Multi-energy complementary power generation, multi-variety synergistic heating, multi-material coupling substitution, and diversified import and export structures support each other, and it is firmly believed that China's electricity consumption will continue to grow for a long time, and the opportunities in the energy manufacturing industry will run through the next few decades.
The special author of this journal is Yang Yaoting.
The most surprising thing about the past year has been the massive increase in electricity consumption. As of the end of November 2023, the country's electricity consumption has exceeded 8,367.8 billion kWh, and it has achieved 6More than 3% growth. It is much higher than the author's ** at the beginning of the year, so that in the whole process of this year, we are all exploring a question: where is the electricity?
What is more worth thinking about is how to solve some pain points in the current development of China's power industry, and how will the future trend evolve?
The reason why electricity consumption exceeds expectations
At the end of 2023, the answer to "where is the electricity?" emerges. Let's take a look at a set of data: from January to November, the growth rate of electricity consumption in 14 provinces exceeded the national average, in order: Hainan (163%）、13.3%), Inner Mongolia (123%), Ningxia (112%), Qinghai (102%), Guangxi (101%), Gansu (96%), Hebei (90%), Jilin (85%), Xinjiang (83%), Guangdong (76%), Sichuan (73%), Anhui (68%) and Zhejiang (63%）。
Aside from provinces with relatively low absolute values such as Hainan**, the installed power capacity of Inner Mongolia officially exceeded the 100 million kilowatt mark in one fell swoop. The large proportion of growth on such a high platform is really impressive. The reason for this is naturally the contribution of high-energy-consuming industries represented by silicon materials, ferroalloys, and electrolytic aluminum, as well as the peripheral industries that are gradually transforming into deep processing. Similar to it also includes Qing, Ning, Gui, Gan, Xinjiang and so on. Although Xinjiang seems to have only grown by 83%, but this is also built on 13.8 billion kilowatts on the shoulders of giants.
In today's Inner Mongolia prairie, electrolytic aluminum is next door, and a production line for integrated die-casting of automobiles is being built. Around each polysilicon plant is a forest of wind turbines. On the land known as the vast grass, pumped storage projects are ...... day and nightAt the same time, Inner Mongolia is still the province with the most basic farmland in China, and it is also known as a large animal husbandry province.
Although coal mines are still the most popular resources in this land, relying on the deepening utilization of resources and providing higher value-added product output has become a strong support for sustainable economic development. The Inner Mongolia sample has given us more research directions and strengthened our confidence in the sustainable growth of electricity consumption with economies of scale.
Under this high growth, on the one hand, it has brought about a rapid explosion of polysilicon production capacity, and an avalanche of photovoltaic modules, so that wind turbines are unprofitable and have to get overseas volumes. On the other hand, the phased high growth will usher in an industrial digestion cycle. It is believed that in the next 3-4 years, the polysilicon market will definitely focus on digesting stocks. If the question in 2023 is: Where is the electricity?So the question for 2024-2026 is: where else can electricity be used?
Let's take a look at the situation of the last few "little potatoes" in the previous article. They are electric ** machine 2600 million kilowatts of Guangdong (76%), machine 12.7 billion kilowatts of Sichuan (73%), 85 million kilowatts of Anhui (6.8%) and ** machine 1200 million kilowatts of Zhejiang (63%）。It is worth noting that Guangdong and Zhejiang have a large number of installed capacity of their own, and have also obtained a cumulative support of more than 100 million kilowatts with the help of west-to-east power transmission.
This is a land where there is no electrolytic aluminum, no polysilicon, no large-scale steel, cement, glass, and coal-fired chemicals. Where do they use their electricity?
From January to October 2023, the total export value of Guangdong Province was 45 trillion yuan, a year-on-year increase of 25%；Zhejiang Province 3 trillion yuan, a year-on-year increase of 43%。They ranked first in China's exports.
First, the second place. At the same time, Guangdong Province has a surplus of 22 trillion yuan, Zhejiang Province surplus 19 trillion yuan. In contrast, Germany's surplus in 2022 was only 79.7 billion euros. From January to October 2023, India's national deficit reached $203.3 billion.
In the study of electric power, I have faced many scholars who must mention beauty and morality, and they have emphasized the market, policy, and feelings. But when the numbers are really in front of you, there is a time when you need to find a dictionary on the spot to see how the word "trillion" is translated. The saying that "quantitative change gives rise to qualitative change" is really only known when you face it in person. Looking at the above data, we can also say that Germany is equivalent to Guangdong Province, and its energy system is worthy of reference from Guangdong Province. With the changes in the international situation, politics, energy, and industry are superimposed on each other, and today's Germany is no longer an economy of magnitude with Guangdong Province in the international ** system. It can probably compete with Shandong Province for a joint fifth position. However, electricity consumption in Shandong Province is still growing, while Germany has fallen by more than 15% compared to 2019 - Germany's national electricity consumption in 2022 is only 484.2 billion kWh, which means that China's electricity consumption in 2023 will exceed the annual electricity consumption of the whole of Germany.
In the annual strategy of the previous year, I mentioned that in the current economic background, we can only maintain China's manufacturing market share by providing products that meet the standards of Europe and the United States and have more advantages than Southeast Asia. After a year of hard work, the full-year data at the end of November has turned positive, and even the 14-month decline in exports to the United States has been reversed, achieving 96% positive growth. Although affected by factors such as the epidemic in the same period, with the support of a series of policies such as RMB depreciation, wage reduction, rent reduction, electricity price reduction, and energy consumption assessment standards, the "true fragrance" law of Made in China has been confirmed again.
At the same time, affected by the epidemic and the international situation, first of all, many industrial chains are no longer included in the backward production capacity sequence of "vacating cages for birds" to be cleared. Secondly, in the context of the international energy crisis, many foreign-funded enterprises have increased their investment in China in an all-round way, which has also made outstanding contributions to the total output value of China's manufacturing industry. This process has only just begun and will continue for many years.
Historically, China's electricity consumption has relied on two troikas: real estate and exports. In the context of the current downturn in the real estate industry, it is relying on the upgrading of new energy-consuming industries and the stability of exports that the basic market of electricity consumption in the secondary industry has been maintained. At the same time, the normal development of energy-intensive agriculture and service industries will show a growth rate that exceeds expectations in 2023
Today's power and economic pattern in China may be understood as follows: we are not only catching up in the provinces with a small base, but also achieving high-speed phased growth in the provinces with a large base. Industrial synergy between different provinces constitutes an adequate safety cushion. In the context of low confidence in the real estate industry, infrastructure investment has still received enough rigid support, and the living conditions of residents still need to be improved enough, so that steel and other industries have always been in a state of high capacity utilization. With such a huge economy, combined with the fact that electricity consumption in the United States is steadily declining at 4 trillion kWh, China and the United States are closing the distance between each other at a rate equivalent to the energy consumption of Germany every year. This will be history that our generation is witnessing with our own eyes in any case. Referring to the inertia of economic development, it is inevitable that between 2020 and 2030, China's total energy consumption will be reduced by more than one of the United States.
Outlook for the development of China's power industry
Let's first look at the rapid development of new energy.
With the concentrated production capacity of photovoltaic silicon materials, it is a reality that the modules of our institute have plunged sharply at the beginning of the year. It was once expected that a giant would face a situation of halving and halving, as of recently, the lowest price in the near future was 2001 yuan, only 0 short of the beginning of the year01 yuan. On this basis, China's photovoltaic industry has ushered in an unprecedented wave of installed capacity. The full year is expected to reach more than 180GW, which is even worse than the beginning of the year, and has already exceeded the peak of optimistic expectations. It can be called a grand event in the history of new energy.
At the same time, local power market policies, land use policies, grid access policies and other non-technical costs have also been adapted, and while the industry has grown, it has also realized the feedback of new energy for the industry's incubation for many years. Starting from 2024, I believe that new energy should be able to straighten up and tell everyone: I am also an industry that can subsidize others!
In the current situation that the conversion rate continues to improve and the new technology route of the industry continues to expand, new energy still has the hope of achieving more than 20% cost optimization in the next 3-5 years. In addition to continuing to contribute to the low-cost power supply of the whole society and creating greater scientific and technological content for exports, it will also further provide new opportunities for the operation of domestic energy-consuming enterprises. Source-grid-load-storage, microgrid, independent power grid and other modes will usher in new explosive growth and even revolution. In the world of new energy, if anyone delays its development, it will definitely use its strength to open up a new ecology.
Although the above content is more brought by photovoltaics, I believe that wind power will usher in the same level of opportunities with its own high utilization hours, high complementarity with photovoltaics, and the increase of export markets. New energy + everything will be the trend of the development of the energy industry for a long time in the future.
Let's look at the diligent persistence of traditional electricity.
In the first 11 months of 2023, 9.39 million kilowatts of hydropower were put into operation, 46.55 million kilowatts of thermal power were put into operation, and 1.19 million kilowatts of nuclear power were put into operation. It is expected to achieve an additional power supply capacity of nearly 300 billion kWh and a regulation capacity of more than 50 million kilowatts. The installation of thermal power plants, which had been in arrears for a long time in the last five-year plan, has finally been restored. Although it is the last batch of thermal power in history, with the support of a series of capacity and electricity price policies, it will still be a good long-term investment by relying on its own adjustment ability, geographical advantages and coordination ability of central enterprises. Their mission will also change from the traditional backbone power supply to the supporting regulation power supply, carrying on the burden of ensuring supply.
It is worth noting that more than 200 million kilowatts of wind and solar power have been added this year, which is reflected in the new increase of more than 300 billion kWh. Combined with the more than 300 billion kWh of new water, fire and water cores, there will be more than 600 billion kWh of new electricity in 2024. Especially considering that hydropower in 2022-2023 coincides with the reduction of dry water, and the water replenishment situation of major reservoirs in the second half of 2023 is good, it is expected that more than 100 billion kWh of electricity can be added. Then, in the context of a cumulative increase of 700 billion kWh**, the growth rate of electricity consumption in the new year will naturally have a far-reaching impact on marginal electricity prices. If the growth rate of electricity consumption is calculated at 5%, it is expected to form a phased redundancy of more than 250 billion kWh. In the case that the marginal cost of hydropower generation of hydronuclear wind and solar power is zero, this amount of electricity will be directly contested with thermal power through the electricity market.
Although China's power market is more planned, the impact on coal should be objective. In addition to the international coal demand, the new supply from Russia and Mongolia, and the withdrawal of production capacity in the east, the coal researcher's model adds a strong indicator. Especially in the past two years, under the new normal of the economy, the moderate relaxation of the assessment of energy consumption indicators will be tightened with the gradual stabilization of the economy. It is not clear whether carbon will peak or not, but coal peaking should be inevitable. It is also inevitable that low-cost coal resources in the east will be gradually withdrawn from the market. How to make every effort to complete the flexible transformation of existing thermal power units and cooperate with new energy output has become the way to survive for the eastern power plant. The green coal chemical industry under the curse of freight in Xinjiang will also set off a new chapter.
There is also the mission of pumped hydro storage.
2023 is the year of explosion after a long downturn in the pumped storage industry. The long-pent-up demand of the industry was ignited in an instant, and the high-quality resources accumulated over the years were revitalized. The preliminary work of hundreds of projects has been launched one after another, opening a milestone chapter in China's carbon neutrality epic. However, due to the lack of comprehensive talents and the hasty preparation in the early stage, the relevant policies, planning depth, and owner management capabilities are in the stage of gradual improvement. In this process, pioneering achievements have been made in the history of human energy storage, but also accompanied by some flaws under the high standards of hydropower people. The hydropower industry has its own precipitation and growth trajectory, and every project has gone through thousands of tempers, and the past year is only the beginning of the hydropower construction period, and it is only a drop in the ocean in the whole life cycle of hydropower projects.
In the work of 2024, I believe that the entire hydropower industry will continue to improve the in-depth understanding of the project by the owners and managers along with the strengthening of the planning and design depth of each project, strive to improve and promote the depth and process control of the current work of the design, construction and core equipment enterprises, and strengthen the improvement of the industry's own capabilities and the understanding of policies and markets in the work. Grasp the first principle of users' demand for energy storage, so that the industry can enter the sustainable promotion of planning, demonstration and construction.
On this basis, the hardware matching of pumped storage projects with conventional hydropower, wind, solar and thermal cores, and new energy storage, the systematic coordination with the power market, carbon market, and first-class market, the comprehensive utilization of water conservancy, cultural tourism, and environmental protection, the rapid iteration of new materials, new technologies, and new standards, and the mission of the "Belt and Road" going out with wind and solar synergy will become a comprehensive topic in the new era. It is necessary for us to establish comprehensive expansion capabilities in our work, carry out all-round exploration based on the hardware conditions of each project itself, and establish multiple mechanisms to reward and punish, so as to give full play to the system advantages of hydropower projects and make more efforts for the development of the clean energy industry.
Finally, let's look at the dawn of hydrogen energy.
Corresponding to the successive signing ceremonies that greeted the eyes were the actual development of hydrogen energy projects. As an originally mature industry, when it is suddenly faced with an increase of thousands of times the demand, it is very normal to produce some inconsistencies in the first chain. While there is occasionally one or two pieces of vague information that spark discussion, no one in the current energy industry ignores the inevitability of this direction. The low cost of off-grid new energy and the urgent need of the European energy crisis are enough for the hydrogen energy industry to step down from the altar and enter the red sea of manufacturing slaughter. The most pessimistic point of view is also the comprehensive rationalization of the industry in about 5 years. It is believed that a batch of large-scale hydrogen production projects will be ushered in in at most 2 years. In about 5 years, the hydrogen energy industry may have been discounted by two and a half compared to the current unit cost. Just like the current wind power, photovoltaics, and even faster iterations.
On this basis, whether it is the green hydrogen shipping industry chain that meets the needs of Europe, or the green hydrogen + chemical industry that meets China's energy-saving requirements, or the large-scale new energy hydrogen production base expected by Australia in the Middle East, it will become a new energy highlight. Hydrogen may bring more to the world than wind + solar, and even an important way for China to move towards "energy independence". How to deepen understanding in this industry chain and find their own opportunities is probably a problem that every investor must consider. In particular, enterprises that already have an understanding of the chemical industry and are familiar with the manufacturing and operation of chemical equipment will have a greater opportunity than those of electric power people. With the support of green electricity, more profits can be obtained than coal.
And there is not much time left for new energy storage.
In the strategy of the previous year, we are looking forward to the development of various technical routes. It is hoped that in the end, entrepreneurs will have the courage to take responsibility and use funds to explore the energy storage needs of the whole society, rather than just staying in PPT. A year on, the only bright spot seems to be the mining investment opportunity caused by the mismatch between short-term lithium mining capacity and electric vehicle production capacity. And every new energy storage route has been stagnant for a long time, with no clues in sight. Although it is depressing, it feels like too much social attention has been wasted. But there is still hope, I hope that scientists will not abandon or give up, and continue to work hard in the direction of production, education and research, after all, doing a good job in basic discipline research is also the cornerstone of industry development.
In addition, electric vehicles will be China's No. 1 manufacturing industry and No. 1 export variety. The current competition among electric vehicle companies has just begun, and there will be many trillion-level opportunities brewing around this industrial chain. It will be possible for the automotive industry to replace part of the demand for real estate exits.
Calls for strategic direction
The first is the upgrade of green heating.
For China today, the depletion of low-cost coal resources in the east is the biggest challenge. According to the internal estimation of an authoritative enterprise, by 2030, there may be more than 700 million tons of low-cost production capacity gradually withdrawn. Combined with the increase in inflation, mining costs, safety costs, and transportation distances, it should be a very conservative expectation that the coal price of Dagang Changxi will exceed 1,000 yuan tons. The core of China's development of new energy and new power system is also based on the dual challenges of current national conditions and international energy. In the current national energy consumption system, air conditioning and heating have become the first major load in the city. More than 60% of the summer and winter load in large cities is brought by air conditioning. Only by vigorously developing the "multi-heat complementary" model of geothermal + water source heat pump + heat storage + BIPV (building integrated photovoltaic) and establishing many microgrid systems for localized cooling and heating can we hope to solve the growing energy demand of the current city. At the same time, it can also save the distribution network capacity, improve the utilization rate of the city's current stock distribution network, and further reduce the demand for foreign energy imports. The traditional large-grid heating system has reached the limit of the system and is deeply challenged by the cost. It is not uncommon for many cities to stop accessing the main network and stop heating and peak regulation in the short term. At present, we have reached a stage where we must consider, otherwise it may be impossible to talk about carbon peaking in China's cities.
The second is the national strategy of synergy between "water" and "energy".
As mentioned above, in the context of the current bottleneck of large-scale coal export in Xinjiang, the development of green power + coal chemical industry will become a national strategy. Replace the cheap coal in the region with oil, gas, aviation fuel, olefins, hydrogen, aluminum, silicon and other high-value products, and use its relatively insensitive characteristics to freight rates. But the core requirement of the strategy is also reflected in the allocation of water resources. The planning of the national water network has already been completed, and the eastern and central routes of the South-to-North Water Diversion Project have been completed and put into operation. Met the coastal 1The clean water needs of 500 million people. Under the current rapid development of technology and the rapid improvement of engineering capacity, it is imminent for the western route of the South-to-North Water Diversion Project to be fully launched. Through the full launch of the western route, the domestic and international water resources will be uniformly allocated, and at the same time, the conventional hydropower, pumped storage, wind, solar, and geothermal resources along the line will be comprehensively utilized, and the new 1 billion mu of basic farmland will be combined to achieve multiple multiplication effects.
At present, China needs to import 500 million tons of oil and 180 billion cubic meters of natural gas every year, costing more than 3 trillion yuan, making it China's largest import. If green energy and water resources are redeployed, it is expected to completely solve China's energy import problem, achieve greater economic benefits and reshape the global pattern.
Multi-energy complementary power generation, multi-variety synergistic heating, multi-material coupling substitution, and diversified import and export structures support each other, and it is firmly believed that China's electricity consumption will continue to grow for a long time, and the opportunities in the energy manufacturing industry will run through the next few decades.