"Fourteen Five"! Where will the biomass power generation industry go?

What about the cost? For simplicity, assume that the annual operating cost (including consumables, spare parts, etc.) is 8 million yuan, the management cost is 8 million yuan, and the financial cost is estimated to be about 38 million yuan.

In this way, we can roughly calculate that the annual after-tax net profit of the first to 15 years of the operation period of the waste incineration power generation project is about 24 million yuan, from the 16th to the 28th year (assuming that the franchise period is 30 years, the construction period is 2 years), there is no longer a financial cost, and the annual after-tax net profit is about 52 million yuan.

According to the above calculation, without considering the cancellation of electricity price subsidies, it will take 16 years for waste incineration power generation enterprises to recover their investment, but if you consider the factors such as the production cycle, the cost of rising costs, and the cost of periodic large-scale maintenance, it is expected that it will take about 18 years to recover the investment.

For agricultural and forestry biomass power generation projects, the situation seems to be more severe, although the total investment of such projects will be lower, generally about two to three hundred million yuan, and the benchmark price is higher than the waste incineration power generation project, but agricultural and forestry biomass power generation projects need a huge amount of fuel costs, that is to say, not only there is no waste disposal fee in terms of income, In addition, the cost also increases a lot of fuel acquisition costs, especially in some regions, the fuel market competition is fierce, and the fuel cost is high.

At the same time, because agricultural and forestry biomass power generation projects generally use circulating fluidized bed technology, whether it is the effective use of hours or energy conversion rate, there is a certain gap compared with the use of grate technology waste incineration power generation projects, and the cost of inspection and maintenance will be much higher than the waste incineration power generation project. Taking the above factors into account, the cycle of investment recovery of agricultural and forestry biomass power generation projects is at least not shorter than that of waste incineration power generation projects, and even longer.

It should be emphasized that the above calculation does not take into account the elimination of the tariff subsidy in the 12th year. If this factor is taken into account, the recovery period will be extended by another two years, that is, 20 years. This means that only eight years are really "earning money", the annual after-tax net profit of 35 million yuan, the total return of 280 million yuan, the internal rate of return (IRR) of the whole investment of the project has plummeted from about 7% before the New Deal to about 4.9%. Although the above calculation is relatively simple, but enough to explain the problem, IRR4.9% means what, needless to say.

Where will the biomass power generation industry go?

The issuance of the "Supplementary Notice" may announce the end of the golden age of the biomass power generation industry. The New Deal has become a fact, so how will the biomass power generation industry go in the future, and how should enterprises respond? We may wish to make a forecast from the three levels of policy, industry and enterprise.

Policy level

The purpose of various policies introduced by the state is to regulate and guide the healthy development of the industry, and not to kill a certain industry with one stick. Therefore, we have reason to believe that the relevant departments will introduce supporting policies to make the industry glow with new vitality, and there are two aspects of policy worthy of everyone's expectation.

First, Article 4 clearly points out that "the price authorities will improve the price formation mechanism of waste incineration power generation in a timely manner according to the development needs of the industry and cost changes." On September 11, the National Development and Reform Commission, the Ministry of Finance and the National Energy Administration jointly issued the "Implementation Plan for Improving the construction and operation of biomass power generation projects" (Development and Reform Energy (2020) No. 1421) pointed out that the benchmark price of waste incineration power generation projects in 2020 continued to be determined as 0.65 yuan, which has been implemented for many years. The benchmark price of agricultural and forestry biomass power generation projects is still 0.75 yuan. We may be able to look forward to 0.65 yuan of waste incineration power generation project on-grid benchmark price can be increased in the future.

Second, the "Supplementary Notice" clearly points out that after the biomass power generation project has been connected to the grid for 15 years, regardless of whether the project has reached the full life cycle of subsidized electricity, it no longer enjoys the central financial subsidy funds, and the green certificate is issued to allow participation in the green certificate transaction. At the same time, article 4 also puts the "full implementation of green power certificate trading" in an important position.