Energy storage 2023 strategy: big savers and storage are flying together

1. Energy storage market space
2. Household storage: rigid demand under high electricity prices
3. Large storage battery          
   1. Energy storage converter
   2. Energy storage temperature control and fire protection
   3. System integration
4. Household savings

Energy storage can be divided into pre-meter energy storage, post-meter energy storage and portable energy storage according to different application fields. In China, portable energy storage manufacturers are also developing quite quickly and promisingly. You can read our article of  portable energy storage manufacturers to know more about this industry.

Pre-meter energy storage can be further subdivided into power-side energy storage and grid-side energy storage, which belong to power engineering investment.

The energy storage behind the meter is mainly used in industrial, commercial and household scenarios, in which the household energy storage system is directly oriented to end-users and has certain electrical characteristics.

In 2022, the household energy storage market is showing a rapid growth trend in Europe and other places. By 2022Q4, with the arrival of the winter power consumption peak, the household energy storage market is expected to continue its high growth trend, and the elasticity of the income side enables household storage to have a faster installation speed at present.

Energy storage market space

It is estimated that by 2025, the installed capacity of the world energy storage market will reach 661.3GWh, and the newly installed capacity market will reach 1,006.23 billion RMB. China, the United States and Europe will be the main energy storage capacity in the world.

It is estimated that the compound growth rate of newly installed capacity of energy storage systems in China from 2021 to 2025 will reach 174.3%. Among them, the large reserve in front of the table will be the main force of installed capacity in China. It is estimated that by 2025, the newly installed capacity of pre-meter energy storage in China will reach 262.3GWh, and the annual compound growth rate will reach as high as 190.2%.

It is estimated that the compound growth rate of newly installed capacity of energy storage systems in Europe from 2021 to 2025 will reach 76.3%. Among them, the energy storage behind the table will be the main force of energy storage installations in Europe in the future. It is expected that the compound growth rate of the installed energy storage capacity will reach 142.8% from 2021 to 2025.

It is estimated that the compound growth rate of newly installed capacity of energy storage systems in the United States from 2021 to 2025 will reach 118.3%. It is estimated that by 2025, the newly installed energy storage capacity in the United States will reach 201.2GWh, and the market space will reach 331.5 billion RMB.

Household storage: rigid demand under high electricity prices

In 2021, the penetration rate of PV distribution and storage in the world will be less than 6%, and the penetration rate in Europe will increase the fastest, but there is still room for substantial improvement. According to the data, the cumulative proportion of PV distribution and storage in the world is increasing year by year, and it is estimated that the penetration rate of worldwide household PV distribution and storage has reached 5.7% by 2021.

In terms of sub-regions, only European regions such as Italy and Germany have achieved a penetration rate of more than 10%, of which Germany has a penetration rate of more than 20%. However, it can be seen from the world that the penetration rate of photovoltaic distribution and storage in many countries, including the United States and Australia, is still less than 10%, and the penetration rate of household storage in the world still has a lot of room for improvement.

China’s energy storage tenders are growing rapidly. According to statistics, as of October 2022, the cumulative bidding volume of energy storage projects in China has exceeded 12.1GW/26.1GWh. Especially since June 2022, the bidding process of energy storage projects in China has accelerated significantly. There is a very significant improvement.

The grid-side energy storage business model is accelerating, and the market is expected to increase in volume. With the exploration of new energy storage business models in Henan, Ningxia, Shandong and southern regions, China’s pre-meter energy storage is expected to usher in an inflection point of project economics.

The energy storage power station participates in the power market peak regulation service compensation and frequency regulation compensation, and the benefits are considerable. Peak shaving refers to calling other units to meet the electricity load during peak electricity consumption, and the revenue comes from the compensation income paid by the power grid to the called unit.

According to estimates, a 50MWh independent energy storage power station participating in the peak shaving service of the power grid can achieve an internal rate of return of 9.7% under the compensation income of 1RMB/kWh of peak shaving service and the cost of energy storage system of 1.5RMB/Wh.

Frequency modulation is divided into primary frequency modulation and secondary frequency modulation. The primary frequency regulation is mainly done spontaneously by the generator set, and the secondary frequency regulation means that the generator set provides enough adjustable capacity and a certain adjustment rate to keep the power grid stable.

According to our calculations, a 300MWh energy storage power station participates in the frequency regulation auxiliary service of the power grid, and its project internal rate of return can reach 9.2% under the cost of the energy storage system of 9RMB/MW and 1.5RMB/Wh.

Large storage battery

Energy storage cells are the most valuable link in the battery energy storage system, and the short-term supply and demand are tight. Energy storage cells are the most valuable components in the current electrochemical energy storage system. Considering the rapid growth of the energy storage market demand, it is expected that large-capacity cells will still be in short supply in the short term.

At the same time, in terms of energy storage systems in China, considering that energy storage systems are purely cost-effective, it is expected that the energy storage cells of second- and third-tier enterprises will be more popularized and applied. Some local businesses anticipate some opportunities. In terms of exports, considering that many countries pay more attention to the performance of battery cells, the phenomenon of head-turning is more obvious.

Energy storage converter

The cost of the energy storage converter is about 15-20% of the energy storage system. The energy storage converter is the core equipment for DC/AC conversion in the energy storage system. At present, the energy storage converter in the Chinese market shows a clear trend of head-to-head.

In the Chinese market, because the end customers of energy storage systems are mostly power generation groups and power grid companies, the owners will designate part of the energy storage converter products in the power grid system to ship together in the bidding. In terms of export markets, leading companies and companies that take the lead in overseas markets will benefit more.

Energy storage temperature control and fire protection

The value of energy storage and fire protection is expected to gradually increase. Energy storage and fire protection account for about 3% of the cost of the energy storage system. As the safety of electrochemical energy storage is increasingly valued by terminal power station owners, the construction standards and requirements for fire protection equipment in energy storage systems are gradually improving, and the unit value of the energy storage system will also increase.

It is expected to increase gradually with the improvement of fire safety standards and requirements. Energy storage fire protection is expected to grow in value and volume with the rise of energy storage market demand and is expected to outpace market growth.

The penetration rate of liquid cooling increases, and the value of energy storage temperature control is expected to gradually increase. The cost of energy storage temperature control accounts for about 3%-5% of the total cost of the energy storage system.

Compared with air-cooled technology, liquid-cooled technology has higher heat dissipation efficiency and is more suitable for current high-power and large-capacity energy storage systems. With the increase in the penetration rate of liquid cooling technology, it is expected that the value of energy storage temperature control will increase to a certain extent.

System integration

China’s energy storage system integration has a high degree of certainty, and high-barrier overseas energy storage system integration is expected to increase both volume and profit. With the transformation of the world’s energy structure and the construction of new power systems, countries have accelerated the construction of pre-meter energy storage systems to maintain the stability of the power grid system.

At present, most of China’s large-scale storage is mainly equipped with mandatory power supply side, with high volume certainty. At the same time, companies such as Zhiguang Electric and Xinguang are vigorously promoting high-voltage cascade technology solutions with higher efficiency and lower cost, which is expected to become an industry technology trend.

Exported energy storage systems have relatively good profitability due to certain barriers to entry in terms of the quality and safety standards of overseas cells and grid access standards, and the integration of exported energy storage systems is expected to increase both volume and profit.

Household savings

Under the premise of the rise of the household savings market in many countries in Europe and the world, household savings companies with first-mover advantages will benefit first. In 2021, Chinese companies Paineng Technology, BYD and Wotai Energy will rank 2nd, 3rd and 6th respectively in the world household storage system.

At the same time, in the field of energy storage inverters, Chinese companies Growatt, Deye, Jinlang Technology and GoodWe all rank among the top five energy storage inverters in the world. At present, energy storage inverter companies including Deye and GoodWe have extended downstream to provide customers with integrated terminal energy storage products and complete home energy storage system solutions.

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