Power auxiliary services will be market-oriented, with a market space of 171 billion yuan in 2025. The National Energy Administration revised and issued the measures for the administration of power auxiliary services to improve the market entities, transaction varieties, price transmission and inter provincial and inter regional mechanisms, with the main purpose of ensuring the stability of the power system with the increasing proportion of new energy installed capacity. According to the public data of the National Energy Administration in 2018 and 2019, the cost composition of auxiliary services in China is mainly peak shaving, frequency modulation and standby, and the supply of auxiliary services mainly comes from thermal power. Referring to foreign auxiliary service markets, we believe that peak shaving auxiliary service is a transitional variety when the construction of power spot market is imperfect. With the improvement of China’s power spot market, peak shaving products will be cancelled in China’s auxiliary service market in the future. During the pilot market construction, Zhejiang and Guangdong have largely learned from the PJM market of the United States, We believe that in the future, the national market will largely learn from the product design and organization form of American PJM market. According to international experience, auxiliary service fees account for about 3% of the total electricity consumption of the whole society. We predict that the scale of auxiliary service market will reach 171 billion yuan and 1980 billion yuan respectively in 2025 and 2030.
With the increase of the installed proportion of new energy, energy storage is indispensable because of its excellent performance. In the whole auxiliary service supply, the energy storage performance of frequency modulation service is the best in terms of active power balance, followed by hydropower, gas power and coal power. The flexibility transformation cost of peak shaving service is the lowest. At present, the standby mainly provides compensation for rotating standby, and the moment of inertia can be realized through energy storage simulation. The flexibility transformation of thermal power unit, gas, hydropower and energy storage can provide climbing capacity. The automatic voltage control of reactive power balance depends on the generator voltage regulator and reactive power compensation device, and the phase modulation camera is mostly used in the hub substation and the HVDC converter station. In the emergency recovery of accident, the stable machine cut-off and the stable load cut-off should deal with the faults of the unit and the power grid respectively, and maintain the balance of the power system by cutting off the generator or load. Black start is to rely on the main body with self starting ability to provide initial electric energy and gradually restore the power supply of the power grid after a large-scale power failure of the power system. At present, the black start test of energy storage auxiliary gas unit has been completed.
According to our calculation, the cost of two charges and two discharges per day of 100MW / 200mwh independent electrochemical energy storage power station is 0.55 yuan. When the demand for peak shaving and frequency modulation is sufficient in the early stage, it is expected to obtain an annual average rate of return of 24.6%. Referring to the recent bidding data, we calculate the kWh cost of battery energy storage in the whole life cycle, which is 0.55 yuan without subsidy and 0.48 yuan with subsidy. Under the condition of subsidies, a 100MW / 200mwh independent energy storage power station will be built with 350 million yuan to adjust the peak load with two charges and two discharges every day. In the whole seven-year life cycle, the total profit after interest and tax is about 106 million yuan according to the market peak valley price difference, and the annual average rate of return is 4.33%. Under the condition of no subsidy, when the demand of the above independent energy storage power station is sufficient, the total profit after tax is expected to reach 394 million yuan in the seven-year life cycle, corresponding to the annual average rate of return of 14.7%. According to the calculation of two charging and two discharging peak shaving, one hour maintenance and the remaining 19 hours frequency modulation of the energy storage power station every day, the total profit after tax in the seven-year life cycle is expected to reach 394 million yuan, and the average annual rate of return is expected to reach 24.6%.
Industry rating and investment strategy we recommend the energy storage EPC and energy storage power station operation industries participating in the auxiliary service market, because we believe that the early investment in independent energy storage power stations has a high rate of return, and more electrochemical energy storage power stations need to be built in the future with the increasing installed capacity of new energy. It is suggested to pay attention to Yunnan Wenshan Electric Power Co.Ltd(600995) , Zhejiang Wanliyang Co.Ltd(002434) and Shaanxi Baoguang Vacuum Electronic Apparatus Co.Ltd(600379) , and energy storage EPC is suggested to pay attention to southern grid technology, Jiangsu Tongli Risheng Machinery Co.Ltd(605286) , Suwen Electric Energy Technology Co.Ltd(300982) .
The construction progress of risk warning auxiliary service market is less than expected; Breakthrough of electrochemical energy storage technology and rapid reduction of cost; Policy adjustment related to ancillary services; The construction progress of energy storage power station is less than expected; Intensified market competition; The performance of the company concerned is less than expected.
