Recently, the important measures to control energy prices approved by the European Council of will cause the electricity price of EU to plummet by 80%!
There is nothing new in the sun, history is always changing and reenacting! It is worthless to get a mask, but it is hard to get a penny, and it is hard to get a shot of COVID-19 vaccine, and it is difficult to get a large number of expired and destroyed. International shipping prices are soaring by 80%. The stock prices of companies in related industries have also fallen into a long bearish journey after experiencing a surge. Since the beginning of this year, benefiting from the European energy crisis, the stock prices of companies in photovoltaic , wind energy, energy storage, heat pumps, electric blankets and other industries have soared. Now is the time to be vigilant! Never immerse yourself in the "thinking" of the European energy crisis to buy stocks! Otherwise, you may stand guard on the mountain.
detailed analysis is as follows:
incident:
According to CCTV Finance on October 1, the European Council recently announced that it has officially approved European Commission 's emergency measures to control energy prices previously suggested. The three key points of measures are: Power limit, price limit, and levied profit tax .
(1) Power limit: Actively reduce electricity consumption by 10% from December 1 this year to March 31 next year, of which 5% is reduced during peak electricity consumption.
(2) Price limit: Set an income cap for power producers with lower input costs (such as nuclear and renewable energy companies), with the electricity price limit of 180 euros/megawatt-hour . In addition, the European Council agreed that member states set temporary maximum limits for small and medium-sized power companies, and this limit can be lower than the cost if necessary.
(3) High profit tax : EU member states agree to set up temporary compulsory obligations to enterprises that use fossil energy generation such as crude oil, natural gas and coal. The amount of donations is calculated as taxable profits. If the profit of the power generation company this year and next year exceeds 20% of the annual average profit since 2018, the excess will be collected by the government as an obligation to subsidize households and businesses that have suffered losses due to rising electricity prices.
(4) Implementation time: The European Council emphasizes the temporaryness and particularity of these measures, and only implements from December 1 this year to 31 December next year. Among them, the provisions that limit the income ceiling for related companies only apply to December 1 this year and the first half of next year.
impact analysis:
The three emergency measures for the EU to control energy prices: electricity limit, price limit, and huge profit tax, which is very strong. First, European electricity prices will fall sharply; second, huge profit tax will be subsidized to enterprises and residents through government transfer payments, and electricity costs will drop significantly again, which is a great favorable measure for European people and enterprises. On the other hand, it will seriously damage the enthusiasm of power generation companies. The growth rate of installed capacity of new energy power generation and the power generation of traditional power plants will decline, and the yield and installed demand of household energy storage in Europe will decline; it is a huge negative news for China's photovoltaic, wind energy, energy storage and other industries. A large number of products were stockpiled in the early stage, and the demand for related orders may go from hot to insufficient. At the stock market level, the stock prices of related companies may be difficult to see a trend rise again after the sharp decline in European electricity prices.
European power generation structure has two obvious characteristics: First, non-fossil energy power accounts for a high proportion, nuclear power, hydropower and renewable energy power generation account for about 63% of the total electricity generation in Europe; second, natural gas power generation accounts for a high proportion, with natural gas accounting for as high as 19%, far higher than coal (15%) and petroleum power generation (1%).
Since the beginning of this year, the surge in electricity bill prices in Europe is mainly due to the sharp decline in Russia's natural gas supply, because the characteristics of the European power generation structure of make European electricity prices highly sensitive to natural gas prices . On the one hand, the European electricity market is relatively market-oriented, and fluctuations in natural gas prices are easily transmitted to electricity prices. On the other hand, the high proportion of renewable energy has led to a large impact on the weather and lack of stability in the power system; while the generator sets that burn fossil fuels have good flexibility and play an important role in regulating the peak and valley of and balancing the power market.Since European power market adopts marginal pricing method, power supplies with lower marginal costs are preferred to be connected to the grid, while natural gas costs are relatively high, and the grid connection order is relatively backward, thus becoming the anchor of pricing . In terms of quantitative relationship, natural gas prices are highly correlated with electricity prices.
Therefore, in the marketization of electricity prices, natural gas is an important variable affecting European electricity and related varieties. natural gas price has the role of power price anchor. This time, Europe's emergency measures to control energy prices failed to reach an agreement on setting a natural gas price ceiling. I think it is reasonable to not set an upper limit on natural gas prices, which can prevent the natural gas prices from being decoupled from electricity prices in the short term. After natural gas power generation companies make more than 20%, the government will impose huge profit tax on electricity subsidies to residents' enterprises; in the event of insufficient profits or even losses, power companies will actively reduce power generation and reduce demand for natural gas; in any case, the enthusiasm of power companies to purchase natural gas will decline, resulting in a decline in gas prices and electricity prices.
European natural gas prices and electricity prices have fallen sharply from high levels, and the electricity price conduction is very fast . The conflict between Russia and Ukraine has led to a surge in energy and electricity prices in Europe. European electricity prices have soared nearly 10 times in the past year, setting new records almost every day, with severe fluctuations. On August 29, Germany and France's electricity prices broke through the 1,000 euro/megawatt-hour mark next year, but then stimulated by the news that "the EU gas storage progress is faster than expected and may complete the plan one month ahead of schedule", the electricity prices of the two countries fell by more than 20%. According to data from the Pan-European power exchange Nord Pool, on September 14, the average European power system price was 231 euros/megawatt-hour, a significant decrease from 400 euros/megawatt-hour in mid-to-late August. Among them, the power delivery price in France and Germany also dropped from the previous 1,000 euros mark to around 400 euros/megawatt-hour. As of the end of September, electricity prices in Europe fell slightly again.
Image source: Cailianshe
In the EU's measures to control energy prices, the electricity price is restricted for nuclear and renewable energy power generation companies, with the upper limit of electricity price of 180 euros/megawatt hours; means that Germany's electricity price exceeds 1,000 euros/megawatt hours at peak, which will drop below 180 euros/megawatt hours, a drop of 82%! It means that countries with high electricity prices such as France and Germany will be cut again on the basis of the current basis. The current exchange rate is 1.26 yuan/kilowatt hours at . Therefore, do not immerse yourself in the "thinking" of the European energy crisis to buy stocks! Otherwise, you may stand guard on the mountain.
As for, power restrictions are a little helpful in alleviating the European energy crisis . Because power generation and heating are the main uses of European natural gas, among European countries, Germany and the United Kingdom consume relatively high natural gas. The main uses of European natural gas are industrial and household heating. Taking Germany as an example, industrial and household (including heating) consumption accounts for 36% and 30% of the total natural gas consumption in 2021 respectively. Europe plans to actively reduce electricity consumption by 10% from December 1 this year to March 31 next year, of which 5% will be reduced during peak electricity consumption. The first is to reduce the consumption of natural gas from power generation, and the second is to indirectly reduce the consumption of natural gas from industrial and household use.
1965-2021 Natural Gas Consumption (Bcm) Germany and the Netherlands Downstream Natural Gas Consumption Structure in 2021
High profit tax : EU member states agree to set up temporary compulsory obligations to enterprises that use fossil energy generation such as crude oil, natural gas and coal. The amount of donations is calculated as taxable profits. If the profit of the power generation company this year and next year exceeds 20% of the annual average profit since 2018, the excess will be collected by the government as an obligation to subsidize households and businesses that have suffered losses due to rising electricity prices. According to estimates, an additional energy tax could increase revenue of 140 billion euros. Through government transfer payments, electricity costs for residents and enterprises are expected to drop sharply.
Since the beginning of this year, benefiting from the escalating energy crisis in Europe, my country's new energy products such as photovoltaics, wind energy, energy storage, etc.; demand for household heating equipment with less energy consumption such as heat pumps, electric water heaters, electric heaters, electric blankets, etc., which have smaller energy consumption, has increased significantly, and the stock performance of related companies is also particularly impressive.
However, with the implementation of Europe's major policy of controlling energy prices, it is expected that European electricity prices and natural gas prices will fall sharply , and huge profit tax will be subsidized to enterprises and residents through government transfer payments. The cost of electricity will drop significantly again, and residents' lives and business operations will gradually return to normal. At the same time, the enthusiasm of European power generation companies has declined, the growth rate of installed capacity of new energy power generation and the power generation of traditional power plants will decline, and the yield and installed demand of household energy storage in Europe will decline; it is a huge negative news for China's photovoltaic, wind energy, energy storage, heat pumps, electric blankets and other industries. A large number of products have been stockpiled in the early stage, and the demand for related orders may go from hot to insufficient.
There is nothing new in the sun, history is always replaying the dress up. It is hard to get a mask and it is worth the money. It is hard to get a shot of the new crown vaccine and it is difficult to get a large number of expired and destroyed. The sky-high international shipping price is hard to get a ship. The freight rate plummeted by 80%. The stock prices of related industries and companies have also fallen into a long bear road after experiencing a surge. Since the beginning of this year, the stock prices of companies in related industries have soared due to the European energy crisis. Now is the time to be vigilant! Never immerse yourself in the "thinking" of the European energy crisis to buy stocks! Otherwise, you may stand guard on the mountain.
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