CITIC Securities: Large-scale solar and thermal development promotes cost reduction and industrial chain manufacturers are expected to fully benefit
The Zhitong Finance App learned that CITIC Securities released a research report saying that photothermal power generation has the dual function of regulating power supply and long-term energy storage. It also has the potential to act as a baseload power source in power systems. In recent years, with policy support, photothermal power has developed rapidly as a supporting regulated power source for new energy bases; factors such as technological progress, localization, and scale have driven the rapid decline in solar and thermal electricity costs. Although there is still a gap with mainstream power sources, it is expected to benefit from reduced costs and improved adjustment value to enhance power supply competitiveness in the future Healthy development.
The bank said that the shortage of power system capacity and regulation resources may continue to be exposed, driving a sharp increase in demand for ancillary services such as peak shifting. The ability to regulate photothermal power generation is excellent, and there is room for value in the power system. It is expected to continue to reduce costs and obtain higher electricity prices driven by factors such as policy support, technological progress, and large-scale development, and promote long-term continuous growth of the industry. Manufacturers that are deeply involved in the photothermal industry chain are expected to fully benefit; operators with earlier positions in the photothermal sector are expected to gain advantages in terms of technology and experience accumulation.
Incidents:
Recently, the National Development and Reform Commission and the National Energy Administration issued “Certain Opinions on Promoting the Large-scale Development of Photothermal Power Generation” (hereinafter referred to as “Opinions”), which clarifies the overall positioning, development goals, and institutional guarantees of China's photothermal power generation industry, with the aim of promoting large-scale development of the photothermal power generation industry and adding guarantees for the consumption of new energy sources.
CITIC Securities's main views are as follows:
Light and heat have both peak shaking and long-term energy storage functions, and can play the role of baseload and power regulation.
Currently, the main photothermal power generation technology route developed in China is the molten salt tower type. The basic principle is to achieve the conversion of solar energy, heat energy, mechanical energy, and electric energy through heat absorption, heat collection, heat storage and exchange systems and steam turbines. Photothermal power generation projects can store heat energy through molten salt in the heat exchange system to play a role in regulating the power supply. If an electric heating system is added, it can participate in filling valleys, thereby assuming long-term energy storage functions for the power system. Photothermal power generation has strong adjustment capacity. The peak adjustment depth is close to 80%, the lifting load rate is 3% to 6% of the rated power, and the energy storage period can reach 8 to 15 hours, which can form a good support for new energy consumption. Furthermore, judging from the experience of overseas and domestic projects in operation, mature photothermal projects can generally achieve continuous operation time for tens of days, and have the potential to play the role of baseload power supply in specific environments.
The construction of major supporting bases has accelerated, with an ongoing and proposed scale of more than 8 million kilowatts.
Due to high construction costs and immature technology, the installed capacity growth rate of China's photothermal power generation was slow in the early days. In 2024, the installed capacity of Yunguang Thermal Power was only 838,000 kilowatts. In 2023, the National Energy Administration issued the “Notice on Matters Relating to Promoting Large-scale Development of Photothermal Power Generation”, which clearly promotes the accelerated development of photothermal power generation combined with the construction of the Shagowang base. During the “14th Five-Year Plan” period, the annual construction scale was 3 million kilowatts.
According to CSTA's “Blue Book on China's Solar Thermal Power Generation Industry 2024”, the total installed capacity of photothermal power generation projects under construction/proposed at the end of 2024 reached 33.8/4.8 million kilowatts, respectively, and the vast majority of them were built as supporting photovoltaic bases for regulated power sources. This time, the “Opinion” clarifies that photothermal power generation is mainly developing in the three directions of supporting regulated power supplies for large bases, high-capacity independent power supply, and basic power supply for integrated source network load storage projects. By the end of 2030, the installed scale of domestic photovoltaic power generation will reach 15 million kilowatts, corresponding to an average annual production scale of 2.2 to 2.5 million kilowatts during the “15th Five-Year Plan” period, and industry development is expected to accelerate significantly.
Large-scale development promotes continuous cost reduction, and uses value adjustment to enhance market competitiveness.
In recent years, with the basic full localization of the photothermal industry chain and the increase in superposition demand driving technological progress and large-scale development of the industrial chain, the cost of photothermal electricity is falling rapidly. CSTA estimates that the current electricity cost for independent photothermal operation has dropped to around 0.53 yuan/kWh. Although the cost of photovoltaics is still significantly higher than that of other power sources after a sharp drop, and the economy is still weak in situations other than diluting the cost of photovoltaic power supplies, the bank expects that the photothermal economy will continue to improve with policy support.
On the one hand, some provinces currently grant higher feed-in tariff policies. For example, Qinghai clarifies that feed-in tariffs for demonstration projects included before 2028 will be implemented at 0.55 yuan/kWh. The “Opinion” also clearly supports photothermal development through long-term mechanisms such as differential settlement mechanisms and reliable capacity compensation to provide strong support to stimulate industry investment enthusiasm and promote technological progress in the industrial chain; on the other hand, according to the “Opinion”, photothermal projects will develop to 300,000 to 600,000 kilowatts of individual power plants, and dilute construction & operation and maintenance costs through scale effects.
Furthermore, in the future, in the electricity inventory, auxiliary services, and capacity markets, photothermal power generation can obtain higher electricity prices and revenue levels through its regulation & capacity functions, get rid of dependence on electricity price policies or subsidies, and help the industry develop healthily in the long term.
Risk factors:
Demand for electricity fell short of expectations; market-based electricity prices fell sharply; progress in photothermal technology and cost reductions were slower than expected; policy support for photothermal electricity prices was weaker than expected; electricity market reforms were progressing slowly, etc.