The Zhitong Finance App learned that Huayuan Securities released a research report saying that the electricity consumption cost of optical storage microgrids is only 0.6-0.7 yuan, which has significant cost advantages, and can meet mining companies' carbon emission reduction requirements, and has outstanding replacement potential. The global mining industry is experiencing a cycle of investment growth, and the capital expenditure of mining companies may continue to increase, which is expected to bring new demand for green electricity in mines. Relying on a complete domestic industrial chain and project implementation experience, Chinese enterprises have outstanding competitiveness in going overseas.
The main views of Huayuan Securities are as follows:
Development background: Mine diesel is expensive and carbon emission pressure is high, and mine microgrids are expected to be replaced at an accelerated pace
Electricity costs account for 15% to 40% of mine operating costs. Many remote overseas mines are far from the main power grid and are highly dependent on diesel to generate electricity. Traditional diesel engines have problems such as high cost, poor stability, and high carbon emissions. The electricity cost of optical storage microgrids is only 0.6-0.7 yuan. They have significant cost advantages, and can meet the carbon emission reduction requirements of mining companies, and have outstanding replacement potential.
Market space: replacement of diesel fuels+increased electrification of mining cards+global mining companies' exploration investment & capital expenditure, global mining green power market space is broad
Stock space: The estimated annual market space of global mine optical storage microgrids is 1646-247 billion yuan, of which 741 to 111.1 billion yuan in African mining areas; the potential global demand for PV replacement installed capacity is about 103 GW and 309 GWh of energy storage. Africa corresponds to 46 GW of PV and 139 GWh of energy storage. Incremental space: 1) Mine truck electrification replacement demand: The annual diesel consumption for mine truck transportation is about 2.6 times that of on-site diesel, and 100% electrification will increase the electricity demand by 428.06 billion kilowatts per year; considering that the domestic electric mine card penetration rate is only 10% and the 5-year replacement cycle, there is plenty of room for stock replacement. 2) Driven by exploration investment & capital expenditure: Global non-ferrous metal minerals (excluding oil, gas and coal) exploration investment increased 30% in 26 years compared to 25, achieving the biggest increase in 10 years. Furthermore, the global mining industry is experiencing a cycle of investment growth, and the capital expenditure of mining companies may continue to increase, which is expected to bring new demand for green electricity in mines.
Business model: Overseas mines mainly use PPA (long-term electricity purchase agreement) model, and typical projects have excellent profit levels
Overseas mines mainly use the PPA electricity sales model. Independent power generators are responsible for investment, financing, operation and maintenance. The settlement price is divided into fixed electricity prices and settlement based on the average value of diesel cost and light storage LCOE. The project party signs a long-term power purchase agreement for 15-20 years. Typical projects (average annual utilization of 1600 hours, 1:3 distribution and storage, sales price 1.4 yuan, 10-year depreciation) have a net profit of about 0.7 yuan. The total investment IRR is 23%, and the capital IRR is 62.6%, and the business model is highly replicable.
Industrial layout: The industry accelerates layout and establishes trends in the mine green power industry
Relying on a complete domestic industrial chain and project implementation experience, Chinese enterprises have outstanding competitiveness in going overseas. Overseas projects such as Zijin Longjing, Boleyton, and Sany Silicon Energy continue to be implemented. Yutong Heavy Industries leads the sales and market share of new energy mining trucks. Jinguan Electric focuses on integrated solutions for heavy truck charging piles and optical storage and charging in mining areas. Hongfuhan entered the microgrid business through the acquisition or self-investment of green power projects. Technology industries such as Huawei, Vision, Sunshine Power, and Honglida are speeding up the deployment of microgrid technology solutions.
Risk warning: Uncertainty in power plant construction and implementation; risk of fluctuations in electricity users' operations; risk of electricity bill repayment; risks such as overseas policies and compliance.