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The policy clarifies that all compliant photovoltaic power plants can be included in the subsidy list, and the full-capacity grid-connected time solution is introduced. On November 25, the Ministry of Finance issued the “Notice on Accelerating the Review of the List of Renewable Energy Power Generation Subsidy Projects”, stating that all compliant photovoltaic projects built after 2006 can apply for the subsidy list. According to the “Notice Concerning the Review of the List of Renewable Energy Power Generation Subsidy Projects” issued by the Ministry of Finance in March, the last batch of lists is only for ordinary photovoltaic projects connected to the grid at the end of July 2017 and front-runner projects connected to the grid at the end of 2019 , This time the policy is issued to realize the right to confirm all compliant photovoltaic projects with subsidies. In addition, the policy requires projects to implement the on-grid electricity price for the full-capacity grid-connected time. For projects that are connected to the grid in batches, the on-grid electricity price should be determined according to the actual time of each batch of full-capacity grid-connection. If neither the local energy regulatory agency nor the power grid company can determine the full-capacity grid-connection time, the project can be recognized in accordance with the “Measures for the Determination of Renewable Energy Power Generation Projects’ Full-Capacity Grid-connection Time” issued at the same time.

The issue of photovoltaic power generation subsidies in arrears has seriously affected the financial performance and valuation of power plant operators. According to our calculations, as of the end of 2019, the accumulated arrears of photovoltaic power generation subsidies have reached 162.1 billion yuan, and it is expected that it will reach 206.7 billion yuan in 2020. As of the end of 2019, the total arrears of photovoltaic power generation subsidies by 17 listed companies were about 63.66 billion yuan, and the average subsidy arrears were about 3.75 billion yuan. Among them, 7 companies accounted for more than 40% of the company’s market value in arrears of subsidies receivable, 3 companies accounted for more than 40% of total assets, and 5 companies accounted for more than 100% of revenue, accounting for more than There are 8 of 500%. Subsidy arrears significantly affect the valuation of power plant operating companies. The PB (MRQ) of A-share photovoltaic power plant operating companies is 1.24 times, significantly lower than the 2.43 times PB valuation of A-share traditional energy power plant operating companies; the Hong Kong stock photovoltaic power plant operating company PB (MRQ) estimates The value is 0.64 times, which is significantly lower than the 1.17 times PB valuation of traditional energy power plant operators in Hong Kong stocks.

The total amount of subsidy funds for all photovoltaic projects has been closed, and the problem of subsidy arrears has been resolved or further progress. With the confirmation of all compliant subsidized power stations and the clarification of the “reasonable utilization hours”, the total subsidy funds for all photovoltaic projects will also be closed, creating conditions for the next step to fully solve the subsidy problem through financial and other methods. According to the policy plan, domestic new photovoltaic projects are expected to achieve complete price parity in 2021, and there will no longer be subsidy arrears for new projects. According to the current policy, we expect that by 2022, the proportion of installed capacity of projects not included in the subsidy list will be less than 20%; assuming that the final account of photovoltaic subsidies will increase by 8% annually, it is expected that the cumulative arrears of photovoltaic subsidies are expected to peak in 2028 and be cleared in 2037 . We believe that if the subsidy issue is resolved, it is expected to bring about a significant improvement in the cash flow of photovoltaic power plants, promote the revaluation of power plant assets and increase the valuation of the photovoltaic sector.