CITIC Securities: The new energy industry is expected to experience a Davis double play

CITIC Securities released a research report stating that the intensification of the US-Israel-Iran military conflict has led Iran to block the Strait of Hormuz. EIA data shows that approximately 20% of global oil and gas supply has been impacted, causing a sharp rise in international oil and gas prices that are expected to remain relatively high. China and Europe are both facing the dilemma of excessive dependence on fossil fuels, highlighting energy security risks. Against this backdrop, the flexible allocation and economic advantages of new energy further enhance its importance. The energy transition has shifted from an optional path to an essential strategy for ensuring energy security, and the industry is expected to see accelerated demand growth and valuation double-digits.

In energy storage, overseas, considering the energy price increases and replenishment needs triggered by the US-Israel-Iran conflict, combined with the rising penetration rate of household storage in markets like Europe, household storage demand is expected to replicate the 2022 market trend. Leading Chinese household storage companies are likely to see a resonance in performance and valuation. Domestically, “new energy + storage” has become a core solution for energy independence. As energy storage plays a key role in grid regulation and with the continuous increase in green electricity penetration, installed capacity demand remains high, further strengthening the industry’s supply chain and raw material independence to secure industry safety.

Regarding photovoltaics, in the short term, the Middle East turmoil has disrupted the local capacity deployment of Chinese companies. In the long term, policies such as the continued expansion of China’s “Sand and Desert” base construction and Europe’s support policies to reduce energy dependence are ongoing. The levelized cost of electricity for “PV + storage” is now lower than natural gas. Under the global energy security demand, the PV industry is shifting from incremental supplementation to stock replacement. Domestic and international installed capacity demand is expected to continue releasing, ushering in a phase of high-quality development.

For wind power, due to its cost advantages and relative stability, wind power may become the mainstream green electricity choice for domestic green fuels and power calculation synergy. Offshore wind is the most resource-rich new energy form in Europe, with significant progress in construction speed. Domestic supply chain gaps are driving order spillovers, with domestic pipe piles and cables seizing overseas markets through cost-effectiveness and supply security. Overseas business gross profit margins are significantly higher than domestic. Upgrades in wind turbine models and certification improvements are accelerating international expansion. The increasing proportion of “dual sea” projects is optimizing sales structure, and overall industry profitability continues to improve.

Additionally, green fuels not only align with global decarbonization goals but also relate to national energy security, effectively reducing dependence on foreign oil. As oil and gas prices remain high, the economic viability of green fuels has significantly improved, potentially exceeding expectations in replacing fossil fuels. Domestic wind power companies and central power enterprises are leading integrated projects for green hydrogen and ammonia. With falling green electricity costs and policy improvements, the industry is expected to leap from a hundred-billion-yuan niche segment to a trillion-yuan main energy sector, offering vast market potential.