Electricity reform breaks ice and energy storage can benefit
If 2017 is the year in which the reform of state-owned enterprises' mixed ownership system has been a tough year, then electric power reform may be the most difficult one. The nature of the natural monopoly of power grids and problems left over by history have caused difficulties for the transformation of electric power, but it can be delighted to see that. With the announcement in December that the State Grid has implemented key reform initiatives such as the incremental power distribution investment business in a mixed ownership system and the first batch of mixed reform programs for central SOEs will be approved in the near future, the “frozen” of mixed power reform and even the overall reform of state-owned enterprises has finally come to an end. With signs of meltdown, we expect 2017 to see faster and deeper reforms.
Electric power reform is not easy to break ice
Looking at the power system reform, it is actually divided into four stages.
The first stage is facing the lack of infrastructure in our country. There is a long-term lack of funds for power construction. The lack of electricity in the entire society requires the concentration of all parties to establish a basic power system. Therefore, it was proposed that the central ministries and commissions, local governments, ministries, and ministries and commissions, fund-raising, and even foreign-invested shares be used to solve this problem, and be managed by the Ministry of Power as a whole.
The second phase began with the establishment of the State Power Corporation in 1996. The company is under the power generation group, power grid company, and subsidiary industry group company. The major power generation groups such as Huaneng Group, Datang Group, and Huadian Group, which are now familiar to us, all belong to the power generation group management of the current year; the power grid companies are not much changed and are still the two companies of the State Grid and China Southern Power Grid. As for the hydropower group and the engineering construction company, it is divided into subsidiary group management.
The third stage is the power system reform that was initiated in 2002 with the “Electricity Reform No. 5 Document”. The direction of the reform of the power industry, which includes the separation of government from enterprises, separation of factories and networks, separation of main and auxiliary facilities, separation of transmission and distribution, and competitive pricing, is proposed. The former State Power Corporation was split into two major power grid companies, five major power generation groups and four auxiliary companies.
In fact, the direction of reforms in the second phase and the third phase are relatively consistent. All hope that the power companies will completely get rid of government identities and purely enter into marketization operations. After nearly 20 years of reforms, due to various reasons, the results have been effective. not good.
The fourth stage is the “Electricity Amendment No. 9” promulgated in 2015, emphasizing “Encourage social capital to invest in distribution business, gradually release incremental power distribution investment business to qualified market entities, and encourage the development of distribution business through a mixed ownership system. ".
Zhitong Finance believes that the conditions in various aspects are already very mature. With the intensive introduction of policies, the fourth power system reform, which is to be replaced by the next five years, will fundamentally solve the current problem of the power system.
It's not only the mouth that moves this time
Following the “No. 9” document, only in 2015, the GD&E issued a total of 13 documents for the purpose of electric reform, and introduced the direction and concrete steps of electric reform.
In the third month after the formal publication of Circular 9, on November 27, 2016, the National Development and Reform Commission announced 105 pilot projects for the first batch of incremental power distribution reforms, of which 82 were in the national grid operating area. Up to 80%.
Just a few days later on December 5, the State Grid proposed to start incremental power distribution investment business in a mixed ownership system. Specifically speaking, the State Grid will use provincial power companies as the main investment entity and cooperate with qualified social capital to establish a mixed-ownership power supply company and strive to become a pilot project owner by participating in bidding and other market-oriented methods.
After combing through the reforms of the National Development and Reform Commission, the Energy Bureau, and the State Grid, one can't help but feel dazed. Such high efficiency shows that electric reform has been in full swing, but it has not been publicized. Once the shot is made, cooperation from the central government to the enterprise can be described as a thunderbolt. The industry insiders who lost their confidence in "oral reform" also said: "Perhaps this time it is really different."
The largest "pie" will be directed to the distribution network
Very complicated reforms are expected to start at the same time in many fields such as power generation, backbone networks, and distribution networks. This is very unrealistic. The most important aspect of power generation is natural endowment. Although monopolization of backbone transmission and distribution links is relatively serious, the investment is relatively large, the recovery cycle is relatively long, and it belongs to the key lifeline of the economy. The possibility of reform in the short term is relatively small.
Combined with the guidance of policies, coupled with the characteristics of different sectors of the industry, it is doomed that the distribution network is the first to benefit from the mixed reform. The introduction of social capital, on the one hand, will stimulate investment in the distribution sector, on the other hand, it will increase efficiency and profitability. After the mixed reform, the dominance of the incremental distribution network will be transferred from the grid company to the local government's energy management department. Due to the liberalization of power-supply-type power licenses and the government's supportive attitude toward the securitization of such assets, distribution networks have become a quality asset that can generate stable cash flows and are attractive for investment.
1. Distribution network investment will increase significantly
The distribution power price is approved according to the permitted cost plus permitted revenue. According to the approved method, the net assets return rate of the distribution network investment operation is between 5% and 8%. This will be higher than the interest rate for long-term Treasury bonds (3.79%) in the past three years, which is suitable for the allocation of large funds. More importantly, the approved cost of authorization should be the average cost of the provincial grid companies. Social capital can select business areas, at the same time it can reduce costs through deregulation, compensation, and other aspects through market-based measures, and thus obtain higher profits. It can be foreseen that the distribution network investment will increase rapidly under the influence of social capital.
2. Distribution network supplier revenue
Since the scale of distribution network investment will increase rapidly after the implementation of the policy, it is only natural that the equipment manufacturers will benefit the most in the short to medium term. The industrial chain of equipment manufacturers includes power cables, construction companies, transformer manufacturers, and meter companies.
Or will be the subject of the benefits of Weisheng Group (03393), its company's products include electricity meters, smart meters, gas meters and other meters, its income structure is divided into smart meters, smart metering solutions and intelligent distribution systems and According to the company's semi-annual report, the revenues were 442 million yuan, 809 million yuan, and 265 million yuan. The most eye-catching part was the distribution of the power system and solution division that was the most relevant to the transformation of the power distribution network. The revenue increased by 35.4%. . If the distribution network is completed, it is believed that its performance will show performance.
3. Energy storage may benefit
The reform of the distribution end, taking into account the reasons for the “finding” of capital, the funds that are easily accepted by the industry should be supported by industrial or industrial parks. Because the distribution load of the park is concentrated and the average load rate is high, it is the highest quality distribution network asset. In the future, the price difference between peaks and troughs may further increase.
In the United States, for example, the peaks and troughs may differ by a factor of 100. In times of troughs, even power plants paid for the use of electricity to ensure the operation of their own motors. Energy storage is conducive to smooth electricity prices. After market-oriented operations, the demand for energy storage may formally enter the eyes of the capital market. Some international giants, including Tesla, have begun to study a new generation of energy storage technology.