CITIC Construction Investment: Significantly increase in value, flexible and direct converter valves have strong investment flexibility

Time：

2024-01-09

According to a research report released by CITIC Construction Investment Corporation (601066), flexible DC transmission engineering is an important tool for solving the problem of new energy consumption and an important driving force for power grid investment from 2024 to 2025. Flexible DC technology is more suitable for long-distance transmission (transmission end) of new energy, multi terminal interconnection (reception end), and long-distance offshore wind power transmission, and has become the preferred solution for ultra-high voltage DC. Converter valves are the equipment with the highest value in flexible DC transmission lines. The value of flexible DC valves in a single converter station can reach 2-2.5 billion yuan, which is much higher than that of conventional DC converter valves. Therefore, the increase in penetration rate of flexible technology will bring elasticity to the converter valve industry chain (equipment, core components).

The main viewpoints of CITIC Construction Investment are as follows:

The pressure to connect large bases to the grid is high, and the demand for long-distance power transmission is increasing with certainty.

The consumption problem of the Shagohuang large base is severe, and the demand for ultra-high voltage direct current transmission projects that can achieve long-distance and high-capacity electricity transmission is rigid and continuous. Due to the large scale of external transmission demand in large bases, assuming a single DC ultra-high voltage transmission capacity of 12-15GW, the existing ultra-high voltage lines are insufficient to meet the external transmission demand. From the end of the 14th Five Year Plan to the 15th Five Year Plan period, there will be continuous dynamic additions of ultra-high voltage projects.

Flexible DC is the preferred choice for new transmission lines and has become a clear technological trend.

Flexible DC technology does not rely on AC system voltage support, has no commutation failure, and can provide power to passive systems. It is more suitable for long-distance transmission of new energy (transmission end), multi terminal interconnection of receiving end (receiving end), and long-distance offshore wind power transmission. At present, at least 4 ultra-high voltage projects plan to adopt flexible DC solutions.

New lines are expected to prioritize flexible DC solutions (at least for use at the receiving end), especially for supporting transmission lines in new energy bases. The penetration rate of flexible and direct technology will significantly increase, becoming a clear technological trend, which is a new change in technology in the power grid system.

The flexible and direct converter valve equipment has the highest value and brings high elasticity to the industrial chain.

The value of the flexible and direct converter valve at the single station equipment end accounts for nearly 50% of the total value. According to existing projects, the estimated value of full capacity single station flexible DC converter valves is around 2.4 billion yuan, far higher than conventional DC valves. IGBT is the most valuable core device among flexible and direct converter valves. The continuous promotion of flexible DC technology will bring significant revenue elasticity to various links in the industrial chain (converter valve factories, component suppliers), and it is expected to see a peak in revenue recognition after 2025.

Investment advice:

It is recommended to pay attention to manufacturers of converter valves and suppliers of core components with high elasticity.

Risk statement

1) In terms of demand: Changes in national infrastructure policies have led to lower than expected investment in power supply; The investment scale of the power grid is lower than expected; The decrease in the growth rate of new energy installation has led to a decrease in demand for power equipment; The growth rate of electricity consumption in the whole society has decreased, etc; The bidding progress of the two networks is not as expected; The progress of ultra-high voltage construction is not as expected.

2) On the supply side, prices of bulk commodities such as copper resources and steel have risen; The supply of power electronic devices is tight, and the progress of localization is not as expected.

3) In terms of policies, the support for the new electricity market is less than expected; The progress of promoting the electricity price mechanism is lower than expected; The progress of the electricity spot market is not as expected; The price difference between peak and valley electricity is lower than expected.

4) In terms of international situation: the energy crisis is easing rapidly, and energy prices are falling rapidly; Deepening international trade barriers, etc.

5) In terms of market: there has been a significant change in the competitive landscape; The intensification of competition has led to lower than expected profitability in various aspects of power equipment; Transportation and other costs have increased.

6) Technical aspect: The progress of cost reduction in technology is lower than expected; Difficulty in further improving technical reliability, etc.

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