Power Equipment: Finalization of "New Energy Industry Development Plan"

During the “12th Five-Year Plan” period, the smart grid, UHV and new energy construction will become the troika that will drive the development of the power equipment industry. The total investment in smart grids is expected to be 1 trillion yuan in the next 10 years. Digital substations will be fully constructed and transformed. The UHV total investment will be as high as 400 billion yuan, of which equipment investment will reach around 250 billion yuan. The "New Energy Industry Development Plan" will also be introduced. From 2011 to 2020, the total investment in new energy development is expected to reach 5 trillion yuan, and nuclear power will become the fastest growing new energy source.

The smart grid has become the theme of the "12th Five-Year Plan" power grid construction: It is expected that the investment in China's power grid construction will reach 1.5 trillion yuan during the "12th Five-Year Plan" period, and that the UHV line construction investment will be about 400 billion yuan. The development of smart grid will enter the stage of construction of smart grid demonstration project from the stage of technology and management standard formulation.

Digital substations will be rapidly promoted and the demand for electronic transformers will increase substantially: The development of digital substations is an important part of building a strong and unified smart grid. During the “Twelfth Five-Year Plan” period, with the maturity of digital substation technology, the construction of digital substations and The renovation will be fully rolled out. As the basic equipment of the process layer in digital substations, electronic transformers will gradually replace traditional transformers. Therefore, the market for electronic transformers will become one of the focuses of competition for secondary equipment companies.

The construction of UHV lines will be fully carried out: The "12th Five-Year Plan" period is an important stage for the development of China's UHV power grids. By 2015, the "Three Chinas" region (North China, East China, and Central China) will form a "three vertical and three horizontal one ring network". UHV AC grid, the country will also build 11 UHVDC transmission lines. The UHV total investment will be as high as 400 billion yuan, of which equipment investment will reach around 250 billion yuan.

The “New Energy Industry Development Plan” was finalized, and nuclear power grew fastest: The “New Energy Industry Development Plan” compiled by the National Energy Administration had passed the approval of the National Development and Reform Commission. It is estimated that the total investment in new energy development from 2011 to 2020 is expected to reach 5 trillion yuan. It is estimated that by 2020, China's hydropower installed capacity will reach 380 million kilowatts; nuclear power installed capacity will reach 80 million kilowatts; wind power installed capacity will reach 150 million kilowatts. Nuclear power installed capacity will increase nearly 8 times, becoming the fastest growing new energy source.

Investment suggestion: As a defensive type, the power equipment sector has strong defensive ability. At the same time, under the influence of national industrial policies, the hotspots in the industry are obviously outperforming the broader market. In the fourth quarter, we continued to focus on the recommendations of Smart Grid-related Changyuan Group, Baili Electric, and the new energy sector of Hunan Power.