Smart grid construction "plan is not changing fast"

The development of power investment and key projects will not give any impetus. In the first three quarters of 2011, the power and grid investments were 242.8 billion yuan and 220.1 billion yuan, respectively, an increase of 5.1% and 11.3% year-on-year, respectively, and the growth rate was up from that in 2010, but it was still at a low level. Only one UHV line was approved during the year, and four were approved by the Development and Reform Commission. This was slower than the plan for the approval of seven UHV lines during the year that the State Grid established at the beginning of the year.

In terms of smart grids, due to the high cost of smart substations, the electrification of electric vehicles has been slower-than-expected due to the selection of market direction.

The growth rate of power investment in 2012 is expected to continue to rebound slightly, and opportunities for rebounding in the sector will appear. The country’s willingness to eradicate the power shortage is not strong, and the power shortage will not lead to a substantial increase in future power investment. In 2011, railway and rail traffic accidents occurred frequently, real estate control policies did not show signs of relaxation, and investment growth pressure in 2012 was greater. Power investment is expected to resist the banner of “guarantee growth”. We have judged that the valuation of the power equipment sector has become reasonable and the repair process of the sector valuation has basically ended. It is recommended to pay attention to the rebound of the sector. At the same time, it is expected that the growth rate of power investment will increase slightly in 2012, and the industry mainly embodies structural investment opportunities. It is recommended that we pay attention to the relatively higher plate of smart grid and energy-saving emission reduction.

The economy of the energy-saving and emission reduction sector is relatively high, and the driving factors directly affect the promotion potential of energy conservation and emission reduction measures. We believe that the market space for all kinds of energy-saving methods is very broad, and the promotion drivers will largely determine the release of downstream demand, which will in turn affect the final promotion effect of this type of energy-saving method. Based on this, we strongly favor the future development of desulphurization and out-of-sales, waste heat utilization, inverters and reactive power compensation devices.

Smart substations and electric vehicle charging and switching stations are expected to become the main highlights in the future. During the “Twelfth Five-Year Plan” period, China will build 6,100 smart substations with 110 kV and above. It is expected that after the State Grid adjusted the design plan and reduced construction costs accordingly, the smart substation will usher in an explosive growth period. Electric vehicles have low operating costs and have economic drivers for large-scale promotion. During the “12th Five-Year Plan” period, China will build 2,900 new electric vehicle charging and exchanging stations, which is expected to be promoted in a large scale after the State Grid has chosen its direction.