Guotai Haitong: New electricity installations will be dominated by wind and solar power, and revaluation of thermal power may become possible after the dividend yield is realized.

Guotai Haotong released a research report stating that based on the assumption of a compound annual growth rate of around 1.7% in electricity consumption, it is estimated 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 needs to decrease to below 20%, with new electricity generation capacity focusing mainly on wind and solar power. Looking at the integration of wind and solar power in various provinces, many regions are already facing profitability challenges. The upper limit for wind and solar power integration can be estimated through stress testing. In terms of wind and solar power generation, the upper limit is around 30-40% of total electricity generation, while in terms of installed capacity, exceeding 50% would require external transmission or the establishment of energy storage for internal consumption. Currently, the 50% threshold may need to be lower because Inner Mongolia and Gansu, which have spot electricity prices, are already facing electricity trading prices of around or below 2 cents per kilowatt-hour, despite wind and solar power accounting for over 52% of their electricity generation. The report suggests that excess wind and solar power beyond the upper limit must be fully absorbed by energy storage to address curtailment issues. Therefore, according to the national upper limit of wind and solar power generation and the 1:1 rule for matching wind and solar power with energy storage, the estimated national demand for energy storage is projected to increase from 270 million kilowatts in 2026 to 920 million and 4.5 billion kilowatts by 2030 and 2060, respectively.