In the tense situation of electricity supply and demand contradiction, the peak value of coal power is highlighted; under the continuous promotion of electricity marketization reform, the price trend is expected to rise slightly and steadily.
Cnstock Finance APP learned that Sinolink Securities released a research report stating that the inter-provincial electricity spot market is gradually highlighting its roles in ensuring supply, promoting green energy, discovering prices, and guiding production. It is expected that in the future, the inter-provincial electricity spot market will continue to develop within the national unified electricity market framework. Looking at the monthly electricity production situation, in September 2024, hydropower generation turned from positive to negative, while thermal power generation significantly increased month-on-month. In the tense situation of electricity supply and demand contradiction, the peak value of coal power is highlighted; under the continuous promotion of electricity marketization reform, the price trend is expected to rise slightly and steadily. The electricity spot market and auxiliary service market mechanisms are expected to continue to be promoted, the capacity pricing mechanism will be officially introduced, clarifying the cornerstone position of coal power.
Cinda Securities' main points are as follows:
Inter-provincial electricity spot market turns positive, further advancing the national unified electricity market.
Overview of the inter-provincial spot market development: The inter-provincial electricity spot market conducts daily intraday energy trading using surplus channels between power grids. In 2022, the inter-provincial electricity spot market started its simulation trial operation for the first time; as of September 2024, the inter-provincial electricity spot market has been operating non-stop for settlement trials for 31 months.
Inter-provincial spot market operations: In spatial terms, the inter-provincial electricity spot market plays a role of mutual aid to balance surplus and shortage of electricity between provinces through abundant electricity interchanges, coordinating provincial spot markets to ensure optimal resource allocation and electrical balance within provinces; in the temporal dimension, it has built a complete national electricity market system for resource optimization based on medium and long-term foundations and spot market mutual aid of surplus and shortage. The rules and mechanisms of the inter-provincial electricity spot market are continuously being optimized and improved.
Sinolink Securities believes that the inter-provincial electricity spot market is gradually highlighting its roles in ensuring supply, promoting green energy, discovering prices, and guiding production. It is expected that in the future, the inter-provincial electricity spot market will continue to develop within the national unified electricity market framework.
Analysis of monthly electricity demand: In September, the growth rate of electricity consumption decreased slightly compared to the previous month.
In September 2024, the year-on-year growth of electricity consumption for the whole society increased by 8.52%. By industry: The month-on-month growth rate of electricity consumption in the secondary industry continued to decline, while the growth rate of household electricity consumption continued to be high: In September 2024, the year-on-year growth rates of electricity consumption for the primary, secondary, and tertiary industries were 6.36%, 3.55%, and 12.66% respectively, while the year-on-year growth of household electricity consumption was 27.80%.
By sector: The high-energy-consuming manufacturing industry saw a noticeable decline in the month-on-month growth rate of electricity consumption, while the consumption sector continued to see an increase in the month-on-month growth rate of electricity consumption.
Looking at sub-sectors, the top three sectors in terms of electricity consumption in the high-tech equipment manufacturing sector are computer and communications equipment manufacturing, metal products, and electrical machinery manufacturing. In the consumer sector, the top three sectors are wholesale and retail trade, transportation, warehousing and postal services, and real estate. Among the six major high-energy-consuming sectors, the top three are electricity, heat production and supply, nonferrous metal smelting and processing, and chemical-related manufacturing. In terms of regions, coastal provinces in the east lead in electricity consumption, while western provinces lead in electricity consumption growth rate. As for the elasticity coefficient, the electricity consumption elasticity coefficient for the third quarter of 2024 was 1.57.
Analysis of monthly electricity production: Hydroelectric output changed from positive to negative, while thermal power output saw a significant increase compared to the previous month.
In September 2024, the national electricity generation increased by 6.00%. By generator type, thermal power generation increased by 8.90% year-on-year; hydroelectric power generation decreased by 14.60% year-on-year; nuclear power generation increased by 2.80% year-on-year; wind power generation increased by 31.60% year-on-year; solar power generation increased by 12.70% year-on-year.
In terms of newly added installed capacity, the total new installed capacity nationwide in September 2024 was 32.63 million kilowatts, including 4.84 million kilowatts of new thermal power installed capacity, 1.39 million kilowatts of new hydroelectric installed capacity, 0 million kilowatts of new nuclear power installed capacity, 5.51 million kilowatts of new wind power installed capacity, and 20.89 million kilowatts of new photovoltaic installed capacity.
In terms of the utilization of power generation equipment, the average utilization hours of power generation equipment nationwide from January to September 2024 was 2619 hours, a decrease of 3.90% year-on-year. Among them, the average utilization hours of thermal power were 3305 hours, a decrease of 1.17% year-on-year; the average utilization hours of hydroelectric power were 2672 hours, an increase of 12.89% year-on-year; the average utilization hours of nuclear power were 5704 hours, a decrease of 0.35% year-on-year; the average utilization hours of wind power were 1567 hours, a decrease of 5.89% year-on-year; and the average utilization hours of photovoltaics were 959 hours, a decrease of 5.70% year-on-year.
Regarding the situation of coal inventory, daily consumption, and the Three Gorges reservoir discharge, the inland coal inventory increased on a month-on-month basis, while daily consumption decreased. The coastal coal inventory decreased on a month-on-month basis, along with the decrease in daily consumption. The water level of the Three Gorges decreased year-on-year, and the reservoir water storage volume also decreased.
Monthly analysis of the electricity market data: In November, the average price of agent electricity purchase continued to rise on a month-on-month basis.
In November, the monthly average price of agent electricity purchase was 408.79 yuan/MWh, a month-on-month increase of 2.89% and a year-on-year increase of 0.12%. Guangdong's monthly trading price in November remained low, with the spot market electricity price decreasing again on a month-on-month basis in October. The spot trading prices in Shanxi and Shandong in October showed a slight decrease compared to the spot average price.
Investment advice
Sinolink Securities believes that in the tense situation of power supply and demand contradiction, the peak value of coal-fired power generation is highlighted. With the continuous advancement of electricity market reform, there is a possibility of moderate price increase in the trend of electricity prices. The mechanisms of electricity spot market and ancillary services market are expected to continue to expand, the capacity price mechanism will be officially introduced, clarifying the position of coal-fired power generation as the cornerstone. The construction of a new power system under the dual-carbon goal may continue to rely on the enrichment and input of system adjustment means. In addition, with the National Development and Reform Commission increasing the guarantee of long-term coal-electric power supply, the actual compliance rate of long-term coal-electric power contracts is expected to marginally increase, making the cost end of coal-electric companies more controllable. Looking ahead, the performance of power operators is expected to improve significantly.
Power operators are expected to benefit from the target beneficiaries.
Coal-electricity integrated companies: China Coal Xinji Energy (601918.SH), Shaanxi Energy (001286.SZ), Huaihe Energy (600575.SH), etc.
National coal-electricity leaders: GD Power Development (600795.SH), Huaneng Power International,Inc. (600011.SH), Huadian Power International Corporation (600027.SH), etc.
Power supply tight areas: anhui wenergy (600543.SH), zhejiang zheneng electric power (600023.SH), shenergy (600642.SH), guangdong electric power development (000539.SZ), etc.
Hydropower operators: china yangtze power (600900.SH), sdic power holdings (600886.SH), sichuan chuantou energy (600674.SH), huaneng lancang river hydropower inc. (600025.SH).
Equipment manufacturers and beneficiaries of flexibility transformation: dongfang electric corporation (600875.SH), qingda environmental protection (688501.SH), wuxi huaguang environment & energy group (600475.SH), etc.
Risk factors: A slowdown in the macroeconomy leading to slower electricity consumption growth than expected, slow progress in the market-oriented reform of electricity, and the execution intensity of policies guaranteeing stable coal supply falling short of expectations.
