Question 1: why focus on household energy storage at the current time?
The prosperity of household energy storage demand continued to rise in 2022: the global energy crisis spread last year was further exacerbated under the conflict between Russia and Ukraine. The upsurge of household photovoltaic distribution and storage continued to heat up due to the soaring electricity price and hidden concerns about energy security, and the prosperity of household energy storage demand also continued to rise.
In 2022, the profitability of enterprises related to household energy storage first stabilized and rebounded in Q1: suppressed by the continuous rise in the price of lithium carbonate in the upstream, the demand for large-scale energy storage was restrained. Even if household energy storage enterprises increased their income but did not increase their profits in Q4 in 2021, driven by strong demand in Q1 in 2022, the price of household energy storage increased smoothly and the profits of relevant enterprises stabilized and rebounded.
Question 2: how sustainable is the growth of household energy storage?
The conflict between Russia and Ukraine is only an accelerator. "High electricity price + policy support" is the dual driving force for the rapid growth of overseas household energy storage
High electricity price and cost reduction of light storage system are important source power for overseas household energy storage to realize economy: 1) at present, household energy storage is mainly concentrated in countries or regions with high electricity price. According to ihsmarkit data, in 2020, the total household energy storage of Germany, the United States, Japan and Australia accounted for 74.8%. 2) The main function of household energy storage is to realize the self-use of household photovoltaic power generation in the daytime at night. The main profit comes from the difference between the residential electricity price at night and the on grid electricity price of household photovoltaic power generation in the daytime. By increasing the self-use of household photovoltaic power generation to save electricity charges, high electricity price and cost reduction of optical storage system are important prerequisites for realizing the economy of household energy storage. 3) For countries and regions such as South Africa, due to the relative weakness of local power grid facilities or the threat of natural disasters from time to time, relatively affluent families also have urgent demands for configuring household energy storage to improve the reliability of power supply.
The "self consumption" of household PV is an important policy basis for the development of household energy storage: 1) for the complete "net metering" policy adopted by many countries and regions, the on grid price of household PV can be equivalent to the residential electricity price. If the residential electricity price in this region does not have a large difference between the electricity price at night peak and white day Valley, the residents lack the economic power to allocate energy storage; 2) Under the "self consumption" mode, the price difference between the lower household photovoltaic on grid price and the higher residential price provides arbitrage space for household energy storage; Under the "net metering" mode, if there is a large price difference between peak time at night and valley time during the day, it can also provide arbitrage space for household energy storage. 3) Germany, Japan, Australia and other countries generally adopt the "self consumption" policy based on fit, and only some states in the United States adopt the "self consumption" policy of household photovoltaic, or there is a large time-of-use electricity price difference between residents at night peak time and daytime valley time.
Subsidy policy support is a booster for the rapid development of overseas household energy storage: in order to encourage the development of household energy storage, countries or regions with concentrated household energy storage demand generally implement energy storage subsidy policies, such as the tax credit policies of the United States and Italy, the investment subsidy policies of Japan and Australia, etc.
Question 2: how sustainable is the growth of household energy storage?
In the new household appliances under the energy transformation, the integration of household light and storage has gradually become a trend, which is the sustainable driving force for the development of household energy storage
In the near and medium term, the demand for household energy storage mainly comes from the improvement of the penetration rate of household light storage integration in advantageous regions: 1) developed countries and regions accelerate the green transformation of energy, and household photovoltaic is expected to continue to receive greater policy support; Accelerating energy policies such as "coal withdrawal" and "nuclear removal" will inevitably continue to push up or maintain the price of residential electricity in relevant countries; More regions are expected to gradually withdraw from the "net metering" policy of household photovoltaic, which is expected to continue to benefit the integration of household light storage. 2) In the near and medium term, the main driving force of household energy storage demand comes from the continuous improvement of household photovoltaic penetration rate and household photovoltaic power in developed regions, as well as the synchronous improvement of the penetration rate of optical storage integration. 3) For areas with weak power facilities or threatened by natural disasters from time to time, household light storage system is expected to gradually become a substitute for self power supply methods such as diesel generators and an economic choice for relatively affluent groups to improve the reliability of power supply.
The key to the growth of household energy storage in the medium and long term lies in the continuous cost reduction of household light storage integration: 1) with the continuous development of photovoltaic and the steady improvement of its penetration rate, household light storage integration is expected to become the mainstream direction of household photovoltaic development in various countries. It is expected that more countries and regions will continue to withdraw from the "net metering" household photovoltaic policy. Its essence is to promote household photovoltaic distribution and storage and realize the self balance of household power generation and consumption, so as to deal with the problem of "duck" curve of power system caused by the continuous improvement of photovoltaic penetration. 2) The key to the growth of household energy storage in the medium and long term lies in the continuous decline of the cost of household light storage system, which makes the household light storage system an affordable green power option for residents in a wider area, especially in areas with weak power infrastructure.
Measurement of growth space
In terms of total volume: driven by the strong European market, the global household energy storage demand is expected to nearly double in 2022. We expect the growth rate of new capacity to reach 97.9%. However, considering that the scope of household energy storage market in the near and medium term is still limited to a few regions or groups in the world, the growth rate may slow down slightly from 2023 to 2025, but it will still maintain a high growth rate. We expect the three-year compound growth rate of new capacity to be 48.3%. If the "net metering" policy of household photovoltaic in the United States and other countries accelerates the exit, and the cost of household light storage integration accelerates the decline, the household energy storage market is expected to usher in faster development.
Regional structure: in the near and medium term, the United States, Germany, Japan and Australia are still the world's most important household energy storage markets. However, due to the small initial scale and faster growth rate of household energy storage markets in Italy, Spain, the Netherlands and other countries, it is expected that the proportion of new capacity increase in the above four countries will continue to decline. By 2025, we expect the proportion of the above four countries to drop to about 50%.
Question 3: household energy storage market pattern and investment ideas?
It is not easy to enter the overseas market, and the first mover advantage of brand and channel construction
Household energy storage is an overseas market, and certification is the basic threshold: at present, there is almost no household energy storage market in China, and the demand for household energy storage is concentrated in high price countries dominated by the United States, Germany, Australia and Japan. The overseas market involves a large number of strict safety standards and certification procedures, which puts forward higher requirements for Chinese enterprises to go to sea. At the same time, the certification cycle limits the speed of new entrants entering the market.
Household energy storage has the attribute of consumption, and brand and channel development are the core of competition: the market is mainly high-end market, and quality is better than price, which provides a good guarantee for enterprises to maintain high gross profit. At the same time, household energy storage has the attribute of consumption. Brand and channel development have become the core competitiveness of relevant enterprises, and also built a moat for enterprises with first mover advantage for a period of time.
Localization is expected to become a moat of household energy storage competition: the difficulty of household energy storage lies in the establishment of distribution market, including local warehouse, logistics, language support, as well as the support of local installers. The distribution industry is a localized business, and localization is an important condition for the continuous growth and strength of Chinese household energy storage related enterprises.
Certainty is king, high proportion of household energy storage and distributed photovoltaic inverter enterprises are the key investment recommendations
Investment idea: under the current high price of lithium carbonate, the performance of household energy storage segment track has higher certainty and sustainability. In the near and medium term, household energy storage investment can focus on enterprises with a high proportion of related businesses. For the battery link, we pay more attention to the proportion of household energy storage business, and for the PCs link, we pay more attention to the proportion of household energy storage PCs and distributed photovoltaic inverter business.
Household energy storage PCs is strongly related to distributed photovoltaic inverter: 1) the demand is highly correlated. The existing household energy storage is mainly in the form of light storage. The combination of the two can reduce the electricity charge of residents in high electricity price areas. Therefore, the household energy storage is related to the strong demand for distributed photovoltaic in the corresponding areas.
2) Similar to the logic of household energy storage, distributed PV corresponds to the end-user electricity price, which is significantly higher than the power generation side electricity price corresponding to the centralized power station. Therefore, the price sensitivity of distributed PV is relatively low, and it is also easier to transmit the cost of upstream raw materials.
Investment suggestions and risk tips
Under the current high price of lithium carbonate, the performance of household energy storage segment track has higher certainty and sustainability. At the same time, the leading enterprises have obvious brand and channel first mover advantages. Based on this, we give a "recommended" rating to the household energy storage industry.
Recommended by battery enterprises Pylon Technologies Co.Ltd(688063) and Guangzhou Great Power Energy&Technology Co.Ltd(300438)
Pylon Technologies Co.Ltd(688063) : the leading enterprise in the global household energy storage market, accounting for the top three in the world, and overseas household energy storage accounts for a high proportion of the company's revenue. The company has the characteristics of complete qualification certification, rich customer resources and high proportion of independent brands, with significant first mover advantage. With the steady improvement of the company's production capacity, the strong demand for household energy storage abroad is expected to promote the rapid growth of the company's performance.
Guangzhou Great Power Energy&Technology Co.Ltd(300438) : the focus on energy storage business continues to highlight its effectiveness. In 2021, it ranked second in the country in terms of global energy storage battery shipments, and the contribution of overseas household energy storage business to revenue increased rapidly. The company continues to expand market coverage and increase the inclination of household energy storage production line, which is expected to benefit from the market of full production and full sales.
Inverter enterprises recommend Ningbo Deye Technology Co.Ltd(605117) and focus on Ginlong Technologies Co.Ltd(300763) and Jiangsu Goodwe Power Supply Technology Co.Ltd(688390)
Ningbo Deye Technology Co.Ltd(605117) : a rookie in the inverter industry. The business of photovoltaic and energy storage inverter is developing rapidly, and focuses on the overseas distributed photovoltaic and household energy storage market. With rapid product iteration, excellent fine cost control ability and continuous breakthroughs in market development, the company is expected to maintain rapid performance growth in the current market with strong demand for distributed photovoltaic and household energy storage.
Ginlong Technologies Co.Ltd(300763) : the leading enterprise of series inverter, and the series grid connected inverter is the main revenue of the company. At the same time, the energy storage inverter has achieved rapid growth. Affected by the conflict between Russia and Ukraine, the demand for distributed photovoltaic and household energy storage in Europe has surged. As a traditional advantageous region of the company's business, this region will benefit the company's high performance this year.
Jiangsu Goodwe Power Supply Technology Co.Ltd(688390) : the world's leading inverter brand, with the highest shipment volume and the rapid growth of energy storage business. Due to the significant increase in expenses during the superposition of chip shortage, the company's profit is under pressure in the short term. However, it is expected that with the transformation of R & D achievements and large-scale effect, the revenue will continue to grow, the expense rate will be diluted, and the profitability is expected to rebound. The company attaches great importance to R & D investment, which is expected to inject a source of power into the sustainable growth of the company.
Risk tips: 1) covid-19 epidemic situation has repeated uncertainties; 2) There is uncertainty in the international energy supply and demand situation; 3) The adverse impact of energy storage and photovoltaic upstream prices exceeded expectations; 4) The competition pattern intensifies; 5) The calculation has certain subjectivity; 6) Focus on the uncertainty of the company's future performance.
