Profit and cash flow worries of the hottest increm

2022-10-24
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Worry about the profit and cash flow of incremental allocation: thinking about investment income

Adam Smith said, "subjectively for yourself and objectively for others". The most effective logic for the market to allocate resources is that it is profitable. The development process of incremental allocation needs capital to promote it. Naturally, a loss making business cannot be done, and no one is willing to do it. In the current electricity price composition of incremental distribution users, the space of distribution price will lead to the limited profit space of project owners, and even risks. The imagined other services and profit models are also uncertain. The investment income of investment owners and capital will affect the process of reform, even success or failure

recently, I read a series of articles on power system reform and incremental power distribution, such as TPE car sealing strips, TPE car mats and other products in the 3rd issue of China Power Enterprise Management in 2018. Most of the authors of the articles are familiar to me and have met; The pilot projects written in the article are familiar; The problems in the article have been tangled for a long time and are commonplace. Later, I read an article written by sun Xiaobing, "nine questions about whether social capital is willing to invest in increasing the amount of power distribution with anti loose devices", which was incisive, very profound and thought-provoking. In recent years, our team has also done some incremental distribution planning, design, review and related research work, and has a deep resonance with these issues

according to the current formulation, energy is revolution and the power system is reform. The revolution is subversive, and the reform seems to be just a change of the existing system and the redistribution of established interests, in order to release greater market vitality. I wonder why there is such a difference in wording? The concept of energy is chaotic, one pot of porridge, no fixed finger, love leather whose life can be, everyone has their own thoughts, express their views, hot and noisy, ha ha. Electricity reform and incremental distribution seem to be different. There is a vague meaning of "fighting local tyrants and dividing fields", so the words are appropriate, saying: reform. China's reform has been turbulent for 40 years, and China's electricity reform has also gone through turbulent for 30 years. We also have the experience of reform. Throughout our history, no matter what kind of reform or form of reform, it is inseparable from the powerful carriage of "investment". Of course, China's power system and incremental distribution reform should also be no exception. Incremental distribution is primarily a "land enclosure movement". The next step is the infrastructure construction of power distribution. Moreover, this investment means competition. It is necessary to solve not only the problem of stock, but also the problem of increment

Adam Smith once proposed in the wealth of nations that "subjective is for oneself and objective is for others". There is a profound market philosophy and capital nature in the bread here. In a more explicit sentence, "there is no love or hatred for no reason in the world". Markets and capital are profit seeking. Without objective interests, there will be no subjective interest drive. Market-oriented investment, using the market to allocate resources, this is a universally applicable "formula". In this round of power reform, how to use the market to allocate resources? Market and interest driven export growth is slowing down; Is the economic model of 3 clearly visible

looking back, we can see that there was a huge market demand behind the "fund-raising for power generation" in those years. Objectively, it solved the problem of power supply for power users and balanced the load and electricity consumption. But subjectively, it was the investors' profitable, which made the capital find a way out, and everyone was full. Later, with the "separation of power plants", the power demand is a long-term stable demand with economic growth. Driven by the market and welcomed by national policies and local governments, the power generation group has made a lot of investment in power points. As long as the accounts can be calculated, the market is positive. The inertia thinking of investment is that everyone works together to dry the installed power generation capacity to 1.78 billion kw (statistical data of China electricity Union in 2017). The power generation group and the power company, everybody ' s happy. Today, the rise of new energy in the whole country also confirms Adam Smith's words. Driven by the interests of the market, traditional coal-fired power is rapidly losing capacity and embracing new energy. National policy guidance and subsidies make money

from the first batch of pilot owners to the statistical data of the third batch of published projects, it can be seen that in addition to the two major power companies (responsible for keeping the land), the "five major and four small" of power generation groups are also positive, followed by listed companies with financial background and similar industrial chains related to energy, local energy investment groups, large energy users or users with stock assets, And the management committee with the background of local government... We found that this is a group of "people with rice". They all have investment needs, and the crowd is excited, waving flags and shouting, eager to try. How about the reform of incremental power distribution led by the central government, which is not smooth, and investors' prudence and hesitation in the face of a "blue ocean market"

this reminds me of the development of photovoltaic and energy storage. The process and performance of these two are also very different. One is a market driven by profit seeking capital, and the other is that technology needs to find its own application scenarios and business models. Capital will follow its rules of the game, so the difference in industrial development is also self-evident. I don't want to express here that the subsidy market is a good market. Subsidies are conducive to the early cultivation of the market, but not conducive to the effective and reasonable allocation of resources. Under the guidance of its own rules, social capital penetrates in its way, and it is also mercenary

in the published Guiding Opinions on the formulation of local electricity and incremental distribution prices, the user electricity price for incremental distribution is "upper electricity price + provincial transmission and distribution price + distribution price + fund and cross subsidy", and it is stipulated that the user terminal price cannot be higher than the price directly connected to the voltage level at the same level. At present, Fujian incremental distribution price mechanism has been introduced, which is in line with the guiding opinions. Electricity price, transmission and distribution price, funds and subsidies have been defined. Where will the space of distribution price be? Can the investment income of the investment owner and capital be guaranteed

according to the current pilot project operation, the incremental power distribution is in the form of franchise rights, and in the form of competitive negotiation in the owner selection, "allowable cost + reasonable income". At this stage, it is still in the stage of fuzzy concept without operation. We can see it from the verification of transmission and distribution electricity price

with monopoly nature, the "permitted cost + reasonable income" in public basic services is the basic pricing principle: the permitted cost is the permission of the government and society, not the incremental distribution itself. If we say that the verification of transmission and distribution electricity price is "wonderful", the allowable cost of incremental distribution price in the future will also make you tangle. Who will be the vested interest? Reasonable income should completely eliminate the transfer of interests caused by the proliferation of auxiliary industries. What is its accounting basis? Based on the cost of basic investment or future sales revenue? There are many uncertainties in this. It can be expected that the future incremental distribution investors will also face the same situation of management and supervision of the separation of main and auxiliary power supply faced by the two major power companies today

investment requires return, which is the nature of capital. In the process of electricity reform, we have lined up in a long line to sell electricity and do incremental distribution. Maybe more owners' mentality is to line up first, get on the bus first, wait and see, be careful, look left and right, risk analysis, entanglement... "Touch the stone to cross the River", and guide our reform and development through practice. This is the objective law of materialism. However, if in the process of reform, investment owners perceive the existence of income risks, and even cannot recover costs in the whole life cycle or within the franchise time, there is no subjective "self motivation", there is no objective "altruism". If they want to force capital in, it is against the law

at the beginning of the year, Jia Yu, executive deputy general manager of Xinggang Electric Power Co., Ltd. (3) cooling effect Department of Zhengzhou airport incremental power distribution pilot project, said in an interview with China electric power enterprise management that "in the case of unclear policies in the early stage, the business went ahead... As the project owner company, we were running naked at the beginning". After running for a year, with the promotion of reform, some policies have been implemented, and there are rules and laws to follow gradually. Is it right to put on clothes like this? Incremental power distribution is a deep-water area of power reform, and it has become elusive. If the stakeholders involved in this reform do not clarify the key core issue of interests, I really don't know whether it will be a "naked feast"

remembered the end of the emperor's new clothes in Andersen's fairy tale: "one day, a child said," but he didn't wear any clothes! ""

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