Author: Taylor, Editor: Xiaoichi Mei
On May 14, the National Development and Reform Commission (NDRC) issued the Basic Rules for the Operation of the Electricity Market, which will come into force on July 1, 2024. After the release of the new regulations, the A-share power sector bottomed out and rebounded, with Jiangsu New Energy, Jinli Huadian, Kelin Electric and other shares rising to the limit, and Xichang Power, Star Power, Gansu Energy, Zhejiang New Energy, Leshan Electric Power and other collective rose.
Specifically, the Rules make it clear that electricity energy trading shall be organized and implemented by the electricity market operating institution in accordance with the electricity market operation rules, and may also be negotiated by both parties to the electricity transaction. After performing the market registration procedures, the business entity participates in the electric energy market transactions。 Business entities shall not collude in quotations, raise prices, and disrupt market order. Business entities shall not abuse their dominant market position to manipulate market prices when trading electric energy; Power generation enterprises composed of multiple power plants shall not make centralized quotations for electricity energy trading.
CITIC Securities pointed out that in 2023, the net profit attributable to the parent company of the public utilities industry will increase by 70% year-on-year, and in the context of the downward trend of interest rates and the decline in the return expectations of the whole society, the value of assets with long-term characteristics in the utility industry is expected to be revalued, further highlighting its investment value.
After the explosion of new energy, renewable energy will no longer be a "supplement" for electricity consumption, but will be the "main force" for the increase in energy consumption.
The historic change in the energy structure has brought about drastic changes in the transmission link; The consumption and transmission of new energy has given rise to a huge demand for new power systems.
This is a historic investment opportunity.
Xin Baoan, chairman of the State Grid Corporation, previously disclosed that during the "14th Five-Year Plan" period, the State Grid plans to invest 350 billion US dollars (about 2.23 trillion yuan) to promote the transformation and upgrading of the power grid.
China Southern Power Grid's plan for the 14th Five-Year Plan period is to invest a total of about 670 billion yuan, an increase of about 22% over the total investment in the 13th Five-Year Plan. The total investment of the two is as high as 2.9 trillion yuan, and if you count the regional power grid companies, the total investment of the national power grid during the "14th Five-Year Plan" period is expected to reach 3 trillion yuan.
It should be noted that the investment focus of 3 trillion yuan is "smashed" to direct current in UHV. Among them, the State Grid will plan to build 7 UHVDC, with an additional transmission capacity of 56 million kilowatts. If China Southern Power Grid is added, it is expected to exceed 100 million kilowatts. According to the "14th Five-Year Plan" construction plan for the wind and solar base, it is expected that at least 9-10 long-distance UHVDC lines will be needed.
By the end of 2020, 22 UHV lines had been built in mainland China, including 6 AC and 16 DC. In the future, DC UHV will not only dominate in terms of quantity, but also be the main force in the transmission of renewable energy.
UHV is known as the "Mount Everest" in the field of power transmission technology in the world, and DC UHV transmission is the main line of the new power system, and it is also the most clear direction of power grid investment in the next five years.
In particular, with the blessing of flexible DC technology, it not only overcomes the shortcomings of conventional DC transmission, but also can be transported over long distances, and can even be used for the transmission of deep-sea wind energy. China Securities Construction Investment expects that the total investment scale of DC transmission during the "14th Five-Year Plan" period will be close to 400 billion yuan.
Unlike conventional DC, flexible DC (VSC) uses power semiconductors (IGB, etc.) and uses a flexible converter valve as the core for AC/DC conversion.
The most valuable amount of DC transmission equipment is the DC converter valve, which is difficult to manufacture, the barrier is deep, and the gross profit margin reaches about 35%, usually the value of an UHV DC converter valve is about 1.6 billion, of which the value of the thyristor accounts for 30%.
In the flexible DC station, the value of the flexible straight valve will be higher, different from the conventional converter valve, its technology is more complex, and the technical content of the IGBT is higher, so the flexible straight valve with the same capacity is 3-4 times the price of the conventional valve.
Generally, IGBT accounts for 30-40% of the flexible DC usage, and IGBT and thyristor (both core components of converter valves) can account for 10-15% of the 400 billion investment plate, about 45 billion.
NARI is the industry leader of converter valves and DC protection systems in mainland China, backed by the State Grid, and the company is the "big brother" in the field of domestic power grid intelligence. Some institutions even call it "the CATL era of the power grid industry", which is the absolute leader in the industry regardless of size, technology and leading role.
NARI has a market share of 50% in the field of DC UHV converter valves, and its leading position is obvious. However, the company's size is already very large, and the elasticity of the new UHV is smaller, and the income elasticity of the new UHV is about 10%, which is the first choice for prudent investors.
Another subsidiary of the State Grid is also worth paying attention to, Xu Ji Electric has strong competitiveness in the field of conventional DC and flexible DC, and has provided flexible converter valves and DC energy-consuming complete sets of devices for the mainland's first sea breeze flexible direct transmission project - the Three Gorges Rudong Flexible Straight Project. It shows the company's technical strength.
The DC transmission business will bring structural growth space to Xu Ji Electric, the company's market share of converter valves is 30%, and the agency expects its performance to be elastic at 25%-30%. In addition, Xu Ji Electric is also a leading enterprise in the intelligent power grid in China, and its products involve relay protection, smart meters, medium voltage power supply, electric vehicle charging and swapping, etc.
Backed by the State Grid tree is good to enjoy the shade, the controlling shareholder of the State Grid to the State Power NARI and Xu Ji Electric's revenue contribution rate is about 7 percent, after the start of the UHV project, orders are generally converted into performance after one year, so the focus is not on the current performance but orders, because the order fulfillment is extremely high, and the two companies have almost no bad debts. The market's expectation of positive orders, which in turn boosts the stock price, is the sweetest moment for its stock price performance.
In addition, the core enterprises of IGBT and thyristor in converter valves are worth paying attention to. The first rectifier, thyristor, fast thyristor, bidirectional thyristor, reverse conducting thyristor, turn-off thyristor (GTO) and optical control thyristor are all developed by Xidian.
Perry is the only two thyristor manufacturers in China that can meet the technical requirements of power transmission and transformation projects, and has products from Perry in more than 30 UHV projects such as the Three Gorges Project and Yunnan-Guangzhou. The other is Times Electric, but the latter's main business is rail transit.
As a power semiconductor, thyristor is a necessity in HVDC converter valves, occupying an important position.
At the time of the historic inflection point, the previous low valuation logic of power equipment will be rewritten, and the broader imagination space of green power, the huge investment and the construction in progress will continue to boost the performance and valuation center of new power system-related enterprises.
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