Policy favorable wind power operation industry

The renewable energy power generation price increase was raised from 4 pct/kWh to 8 pct/d, which was earlier than we expected. According to the notice of the National Development and Reform Commission, from December 1st onwards, the renewable energy price additional standard levied on electricity use other than residential life and agricultural production will be increased to 8%/kWh. The previous 4 PCT/degree standard can only meet about 70% of the renewable energy subsidy demand in 2010. After the increase, it means that about 20 billion yuan will be collected a year as a subsidy for renewable energy. In our review issued on November 17, it is expected that the policy will be launched in early 2012.

The additional standard is doubled twice, and the source of wind power subsidies is guaranteed. According to the “Renewable Energy Law” passed by China in 2006, power grid enterprises purchased renewable energy such as wind power, photovoltaics, etc. in accordance with the bid price, which exceeds the benchmark price of conventional thermal power on-line and are added to the sales price. At that time, the additional standard was 2 cents/degree, and the total annual contribution was about 5 billion yuan. In December 2009, it was changed to 4 centidegrees/degree; now it shows again the sustainability and stability of the country's new energy subsidy policy.

At the same time, the increase in thermal power on-grid tariffs and sales price also reduced the pressure on subsidies. From December 1st onwards, the on-grid electricity price of coal-fired power plants across the country will increase by an average of 2.6 cents/degree (including tax, the same below); and the denitrification price policy will be implemented for coal-fired power plants that have installed and operated denitrification devices, with a price increase of 0.8 cents/degree; The national sales price increases by an average of about 3 points per degree. Residents lived and used electricity to try a ladder-based electricity price system, and 80% of households did not adjust their electricity prices. The increase in thermal power prices also reduces the pressure on renewable energy subsidies.

Reiterate our view: It is estimated that around 2015, the cost of wind power will be the same as thermal power. In 2010, the average on-grid price of thermal power in the country was 0.395 yuan per kWh. Taking into account the three price adjustments in 2011, the on-grid electricity price without denitrification currently rose to about 0.44 yuan per kWh, an increase of 11.6%, but still unable to reverse thermal power companies. Loss of the outcome. Coal coercion of thermal power prices is a long-term challenge for China. The on-grid electricity price of land-based wind power is between 0.51 yuan/kWh and 0.61 yuan/kWh, and the low-end price has been equal to that of some thermal power grids. From a cost perspective, around 2015, wind power costs will be the same as thermal power. The initial investment in wind power is large. If an effective ** model can be proposed, the development return of wind power will be better than thermal power.

The policy is favorable for wind power wind power operations and maintains a “leading” investment rating. The new energy subsidy policy is stable, while the on-grid electricity price of thermal power continues to rise, and the price of wind power is gradually approached – which all enhances the competitiveness of wind power. The “12th Five-Year Plan” energy-saving and emission-reduction goal is to reduce the energy consumption per million yuan GDP by 16%, and from January to September 2011, the total electricity consumption of the whole society will increase by about 12%, and the energy saving and emission reduction situation will be severe. We are optimistic about the status of wind power in China's power structure and energy saving and emission reduction, maintaining the “leading” rating of wind power operation industry, and recommending Longyuan Power and Datang New Energy as the key, and giving “Buy” a rating.