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In a flash, the roller coaster 2020 has passed, China's fourth-quarter GDP growth rate of 6.5% to a perfect close, the full-year growth rate of 2.3% to achieve positive economic growth. At the same time, copper terminal consumption data have been published, this paper aims at summing up the last year's copper consumption in the power sector, looking for power consumption highlights, focusing on the sustainability of power consumption this year.

1.Investment in electric power exceeded expectations, and investment in electric power was significant

First, from the perspective of investment in electric power infrastructure, the proportion of copper consumption in electric power infrastructure is the highest among copper terminal consumption, and this includes two types of investment in infrastructure, one is investment in electric power infrastructure, covering fire power, water power and wind power, nuclear and solar power generation equipment construction; the other is the power grid type of infrastructure investment, including the construction of some transmission and distribution equipment, ultra-high voltage and charging piles. The figure 1 below shows the completion of investment in power infrastructure this year. In 2020, the amount of investment in power was 524.4 billion yuan, up 67.06 percent year-on-year, the second quarter was due to the need to stabilize the economy after the outbreak, and the fourth quarter was due to increased investment in new energy power after the fifteen plan, particularly in December, which saw a 26% increase from November.

It is not difficult to find from the investment sub-areas that the highest proportion of investment in the four major power generation areas is respectively wind power investment and hydropower investment. The proportion of wind power investment is as high as more than 50% , and the proportion of hydropower investment is around 25% , the direction of investment in power infrastructure in the first half of the year is still based on the construction of hydroelectric generating equipment. By the second half of the year, the amount of investment in wind power will be substantially increased, and by December, the wind power installation will have a "rush to install" while subsidies have not yet subsided, continued to drive up investment in wind power infrastructure throughout the year.

Investment in the power grid also slightly exceeded expectations this year, with a cumulative total of 469.9 billion yuan completed in 2020, a cumulative decrease of 3.23% year on year. In the first three years of 2008 fifteen, investment in the power grid basically completed the target ahead of schedule in a high-speed growth mode, but with the impact of the epidemic and the direction of New Infrastructure Development, the 2020 grid investment target increased from 405 billion yuan to 460 billion yuan, mainly for UHV 181.1 billion yuan, digital new infrastructure 24.7 billion yuan, charging piles 2.7 billion yuan.

2.Wind power photovoltaic increment is big, high-voltage cable grows slowly

Investment reflects one kind of expectation and direction, and the construction and material demand of concrete projects are different. In the field of actual construction of power sources, nearly all new additions of power equipment this year achieved the positive growth target for the whole year in the fourth quarter, however, there are differences in the specific power generation structure, in which the increase of hydropower equipment followed the pace of investment above, in the first half of the power generation equipment capacity steady growth; New Wind capacity jumped from 24.62 gigawatts to 71.67 gigawatts in December, an impressive performance, while new solar capacity also jumped from 25.9 gigawatts in November to 48.2 gigawatts.

From the demand for copper for power equipment, up to 2020, the cumulative amount of copper used for new hydropower equipment was 13,200 tons, for new thermal equipment was 56,400 tons, and for new wind equipment was 286,700 tons, the cumulative amount of copper used for new solar energy equipment was 144,600 tons, and the cumulative amount of copper used for power sources reached 500,000 tons last year, far exceeding the previous level.

In the field of power grid construction, we take the transmission and transformation equipment of 220 kv and above as our observation. This type of infrastructure project uses more copper. From the completion of the project, the capacity of the new transmission equipment of 220 kv and above was 222.88 million KVA last year, the cumulative year-on-year decline of 6.4 percent is lower than the 3.17 percent drop in grid investment, and the amount of copper used is about 40,000 tons. Last year, a total of 35,029 kilometers of new 220 kv and above lines were added, a cumulative year-on-year decline of 2.5 percent is higher than the decline in grid investment, the cumulative amount of copper is about 1,566,300 tons.

3.Power Grid Investment Speed Down Transformation, power new energy upwind

To sum up, last year's performance in the power sector exceeded expectations both in terms of investment and actual implementation of projects, especially in the light of the Global Green Energy R & D and construction boom after the epidemic, low-carbon targets tilt the balance of power distribution around the world towards wind and solar power. In the area of grid investment during the 14th five-year Plan period, according to data released by the State Grid last year, fixed asset investment increased to 460 billion yuan for the whole year, and is expected to drive social investment to over 900 billion yuan, with the overall scale reaching 1.4 trillion yuan. According to this algorithm, if the investment in the State Grid and Related Industries during the "14th five-year plan" period reaches 6 trillion yuan, the overall scale is about 1.2 trillion yuan per year, based on the ratio of the investment in the State Grid to the investment that drives social investment this year, the average annual investment in the State Grid during the 14th five-year plan period is likely to be around 410 billion yuan. In absolute terms, the investment of State Grid companies during the 14th five-year plan period is likely to decline to a certain extent compared with the fifteen period, but the transformation of the power grid sector combined with 5G technology will accelerate and new grid infrastructure may be favored, there may be a decline in demand for copper.

China aims to reach a carbon peak by 2030 and be carbon neutral by 2060. According to the calculation, during the "14th five-year plan" period, it is expected to add 80 gw of photovoltaic units per year and 30 Gw of wind power per year on average. According to the planning of the National Development and Reform Commission, 2/2.1 trillion kwh of wind power/photovoltaic generation will be generated in 2050, compared with 0.8/0.7 trillion degrees in 2025, there is still a lot of room for new energy consumption. In the process of overseas new energy development, the price of electricity has risen sharply, while the domestic terminal price has higher resistance. From the power structure, the next five years thermal power is still the ballast of power system balance, but wind photovoltaic power generation is expected to account for more than 15% of the total.

Therefore, the installation and construction of new power sources is still the main trend in the field of power investment, and it is expected that the installation of offshore wind power next year will be the main force of scale expansion. The demand for copper from new power sources will also change from the low growth rate in the period of fifteen to the high growth rate of 20-40% of annual copper consumption.

 Source: MEERYA Futures, author, Jeff Zhang

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