Analysis of the development status of the distribution switch control equipment industry in 2018.

   Source: Foresight Industry Research Institute

2019 Incremental Power Distribution Project Operation and Practice Seminar (Phase 3) · Beijing · December 7

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I. Expansion of downstream application market demand

As a basic industrial product of the national economy, distribution switch control equipment is widely used in the power industry. Since 2009, China's annual cumulative investment in power engineering construction funds have remained at more than 730 billion yuan. In 2016, the accumulated investment in power engineering construction nationwide totaled 884 billion yuan, an increase of 3.08% year-on-year, reaching the largest value in recent years. In 2017, the accumulated investment in power engineering construction across the country declined, reaching 801.4 billion yuan, a decrease of 9.34%. Looking ahead, we believe that the scale of investment in China's power construction will remain high in the future, and the broad market space of the distribution switch control equipment manufacturing industry will continue to be maintained.

Table 1: Accumulated completed investment amount and year-on-year growth of national power engineering construction in 2009-2017

Source: CEC Research Institute

The strong development of the national economy has brought huge development opportunities to the distribution switch control equipment manufacturing industry, especially the high-voltage switch control equipment, frame circuit breakers, and molded case circuit breakers have been driven by the rapid growth of power generation equipment in recent years, and the production and sales have been significantly enlarged . As of the end of 2017, the installed capacity of full-caliber power generation equipment nationwide reached 1,777.3 million kilowatts, an increase of 7.67% over the previous year, and the growth rate was 0.54 percentage points lower than the previous year.

Table 2: Capacity and growth of full-caliber power generation equipment in China from 2007 to 2017 (Unit: 10MW,%)

Source: CEC Research Institute

In recent years, with the rapid development of China ’s economy, power shortages have generally occurred in the southeast coastal areas. The long-standing “retransmission and light transmission” problem of China ’s power development has gradually been exposed, which highlights the development of China ’s power industry. A weak link-relatively inadequate power grid facilities. After 2006, power grid construction surpassed power supply development and became the main investment focus for power construction. The proportion of investment in the power grid continues to rise, and the structure of the proportion of investment has become more reasonable, which has improved the trend of excessively large scale, rapid growth, and excessive proportion of China's power supply investment in recent years. At present, the UHV, power distribution network and its new round of rural power grid upgrade and reconstruction projects have been fully launched, which has led to a substantial increase in grid investment. In 2017, the investment in power grid construction was 531.5 billion yuan, a year-on-year decrease of 2.14%.

Table 3: China grid investment scale and growth rate from 2009 to 2017 (Unit: 100 million yuan,%)

Source: CEC Research Institute

Second, the industry market scale is gradually expanding

According to the data from the "Forecast and Analysis of China's Distribution Switch Control Equipment Manufacturing Industry Production and Sales Demand and Investment Forecast Analysis Report 2018-2023" by the Foresight Institute of Industry, in 2017, China's distribution switch control equipment industry realized sales revenue of 666.758 billion yuan, a year-on-year increase of 1.58%. Looking forward, we believe that in the future, the scale of investment in China's power construction will remain high, and the broad market space of the distribution switch control equipment manufacturing industry will continue to be maintained, and it is expected to continue to grow at a low speed.

Source: National Bureau of Statistics

3. Smart grid and railway electrification construction are expected to drive the industry's development speed up

At present, the proportion of smart grid investment in China is low, but with the advancement of smart grid, the proportion of smart investment in grid investment will increase significantly. In the first phase of the smart grid (2009-2010), the total grid investment was 551 billion yuan, the smart investment was 34.1 billion yuan, and the average annual smart investment was 17 billion yuan, accounting for 6.2% of the total grid investment. (2011-2015) Total grid investment is expected to be 1.5 trillion yuan, intelligent investment is 175 billion yuan, annual average grid investment is 35 billion yuan, accounting for 11.7% of total investment; the third stage (2016-2020) total grid investment is 1.400 billion yuan, intelligent investment is 175 billion yuan, the average annual intelligent investment is 35 billion yuan, accounting for 12.5% of the total investment.

Table 5: Annual average investment scale of intelligent power grid in each stage

Source: National Bureau of Statistics

The average annual investment amount of intelligent investment during the "Twelfth Five-Year Plan" period was doubled in the first phase, and the proportion of investment in power grids also increased from 6.2% to 11.7%. With the development of smart grid construction, intelligent investment will increase significantly, and the proportion of secondary equipment investment will increase from the current less than 5% to 12% -15%; the demand for distribution switch control equipment will then expand again, which is expected to drive The growth rate of industry sales revenue picked up.

Furthermore, according to the medium and long-term railway network plan, by 2020, China's railway operating mileage will be increased from the originally planned 100,000km to 120,000km, and the total investment scale will be increased from the original 2 trillion yuan to 5 trillion yuan. Electrification rate increased to 60%. And this round of railway electrification construction and transformation requires the utilization rate and localization rate of domestic equipment to be increased from less than 10% to 70%, which will inevitably bring a large number of orders and good development opportunities for domestic distribution switch control equipment manufacturing enterprises. .