As we all know, since the beginning of this year, the stock prices of traditional energy such as coal and oil have performed strongly, and China Shenhua and CNOOC have continued to hit new highs. Many friends want us to talk again. So let's talk about energy again.
In fact, in retrospect, whether it is the hype of new energy or the rise of old energy, their essence revolves around the demand for electricity. The interpretation of this wave of the market nowadays, although it is inevitable that there will be market speculation about the Chinese word. But in fact, there is still a certain logic implied in it.
What is the value of our previous investment in coal companies? In fact, the investment logic of coal has been summarized in this article. At that time, the view was that "when the historical capital expenditure of traditional energy in the world is insufficient and the supply and demand pattern is tight, it is still good to invest in coal stocks with cheap valuations and only eat dividends". (PS: At that time, the dividend yield of mainstream coal companies in the market was around 8%-10%).
In fact, as the research follows up, we find that Warren Buffett has already articulated his views on old energy in his early years. In this article, we plan to borrow the mouth of Lao Ba again, and then give you a combing of the importance of traditional energy in the development of the power industry. Here is the conclusion first: traditional energy power generation led by coal and natural gas is the cornerstone of the future development of new energy power. New energy is the trend of the future, but the process is not achieved overnight. The old energy should not be too separated, and the two are not opposites but unified.
Warren Buffett's view is as follows:
The world will slowly find better ways to replace what coal is doing, and new methods will be more environmentally friendly, but that won't happen anytime soon. I mean, if you shut down the coal-fired power generation facilities in the United States, it will cause us to have the lights on here. This is a very difficult problem to solve, and it is difficult to make significant progress in a short period of time. (2008 Berkshire Shareholder Meeting).
Of course, the wind is intermittent, and our wind turbine blades in Iowa are only turning part of the time. In some periods, when the air is still, we rely on non-wind power generation capacity to ensure the required power. When it's windy, we give the excess electricity that wind energy provides to us** to other utilities to serve them through the so-called "grid". The electricity we supply to them replaces the need for carbon resources, such as coal or natural gas. (Warren Buffett's 2020 Shareholder Letter).
In Iowa, we're actually producing more wind power, and that's already being used by our consumers, but it's not going to be able to use that energy 24 hours a day, and there's still some problems. When we entered Iowa, it was very popular, and most people wanted to be able to use these products generated by wind power. Of course, there are many people who think that my backyard can generate electricity accordingly, so what's the wrong thing? Some of the summits have also done a lot more of some deployments. Iowa is an example of this, and there are a number of other major companies, but of course there are more mechanisms for cooperation in between, and there are all sorts of different things that come together to start selling electricity. (2023 Berkshire Shareholder Meeting).
On the whole, Lao Ba's views are also easy to understand: new energy is difficult to replace quickly, the limitations of new energy power generation, the peak regulation capacity of thermal power and new energy complementary, etc. Therefore, in terms of specific operation, Lao Bus has always been grasping both new and old energy, and gradually transitioning.
For example, Berkshire Energy's BHE power generation structure: in 2005, it was mainly coal; In Q3 of 22, coal + gas + wind energy occupied the mainstream; Until 2030 (**When new energy occupies the mainstream, traditional energy will still account for nearly 40%. According to BHE's development trajectory, the large-scale power stations of the future will theoretically become integrated energy generators.