In the era of parity, the three major trends of China's wind power development

On October 29, 10 fund companies focused on tracking the CSI wind power industry index related products, including 9 ETF funds and an over-the-counter index fund. The intensive attention of funds seems to indicate that the era of "wind power" in the capital market is coming.

Under the trend of "carbon neutrality", the biggest change in the world comes from the essential change in the energy structure, and new energy sources have gradually replaced traditional energy sources such as coal and fuel oil.

In 2020 alone, the installed capacity of the global new energy market will increase by 10%, from 2,572.5GW to 2,832.6GW. In the new 260.1GW of new installed capacity, photovoltaic units and wind turbines accounted for 53.4% and 35.8% of the share, respectively. According to this trend, photovoltaic power generation and wind power generation are expected to become the core force of future global development.

However, in the capital markets, the photovoltaic concept and the wind power concept have come out of the different stock price trends. Compared with the hot photovoltaic concept, although the concept of wind power has also grown as a whole, it is much lower whether it is the price increase or the market attention.

What is the reason for the low attention on wind power? What are the industrial development opportunities behind this underrated track?

01 The wind power industry has changed

Although photovoltaic and wind power are the same new energy industry, wind power has always given a very mediocre impression, and even many investors regard it as a traditional manufacturing industry. The fundamental reason is that the "once" wind power is not cost-effective.

The principle of wind power is very simple, is to use the natural flow of wind to blow the wind turbine rotation, drive the generator work, thereby converting the kinetic energy of the wind into electricity. However, although the power generation principle is simple, it is difficult to really use wind power for the people.

As we all know, the wind in nature is not under human control. Because of the uncertainty of wind, wind direction and wind speed, the cycle of wind power generation is also not fixed, which causes great difficulties for power grid connection.

When wind power was just emerging, China had large-scale construction of wind power plants in the three North (northwest, northeast, North China) areas, hoping to quickly control wind power generation.

Ideal is very plump, reality is very bony. Because the power grid is instantaneous, and the wind power generation is not controlled, so when the power generation exceeds the capacity of the local power grid, it will cause a burden to the entire power grid, resulting in many times only by shutting down the way to suspend power generation to ensure the stable operation of the grid, which caused the phenomenon of wind curtailment.

Before 2017, China's wind abandonment rate almost always remained above 10%, and in some areas, the wind abandonment rate even exceeded 20%, resulting in serious waste.

Data sources: China Energy Network, National Energy Administration, Soochow Securities Research Institute

In essence, the most important measure of power generation efficiency is the cost of power generation. The cost of wind power generation consists of three main parts: the one-time acquisition cost of the unit, the entire project operating cost, and the equipment maintenance cost.

In the early development of wind power, the industry's various technologies are not mature enough, so the manufacturing cost is not cheap, coupled with the phenomenon of abandoned wind caused by blind expansion, so the cost of wind power was once much higher than that of thermal power.

At the same time, because the wind is often remote, the power grid is difficult to keep up in the short term, and the power grid absorption capacity is hopeless, which has caused the electricity is not a very good business for a long time.

But that has changed radically. With the maturity of wind motor manufacturing technology and the improvement of supporting power grids, the national wind curtailment rate has been reduced to 3.5%, and the cost of wind power has plummeted.

Since 2018, the three northern regions have greatly improved their consumption capacity, and gradually began to lift the ban on installed capacity, and the growth of regional installed capacity has increased. On the basis of the increase of installed capacity, the wind curtailment rate in the three North regions has not increased simultaneously, indicating that China's wind power industry has achieved comprehensive development.

Looking at the global market, onshore wind power has become the most mature new energy generation method, and its cost is not only lower than photovoltaic power generation, but even lower than the cost of hydropower. Focusing on the domestic, the continuous innovation of the industry makes the cost of wind power in China is expected to fall to 0.1 yuan/KWH in 2025.

Policy level analysis, China's wind power industry is about to fully enter the era of parity. Onshore wind power will enter a full parity development stage after 2021, and price subsidies will completely decline, which also proves that China's wind power technology has been fully mature.