Over the past 22 years, affected by the rising price of lithium carbonate, the market is worried that the rising cost of energy storage system will weaken the economy of energy storage (especially China's pre meter market with larger installed capacity and relatively weaker economy), and finally weaken the installed capacity demand of the industry; On the other hand, we find that many provinces (cities) in China have accelerated the introduction of stimulus policies for the energy storage industry, which has brought demand support to China's pre balance sheet market. Based on the policy changes at the current time point, this report will discuss 1) the business model and economy of independent energy storage on the side of China's power grid; 2) Changes in the demand for power generation side energy storage in China; Combined with the demand of overseas pre balance sheet market, explore investment opportunities under the background of the outbreak of global pre balance sheet market.
Development background of grid side independent energy storage
In the past 21 years, the proportion of Shanxi Guoxin Energy Corporation Limited(600617) grid connection has accelerated, and the demand of power grid for energy storage to participate in peak shaving + frequency modulation has increased accordingly. In the past 21 years, the proportion of wind power and other new energy power generation has increased significantly, which makes China's power system show the characteristics of "double peaks and double heights" & "bilateral randomness". The power grid has an urgent demand for peak shaving + frequency modulation. In order to stimulate electrochemical energy storage to participate in peak shaving and frequency modulation services at the power grid side, the state and many places have issued relevant policies in the past 21 years to clarify the identity of the independent subject of energy storage + the compensation standard for independent energy storage to participate in the auxiliary service market, so as to determine the feasibility and economy of the business model of independent energy storage at the power grid side.
Business model and economic calculation of independent energy storage on grid side
Business model: participate in peak shaving (electricity spot market or auxiliary service market) + frequency modulation (auxiliary service market), and increase capacity leasing mode to increase revenue in the future. As a new market subject, the independent energy storage at the power grid side provides auxiliary services such as deep peak shaving and fast frequency modulation for the power grid to obtain income. At present, at least 19 provinces (cities) have defined the compensation standard for peak shaving and frequency modulation (i.e. income from the auxiliary service market). In the future, independent energy storage is expected to lease capacity from new energy power stations to obtain rent and form incremental income.
Economic calculation: Based on the existing price mechanism + price increase of system cost (assuming that the system cost is 2 yuan / WH), the economic ranking is: participating in peak shaving at the same time + frequency modulation participating in frequency modulation alone participating in peak shaving alone.
Peak shaving: it is assumed to work 300 days a year, fully charge and discharge once a day, and cycle 6000 times. 1) The estimated hourly power cost = 0.63 yuan / kWh, which has been economical in 8 provinces (cities); In addition, in the spot electricity market, it is also economical when the peak valley price difference of on grid electricity price kwh cost; 2) Based on the peak shaving price mechanism of the southern power grid of 0.792 yuan / kWh, IRR = 2.07%.
Frequency modulation: it is assumed that each participation in frequency modulation takes 1.8 minutes, the interval is 2 minutes, and the whole life cycle is 10 years. 1) The estimated mileage cost =3.47 yuan /mw, which is economical in many provinces (cities); In addition, some provinces (cities) have also introduced relevant compensation mechanisms for primary frequency modulation to further increase the economy of frequency modulation; 2) Based on the compensation price of 7.5 yuan / MW, IRR = 14.91%.
Participate in peak shaving + frequency modulation at the same time: under the use of higher frequency charge and discharge, it is assumed that the whole life cycle is reduced to 8 years; Peak shaving operates for 300 days a year, fully charged and discharged once a day, and the annual operation proportion of frequency modulation is 80%. Based on the compensation price of peak shaving of 0.792 yuan / kWh and frequency modulation of 7.5 yuan / MW, IRR = 18.61%, with high economy.
Calculation of installed capacity of China's power grid side energy storage: Based on the three main application scenarios of power grid side energy storage - peak shaving, secondary frequency modulation and primary frequency modulation.
Peak shaving: core assumption: China's social power consumption will increase by 5.5% each year in 22-25 years; The peak shaving demand accounted for 0.5% in 21 years, increasing by 0.3pct year by year; The energy storage permeability is 1% in 21 years, increasing by 0.5pct year by year. Considering the annual charging and discharging time of energy storage for peak shaving, it is estimated that the energy storage demand on the grid side under the peak shaving scenario in China in 21-25 years will be 0.8/1.8/3.0/4.6/6.3gwh, CAGR + 69%.
Secondary frequency modulation: core assumption: the maximum power load in China will increase by 8% every year in 22-25 years; In 21 years, the demand for secondary frequency modulation accounted for 3%, increasing by 0.5pct year by year; The energy storage permeability is 2% / 3% / 3.5% / 4% / 4.5% in 21-25 years. It is estimated that the energy storage demand in China's secondary frequency modulation scenario in 21-25 years will be 0.7/1.4/1.9/2.7/3.6gwh, CAGR + 50%.
Primary frequency modulation: core assumption: the installed capacity of Shanxi Guoxin Energy Corporation Limited(600617) power generation without storage is calculated based on the installed capacity of new energy power generation without storage in 20 years, the installed capacity of new energy power generation in 21-25 years and the proportion of forced distribution at the power generation side; The demand for primary frequency modulation accounts for 10%; The energy storage permeability is 0% / 5% / 10% / 15% / 20% in 21-25 years. It is estimated that the energy storage demand in China's primary frequency modulation scenario in 21-25 years will be 0.0/1.3/3.0/5.0/7.3gwh, which is expected to become the largest increment of energy storage installed capacity on the grid side.
Total installed capacity of energy storage at the grid side: considering that some energy storage projects provide services for three scenarios at the same time, it is conservatively estimated that the total installed capacity is 80% of the total installed capacity of the three scenarios. It is estimated that the demand for independent energy storage at the grid side will reach 1.2/3.5/6.3/9.8/13.8gwh, CAGR + 85% from 2021 to 2025.
Optimistic about the high growth of market demand before China's energy storage meters
The proportion of high economy on the power grid side + forced distribution on the power generation side has increased, and China's pre meter market is expected to continue to grow at a high rate. The price of lithium carbonate rose sharply in 22 years (from the average price of about 138000 yuan / ton from April to December of 21 years to 500000 + yuan / ton in March of 22 years). It is estimated that the unit cost of the current energy storage system has increased by about 0.23 yuan / wh compared with the average price of 21 years, resulting in market concerns that it will affect the demand of China's pre meter energy storage market and the installed capacity of global pre meter energy storage is less than expected. However, we believe that it is unlikely that the demand of China's pre balance sheet market will be weakened:
Power grid side: policy changes have made independent energy storage highly economical. It is estimated that China's power grid side energy storage CAGR + 87% in 21-25 years;
Power generation side: policies such as the proportion of compulsory distribution and storage areas (currently covering 25 provinces (cities)) and the proportion of forced distribution (10% and more than 2 hours) have been significantly accelerated to ensure the installed capacity demand of China's front watch market. Based on the mandatory allocation policy of new wind power stations and the installed capacity of existing wind power stations allocated and stored to reduce the cost sharing of wind and light abandonment and auxiliary service market, we calculate the installed capacity of China's power generation side: it is estimated that the installed capacity of China's power generation side energy storage is expected to reach 4.7/14.3/25.2/42.4/68.4gwh and CAGR + 95% in 21-25 years. Total: we expect the installed capacity of China's pre balance sheet market to reach 5.9/17.8/31.5/52.3/82.2gwh, CAGR + 93% in 21-25 years.
Investment suggestion: be optimistic about the relevant industrial chains in the global pre energy storage meter market + investment opportunities of independent energy storage operators
Driven by the policy, it is expected that the demand of China's pre meter market will continue to grow rapidly in 22-25 years. Based on our previous calculation of the demand of the global pre meter Market for energy storage, we expect that the installed capacity of the global pre meter Market in 21-25 years is expected to reach 15.3/53.9/96.6/156.5/265.8gwh, CAGR + 104%. Therefore, we are optimistic about: 1) investment opportunities in relevant industrial chains under the high growth of market demand in front of global energy storage meters; 2) Independent energy storage at the grid side is an investment opportunity for relevant operators under the high economy.
Related industrial chains:
Battery: battery enterprises [ Contemporary Amperex Technology Co.Limited(300750) ], [ Eve Energy Co.Ltd(300014) ], which are optimistic about cell performance, cycle life and battery pack consistency, and have a higher market share; It is suggested to focus on the business covering China's pre balance sheet and overseas post balance sheet markets, benefiting from [ Guangzhou Great Power Energy&Technology Co.Ltd(300438) ] with high downstream demand; It is suggested to pay attention to the elastic target [ Pylon Technologies Co.Ltd(688063) ] of energy storage battery with full coverage from wh level to MWh level.
Energy storage converter: it is optimistic about [ Sungrow Power Supply Co.Ltd(300274) ] benefiting from the high growth rate of large energy storage (front table + industry and Commerce).
Temperature control: under the trend of large energy storage capacity at the generation side and high power storage at the grid side, it is recommended to pay attention to [ Shenzhen Envicool Technology Co.Ltd(002837) ] with obvious first mover advantage and non-standard advantage, and [ Sanhe Tongfei Refrigeration Co.Ltd(300990) ] with high-precision temperature control ability. Independent energy storage operator: it is suggested to pay attention to 1) [ Zhejiang Wanliyang Co.Ltd(002434) ] of 300MW / 600mwh independent energy storage project under construction; 2) Focus on developing the business model of new energy power generation + shared energy storage. The reserve projects include [ Jiangsu Linyang Energy Co.Ltd(601222) ] of Rudong 100MW / 200mwh centralized shared energy storage project + Anhui 400MW / 800mwh centralized shared energy storage project.
Risk tips:
Energy storage demand is lower than expected; The policy strength is less than expected; The cost of lithium battery increased more than expected; The development of other energy storage methods exceeded expectations; The calculation is subjective and only for reference.
