned that the planning and operation of UHV channels are also facing a series of problems. Industry experts have pointed out that the current model of "large base + UHV" and "distributed energy + distribution network" is not the ultimate solution for the new power system.

Therefore, in addition to the construction of UHV, on-site consumption is another feasible idea.

How to consume it locally? This brings new industrial opportunities. At present, the following major directions are worth looking forward to.

First, green hydrogen production brings industrial investment opportunities. For example, Inner Mongolia, Ningxia, Gansu and other places are currently actively deploying "off-grid hydrogen production".

The increasing proportion of wind and solar energy has pushed up the curtailment rate of wind and solar power. As an effective medium for long-term energy storage, green hydrogen has shown great potential in absorbing excess new energy power, and off-grid hydrogen production in large wind and solar bases can reduce the impact of wind and solar power generation on the grid and consume new energy power locally, which is expected to become an important consumption method in the future.

Second, new industries have migrated to the west. Qinghai, Inner Mongolia and even Xinjiang have attracted a large number of photovoltaic manufacturing companies with low-cost green electricity in recent years. Trina Solar, Jinko Solar, Tongwei Co., Ltd., GCL Group, Qinghai Lihao and many other leading new energy companies have invested in large-scale production capacity in the western region.

In Nanchuan Industrial Park, Xining (National Level) Economic and Technological Development Zone, Qinghai Province, more than 10 leading photovoltaic enterprises are brought together on a main road, forming a "photovoltaic street" and a complete industrial chain. In this development zone, electricity consumption has been close to half of Qinghai Province's electricity consumption, and the surge in the production of polysilicon, monocrystalline silicon and photovoltaic modules in the zone has also greatly promoted the consumption of new energy in Qinghai Province.

In addition, it is foreseeable that the migration of manufacturing to the west is a continuous and unadjustable load, which will bring challenges to the power grid upgrade in the western region.

Therefore, at present, Qinghai is welcoming more adjustable loads to settle in. In addition to hoping that the load of the enterprise itself is adjustable, the enterprise has the ability to respond to electricity, and also hopes that the enterprise can be equipped with energy storage to reduce the cost of the enterprise while promoting the consumption of new energy. This will bring a third industrial opportunity.

After more than 20 years of large-scale development of the western region, the difficult problem we are facing is that the industrial foundation is not solid. Imagine that following the "baton" of energy transition, in the future, more photovoltaic manufacturing, hydrogen production, textile, steel, cement, electrolytic aluminum and many other industries will move to the western region rich in green electricity.

In the past ten years, the real estate boom and development zone fever in the western region have all been due to the fact that the local area cannot attract foreign industries, retain people, and attract people. Facts have fully proven that real estate and development zones cannot save the economy of the western region, and it is possible to develop new energy on a large scale.