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Cai Yuekun, reporter of Economic Observer Under the background of "dual carbon", the new energy field is becoming one of the key directions of transformation of urban investment institutions in some regions.

Since July, Economic Observer has learned from a number of urban investment institutions that, relying on their resource advantages in industrial parks and other areas, many urban investment companies have begun to actively transform into investors in the new energy field, directly investing in projects such as photovoltaic power stations.

At the end of July, Jin Yongliang, general manager of Shaanxi Hangyuan New Energy Technology Co., Ltd. (hereinafter referred to as "Hangyuan New Energy"), was making final preparations for the full grid connection of the Zhihui Valley rooftop distributed photovoltaic power generation project in the Aviation City of Xi'an Aviation Base.

Jin Yongliang said that after three months of intensive construction, the project is about to be connected to the grid. The total installed capacity of the project is about 4.4MWp (megawatt peak), and a total of 7,587 LONGi Hi-MO X6 anti-dust modules will be installed. The operation mode of "self-generation for self-use and surplus power connected to the grid" is adopted.

As of June 2024, Hangyuan New Energy has completed the construction and grid-connected power generation of 26 industrial and commercial distributed photovoltaic power stations, including standard factory buildings, with a total installed capacity of more than 40MW (megawatts).

On August 2, He Peng, general manager of Yulin Energy Investment Photovoltaic Construction Management Co., Ltd. (hereinafter referred to as "Yulin Energy Investment Photovoltaic"), said in an interview with Economic Observer that the urban investment company not only has rich experience in the field of infrastructure construction, but also has built many government office buildings, and part of the property rights also belong to the urban investment company. It is based on such background and advantages that the urban investment company is now facing a new development opportunity. He Peng said that at present, the company is actively engaged in the investment and construction of the photovoltaic industry, and is committed to promoting the transformation of the energy structure in Yulin City and even the wider region.

In addition, Economic Observer also learned from a municipal investment agency in East China that the local government attaches great importance to the development of the photovoltaic industry, and has formed a linkage and coordination with the municipal investment company to vigorously promote the construction of village-level photovoltaic power stations and assist in the large-scale operation of distributed photovoltaics.

Running into photovoltaic industry

It is reported that Hangyuan New Energy was established in 2020 and is affiliated to Xi'an Aviation City Construction Development (Group) Co., Ltd. (hereinafter referred to as "Xi'an Aviation City Group"). It was previously a city investment company mainly engaged in the production and supply of recycled water and heat. Starting from 2021, Hangyuan New Energy will expand its business in green energy fields such as photovoltaics, charging piles, and energy storage.

As a municipal investment institution, what stories are behind Hangyuan New Energy's entry into the photovoltaic field?

Public data shows that Hangyuan New Energy has changed its company name twice in three years, reflecting the changes in the company's main business. When Hangyuan New Energy was first established in 2020, it was named "Xi'an Aviation Base Hangyuan Water Co., Ltd." and mainly engaged in water-related businesses; in September 2021, Hangyuan New Energy was renamed "Xi'an Hangyuan Urban Supporting Facilities Co., Ltd." and its main business was urban supporting facilities construction.

Jin Yongliang revealed that although Hangyuan New Energy is positioned as a city investment institution for the construction of urban supporting facilities, starting from 2021, because Hangyuan New Energy's parent company, Xi'an Aviation City Group, owns multiple industrial parks and has abundant resources such as idle standard factory roofs, many social investors hope to cooperate with Hangyuan New Energy to build photovoltaic projects. After investigating and researching distributed photovoltaic power generation projects, Hangyuan New Energy decided to layout the distributed photovoltaic power generation field, considering that the company group has abundant idle standard factory roofs and other resources, which can effectively exert the scale effect.

In the more than three years of investment in the photovoltaic field, Hangyuan New Energy has completed the construction and grid-connected power generation of 26 industrial and commercial distributed photovoltaic power stations, including the International Cooperation Cross-border Trade Port (Comprehensive Bonded Zone), Large Aircraft Advanced Parts Manufacturing Park (Advanced Phase I), and standard factory buildings, with a total installed capacity of more than 40MW. In terms of revenue, Hangyuan New Energy plans to achieve an operating income of 14 million yuan in 2023 and a tax-inclusive operating income of 40 million yuan in 2024.

Jin Yongliang said that in the next three years, Hangyuan New Energy will deepen the development of new energy industries represented by distributed photovoltaics, continue to strengthen the foundation of the new energy industry in 2024, and plan to carry out the development and construction of 120MW distributed photovoltaics for public buildings, schools, hospitals, individuals and industrial and commercial enterprises in batches.

He Peng, general manager of Yulin Energy Investment, also said that as the global call for achieving the goals of "carbon peak" and "carbon neutrality" grows louder and louder, Yulin Energy Investment, as an urban investment and operation company, actively assumes social responsibility and responds to government initiatives. The urban investment company not only has rich experience in infrastructure construction, but also has built many government office buildings, and part of the property rights belong to the urban investment company, which avoids many disputes caused by unclear property rights.

He Peng said that it is precisely based on such background and advantages that the Urban Investment Company has ushered in new development opportunities. The Yulin Municipal Government has clearly designated the Urban Investment Company to be responsible for the development and construction of distributed photovoltaic projects in Yulin. So far, the scale of photovoltaic investment by the Urban Investment Company in the region has reached more than 20MW, with a total investment of more than 80 million yuan.

Investor's economic account

As an investor in industrial and commercial distributed photovoltaic power stations, Hangyuan New Energy always puts economic accounts at the top of its considerations when planning the investment in each distributed photovoltaic power station.

Jin Yongliang did some calculations: a distributed photovoltaic power station invested by Hangyuan New Energy has a total installed capacity of about 4.4MW. According to the estimated investment cycle, it will be profitable in about eight years of operation, and some high-quality projects may be shortened to six years.

"Although the investment in distributed photovoltaic power stations is asset-heavy and requires a large amount of initial capital investment, from a long-term perspective, it still has considerable profit potential," said Jin Yongliang.

He Peng said that in the industrial and commercial fields, Yulin Energy Investment's photovoltaic investment projects are expected to pay back within five to six years; while for photovoltaic investment in public buildings such as government office buildings, due to relatively cheap electricity prices, the investment payback period is expected to be slightly longer, about eight years.

He Peng said that in the photovoltaic projects operated by the urban investment company,LONGi Green Energy(601012.SH) emerged as a major supplier of photovoltaic modules. Considering the strong wind and sand in northern Shaanxi, the introduction of LONGi's anti-dust modules effectively reduced the frequency of module cleaning. This not only reduced maintenance costs, but also improved the operating efficiency and service life of the photovoltaic system. In order to reduce the maintenance cost of operating distributed photovoltaic power stations, not only Yulin Energy Investment, but also Hangyuan New Energy began to purchase LONGi Hi-MO X6 anti-dust modules from the second half of 2023.

In order to reduce the maintenance costs of operating distributed photovoltaic power stations, not only Yulin Energy Investment, but also Hangyuan New Energy has begun purchasing LONGi Hi-MO X6 anti-dust components since the second half of 2023.

It is reported that the Hi-MO X6 anti-dust module is a high-efficiency functional photovoltaic module released by LONGi Green Energy. Due to its unique anti-dust frame design, it can allow dust to slide naturally with rain and snow due to gravity, effectively preventing dust and snow accumulation and increasing the single-watt power generation under special extreme weather conditions.

The National Photovoltaic Quality Inspection Center (CPVT) Yinchuan Outdoor Demonstration Base conducted a seven-month outdoor demonstration power generation test on the LONGi Hi-MO X6 anti-dust modules. The results showed that compared with conventional modules, the monthly relative gain of this module reached 2.84%, the highest monthly relative gain (January) was as high as 5.4%, and the highest daily gain was more than 10%.

After statistical analysis of data, the operation department of Hangyuan Company believes that the power generation of 1MW LONGi conventional modules (with frames) from January to May 2024 is about 529,500 kWh, and the power generation of 1MW anti-dust modules from January to May is about 537,400 kWh. The power generation of anti-dust modules is 1.5% higher than that of conventional modules.

From the perspective of investors, Jin Yongliang said that when Hangyuan New Energy first started investing in distributed photovoltaic power stations in 2021, it purchased photovoltaic modules from Longi Green Energy. Jin Yongliang said: "As a leading photovoltaic company located in Xi'an, we choose to cooperate with Longi for a long time. Whether in terms of product quality, power generation efficiency and after-sales service, Hangyuan New Energy is currently quite satisfied with Longi's modules."

Transformation is imminent

As local governments accelerate their debt reduction process, the market-oriented transformation of urban investment companies is also imminent.

Jin Yongliang said that starting from 2023, the price of photovoltaic modules continued to fall, and the procurement cost of 1WM photovoltaic modules dropped to around 0.9 yuan to 1 yuan. Compared with the lowest bid price of 2 yuan per watt in 2021, it has been halved.

Therefore, distributed photovoltaic investors such as Hangyuan New Energy generally believe that 2024 is the best time to invest in industrial and commercial distributed photovoltaic power stations.

Regarding the investment in distributed photovoltaic power stations, Jin Yongliang said that on the one hand, Hangyuan New Energy can achieve lower-cost investment by relying on the advantages of its parent company's group industrial park; on the other hand, as the company continues to increase its investment in green new energy fields such as photovoltaics, it can also help achieve the country's "carbon peak and carbon neutrality" strategic goals.

He Peng believes that the competition in the photovoltaic industry is becoming increasingly fierce, and high-quality use scenario resources are becoming increasingly scarce. This has become an industry consensus. Although the investment threshold in the new energy field is relatively low, as the market matures, the requirements for project quality and operational efficiency are also constantly increasing. Urban investment companies are actively exploring the path of transformation and regard the new energy field as an important direction for corporate strategic transformation. In this transformation process, Yulin Energy Investment not only focuses on the photovoltaic industry, but also expands its vision to the entire new energy industry chain. As a photovoltaic resource-rich area, Yulin City also provides the company with unique natural conditions and development opportunities.

Niu Yanyan, president of Longi's distributed business in China, told Economic Observer that for investment clients such as municipal investment companies, the investment income of photovoltaic power stations is the topic that investors are most concerned about. Longi's anti-dust modules have unique advantages in high power generation, high reliability and low attenuation, which can effectively shorten the investment income cycle, allowing investors to recover their investment as soon as possible and maximize their returns.

China Securities Credit Ratings believes that the ultimate goal of the transformation of urban investment companies is to transform into a market-oriented entity that operates independently, finances independently, and bears its own profits and losses. This inevitably requires urban investment companies to transform from simply undertaking government projects to operating industries. From the perspective of urban investment companies that have achieved operating transformation, the operating industries involved mainly include construction engineering, commercial trade, finance, real estate development, cultural tourism development, industrial investment, etc.

"Urban investment companies should focus on stability when transforming to industrial investment, deepen their professional capabilities based on their own resources and advantages, and develop diversified businesses along the industrial chain," said China Securities Credit Rating Co., Ltd.