The trend of profit level changes in the cogeneration industry in 2024
1. Overview of the development of cogeneration in China
China began large-scale industrial construction in the first five-year plan, and regional thermal power plants were built in some industrial zones. At that time, there were mainly Wuhan Qingshan Thermal Power Plant, Luoyang Thermal Power Plant, and Fularji Thermal Power Plant built with the aid of the former Soviet Union.
After 1981, China started from saving energy and protecting the environment, and increased the development of cogeneration, and cogeneration developed at a relatively rapid speed.
2. The competition pattern of the cogeneration industry
Combined heat and power (CHP) is a public infrastructure industry, and the on-grid electricity is determined according to the principle of "determining electricity by heat", and the heat supply determines the annual on-grid electricity plan. At the same time, due to the loss of heat in transmission, long-distance heat transmission is uneconomical, and the heating business presents the characteristics of regional distribution, and has not yet formed a national large-scale heating group. Therefore, the cogeneration project is based on the local urban planning, in accordance with the principle of "unified planning, step-by-step implementation, heat determination and moderate scale", the project takes heating as the main task, and meets the requirements of improving the environment, saving energy and improving the quality of heating, so the number and scale of cogeneration projects within a certain geographical range are limited.
At present, the cogeneration industry is more regional, the industry as a whole is more scattered, and enterprises in the industry take the development of cogeneration projects near the main heat source points to seize the first-mover advantage and regional exclusivity advantage as the main way of competition.
The cogeneration industry market is fragmented and has many industry players. On the one hand, large state-owned power groups such as State Energy Investment, Huaneng Group, and Datang Group have subsidiaries for cogeneration projects. On the other hand, listed companies such as, Shijiazhuang Dongfang Energy Co., Ltd., Xinjiang Tianfu Energy Co., Ltd., Ningbo Energy Group Co., Ltd., Jilin Electric Power Co., Ltd., and Zhejiang Fuchunjiang Environmental Protection Thermal Power Co., Ltd. are also actively engaged in the cogeneration industry.
3. The profit margin level and future changes of the cogeneration industry
According to the "Opinions on the Implementation of the Orderly Development and Consumption Plan" supporting document of the "Electricity Reform No. 9 Document", renewable energy power generation such as wind energy, solar energy, and biomass energy included in the plan is given priority for power generation; In order to meet the needs of peak and frequency regulation and grid security, the amount of peak and frequency regulation is given priority to power generation; In order to ensure the demand for heat supply, the cogeneration unit implements "heat to determine electricity", and the heating mode is reasonable, realizes the best monitoring and meets the environmental protection requirements in the heating period to give priority to power generation, and the above is listed as a priority guarantee in principle. Therefore, compared with conventional thermal power and other power generation formats, combined heat and power and clean energy power generation business are all priority categories of national guarantees, and profit margins will remain relatively stable in the future.
Gas turbine cogeneration and coal-fired cogeneration are affected by the changes in natural gas and coal, which have a certain impact on the profitability of the industry, but due to the full guarantee of the industry's current implementation of gas-electricity linkage, coal-electricity linkage, coal-heat linkage and other mechanisms, the above-mentioned cost changes only produce cyclical fluctuations in the overall profitability of the industry, and the profit margin remains stable.
(1) Gas and electricity linkage
Article 3 of the notice of the National Development and Reform Commission on issues related to the regulation of the management of feed-in tariffs for natural gas power generation (Fagai ** [2014] No. 3009) stipulates that "a linkage mechanism for gas and electricity shall be established. When there is a large change in natural gas**, the feed-in tariff for natural gas power generation should be adjusted in a timely manner, but the maximum electricity price shall not exceed the local coal-fired power generation on-grid benchmark electricity price or the average power purchase ** of local power grid enterprises ** 0. per kilowatt hour35 yuan. Where conditions permit, measures such as financial subsidies and preferential gas prices should be actively adopted to ease the contradiction between natural gas power generation. ”
In practice, the management department will comprehensively consider factors such as fuel fluctuations to adjust the feed-in tariff of gas turbine cogeneration from time to time, but due to the influence of many other factors, there are insufficient and timely adjustments in terms of adjustment intensity and timeliness, and the implementation situation in various regions is also different.
(2) Coal-electricity linkage
On December 25, 2012, China issued the "Guiding Opinions on Deepening the Market-oriented Reform of Thermal Coal" (Document No. 57 [2012] of the State Council of the People's Republic of China), in which the second main task of the opinion proposed: to improve the linkage mechanism of coal and electricity. We will continue to implement and continuously improve the linkage mechanism of coal-power**, and when the fluctuation range of thermal coal** exceeds 5%, the feed-in tariff will be adjusted accordingly on an annual basis, and the proportion of coal price fluctuations consumed by power enterprises will be adjusted from 30% to 10%.
On December 31, 2015, the Notice of the National Development and Reform Commission on Matters Concerning the Improvement of the Coal-to-Power Linkage Mechanism (Fa Gai ** [2015] No. 3169) stipulates that the coal-power linkage mechanism shall be launched by the National Development and Reform Commission on an annual basis, and shall be organized and implemented by provinces (autonomous regions and municipalities). The thermal coal** on which the coal-to-electricity linkage mechanism is based is determined in accordance with the China Thermal Coal ** Index。 Thermal coal** is based on the average coal price of each province (price area) in 2014 of the China Thermal Coal ** Index, and in principle, the feed-in tariff corresponding to the benchmark coal price is used as the benchmark electricity price. In the future, each time the linkage of coal and electricity is implemented, the thermal coal** and feed-in tariff will be compared with the benchmark coal price and the benchmark electricity price respectively. Before 2020, whether the above-mentioned benchmark coal price and benchmark electricity price will be adjusted will be determined according to the actual situation. Implement interval linkage for coal-fired power**, with 5,000 kcal kg of thermal coal** as the standard, and if the fluctuation of thermal coal** compared with the benchmark coal price in the cycle does not exceed 30 yuan per ton (inclusive), the cost change shall be absorbed by the power generation enterprise itself, and the linkage mechanism will not be activated. When the fluctuation of thermal coal** compared with the benchmark coal price exceeds 30 yuan per ton in the cycle, the excess part will be regressed and regressed, and the adjusted level of the calculated feed-in tariff will be less than 0 per kilowattIf it is 2 cents, the linkage mechanism will not be implemented in the current year, and the price adjustment amount will be included in the cumulative calculation of the next cycle. The feed-in tariff and sales tariff adjusted according to the coal-power** linkage mechanism will be implemented on January 1 of each year。
On October 25, 2019, the Guiding Opinions of the National Development and Reform Commission on Deepening the Reform of the Feed-in Tariff Formation Mechanism for Coal-fired Power Generation (Fa Gai ** Gui [2019] No. 1658) stipulates that (1) in order to steadily achieve the goal of fully liberalizing the feed-in tariff for coal-fired power generation, the current benchmark feed-in tariff mechanism for coal-fired power generation will be changed to a market-oriented ** mechanism of "benchmark price + up and down". The benchmark price shall be determined according to the current local benchmark feed-in tariff for coal-fired power generation, and the floating range shall not exceed 10% for the increase and 15% for the downward movement in principle. This restriction may be waived for spot trading carried out by the power trading center in accordance with the power system reform plan. The National Development and Reform Commission (NDRC) will adjust the benchmark price and floating range in a timely manner according to market development. (2) For the amount of coal-fired power generation that is currently subject to the benchmark feed-in tariff, and there are market trading conditions, the specific feed-in tariff shall be formed by power generation enterprises, electricity sales companies, power users and other market entities within the scope of "benchmark price + up and down" through market-oriented methods such as off-site bilateral negotiation or on-site centralized bidding (including listing transactions), and shall be mainly determined by medium and long-term contracts such as annual contracts; For the time being, the amount of electricity corresponding to the electricity consumption of industrial and commercial users who do not have the conditions for market transactions or do not participate in market transactions shall still be subject to the benchmark price。
In practice, the management department will comprehensively consider factors such as fuel fluctuations to adjust the coal-fired cogeneration feed-in tariff from time to time, but due to the influence of many other factors, there are insufficient and timely adjustments in terms of adjustment intensity and timeliness, and the implementation of the situation in various regions is also different.
(3) Coal-heat linkage
Article 7 of the notice of the National Development and Reform Commission and the Ministry of Construction on the Guiding Opinions on the Establishment of a Coal-Thermal Linkage Mechanism (Fagai** 2005 No. 2200) stipulates that the heat factory is linked to coal. When the coal arrives at the factory** after the change is more than 10%, the heat is adjusted accordingly**. Article 9: Determine the heat price linkage cycle. The linkage of coal heat ** is not less than one year as a linkage cycle. If the change in coal price reaches or exceeds 10% in the cycle, the heat price will be adjusted accordingly; If the change in coal price does not reach 10% in the current period, the next cycle will be calculated cumulatively until the cumulative change reaches or exceeds 10%, and the heat price will be adjusted.
Article 5 of the notice of the National Development and Reform Commission and the Ministry of Construction on printing and distributing the "Interim Measures for the Management of Urban Heating" (Fagai ** [2007] No. 1195) stipulates that in areas with conditions, the heat price can be determined by the heating enterprise (unit) and the user through negotiation. Specific conditions and procedures will be formulated separately.
Article 33 of the "Provisions on the Administration of Combined Heat and Power" stipulates that the heat of the combined heat and power unit shall be approved by the competent department on the basis of considering its power generation income, in accordance with the principle of reasonable compensation cost and reasonable determination of income, and based on the heating cost and reasonable profit margin or return on net assets, and encourage all localities to explore the establishment of a market-oriented coal-heat linkage mechanism according to the actual local situation. Article 34 stipulates: to promote the reform of the heat market, for industrial heating, encourage direct transactions between heating enterprises and users, and the heating supply is determined by the enterprise and the user through negotiation.
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