Guotai Haitong: The increase in installed capacity of electricity will be mainly in renewable energy sources. After the dividend yield is realized, reevaluation of thermal power plants may become possible.

Guotai Haitong released a research report stating that based on an assumed compound growth rate of around 1.7% in electricity consumption, it is expected that the national electricity consumption will double by 2060. In order to achieve carbon neutrality by 2060, the proportion of electricity generated by thermal power plants will need to decrease to below 20%, with new installed capacity focusing mainly on wind and solar power. Looking at the integration of wind and solar power in various provinces, many regions are already struggling to make profits, and the upper limit for wind and solar power integration can be estimated through stress tests. Based on electricity generation, the upper limit is around 30-40%, and for installed capacity, anything over 50% would require external transmission or the establishment of energy storage for internal consumption. Currently, the 50% threshold may even be lower, as Inner Mongolia and Gansu provinces are already facing electricity trading prices below 2 cents for wind and solar power, with the proportion exceeding 52%. The report suggests that excess wind and solar power beyond the upper limit will need to be completely absorbed by energy storage to address the problem of surplus renewable energy. Therefore, based on the national upper limit for wind and solar power generation and a 1:1 matching rule for energy storage, the bank estimates that the national energy storage demand will increase from 270 million kilowatts in 2026 to 920 million and 4.5 billion kilowatts by 2030 and 2060, respectively. Assuming excellent grid dispatching capabilities, provinces where wind and solar power generation has not yet reached the upper limit may gradually approach that threshold, leading to a potential outbreak of energy storage demand around 2027-2029. Currently, there is already a shortage of energy storage capacity in the northern regions. The report also mentions that considering the economic feasibility of energy storage, assuming a charging cost of between 0.1-0.2, there would need to be a price difference of 0.4-0.5 yuan per kilowatt-hour between charging and discharging to be profitable. Based on the monthly spot electricity price differences in various provinces, northern provinces with stable basic electricity loads and surplus wind and solar capacity are more optimistic in terms of price differences, while southern provinces generally do not have much space for electrochemical energy storage. The bank believes that the return on equity for thermal power plants is not excessively high, and maintaining the current level in the long term is not unreasonable, but their valuation is significantly lower than in other industries. Once the dividend yield is realized in 2026, reassessment may become possible.