(Report Producer/Author: Minsheng Securities, Deng Yongkang, Ye Tianlin)
1 Energy storage: To solve the problem of power supply and demand imbalance, lithium battery will be the mainstream in the future The essence of configured energy storage is to solve the power supply and demand imbalance caused by the increase in the proportion of new energy. The essence of the balance problem
function is to solve the contradiction between the continuity of power supply production and the discontinuity of electricity demand. realizes the stable operation of electricity on the power generation side, the grid side and the user side.
In front of the table (power generation side + grid side), as traditional power generation methods are gradually replaced by new energy power generation , wind and solar installed capacity continues to grow, and the problem of wind and solar abandonment arises. At the same time, as the proportion of new energy installed capacity continues to increase, the overall intermittency and instability of power generation equipment has increased, and the demand for peak and frequency regulation has become stronger. Energy storage is an effective solution to solve the demand for wind and light curtailment, peak load regulation and frequency regulation.
After the table (industrial and commercial + household), energy storage performs peak shaving and valley filling/peak and valley arbitrage by scheduling electric energy in the time dimension. can smooth demand + save electricity costs for end users.
Energy storage development trend
At present, China's energy storage is still dominated by pumped hydro energy storage, and electrochemical energy storage has a good development momentum. As of 2020, electrochemical energy storage installed capacity accounts for 7.5%, and the cumulative installed capacity reaches 14.2GW, a year-on-year increase of 49.6%. Electrochemical energy storage is the most widely used energy storage technology with the greatest development potential. Among electrochemical energy storage, lithium-ion batteries account for the largest proportion, among which lithium iron phosphate batteries are the most mainstream lithium-ion battery form. As of the end of 2020, among electrochemical energy storage, lithium-ion batteries had the largest cumulative installed capacity, reaching 13.1GW. The cumulative scale of electrochemical energy storage and lithium-ion batteries both exceeded the 10GW mark for the first time. China, the United States and Europe dominate the global electrochemical energy storage market. In 2020, the three newly put into operation accounted for 86% of the total new global electrochemical energy storage capacity.
2 China: The power of abandoned wind and solar power has increased, and the distribution and storage on the power generation side has reached the maximum increment.The energy storage on the power generation side aims to solve the 2% light curtailment rate and participate in peak shaving services.
As of 2021, the value of the national power grid abandonment of wind and solar power will reach 20%. 10 billion yuan, which urgently needs to be solved through energy storage. In 2021, the national photovoltaic power generation increased by 25.1% year-on-year; the average light abandonment rate was 2%, the same as in 2020. Wind power generation increased by 40.5% year-on-year, and the wind curtailment rate was 3.1%. The total amount of power curtailment is approximately 26.748 billion KWh, an increase of approximately 22.7% compared with 2020. Due to the sharp increase in new energy power generation, power curtailment will maintain an upward trend in the future. The energy storage system can effectively reduce the light abandonment rate by storing power generated during valley hours and discharging it during peak hours.
The remaining capacity is used for power grid peak regulation and is also one of the important applications of distribution and storage. The capacity of new energy distribution and storage is often greater than the capacity required to solve the problem of wind and light curtailment. Therefore, the remaining capacity can be used to participate in market-based peak shaving auxiliary services and improve energy storage utilization. By charging when the grid load is low and discharging when the load is peak, it plays the role of peak shaving and valley filling, alleviating the pressure on the grid. In addition, energy storage on the power generation side also has the function of smoothing the output curve and easing the burden on the power grid. Photovoltaic power generation has strong instability, and its power changes rapidly. Through the continuous charging and discharging of the energy storage system, the violent fluctuations of its power generation are weakened, thereby making the output curve smoother, which is conducive to the prediction and dispatching of the power grid.
Macroeconomic and local policies assist the rapid rollout of new energy power generation, distribution and storage
Goals & Framework: In July 2021, the National Development and Reform Commission and the Energy Bureau issued the "Guiding Opinions on Accelerating the Development of New Energy Storage", which clarified the installed capacity in the next few years. Quantitative goals. It is pointed out that by 2025, the installed capacity will reach 30GW, new energy storage will transform from the early stage of commercialization to large-scale development, and new energy storage will develop towards full marketization. In terms of content, the "Opinions" require vigorously promoting the construction of power-side energy storage projects, actively promoting the rational layout of grid-side energy storage, and actively supporting the diversified development of user-side energy storage. The length and presentation style reflect the current construction focus of power side energy storage.
Management Specifications: In September 2021, the National Energy Administration issued the "Management Specifications for New Energy Storage Projects (Interim)".In October 2021, the National Energy Administration and the State Administration for Market Regulation issued the "Model Text for Grid-Connected Dispatch Agreement for Electrochemical Energy Storage Power Stations (Trial)". The two documents provide more specific regulatory requirements and legal basis for the development and implementation of new energy storage projects.
Regional implementation: By the end of 2021, 21 provincial administrative regions across the country have clarified the regulatory energy storage ratio and distribution and storage time of new new energy power generation projects in the entire province or in some regions. Three provinces have introduced policies to encourage allocation of reserves. Taken together, the average allocation and reserve ratio is about 10%, and the allocation and reserve duration is about 2 hours. Among them, the installed wind power and photovoltaic capacity of all provinces or some regions that require storage in 2021 will reach 81% of the national wind and photovoltaic installed capacity, which is the main source of the increase in energy storage installed capacity.
The demand for energy storage installed capacity will increase sharply from 2022 to 2025, and the installed capacity of new energy power generation will be CAGR 14.5%.
Assumption: China’s newly installed photovoltaic power generation capacity from 2022 to 2025 will be 80, 100, 120, and 140GW respectively, and the new installed capacity of wind power will be 52, 54, 56, 58GW. With the continuous promotion of regulated allocation and storage, more provinces will launch allocation and storage policies in the whole province or in some regions. Therefore, it is expected that among the new wind and solar installed capacity in the next two years, will account for the total installed capacity in the provinces with regulated allocation and storage. The proportion of wind and solar installed capacity reaches 60% and 70% respectively. Some areas require provinces to account for 20% of installed wind and solar power, and encourage distribution and storage areas to account for 10% of installed wind and solar power. In the short term, with the implementation of policies, it is expected that the proportion of power distribution and storage on the power generation side will be 10% in 2022 and 2023, and the charging time will be 2 hours. In the long term, with the economic improvement brought about by cost reduction, the average proportion of power distribution and storage in 2024 and 2025 is expected to reach 12%. ,20%.
3 The U.S. energy storage market is growing rapidly, and the front-of-meter market is the main source. The installed capacity in the United States is increasing rapidly, with a CAGR of 118% in 2018-2020.
Among the installed energy storage capacity in the United States, the front-of-meter market accounts for the highest proportion. In 2020, the installed power accounted for approximately It is 75%, and the installed capacity accounts for about 74%. The U.S. Congress passed FERC Bill 841 in 2018, allowing battery energy storage systems to join the frequency regulation ancillary service market. Since then, the installed capacity of front-meter energy storage has increased rapidly. As the profit model continues to become clearer, pre-balance sheet energy storage installed capacity reached 0.75, 1.03, and 3.57GWh respectively from 2018 to 2020. (Report source: Future Think Tank)
Reasons for the high growth in installed capacity 1: U.S. electricity is highly market-oriented and the power grid foundation is weak.
U.S. electricity prices are completely determined by market supply and demand. Therefore, electricity prices vary greatly from place to place, between different seasons and within the same season. The peak-to-trough price difference is also very large. The average electricity price is between 0.18 (trough) and 0.64 (peak) USD/KWh. The average price of photovoltaic PPA (power purchase agreement) is between 0.35-0.44USD/KWh.
The U.S. power grid is composed of 8 regional power grids. The western and eastern power grids form a power grid alliance. Together with the Texas power grid, they form the current three major power grids in the United States. The power dispatch between the three major power grids is conducted through market transactions, and resource allocation efficiency is low. In extreme situations such as natural disasters, electricity prices in some areas will soar due to scarcity of power resources. Under the three major power grids, there are also regional power dispatch centers such as CAISO, SPP, ERCOT, MISO, and PJM, which are responsible for power dispatch in some regions and managing electricity prices.
Reason 2 for the high increase in installed capacity in front of the meter: Power supply defects and environmental protection requirements promote the development of new energy power generation
The installed capacity of centralized photovoltaics in the United States reached 19.72GW in 2020, and the installed wind power capacity reached 14.68GW in 2020 (EIA statistics). It is estimated that photovoltaic installed capacity will reach 28, 36.4, 47.3, and 61.5GW from 2022 to 2025; as of 2025, there are still 62GW of wind power installed capacity to be deployed (September 2021 data).
Reason 3 for the high growth in front-of-meter installed capacity: ITC investment tax exemption quota helps reduce the cost of new energy distribution and storage
Photovoltaic power generation and its distribution and storage projects generally enjoy a 30% ITC tax exemption quota, which means that 30% of the value-added tax generated by the investment is refunded. ITC's tax exemption object is the VAT (value-added tax) generated during the construction of photovoltaic equipment and distribution storage. The ITC subsidy object requires the construction time to be less than 3 years, and the VAT will be refunded in 3 years depending on the construction situation. This policy has been extended for 10 years, which further highlights that recent years have been the peak period for investment in new energy.The energy storage facilities supporting photovoltaic equipment can also enjoy ITC as part of the photovoltaic equipment, which can effectively reduce the cost of energy storage power stations.
The installed capacity of photovoltaics in the United States from 2022 to 2023 is CAGR 110%
22 to 2025. The installed capacity of photovoltaics will reach 28.0, 36.4, 47.3, and 61.5GWh respectively, and the installed wind power capacity is expected to be 18.3, 19.1, 19.9, and 20.7GW respectively. Due to the outstanding economics of energy storage in the United States, the penetration rate of energy storage is expected to reach 40%, 60%, 65% and 68% respectively in the next four years. Using 100% power ratio and corresponding charging and discharging times of 3.1, 3.2, 3.2, and 3.2h, the installed capacity of from 2022 to 2025 is calculated to be 14.36, 26.63, 43.01, and 78.93 GWh respectively.
In terms of unallocated storage installed capacity demand, there are 65.42, 105.80, 149.80, and 199.06 GW power generation installed capacity with allocated storage demand from 2022 to 2025, respectively, and their penetration rates are expected to reach 2%, 3%, 3%, and 5% respectively. Since energy storage costs are expected to drop significantly after 2024, the penetration rate will increase significantly in 2025. Configuring with the same power ratio and duration, it is estimated that the existing peaking installed capacity from 2022 to 2025 will reach 4.06, 10.25, 14.47, and 31.99GWh. In terms of
frequency modulation installed capacity, the installed capacity in 2022 and 2023 will reach 2.82 and 3.37GWh. The continuous increase of new energy has brought higher frequency regulation demand to the United States, so it maintains an annual growth rate of 40%. The installed capacity of 022-2025 reaches 18.36, 40.25, 61.56, and 115.92GWh, of which the CAGR in 22-23 is 110%.
4 Both sides of the meter are working simultaneously, and Australia's energy storage installed capacity is booming. Energy transformation promotes energy storage projects. Official announcement, the scale of installed capacity in front of the meter has exploded.
The Australian government is trying to fill the vacancy of more than 10GW caused by the closure of thermal power plants in the future. , launched a series of favorable policies to promote grid-side energy storage and alleviate power supply pressure. In order to achieve carbon emission reduction, is transforming from thermal power generation to mainly renewable energy. For example, ARENA (Australian Renewable Energy Agency) has set aside 100 million Australian dollars to fund energy storage batteries on the grid side; AEMC (Australian Energy Market) Commission) has also reduced the cost of bringing battery energy storage systems into the market to promote the development of energy storage. The Australian state government and developers have actively cooperated to vigorously promote the construction of large-scale energy storage power station projects on the front side of the meter, resulting in a blowout growth in the scale of installed capacity in front of the meter.
High electricity prices and subsidies have driven the overall energy storage installed capacity CAGR 116%
High electricity prices have led to a continued increase in residential energy storage installed capacity. The average household electricity purchase price in Australia's states in 2021 is 52.2USD/MWh. By the beginning of 2022, it will rise to 56.8USD/MWh. High electricity prices have caused the installed capacity of residential energy storage to continue to increase.
Subsidies and discounts from various states will cause the installed capacity behind the table to continue to increase after 2022. Interest-free loans from the New South Wales government, 825 AUD/KWh subsidies from the Australian Capital Territory government, subsidies from the South Australian government (up to 4,000 Australian dollars) and low-interest loans have further increased the share of off-meter energy storage in the energy storage market. In 2021 It reached about 50% in 2017. Subsidies and discounts from various states will cause the installed capacity behind the table to continue to increase after 2022.
Frequent extreme weather and imperfect power grids have promoted the continued increase in installed energy storage capacity. Australia has a dispersed population, imperfect power grid infrastructure, and increasingly frequent extreme weather events such as storms and fires. Therefore, the behind-the-meter photovoltaic + energy storage model can effectively alleviate the power pressure during peak periods in summer.
The reduced impact of the epidemic has promoted the increase in installed energy storage capacity. After 2022, the impact of the epidemic will decrease, the economy will recover, and the improvement of the epidemic will promote the growth of installed capacity behind the table. Many large-scale energy storage projects have been launched, and the average annual growth rate of Australia's front-meter energy storage installed capacity is expected to exceed 100%. It is estimated that the installed capacity of energy storage in front of the meter from 2022 to 2025 will be 3.30, 6.30, 10.34, and 18.31 GWh.
1-23 household usage has doubled, with an overall CAGR of 116%. estimates that the household energy storage installed capacity from 2022 to 2025 will be 2.08, 4.22, 6.32, and 10.67GWh, and the CAGR from 2021 to 2023 will be approximately 118%; the overall energy storage installed capacity will be 6.18, 12.13, 19.56, and 34.73 GWh respectively. The CAGR of installed capacity from 2021 to 2023 is approximately 116%.
5 Germany and the UK lead the European market, and front-of-meter and behind-the-meter energy storage are blooming. The UK leads the European front-of-meter energy storage market. Policies promote energy storage deployment.
The UK leads the development of the European front-of-meter energy storage market. Europe, as an important energy storage market, plans to reduce carbon emissions by 55% in 2030. Therefore, the market in front of and behind the meter cannot be ignored. According to ESEA statistics, Germany and the United Kingdom accounted for nearly 80% of new installed capacity in Europe in 2020, making them the two most important markets in Europe. Among them, the UK leads the development of the front-of-meter energy storage market, and Germany leads the behind-the-meter market.
The net-zero target has triggered demand for energy storage in the UK, which has led to continued rapid growth in installed capacity. UK is the largest pre-table market in Europe. The British government has set a net-zero carbon emissions target for 2050. By 2050, there will be a short-term energy storage demand of 30GW.
policy deployment has enabled the UK to continue to lead the European table market and maintain rapid growth. The UK has deployed a series of policies to reduce the time and economic costs of large-scale energy storage projects in front of the meter, promote the construction of large-scale energy storage projects and independent energy storage power stations, and the scale of energy storage installed capacity is developing towards large capacity. Following this, there are 1.8GW of large-scale energy storage projects to be constructed in the UK in the future, 6.9GW of approved projects, and 6.2GW of projects under planning, with a total capacity of 14.9GW, and the installed capacity is growing rapidly.
After Germany leads the European table, rooftop energy storage installations are booming
High electricity prices have promoted the rapid growth of German household installations. Germany is the largest behind-the-meter market in Europe, and high electricity prices have prompted the rapid development of the self-sufficient model of rooftop solar + energy storage.
The policy subsidies and preferential policies of various states promote post-table installation. Germany's EEG-2021 surtax reduction and exemption, Bavaria's "Energy Bonus Bavaria" plan and subsidies, Berlin 's "EnergiespeicherPLUS" plan, Lower Saxony's subsidies and other policies have effectively improved the behind-the-sheet economics and promoted the scale of energy storage installations. Rapid growth.
Europe's behind-the-meter energy storage installed capacity is growing rapidly, with the total scale growing at an average annual rate of about 2 times in 2022 and 23.
Europe's front-of-meter installed capacity will experience rapid growth from 21 to 23 years. Due to the implementation of preferential energy storage policies in various countries, especially the United Kingdom, which has deployed a series of policies to promote the construction of large-scale energy storage projects and independent energy storage power stations, it leads the European off-meter storage market. It is estimated that the European off-meter storage market will be the largest in 2022-2025. The installed capacity is 4.00, 7.91, 13.93, and 33.95 GWh respectively.
The installed scale of behind-the-meter energy storage in Europe is growing rapidly, and the overall installed capacity of energy storage has a CAGR of approximately 81% from 21 to 23. After the table, Germany takes the lead in launching a series of subsidy policies for household energy storage installations. The installed capacity scales from 2022 to 2025 are expected to be 3.50, 6.43, 11.12, and 20.12 GWh respectively; in Europe from 2022 to 2025, the total installed capacity before and after the table is new. The increases were 7.51, 14.34, 25.05, and 54.07 GWh respectively, of which the CAGR from 2021 to 2023 is approximately 81%.
6 Business model of the energy storage market: Overseas economic development, domestic policy promotion, channel premiums behind the meter Overseas meter prices are highly affordable, boosting upstream profitability
Overseas meter household electricity prices remain high, with Higher price affordability. Overseas household electricity prices remain high; household photovoltaic + energy storage costs are generally declining. In the U.S. market, the cost of pure grid-purchased electricity is about 30% higher than that of photovoltaic distribution and storage for self-use. In the German market, household electricity prices remain high, reaching 31.9 euro cents/KWh (approximately 2.3 yuan/KWh) in 2021, which is more than twice as high as the cost of electricity per kilowatt hour of photovoltaics + energy storage. After equipped with energy storage, the photovoltaic system can provide more stable power supply to home users. reduces the 's dependence on city power and ensures the sustainability of power savings. Downstream companies are willing to provide home photovoltaic storage. The economic principle of industrial and commercial electricity consumption behind the table is the same as that of household electricity consumption. Enterprises are willing to configure optical storage facilities when the cost of electricity consumption is reduced. overseas users are less sensitive to price, and the profit margins on the upstream manufacturing side are relatively high.
The overseas watch market has a first-mover advantage.
The blue ocean strategy seizes the household market. It is easier for brands to establish reputation first. The overseas back-of-table market of is driven by economics, and the average annual growth rate of demand has more than doubled, which is a blue ocean market. With the rapid growth of the industry, the cost of publicity and promotion required to enter the market is relatively smaller, and it is easier to build a reputation. The
household market has become the best choice, and the first-mover advantage creates industry barriers.The C model builds industry barriers. Companies with established reputations have customer stickiness. It will take at least 2-3 years for new foreign brands to enter the market for publicity and promotion to build a brand. Even if competition leads to product convergence in the future, under the same conditions, customers will still prefer brands with good reputations and have obvious first-mover advantages.
's first-mover advantage has less competitive pressure and sales channels are easier to establish. When energy storage equipment companies enter the overseas post-meter market, they generally sell through dealers and installers. uses sales channels for brand promotion. Being first-mover reduces the pressure of market competition, allowing you to give priority to channel vendors and establish stable sales channels. For example, Deye and Goodwe entered the overseas household energy storage field earlier, successfully established sales channels through OEM and other methods, and currently occupy a dominant position in the behind-the-meter market. (Report source: Future Think Tank)
Overseas pre-meter market performance and technology have become core elements
Overseas pre-meter market certification and channel barriers are high, and technology & equipment performance are core competitive factors. Overseas markets have strict certification processes for energy storage equipment and have extremely high requirements for product quality. Among them, the certification process often takes more than half a year, and the performance requirements of the equipment are extremely high, otherwise the company may face huge fines. Therefore, this is the biggest barrier to entering the overseas energy storage market in terms of the equipment itself. Some domestic energy storage equipment manufacturers have encountered bottlenecks in the United States because they have failed to pass certification or have product performance renewal problems, and have to face the dilemma of compensation or even withdrawing from the U.S. market. Therefore, excellent product quality is one of the core elements of competition.
The accumulation of energy storage technology highlights competitive advantages. With the development of the new energy industry and the increasing use of clean energy, the storage of energy such as light energy and wind energy has put forward higher requirements for energy storage technology, especially large-scale energy storage technology. Front of table The establishment of large-scale power stations and numerous projects in the market have put forward requirements for the accumulation of energy storage technology. The performance of an energy storage power station is usually determined by the following four dimensions: power indicator, energy efficiency indicator, reliability indicator, and operation and maintenance cost indicator. The corresponding most critical components are PCS and battery cells, so the performance advantages of PCS, battery cells and other components It can significantly improve the key performance indicators of the power station and thereby increase the online rate of the power station, thus obtaining more benefits.
The domestic market behind the meter and the grid side in front of the meter have development potential.
The domestic industrial and commercial energy storage market has a higher price tolerance than before the meter. Industrial and commercial enterprises are willing to configure optical storage systems on the basis that the LCOE of the optical storage system is lower than the electricity price. At present, the LCOE of domestic photovoltaic distribution and storage is about 0.315 yuan/KWh, which is lower than the usual and peak electricity prices in almost all regions. terminal applications are economical, and upstream component companies can maintain a certain profit margin.
The grid-side energy storage market places more emphasis on the performance of energy storage hardware and software. grid-side energy storage is currently mostly used for grid frequency regulation. The profit model of frequency regulation services is clear and economical. The IRR of frequency regulation projects with excellent performance can be as high as 18%. Since investors pay more attention to the performance of energy storage products, they are more price sensitive to the products. Lower than the power generation side, and the extremely high internal rate of return allows it to accept higher prices.
The competitive landscape on the grid side may worsen after 23 years. With the subsequent improvement of the marketization level of , the high return on investment of and have attracted new players to enter. Since the construction and debugging of frequency modulation power stations takes more than 1.5 years, it is expected that the industry structure may tend to deteriorate after 23 years.Excerpt from
report:
(This article is for reference only and does not represent any investment advice from us. For usage information, please refer to the original report. )
Selected report source: [Future Think Tank]. Future Think Tank - Official website
