At the same time, the scale and proportion of electrochemical energy storage have increased rapidly: from 2013 to 2020, the cumulative scale of electrochemical energy storage in the world and China increased from 0.7GW and 0.1GW to 23.2GW and 5.3GW respectively.

(report producer: Oriental Securities )

1. Domestic energy storage power stations: planned installation is accelerated, the industry is booming, and the industry is booming than expected

As of the end of 2021, the cumulative installed capacity of global energy storage projects reached 209.4GW, a year-on-year increase of 9%. The cumulative installed capacity of lithium-ion battery in electrochemical energy storage is the largest 23.2GW; the cumulative installed capacity of China's energy storage projects reached 46.1GW, accounting for 22% of the global total scale, a year-on-year increase of 30%. Due to early commercial application and deep integration with traditional power system application scenarios, pumped storage accounts for nearly 90% of energy storage in China and around the world, but this proportion is declining year by year. At the same time, the scale and proportion of electrochemical energy storage have increased rapidly: from 2013 to 2020, the cumulative scale of electrochemical energy storage in the world and China increased from 0.7GW and 0.1GW to 23.2GW and 5.3GW, respectively. In 2021, the world added 10.2GW of electrochemical energy storage installed capacity, an increase of 83% year-on-year, and China added 2.4GW of electrochemical energy storage installed capacity, an increase of 126% year-on-year.

We have counted the winning information of energy storage projects published on the Polaris Energy Storage Network. Excluding feasibility study, supervision, design, survey and other projects, 1H22 The total large-scale energy storage that has won the bid in China is 13.4GWh, an increase of 582% year-on-year, far exceeding the winning bid of 2021 6.6GWh. From the perspective of application scenarios, 1H22 independent energy storage (including shared energy storage) has become a trend, accounting for 47%, and wind power on the power generation side photovoltaic energy storage account for 25%.

Since entering 2H22, the energy storage market has been very popular. According to statistics from the North Star Energy Storage Network, Shanxi has registered 34 100 MWh energy storage power station projects since 2022, with a total investment of over 40.3 billion yuan and a total energy storage scale exceeding 9.1GW/18.9GWh.

We believe that 2H22 domestic energy storage power stations are expected to grow beyond expectations. The main reasons are: (1) The progress of energy storage construction is closely related to the installation of new energy, and new energy power stations are expected to usher in an installation wave in the second half of the year; (2) The policy clarifies the business model of shared energy storage, and the investment economy of energy storage power stations has improved significantly; (3) EPC prices have a downward trend, reducing initial investment costs.

1.1 The progress of new energy installation has accelerated in the second half of the year. The development of energy storage is

The fundamental purpose of developing energy storage is to reduce the power grid impact caused by the volatility and seasonality caused by high proportion of new energy grid connection. According to the calculation of State Grid , by 2035, the installed capacity of wind and light will reach 700 million and 650 million kilowatts respectively. The maximum daily volatility of wind and solar energy in the country is expected to reach 156 million and 416 million kilowatts respectively, which is greatly exceeding the power regulation capacity. It is urgent to rebuild the peak-shaving system to have the ability to deal with the daily power fluctuations of about 500 million kilowatts of new energy. Therefore, the installation volume and installation rhythm of energy storage are closely related to the installation of new energy.

photovoltaic installation, the price of 1H22 silicon material has not diminished, suppressing the willingness to install downstream. Since 2022, the price of silicon materials has continued to rise, and the current average price has reached about 265,000 yuan/ton. Although various silicon material manufacturers are actively expanding production, downstream demand has always been greater than upstream supply. At present, the new production capacity still cannot meet the supply and demand gap, and supply and demand are still the main theme of the market. In terms of grid-connected installation volume, from January to May 2022, photovoltaics was connected to the grid of 23.71GW, only 26% of the target of 90GW at the beginning of the year. The installation progress needs to be accelerated in the second half of the year to achieve the target at the beginning of the year.

The main factor affecting the willingness to install photovoltaics - the price of silicon materials, is expected to gradually decline with the release of production capacity. Currently, the main bottleneck of silicon material supply is the orderly release of subsequent production capacity. According to CPIA data statistics, in 2021, the production capacity of polysilicon is mostly concentrated in leading manufacturers, with the average output of Top5 being 85,000 tons, CR5=86.7%, and the overall shipment of the country was about 505,000 tons. According to Solarzoom's forecast, silicon material production capacity may double in 2022 compared with 2021. With the release of expansion capacity in 2022, this trend of head concentration is expected to strengthen. Combined with Solarzoom data calculations, the effective supply of the silicon material industry is expected to reach the level of 800,000-850,000 tons or above in 2022, which is expected to match the global 240GW installed capacity demand.

Wind power installation: Due to the impact of the epidemic and other factors, the 1H22 installation progress is slow and the second half of the year will accelerate. After the rush to install, demand showed a steady recovery trend, and the subsequent outlook is expected to be upward.2020 The high-heavy land wind installation wave will affect some demand in the next few years to a certain extent. As of 2021, the national cumulative wind power installed capacity was 328.48GW, of which 47.57GW of new wind power installed capacity in 2021, a year-on-year decrease of 33.63%. As of January-April 2022, the installed capacity of wind power was 9.58GW, a year-on-year increase of 43.84%. Coupled with the high prosperity data of subsequent bidding, demand showed a steady recovery trend, and the subsequent outlook is expected to be upward.

1.2 The business model of shared energy storage is clear, economic improvement is improved

June 7, the National Development and Reform Commission and the Energy Bureau jointly issued the "Notice on Further Promoting the Participation in the Power Market and Scheduling and Application of New Energy Storage", clarifying the main position of independent energy storage and clarifying the cross-market trading model of independent energy storage. The policy proposes multiple sources of income from independent energy storage power plants: (1) medium- and long-term markets and spot markets; (2) signing market contracts during peak and low periods to achieve peak and valley filling; (3) Participate in auxiliary services and reasonably share them by relevant power generation side grid-connected entities and power users in accordance with the principle of "who provides, who makes profits, who benefits, who bears", according to the principle of "whoever provides, whoever makes profits, whoever bears", the grid-connected entities and power users on the relevant power generation side are reasonably distributed.

1.3 EPC winning bid price fell, investment cost decreased

According to statistics on domestic energy storage power station EPC quotes, since November 2021, the price of energy storage EPC in power stations has risen rapidly, with the average price rising from 1.1-1.8 yuan/wh in 2021 to 1.5-1.9 yuan/wh in the first half of 2022. Since July, the bidding price has been downward, with an average price of about 1.45 yuan/wh.

2. Business model: New energy distribution and storage are the first, shared energy storage gain

2.1 New energy distribution and storage: pure cost item, loss rate of return

According to our calculations, the distribution and storage on the power generation side is driven by policies, and the loss of 2pcts of the energy storage system for new energy plants is lost. Suppose a 100MW photovoltaic power station, configured with 10%*2h, with 5,000 cycles, and charge and discharge once a day. The photovoltaic power plant has a 20-year operating cycle, a 10-year energy storage battery life, and a primary battery system is replaced. According to the current EPC price of photovoltaic power stations, the EPC price of energy storage system is 1.7 yuan/Wh. The photovoltaic power station IRR is 8.16%, and the cost of kilowatt-hour is 0.3530 yuan/kwh. The IRR of the optical storage power station is 6.54%, and the cost of kilowatt-hour is 0.3621 yuan/kwh. Therefore, in order to achieve higher returns, energy storage must be involved in multiple markets.

2.2 Share energy storage to benefit from multiple points, solve the problem of energy storage revenue

Forced storage and supply and demand are tight, and the result is to squeeze the profits of integrators and operators. Under many difficulties, the policy of compulsory storage allocation will not be loosened, and the industrial chain will use shared energy storage and other methods to rescue itself. The shared energy storage project is larger, which reduces the average cost of initial investment, and can accept grid dispatch, earn rental fees and participate in auxiliary services to generate income. Shared energy storage power stations can provide a variety of services to achieve multiple benefits, including helping new energy stations to achieve additional power generation, reduction and exemption assessment, providing peak shaving, frequency regulation, and black start-up services to the system, and participating in spot power market transactions. All provinces have successively issued policies that are conducive to the shared energy storage model. Hunan and Shandong are currently provinces with relatively typical profit models for shared energy storage power plants. Shared energy storage power plants can obtain peak shaving compensation, leasing costs, electricity bills and reward electricity. The standard for energy storage peak shaving compensation in Qinghai Province is 0.5 yuan/kWh, with an annual utilization hours of no less than 540 hours; the peak shaving service compensation price of Ningxia Province's 2022 and 2023 energy storage pilot projects is 0.8 yuan/kWh, with an annual call of no less than 300 times; the promised energy storage leasing in Hubei, Shaanxi and other regions can be regarded as a new energy storage quota; Shanxi has clarified that shared energy storage power stations can participate in peak shaving and frequency regulation markets, etc.

At the current investment level, shared energy storage power stations are economical. The income from shared energy storage power stations comes from: (1) New energy power station rental fees, assuming 2 million yuan/year; (2) Electricity price difference income from low-priced charging and high-priced discharge. For every 0.1 yuan/wh reduction in system cost, the IRR increases by about 1pcts; for every 100,000 yuan/year increase in rental fees, the IRR increases by about 0.6pcts; if the price difference of charge and discharge electricity exceeds 0.2 yuan/kwh, the shared energy storage power station is economical.

3. Market space: 48GWh of new installed capacity will be added in 2025, and the compound growth rate will be 79%

The demand space of energy storage power stations is closely related to the installed capacity and rhythm of new energy. Assuming the centralized photovoltaic energy storage ratio will increase from 2.8% to 15%, some provinces stipulate that distributed photovoltaics promoted by the whole county will also be equipped with a certain proportion of energy storage. Assuming the allocation ratio is lower than that of centralized power stations, it will increase from 1.5% to 3%, and assuming the distribution ratio of wind power storage will increase from 3% to 12%, in order to meet the volatility of new energy, the market for energy storage will gradually increase, and assuming the allocation and storage time will gradually increase from 2h to 2.5h. According to our estimates, by 2025, the market space of China's energy storage power stations will reach 19.2GW/48GWh, and the compound growth rate of energy storage capacity from 2021 to 2025 will be 79%.

4. Industry chain: Equipment supplier-integrator-operator

Energy storage power station system includes two parts: DC side and AC measurement. The DC side is mainly a battery, and it also includes temperature control, fire protection, convergence cabinet, container and other equipment. The AC test is mainly a converter, and it also includes transformers, containers, etc. The integrator is responsible for the procurement, integration and installation of equipment and ultimately delivering the energy storage power station to the operator.

According to the market space we calculate, the price of energy storage battery of CATL is 0.82 yuan/wh, assuming that it will decrease by 5% per year, the battery market space in 2025 will be 37 billion yuan. Taking the bidding price of converter 0.35 yuan/w as an example, assuming that it will reduce by 5% every year, the converter market space will be 5.2 billion in 2025.

4.1 Energy storage battery: DC side core component, with the highest value

CATL: Leading the battery industry, the world's first-class energy storage battery shipment

CATL was established in 2011 and listed on the Shenzhen Stock Exchange in 2018. The company mainly operates two major businesses: battery system and battery materials, among which the battery system is divided into power batteries and energy storage batteries: (1) Power batteries: Products include battery cells, modules, electric boxes and battery packs, and application fields include new energy passenger cars, new energy commercial vehicles, electric ships, forklifts, etc.; (2) Energy storage batteries: Products include battery cells, modules, electric boxes and battery cabinets, covering solar and wind power generation and energy storage facilities, Application fields such as energy storage, energy storage charging stations, communication base station backup batteries, household energy storage, etc. of industrial enterprises; (3) Battery materials: Purify the metal materials such as nickel, cobalt, manganese, and lithium in waste batteries to produce ternary precursor , lithium carbonate and other battery materials, and collect copper and aluminum for sale and recycling. At the same time, new energy-related mineral and battery material projects such as lithium, nickel, cobalt, and phosphorus are laid out. In 2021, the company's operating income was 130.36 billion yuan, a year-on-year increase of 159.1%, and the net profit attributable to shareholders was 13.442 billion yuan, a year-on-year increase of 215.2%. The company's overall gross profit margin is 26.28%, and its net profit margin is 13.70%. Among them, the proportion of power batteries was 70.2%, and the proportion of energy storage system business was 10.5%, with the fastest growth, with a year-on-year growth of 601.0%. In 2022Q1, the profit margin declined significantly due to the price increase of lithium carbonate and the price of the price in time.

Company has strategic cooperation agreements with National Energy Group , Three Gorges Group , Sungrow Power Supply , China Energy Construction and other companies, and their products are exported to 35 countries and regions. The company has obvious technological advantages. The leading national key project "100MWh new lithium battery scale energy storage technology development and application project" has overcome problems such as 12,000 ultra-long cycle life. According to CNESA statistics, among Chinese companies in 2021, CATL's global shipment ranking and China's new energy storage installed capacity in 2021 are both cliff-like first. According to ICC Xinli information data, CATL's energy storage battery production market share in 2021, and its industry leader is stable.

Penghui Energy: an all-round lithium battery player, growing with the trend of energy storage

Penghui Energy was established in 2001 and listed on the Shenzhen Stock Exchange GEM in 2015. The company currently has a rich lithium battery product structure and is a lithium-electric all-round player.The secondary lithium batteries produced by the company cover nickel-hydrogen batteries and lithium-ion batteries. The lithium-ion battery business covers all aspects of cylinders, squares and soft packages, and the material types cover ternary, lithium iron phosphate and multi-combination. Downstream applications cover three major fields: digital consumption, power and energy storage. They are rare all-round players in the lithium battery industry:

Penghui Energy's company's operating income in 2021 was 5.69 billion yuan, a year-on-year increase of 56.3%, and net profit attributable to shareholders was 182 million yuan, a year-on-year increase of 242.9%. The company's overall gross profit margin in 2021 was 16.21%, the gross profit margin in 2022Q1 was 17.31%, and the net profit margin was 5.7%. In 2021, the proportion of secondary electronics businesses used in consumer electronics, power batteries and energy storage was 90.5%, with the fastest growth, with a year-on-year increase of 56.3%.

Penghui Energy has been deeply engaged in the lithium battery industry for many years and has a complete and comprehensive industrial line and product matrix. From 2017 to 2021, the revenue of energy storage business grew rapidly at a CAGR of 59.5%, and in Q1 2021 and 2022, the year-on-year growth was 138% and 269% respectively. As of the end of 2021, the company's total production capacity has reached 16.3GWh, of which the energy storage battery is 7.65GWh. Energy storage batteries are the main direction of expansion of production. It is planned to expand production at the Changzhou and Zhuhai bases. The energy storage battery production capacity is expected to reach 13.65GWh by the end of 2022.

4.2 Converter: core component on the AC side, realizing AC-DC conversion

Sungrow Power Supply: Optical storage is in line with each other, and layouts the global new energy power generation market Sungrow Power Supply was established in 1997 and was listed on the Shenzhen Stock Exchange in 2011. The company's main business includes power conversion equipment such as photovoltaic inverter , power station investment and development, energy storage systems and other businesses. (1) Photovoltaic inverter products include series photovoltaic inverters, centralized photovoltaic inverters and household photovoltaic inverters, covering a power range of 3~8800KW, and is used in indoor, outdoor, large, medium and small photovoltaic power generation systems; (2) The power station investment and development business is based on Sunshine New Energy Company to build and develop more than 25 million KW photovoltaic/ wind power generation stations; (3) The main products of the energy storage business are energy storage converters, lithium batteries, energy management systems and other energy storage core equipment; (4) Other businesses include new energy vehicle drive systems, wind power converters, surface photovoltaic systems, charging equipment, hydrogen energy business, etc.

Sungrow Power Supply In 2021, the company's operating income was 24.14 billion yuan (yoy+25.2%), and the net profit attributable to shareholders was 1.58 billion yuan. In 2021, the company's overall gross profit margin was 22.25%, and the net profit margin was 7.06%, and in Q1 2022, the gross profit margin was 29.48%, and the net profit margin was 9.25%. In 2021, the businesses with the largest revenue share were power station investment and development and power conversion equipment such as photovoltaic inverters, accounting for 40.1% and 37.5% respectively, energy storage systems accounted for 13%, and operating income increased by 168.5% year-on-year.

Sungrow Power Supply is one of the earliest companies in China to enter the energy storage industry. Its energy storage system is widely used in many countries such as China, the United States, Europe, India, etc. The revenue of the energy storage industry has increased at a CAGR of 164.3%. With the rapid development of the industry, the company will raise funds to build a new energy power generation equipment manufacturing base project with an annual output of 100GW in 2021, of which the energy storage converter accounts for 15GW. According to CNESA statistics, among Chinese companies in 2021, the world's largest energy storage PCS shipments is Sungrow Power.

Shenghong Co., Ltd.: inverter product power scenarios are fully covered, and the energy storage business has grown steadily

Shenghong Co., Ltd. was established in 2007 and listed on the GEM in 2017. The main products are divided into industrial supporting power supplies, electric vehicle charging and swapping services, new energy power conversion equipment, and battery formation and testing equipment.

(1) Main products of industrial supporting power supply include active power filter (APF), three-phase unbalanced adjustment device (SPC), dynamic pressure regulator (AVC), low-voltage line voltage regulation (LVR), uninterruptible power supply (UPS), frequency converter, laser generation power supply and other products, which are mainly used to solve the industrial supporting power problems during user electricity use; (2) The electric vehicle charging and swapping service business mainly provides charging equipment, AC charging piles, constant power charging modules, charging station construction and operation management services; (3) The main products of new energy power conversion equipment include energy storage converters and integrated solutions for energy storage power stations, completing the two-way power conversion and transmission between energy storage batteries and the power grid, and are used in distributed photovoltaic power stations, power energy storage, microgrid systems and other fields; (4) Battery synthesis and detection equipment are mainly used in charge and discharge detection, battery synthesis and capacity distribution processes during battery research and development and manufacturing.

Shenghong Co., Ltd. In Q1 2021 and 2022, the company's operating income was RMB 1.02 billion (yoy+32.4%) and RMB 237 million (year-on-year +31.06%), and its net profit attributable to shareholders was RMB 113 million (yoy+6.93%) and RMB 23 million (year -21.54%). The company's overall gross profit margin was 43.5% and 41.33%, and its net profit margin was 11.11% and 9.67% respectively. The business with the largest revenue share in 2021 was industrial supporting power supply, accounting for 39.6%, and the business with the fastest revenue growth was new energy power conversion equipment, which increased by 93.3% year-on-year.

Shenghong Co., Ltd.'s inverter business has grown rapidly in recent years with a CAGR 81.7%. The inverter products have a wide power coverage and a comprehensive range of applicable scenarios. Its power coverage range is 30~1000KW, and the 50~250kW series modular energy storage converter is the world's first large-scale grid-connected inverter that can meet the UL, CPUC, and HECO response specifications at the same time, and meet the needs of grid-connected and off-grid. Shenghong Energy Storage’s global installed capacity has exceeded 1.5GW. According to CNESA statistics, the new energy storage projects that will be put into operation in 2021 are heavy. Shenghong Holdings’ Energy Storage PCS installed capacity ranks sixth, and in the global market in 2021, the energy storage PCS shipments rank sixth.

4.3 Integrator: Purchase equipment integration systems, resource capabilities are the core

Nandu Power Supply: Based on the leading position of communication backup power supply, strategic transformation of communication energy storage

Nandu Power Supply was established in 1994 and was listed on the GEM in 2010. It mainly engages in three major industries: smart energy storage business field, communication and data business field, and resource recycling business field. The main products include lithium-ion batteries and systems, lead-acid batteries , fuel cell , lead lithium resource regeneration products (1) Energy storage business: The company has entered the energy storage industry since 2011 and has invested in the construction of multiple energy storage power station projects. Provide a variety of energy storage business solutions based on lithium batteries, lead carbon and other products, with a business model mainly based on sales, construction agency, co-construction and other methods; (2) Communication and data business: the main supplier of backup batteries in the communication field, providing intelligent lithium iron phosphate batteries; (3) Resource regeneration business: use waste lead batteries as raw materials to make crude lead, finished lead and synthetic lead and other products; use waste lithium batteries as raw materials to make lithium-ion battery materials.

Nandu Power Supply's company's operating income in 2021 was 11.85 billion yuan, a year-on-year increase of 15.5%, and its net profit attributable to shareholders was -1.37 billion yuan, and its net profit attributable to shareholders in Q1 2022 was 479 million yuan. The gross profit margins in Q1 in 2021 and 2022 were 4.24% and 8.86%, respectively, and the net profit margins were -13.85% and 16.06%, respectively. In 2021, the lead-acid battery product, the largest revenue share, accounted for 51.81%, and the revenue of this product increased by 22.1% year-on-year.

2021 The industry sectors with the fastest growth in Nandu Energy's revenue in 2021 are the energy storage industry and the power industry. In the energy storage power station business segment, the company won the bid for multiple energy storage projects at home and abroad, and the smart energy storage business achieved revenue of 578 million yuan, an increase of 45.38% year-on-year. In the communications industry, we cooperate with major domestic and foreign communications operators and equipment. In the domestic market, it won the bid for multiple communications China Tower , China Telecom , China Mobile Communications lithium battery backup battery projects in 2021, and won the cumulative bid of 1754.97MWh, ranking first in the scale of mobile communications winning bids in 2021.

Nanwang Technology: Release 2022 Currently the largest LFP energy storage battery bidding, heavy warehouse energy storage business development

Nanwang Technology was established in 1988. It is a subsidiary of Southern Power Grid under Guangdong Power Grid , and it was listed on Science and Technology Innovation Board in 2021. The main business includes two major sectors: technical services and smart devices. (1) The products of technical services include energy storage system technical services and testing and debugging services. It is applied to the entire business chain of the power supply side (power generation link), power grid side (transmission link, substation link, distribution link) and user side (user link) of the power energy system. Among them, the technical services of the energy storage system are mainly applied to the power supply side, the power grid side and the user side, and are used to improve the grid-connected consumption capacity, power supply peak regulating and frequency regulation capabilities, flexible regulation and emergency support capabilities on the power grid and valley adjustment capabilities, and realize the integration of source, grid and load storage. (2) Intelligent equipment includes three categories: intelligent monitoring equipment, intelligent distribution equipment, robots and drones. Intelligent equipment is used to conduct real-time monitoring, analysis and early warning of power facilities and their scenarios and environments; robots and drones are used for automated patrols.

Company's energy storage business includes smart energy storage product supply, energy storage power station EPC one-stop service, energy storage network inspection and evaluation. Among them, EPCh business is mainly aimed at thermal power plants and new energy supporting energy storage, grid-side energy storage and large independent energy storage. In 2021, the cumulative installed capacity of the technical service projects of energy storage systems will exceed 260MW. In Q1 2022, the company won the bid for the three-grills new energy Yangjiang Shapa offshore wind power energy storage power station EPC project and Taishan power plant energy storage EPC project. The 30MW/30MWh Yangjiang project is the first offshore wind power supporting energy storage project in the southern region and the first large-scale new energy supporting energy storage project in Guangdong Province. The 60MW/60MWh Taishan project is currently the largest fire reserve joint adjustment project in China, with a total winning amount of 250 million yuan. So far, the in-hand order scale of energy storage business exceeds 500 million yuan. In addition, on July 12, the company issued the bidding announcement for the 2022-2024 energy storage battery cell framework agreement procurement project, and planned to bid for a 0.5C lithium iron phosphate battery of 5.56GWh, which is the largest energy storage battery framework in 2022, demonstrating the company's confidence in the development of its energy storage business.

4.4 Operator: owns energy storage assets, and improves the return on shared energy storage

Linyang Energy : Business focuses on new energy and accelerates the layout of energy storage power stations

The company was established in 1995 and was successfully listed on Shanghai Stock Exchange in August 2011. The company is mainly engaged in three sectors: smart grid, new energy and energy storage. (1) The company's main products in the smart grid sector cover smart meter , power consumption information collection terminal, power consumption information management system and AMI (advanced metering system architecture) solutions, low-voltage intelligent circuit breakers, smart distribution products and related solutions, power operation and maintenance services, power Internet of Things smart terminals and solutions, etc. (2) New Energy Section 's main business is to develop, design, build, invest and operate various photovoltaic power stations, including large, medium and small industrial and commercial roof power stations, ground photovoltaic power stations, optical charging and storage microgrids, etc. (3) Energy storage products include centralized air-cooled energy storage systems, 1500V liquid-cooled energy storage systems, intelligent string energy storage systems, etc.

company has made a full industrial layout for energy storage business. In terms of battery cells, it has jointly built a 10GWh annual energy storage special lithium iron phosphate battery production base. In terms of energy storage systems, in 2021, the company developed a 1500V high-pressure liquid-cooled centralized air-cooled energy storage system and a string-cooled air-cooled energy storage system for the application scenarios of supporting energy storage of new energy, which are mainly suitable for peak regulating and frequency regulation of medium and large energy storage power stations. At the same time, the company and Huawei jointly developed a string energy storage system. This system is based on the iEMS intelligent control system, Huawei's string converter and innovative battery DC-side design. It has higher battery utilization efficiency and longer battery life, and has higher benefits for the entire battery life cycle.In addition, the company has innovative battery module design capabilities and integrated "3S" (BMS+PCS+EMS) integration technology. It has independently developed an energy management system based on 3S integration for new energy application scenarios, and passed the test certification of , State Grid Electrical Sciences Academy of in 2021. Finally, the company also made a layout in the overall aspects of heat dissipation and fire safety of the energy storage system to improve the utilization efficiency and benefits of the energy storage power station. As of the end of 2021, the company's energy storage reserve project has exceeded 3GWh, and its energy storage business has accelerated in 2022, and it has won new bids continuously, with a promising future.

Wenshan Power : Asset restructuring injects pumping and storage + energy storage, focusing on South Grid regional power station operation

Wenshan Power was established in 1997 and is an integrated power grid company for distribution and sales of electricity under the State Grid. It was listed on Shanghai Stock Exchange in June 2004. In May 2022, the details of the company's major asset restructuring were settled, and the assets of the Southern Power Grid Peak-Distribution and FM Company were injected into Wenshan Power. After the restructuring, the company will become a high-quality energy storage operation platform company under the State Grid, with its main business being the development, investment, construction and operation of pumped storage, peak-shaving hydropower and independent energy storage businesses on the grid side. (1) Pumped Storage Power Station : 5 pumped storage power stations have been put into operation, with a total installed capacity of 7.88GW; 2 under construction will be put into production within 2022, with a total installed capacity of 2.4GW; there are 12 other power stations that have entered the preliminary and approval periods, with a total installed capacity of 13.8GW. (2) Electrochemical energy storage power station: 4 independent energy storage power stations on the grid side have been put into operation, with a total of 30MW/62MWh. In addition, three independent energy storage stations on the grid side have entered the preliminary work stage, with a total installed capacity of 470MW/940MWh. (3) Peak-shaving and frequency-modulating hydropower stations: 2 have been put into operation, with a total installed capacity of 1.92GW.

After the merger of Nanfang Peak-Sharing and Frequency-Muting Power Generation Co., Ltd. into Wenshan Power, Nanfang will realize the overall listing of pumped storage business and energy storage business. The company has become the only listed pumped storage + energy storage platform under the Southernfang Power Grid, becoming an entry into the golden track of energy storage. The "14th Five-Year Plan" development plan of the Southern Power Grid proposed that 6GW of pumped storage will be added during the "14th Five-Year Plan" period, and 20GW of new energy supporting energy storage will be promoted. As the energy storage listing platform of Nanwang, relying on the deep strength of Nanwang, the energy storage business will enter the fast lane under the demand for building a new power system. According to the company's announcement, the company has outlined a detailed development trajectory for energy storage business. During the 14th Five-Year Plan period, the company strives to achieve the development goal of adding 6GW of pumped storage installed capacity, with the installed capacity reaching 29GW by 2030 and 44GW by 2035. In terms of independent energy storage business on the grid side, the company expects that the new production will reach 2GW, 3GW and 5GW from the 14th Five-Year Plan period to the 16th Five-Year Plan period respectively.

Baoguang Co., Ltd.: The subsidiary Baoguang Zhi has outstanding battery management capabilities and significantly improves operating efficiency

Baoguang Co., Ltd. was established in 1970 and is a listed subsidiary of China Electrical Equipment Group. It was listed on on Shanghai Stock Exchange in January 2002. The main business includes the research and development, manufacturing and sales of vacuum arc extinguishing room products, energy storage and auxiliary services, and hydrogen energy. (1) Arc extinguishing chamber, electronic ceramic , control mechanism and other related products are mainly used in power transmission and distribution control systems, and are also used in metallurgy , mining, petroleum, chemical and other distribution systems . (2) Energy storage and auxiliary services mainly use energy storage technology. In order to maintain the safe and stable operation of the power system, ensure the quality of electricity, promote clean energy consumption, and provide the power grid with auxiliary services such as peak regulating, frequency regulating, voltage regulating, backup, and black start. (3) Hydrogen energy business is mainly engaged in the upstream, mid- and downstream industries of hydrogen , based on the upstream manufacturing, storage and transportation of hydrogen, and the development of downstream products and industrial applications, and also engaged in characteristic gas business such as nitrogen . In terms of

energy storage business, in 2021, the company established a holding subsidiary Baoguang Zhizhong, which has energy storage as its core business, and completed the acquisition of assets related to the energy storage frequency regulation business. It successfully entered the energy storage industry. The company has relied on the management advantages of a large central enterprise in Xidian, coupled with the core energy storage research team from Tsinghua , and has accumulated a large number of core technologies in the energy storage industry.The company's thermal power frequency modulation control system, new energy energy storage control system, integrated wind and light storage control system, source network and load storage control system, etc. are very mature in various sub-sectors. In addition, the company has developed a battery management system vertically and became the first energy storage EMS to be comprehensively tested by the Jibei Academy of Electrical and Technology, a third-party authoritative testing and certification agency with CMA/CNAS qualifications. The system has been verified by a large number of engineering cases and has a leading advantage in advanced functions such as frequency regulation, voltage regulation, power quality management, battery SOC optimization, and is also the exclusive energy storage EMS with the function of suppressing wideband oscillation to date. In addition, the company has achieved full bloom in energy storage business in many regions such as Qinghai, Inner Mongolia, Hainan, Henan, Shandong and other regions.

(This article is for reference only and does not represent any of our investment advice. If you need to use relevant information, please refer to the original text of the report.)

selected report source: [Future Think Tank]. Future Think Tank - Official Website