"New infrastructure" takes the lead: State Grid invests 100 billion yuan in UHV

Our reporter/Wang Jinlong/Xi'an report

"New infrastructure" is becoming a new "trend" for investment.

Among them, UHV is one of the seven key investment areas of "new infrastructure", and a new round of investment has begun, with a scale of over 100 billion yuan. As the main body of UHV investment and construction, the State Grid told the reporter of China Business News that the investment scale of the State Grid's UHV construction projects in 2020 is 181.1 billion yuan, which can drive social investment of 360 billion yuan, with an overall scale of 541.1 billion yuan.

Industry insiders believe that UHV projects have a large investment scale, and private capital is expected to participate in the investment under the background of mixed ownership reform of central enterprises. Previously, in November 2019, State Grid introduced 12 key mixed ownership reform projects, including the "Baihetan to Zhejiang ±800 kV UHV DC Project".

The head of a power distribution company in Shaanxi told reporters that he had noticed the news that the State Grid would open up UHV to private capital, "but how to open it up and whether there is an entry 'threshold', there is no case to follow, but as a company related to the power industry, we still hope to participate."

Investment and construction speed up

UHV refers to power transmission technology with voltage levels of 1000 kV and above for AC and ±800 kV and above for DC. 11 years ago, on January 6, 2009, the world's first commercial UHV project, the 1000 kV UHV AC test and demonstration project from Southeast Shanxi to Nanyang to Jingmen, was put into operation.

According to people from the State Grid, as of the end of 2019, the State Grid has built a total of "11 AC and 11 DC" UHV projects, with a total investment of more than 430 billion yuan. The "3 AC and 3 DC" UHV project is under construction, with the length of the UHV lines under construction and in operation, and the power transformation (conversion) capacity exceeding 38,000 kilometers and 400 million kilowatts (kilowatts). In North China and East China, a UHV backbone grid has been initially formed, and the UHV power grid has an inter-provincial and inter-regional transmission capacity of 130 million kilowatts. It has played an important role in ensuring power supply, promoting the development of clean energy, improving the environment, and improving the safety level of the power grid.

In the preliminary work plan for key projects in 2020, State Grid has clearly defined the approval progress targets for two direct current (DC) lines, five AC UHV projects, and 13 key projects. The preliminary work for another three UHV DC projects will also be accelerated.

On the other hand, State Grid has studied and compiled the "2020 UHV and Cross-Provincial 500 kV and Above AC and DC Project Preliminary Work Plan", which clearly states that it will accelerate the approval of 5 AC and 5 DC UHV projects, including the Nanyang to Jingmen to Changsha project and the Baihetan to Jiangsu project, as well as preliminary feasibility studies within the year, as well as 13 preliminary work plans to improve the efficiency and benefits of UHV channels.

Among them, among the five UHV DC projects, one is the Longdong to Shandong UHV project. According to the State Grid plan, the preliminary feasibility study of the project will be completed in June. After it is included in the national power plan, an integrated feasibility study and design bidding will be carried out.

"Longdong refers to the Gansu region east of the Longshan Mountains, including the eastern areas of Qingyang, Pingliang and Tianshui. If it can be completed, it will drive the economic development of the above-mentioned areas." A government official in Qingyang City, Gansu Province told reporters that in June 2019, Gansu and Shandong provinces had signed a strategic cooperation framework agreement on the construction of the Longdong to Shandong ±800 kV ultra-high voltage direct current project.

According to the person, according to the plan, the ±800 kV UHV DC project from Longdong to Shandong will start from Qingyang, Gansu, pass through Shaanxi, Shanxi, Henan, and finally reach Shandong. The transmission distance is more than 1,000 kilometers. The planned transmission capacity is 8 million kWh, and the main power transmitted is coal-fired power, wind power and photovoltaic new energy.

The reporter learned that Gansu Qingyang is rich in coal resources, but there are only a few coal mines that have officially started production. The main mines are Hetaoyu Coal Mine and Xinzhuang Coal Mine under Huaneng Group, with a total production capacity of 16 million tons/year. Corresponding power plant projects have been planned, but as of now, the coal mines have not reached full production and the power plants have not started construction. As for wind power and photovoltaic new energy projects, they have not yet formed a scale.

"Gansu is a major energy province, and the ±800 kV UHV DC project from Longdong to Shandong is an important support for the province's transformation from a major energy province to a strong energy province. If the problem of external transmission is solved, Longdong's coal-fired power, wind power, and photovoltaic new energy projects will accelerate development, and the government will urge companies to speed up project investment and operation, which will not affect power grid construction." The above-mentioned Qingyang Municipal Government official told reporters that regarding the above-mentioned project, the relevant consulting unit has been commissioned to complete the "Gansu Longdong AC/DC Power Grid Development Plan and Power Transmission Plan" research and pass the expert group review.

How does private capital get a share of the pie?

How to solve the funding problem in the face of a UHV investment of hundreds of billions of yuan? This has become the focus of attention. In this regard, a senior executive of a local power company told reporters that under the policy of mixed ownership reform of central enterprises, power grid construction will rely on capital from all sources, including private capital, in addition to its own funds.

On November 19, 2019, State Grid held a special promotion meeting for introducing social capital in Beijing, focusing on promoting 12 key mixed-ownership reform projects, including the "Baihetan to Zhejiang ±800 kV UHV DC Project" project.

"Looking at the UHV projects that the State Grid has already put into operation, the investment amount for each project is basically over 10 billion yuan, which requires a large amount of funds, so it must rely on the support of capital from all parties." A person from the State Grid said that although the investment in the power grid is huge, the returns are stable.

Feng Laifa, director of the Finance Department of State Grid Corporation of China, once publicly stated that UHV projects have the characteristics of large investment amounts, high technical levels, strong resource optimization allocation capabilities, stable operations and returns. He hopes to raise funds for grid construction through multiple channels, further strengthen grid construction, and promote high-quality development.

"The ±800 kV UHV DC project from Baihetan to Zhejiang and the UHV DC project from Qinghai to Henan are just attempts by the State Grid to introduce outside capital. We may introduce outside capital for other projects in the future." The senior executive of the local power company told reporters that at present, a lot of social capital, including private capital, is still in a wait-and-see state regarding investment in UHV, and is still in the exploratory stage in the early stages.

The person believes that in addition to the State Grid and China Southern Power Grid, there are a few other power grid companies with regional advantages, such as the Inner Mongolia Western Power Grid and Shaanxi Local Power Company. They are familiar with power grid business and have a strong interest in UHV investment. In addition, banks, insurance companies, large industrial funds and some local government investment platforms are also capital sources that UHV investment needs to win over.

"Although we have also noticed the news that the State Grid is opening up UHV to private capital, there is no case to follow on how to open it up and whether there is an entry 'threshold'. However, as a company related to the power industry, we still hope to participate." The head of a power distribution company in Shaanxi told reporters that "grasping the middle and releasing the two ends" is a direction of power system reform, but this does not mean that the middle is not allowed to participate. Just like the oil and gas pipeline network, it will also introduce social capital, but it is controlled by state-owned assets and can also give benefits to other forms of social capital. Therefore, with the continuous construction of UHV, private capital is also expected to get a share.

Driving hundreds of billions of investment

作为“新基建”七大领域之一，特高压具有产业链长、带动力强、经济社会效益显著等优势。据悉，2020年国家电网的特高压建设项目投资规模1811亿元，可带动社会投资3600亿元，整体规模5411亿元。

The State Grid Corporation of China estimates that the ±800 kV UHV project from northern Shaanxi to Hubei will directly drive equipment production by approximately RMB 12 billion, create more than 40,000 jobs, drive investment in power sources and other related industries by more than RMB 70 billion, and promote the transformation and upgrading of the electric power equipment industry.

In the capital market, some UHV concept stocks also benefited significantly and performed strongly. For example, the share prices of China XD Electric (601179.SH), Pinggao Electric (600312.SH), Tongda Shares (002560.SZ) and many other related concept stocks have increased to varying degrees. On March 13, UHV concept stocks were generally in the green, with a closing increase of 6.58% that day.