CITIC Securities: Traditional power supplies directly benefit from extensive space for energy storage, virtual power plants, etc.

The Zhitong Finance App learned that CITIC Securities released a research report saying that in a high-proportion new energy scenario, ensuring the balance of the power system faces huge challenges, the installed costs of various power generators have to be reasonably recovered, and it is urgent to establish a power capacity market mechanism reflecting the value of capacity support capacity. It is expected that in the short term, the installed cost of traditional baseload power supplies will be effectively recovered, mainly using capacity compensation prices; the medium- to long-term power capacity market will be established, and more power supply entities such as new energy storage, wind power photovoltaics, and virtual power plants will be included in the market. It is recommended to focus on thermal power companies directly benefiting from the capacity market construction process, the expansion of profit models for energy storage and virtual power plants, and supporting industry chain opportunities such as intelligent metering equipment and electricity trading software.

CITIC Securities's main views are as follows:

Necessity: The marketization of new energy sources is advancing at an accelerated pace, and the electricity capacity market needs to plan ahead

At the power system level, in a scenario with a high proportion of new energy sources, ensuring the balance of the power system faces huge challenges. At the level of power generation companies, the use of hours continues to be compressed, and thermal power companies do not operate well. At the level of participants, profit models for new energy storage and virtual power plants are lacking, and the single energy market cannot fully stimulate flexible resources. In the long run, establishing a power capacity market mechanism reflecting the supporting value of capacity is an inevitable trend.

Adequacy: The marketization process continues to advance, and the electricity market puzzle is being completed

Under the new power system, the electricity market is transitioning from a “single energy market” to a diversified system of “energy+capacity+auxiliary services”. The capacity and energy markets respectively correspond to the two core goals of reliability assurance and economic operation of power systems. Judging from the pace of market construction, the medium- to long-term market is relatively complete and mature. Spot trading of electricity is being widely promoted. The electricity capacity market is an effective complement to the electricity trading system, so we should plan ahead.

The capacity market is a market-based incentive mechanism driven by administrative forces

At this stage, the country mainly focuses on compensated electricity prices for thermal power and savings, and new types of energy storage are being explored at the local level. Judging from the mechanism that guarantees sufficient power generation capacity in the electricity market, the main models currently used at home and abroad include scarce electricity prices, fixed cost compensation mechanisms, and capacity market mechanisms. Compared with other mechanisms, the capacity market has higher resource allocation efficiency, and implements effective guidance on source-side installations, or the final form of a capacity compensation mechanism.

There is still a multi-party game of interest in policy implementation, and institutional hardware bottlenecks need to be broken

The mechanism design faces moral risks such as inflated prices and practical problems such as capacity measurement deviations, which are overcome through model mechanism optimization; the game of interest involves conflicting new energy targets for thermal power generation on the power generation side, differences in capacity scheduling across provinces on the power grid side, stable electricity prices and financial burden balance on the user side; hardware bottlenecks involve the lack of flexibility of traditional units, lag in scaling of new players, saturation of transmission channels across provinces, and lack of intelligent measurement and detection.

Policy expectations: pilot first, point-to-point, collaborative integration

Effectively recover the installed costs of traditional baseload power supplies such as thermal power and storage in the short term or using capacity compensation prices; establish a unified national capacity market framework in the medium term to expand market participants to include more reliable power supply entities such as wind power photovoltaic distribution and storage, new energy storage, and virtual power plants; promote the improvement of the market system in the long term, and promote the coordination and integration of the capacity market with the electric energy, auxiliary service market, green power certification market, and power finance derivatives market.

Investment opportunities: traditional power supplies directly benefit, and the prospects for supporting industrial chains can be expected

First, traditional thermal power and energy storage may directly benefit. The capacity compensation mechanism's assessment requirements for deep peak shifting capabilities will force coal power units to speed up flexible transformation and greatly improve the economy of energy storage investment. Second, potential demand for expansion of transmission channels across provinces has yet to be tapped, and the profit margins for integrated energy service providers such as virtual power plants have been significantly broadened; third, supporting industrial chains such as intelligent metering equipment and power trading software have received indirect benefits.

risk factors

The promotion of the dual-carbon strategy fell short of expectations; the promotion of electricity capacity market policies fell short of expectations; coordination between provinces and regions in the electricity capacity market fell short of expectations; and macroeconomic factors led to lower energy demand than expected.