On the evening of March 4, Aerospace Electromechanical, one of the leading developers of photovoltaic power stations, announced that it planned to increase its capital by 272 million yuan for its two power station projects. This is the 10th announcement in the past year, announcing the investment and capital increase of photovoltaic power station projects, involving a total amount of more than 2 billion yuan. Aerospace Electromechanical’s series of moves have also made it rank sixth in the development scale of domestic photovoltaic power plants from the sixth place in 2012 to the top of the list.
According to a recent research report released by market research firm Solarbuzz, in 2013, the top 10 PV power plant EPC developers in China owned 45% of the total market share. TBEA, PowerChina, Zhongli Technology, etc., with strong financial strength, have made repeated achievements in the white-hot competition for the development of photovoltaic power plants.
Although the market is hot, market analysts remind that in the context of the photovoltaic industry, especially the terminal power generation and utilization links, the operation performance of many power station projects is still restricted after completion, which directly affects the return on investment of power station operators. For power plant developers, it is not easy to find an operator willing to take over after the completion of the power station and realize the investment returns.
Increased market concentration
According to Solarbuzz’s latest research report, in 2013, under the influence of the introduction of subsidy policies and the recovery of the industry, the competition among domestic photovoltaic power plant EPC project contractors in 2013 was extremely fierce. The top three developers are all occupied by A-share listed companies, namely TBEA, Aerospace Electromechanical and PowerChina. The top two power plants account for 15% of the total market share, while the top 10 developers account for 45% of the market share.
In 2013, the company announced that it planned to increase its power station projects in Gansu and Ningxia, according to the rough statistics of the China Securities Journal, the company announced investment and capital increase in more than 10 photovoltaic power station projects in the past year, involving an investment of more than 1 billion yuan. In fact, many A-share companies were also focusing on the development of photovoltaic power plants last year, including TBEA and PowerChina, which are ranked “champions” and “eyes” among developers.
With the commissioning of the “Xinjiang Power Delivery” transmission channel, the photovoltaic power generation market in Xinjiang has been gradually activated, and TBEA has increased the scale of power station development from 450 MW in 2012 to nearly 1,000 MW in 2013 by virtue of its local geographical advantages, which is regarded by the market as a “dark horse” in the photovoltaic power generation market. Relying on its strong financial strength as a central enterprise, PowerChina often takes the form of full advance to contract projects, which makes the company’s share expand rapidly.
In addition, some companies that have transitioned from module manufacturers to power plant developers have also stepped up their plant development last year. Among them, in 2012, Zhongli Technology became one of the few photovoltaic companies that took the lead in turning around its losses by virtue of establishing a business model of rapid development and successful sales of photovoltaic power plants. In 2013, Hairun Solar also issued many power station investment announcements, and the total number of newly developed power stations last year was about 300 megawatts, and the reserve power station in hand was as high as 1,639 megawatts.
An expert from the China Renewable Energy Society told reporters that before August last year, due to the unclear benchmark electricity price for photovoltaic grid access, developers of large-scale power station projects were generally in a wait-and-see state, and projects that had obtained “small roads” from local governments in the early stage have slowed down the pace of development. However, after the National Development and Reform Commission (NDRC) announced the new electricity price subsidy standard in August last year, the enthusiasm of developers was reactivated, and the competition for power plant development entered a white-hot state.
The development of distributed power stations is heating up
At present, the main battlefield for power plant developers to compete is concentrated in the western region, especially Gansu and Ningxia, which have superior resource conditions and are relatively easy to connect to the grid. The central and eastern regions have slightly inferior resource conditions, but the market space expansion suitable for the construction of small distributed photovoltaic power stations is much slower. According to the statistics released by relevant ministries and commissions, in 2013, more than 8,000 MW of new PV capacity was added in China, including more than 6,000 MW of large-scale power stations and about 2,000 MW of distributed PV capacity.
The above-mentioned experts said that although distributed photovoltaic has been strongly promoted by policies, there are still some technical policy obstacles that have not been completely cleared, which also makes its development progress unsatisfactory. However, with the exhaustion of large-scale ground-mounted power station resources in the west, the distributed photovoltaic power generation market in the central and eastern regions will be forced to speed up. “On the one hand, small and medium-sized developers who do not have strong financial strength will have to withdraw from the western market and move to the central and eastern regions; On the other hand, with the continuous improvement of policies and measures, the construction of the distributed photovoltaic power generation market in the central and eastern regions will be accelerated.”
Judging from the current pattern of the photovoltaic power generation market and the latest proposals of the policymaker, the expert’s views are being verified. The National Energy Administration recently announced the annual new construction scale of photovoltaic power generation in 2014, and the scale of distributed power stations accounted for 8,000 megawatts of the 14,000 megawatts of new installed capacity target for the year.
In fact, some domestic photovoltaic companies have begun to withdraw from the western region, quietly layout in the central and eastern regions, including many listed companies, the main position of competition is concentrated in Jiangsu and Zhejiang. Among them, the biggest action last year was the photovoltaic inverter leader Sungrow. At the end of last year, the company announced that it would cooperate in the development of a 300-megawatt distributed power station project in the Jiangsu and Anhui regions. The market expects that this project will contribute about 2.6 billion yuan to the company’s revenue after it is completed and put into operation. According to the net profit margin of 10%, it is expected to contribute a net profit of 260 million yuan.
In addition, iKang Technology and Wolong Electric are also trying their best in Zhejiang Province to develop dozens of megawatts of distributed power station projects. Some traditional power equipment manufacturers such as East have blossomed in the field of distributed photovoltaic equipment. In 2012, the sales of Easter distributed generation products increased by 381%; In the first half of 2013, the company’s distributed generation equipment sales accounted for 89% of the annual sales in 2012.
The hidden concern of “difficult transfer” of power stations is gradually emerging
By August last year, 130,000 megawatts of PV projects had been disclosed, signed and under development in China, more than three times more than the country’s new 12th Five-Year Plan target of 35,000 megawatts by 2015, most of which were large-scale ground-mounted power projects, according to statistics from Solarzoom, a research institute. This means that in the coming period, the fierce competition for the development of photovoltaic power plants will continue to maintain high temperatures.
However, the bubbling undercurrents under the craze have begun to surge.
It is understood that the driving force behind the development of power stations by many enterprises lies in the temptation of “more than 10% internal rate of return”, and the development of power stations is generally considered to be the most profitable link in the photovoltaic industry. However, an important premise for achieving this rate of return is that the power station built by the developer in the early stage with billions of yuan in advance should be successfully transferred in the same year. If no buyer can be found, the developer will have to switch to an operator, and the return period of the huge amount of money spent on the initial investment in the power station will be extended, and the project development funds will face long-term risks.
In fact, the hidden concern of “difficult transfer” in the development of power stations has gradually surfaced. The above-mentioned brokerage analysts told reporters that in the past four months, the leading developer Aerospace Electromechanical has twice listed on the property rights exchange to package and transfer the equity of its two photovoltaic power station projects, but as of the end of February this year, the transferee has not been found. This may be a sign that the industry should be wary of. “Power plant development is actually a competition for cash flow, and major companies need to get rid of the projects they have built in the early stage as soon as possible to ensure that there is enough upfront capital on the newly acquired projects.
Ranking Abbreviated as 2013 Results Stock price increase in the past three months
1 TBEA —— -16.39%
2 Aerospace electromechanical profit was 141 million yuan, a year-on-year increase of -10.39%
3 PowerChina —— -17.82%
4 Zhongli Technology made a profit of 155 million yuan, an increase of 30% -10.41% year-on-year
5 Hairun Photovoltaic lost 131 million yuan, a year-on-year decrease of 6395% 26.08%