In 2022, domestic energy storage installed capacity will be 15.3GWh, a year-on-year increase of 232%

The mandatory allocation of storage drives the rapid growth of domestic energy storage, and large storage occupies a dominant position in domestic energy storage installations. In 2022, the installed capacity of new energy storage projects newly put into operation in China will reach 6.9GW/15.3GWh, exceeding the cumulative installed capacity in the past ten years. The growth rate of installed capacity in 22Q4 is rapid, with a quarter-on-quarter growth rate of about 2000%, and 2023Q1 will maintain a growth trend, with a year-on-year increase of about 1500%.

Bidding: 2023H1 energy storage bidding 30.4GWh, a year-on-year growth rate of 234%

The domestic market policy is the main driving force. In 2023, H1 large reserve bidding will increase significantly. Driven by the policy of mandatory storage allocation, the total amount of energy storage bidding in my country in H1 2023 will reach 30.4GWh, a year-on-year increase of 234%. The increase was obvious in March and April, and the monthly bidding in May fell, which was the same as the same period in the same period. Energy storage tenders and installations are expected to accelerate as H2 ground-mounted PV demand grows in 2023.

Winning the bid: 28.7GWh won the bid for H1 energy storage in 2023, and 14.8GWh will be connected to the grid

The number of domestic energy storage bids in a single month is high, and the market continues to maintain prosperity. In 23H1, 28.7GWh of energy storage bids were won, a year-on-year increase of 553%. The number of bids won in a single month from January to June was higher than that of the same period last year. Judging from the data of installed capacity and grid connection in a single month, it has increased significantly compared with the same period last year. In 23H1, a total of 15.6GWh of domestic energy storage was connected to the grid, a year-on-year increase of 727%. The total installed capacity in the first half of the year has exceeded the total installed capacity in the whole of last year.

Cost: The price of lithium carbonate has dropped, and the economics of energy storage projects have become prominent

The price of lithium carbonate has dropped, and the cost of lithium batteries has fluctuated accordingly. In H1 of 2023, the raw material price of lithium carbonate dropped significantly, and stabilized at 300,000 yuan/ton in June. The price of lithium battery cells fluctuates with the cost price, and the price of domestic battery cells dropped to 0.65 yuan/Wh in June. According to our calculations, lithium carbonate accounts for 24% of the cost of energy storage cells. As the price of lithium carbonate declines, the IRR of energy storage projects can further increase.

Price: EPC and energy storage system prices dropped to 1.6/1.1 yuan/Wh in June, a month-on-month drop of 43%/27%

Affected by the price drop of lithium carbonate, the price of EPC and energy storage system dropped to 1.6/1.1 yuan/Wh in June: due to the price of lithium carbonate fell by more than 40%, the price of EPC engineering and energy storage system dropped to per watt-hour in June 1.6 yuan and 1.1 yuan, a month-on-month decrease of 43% and 27% respectively. It is expected that this price drop will further stimulate the growth of energy storage demand in H2 in 2023.

Large storage: the shared energy storage model has outstanding development advantages

The price increase of energy storage has reduced the profitability of power stations, stimulating the development of independent/shared energy storage models. The domestic mandatory allocation of storage and the independent/shared energy storage model will be promoted. Shared energy storage optimizes the resources of independent grid-side, power-side, and user-side energy storage power stations, with outstanding advantages: 1) meet the requirements of strong allocation, 2) reduce costs on a large scale, and 3) participate in dispatching. There are various sources of income, making domestic energy storage truly profitable.

Industrial and Commercial Reserves: There are various profit models, currently peak-valley arbitrage is the main

There are various income models for industrial and commercial savings, and at present it is mainly based on peak-valley arbitrage. Industrial and commercial storage has a variety of income models, and "peak-valley arbitrage" is the current main income model, which saves electricity costs through low-valley charging and peak-peak discharge. Core Energy Technology is mainly for peak and valley arbitrage, China Southern Grid Energy Storage is for grid leasing to earn rental fees, and Suwen Power is for EPC business.

New technologies: New technologies for energy storage emerge in endlessly, and demonstration mass production applications are gradually implemented

From January to May 2023, new technology pilot projects will be launched one after another, and the overall growth momentum of the bidding end will be good. From January to May 23, solar thermal energy storage, liquid flow batteries, compressed air, gravity energy storage, etc. all have tenders & won the bids. According to our statistics, solar thermal energy storage and compressed air energy storage each accounted for 42% in 23 years, which is the main increase. Gravity energy storage pilot project landed, boosting the capacity growth of bidding & winning bids.

The shipments of energy storage batteries are clearly differentiated, and inverter companies have advantages in entering PCS

Ningde Times ranks first among domestic energy storage battery manufacturers in terms of shipments. In 22 years, the global energy storage battery shipments CATL ranked first, about 52.7GWh; BYD ranked second, about 14GWh. Sungrow is TOP1 in domestic energy storage PCS shipments, with an obvious first-mover advantage. Sungrow's shipment volume was 6.3GW, ranking first. Kehua Shuneng and Shangneng Electric are 3.6/2.8GW, ranking second and third.

PART2 United States: record high record for energy storage, high barriers and high profitability market
In 2022, the installed capacity of energy storage in the United States will be 12.2GWh, a year-on-year increase of 12%

The policy boosted installed capacity, with large reserves as the main force. In 22 years, the newly installed capacity of energy storage in the United States was 4.8GW/12.2GWh, +34%/+12% year-on-year, and the power side/household/industrial and commercial installed capacity accounted for 86/16/3% respectively, and large storage accounted for the first. Grid-side grid-connection delay, 23Q1 installed capacity fell from the previous quarter. In 23Q1, 0.8GW/2.1GWh was added, which was -27%/-29% month-on-month. The main reason is that the price of lithium carbonate fell, and the wait-and-see sentiment led to delays in the grid integration of large storage. .

Filing: The number of electrochemical energy storage filings in the United States increased rapidly, reaching 30.2GW in April

The ITC policy has led to a jump in the filing of electrochemical energy storage in the United States, reaching 30.2GW in April 2023. The grid connection process in the United States is complex and requires queuing, with an average approval time of 40-60 months. In August 22, the U.S. ITC policy was implemented, covering independent energy storage for the first time, and the economy jumped, which promoted a high increase in the number of filings in August. As of April 23, the filing volume was 30.2GW, +89% year-on-year.

Short-term impact of interest rate hikes on solar storage demand

Rising interest rates suppress the IRR of energy storage, and the margin is expected to improve in the future. Since March 22, the Fed has raised interest rates 10 times, with a cumulative increase of 500 basis points. According to our calculations, if the loan ratio remains unchanged, the increase in interest rates will reduce the IRR yield of energy storage, which is not conducive to installation. In the near future, the pace of interest rate hikes has slowed down. As interest rates gradually peak, margins are expected to improve in the future, which will benefit the acceleration of energy storage installations in the United States.

Suppliers: Most of the large depositors are local companies, and the proportion of Chinese suppliers has increased

U.S. energy storage is dominated by local manufacturers, and the proportion of Chinese companies is gradually increasing. The US market has strict requirements on safety and qualifications, and they trust local brands more. According to IHS Markit, in 2021, CR5, a large U.S. storage integrator, will reach 55%, and Fluence will rank first with 18%. In 2022H2, CR3 accounts for more than 80% of U.S. household savings, and Enphase/Tesla/Solaredge accounted for 40+/27/10%; the share of Chinese enterprise Sungrow is about 3%, and it is constantly expanding.

PART3 Europe: Distributors are in the process of destocking, low penetration rate and high growth potential
In 2022, the installed capacity of energy storage in Europe will be 7.0GWh, a year-on-year increase of 103.44%

In 2022, the European energy crisis and household energy storage will increase by 143% year-on-year. In 2022, the installed capacity of energy storage in Europe will be 7.0GWh, a year-on-year increase of 103.44%, and the installed capacity of household energy storage will be 2.54GW/4.55GWh, a year-on-year increase of 143%/122% respectively. The core driver source.

European electricity prices continue to fall, gas prices rebound slightly

European electricity prices continued to fall, while natural gas prices rebounded slightly. In July 2023, the price of natural gas in Europe will be approximately US$33.93/MWh, an increase of 30%+. Natural gas installations in the Netherlands are undergoing maintenance, and the government plans to permanently close the Groningen gas field in October 2024 due to frequent earthquakes. The supply of natural gas in Europe will decrease, and the price of natural gas in Europe is expected to rise.

The price of solar storage system is reduced, and the economy is still strong under the new electricity price

The economics of photovoltaic storage are strong, and the demand for household storage will continue to increase. Under the assumption of 40 cent electricity price, the rate of return of German household photovoltaic storage system is 9.86% (considering 19% VAT tax rebate), and the payback period is 13-14 years; if only photovoltaics are installed, the IRR drops to 6.85%, and the payback period takes 17-18 years Year. German household solar storage is economically strong, and the demand for household storage is expected to continue to increase!

The penetration rate of household solar storage is low, and the growth space is broad

Europe has a vast space for developing photovoltaic storage roofs, with household use reaching 394GWh and industrial and commercial use reaching 581GWh! Household use: We estimate that there are 49.62/10.31 million roofs in the EU/Germany that can be installed with solar storage, and the EU/Germany household storage has about 397/82GWh of developable space. Industry and commerce: We estimate that there is 580.75GWh of industrial and commercial energy storage space in the EU, and the penetration rate in the EU will be 0.35% by 2022.

German household savings CR3 exceeds 50%, BYD ranks first, and domestic shipments maintain high growth

The structure of the German household savings industry is relatively concentrated, with CR3 exceeding 50%. In 22H1, BYD/Sonnen/SENEC, the market share reached 23%/21%/20%. It is expected that the market share of BYD and leading household storage suppliers will further increase. The energy storage shipments of domestic manufacturers still maintained high growth. Although European household deposits return to rational growth, the shipments of leading manufacturers in the industry still maintain high growth, and we expect the average growth to more than double in 2023.

PART4 Other markets: Emerging markets in South Africa, Southeast Asia, and Latin America are working together
South Africa: Mainly thermal power, state-owned enterprise Eskom monopolizes the power market vertically

South Africa is dominated by thermal power, and the proportion of new energy continues to increase. From 2020 to 22, the proportion of thermal power in South Africa dropped from 83.5% to 80.1%, and the proportion of new energy power generation increased from 5.6% to 7.3%. Eskom monopolizes the South African electricity market. Eskom is a state-owned enterprise integrating power generation, power supply, and power distribution. The power generation side accounts for 90%, and is fully responsible for the power transmission side; Eskom's direct sales/resales account for 60/40% of the electricity sales side.

Eskom has high debts, negative profits for many years, and its financial situation is worrying. As of 2022, the company's debt is as high as 396.3 billion rand, the cash flow ratio is lower than 1 all year round, and it is only 0.76 in 22 years, and the asset-liability ratio continues to be higher than 1.5. At the same time, the company has been in a state of loss for the past five years, with a loss of 15.8 billion rand in 22 years, and its operating prospects and solvency are worrying.

Southeast Asia: Abundant light resources, low proportion of new energy, and large room for development

Southeast Asia has photovoltaic advantages. APAEC targets that new energy will account for 35% of installed capacity by 2025, for which an average annual installed capacity of 7-8GW is required. The growth rate of electricity consumption is fast, and the growth space of new energy is huge. The ASEAN Energy Center predicts that the population of ASEAN will increase to 715 million in 2025, and electricity consumption will increase by an average of 4.5-5.5%. At present, the proportion of photovoltaic installed capacity and power generation in Southeast Asia is relatively low, and there is a large room for growth.

Vietnam: Southeast Asia's photovoltaic pioneer, FIT policy promotes large-scale installed capacity

Lighting resources are full of advantages, and the prospects are huge. Vietnam has an average annual sunshine hours of 1600-2700. According to the ITA report, Vietnam's photovoltaic power generation potential is as high as 1646GW. Policies promote the high growth of photovoltaic installed capacity. Stimulated by the two FIT policies, 2019-20 years ushered in two surges of photovoltaic installations, with a total installed capacity of 18.1GW. By the end of 2022, Vietnam's cumulative installed capacity exceeded 19GW, leading Southeast Asia.

Other countries in Southeast Asia: Policies continue to be introduced, which is good for the development of solar energy storage

Support new energy and benefit the development of energy storage. In 2022, the installed capacity of energy storage in Southeast Asia will be 468MWh, a year-on-year +403%. Thailand will implement a new FIT from 2022 to 2030, and battery energy storage will be 2.83 baht/kwh; the Philippines allows foreign developers to own 100% of renewable energy assets; Malaysia plans to account for 70% of renewable energy in 2050; Indonesia plans to rely entirely on renewable energy Powered by renewable energy.

Australia: Impact of energy crisis + policy subsidy support promotes high growth of household savings

Energy crisis + policy subsidies, the rapid development of energy storage in Australia. The Australian power system is often damaged by extreme weather. In 2022, the energy crisis will stimulate the rapid growth of household storage installations. A total of 47,100 residential battery energy storage systems will be deployed, a year-on-year increase of 73.8%. According to BNEF data, in 2022, the installed capacity of energy storage will be 1.07GWh, and household storage will be 0.5GWh, a year-on-year increase of 58%.

PART5 Global: Photovoltaic storage parity opens up the market, energy storage ushers in the best era
Installed capacity: Global electrochemical installed capacity will increase rapidly in 2022, adding 16GW/35GWh

The global installed capacity of electrochemical energy storage continued to grow, adding 16GW/35GWh, +61% year-on-year. Mainly due to China (5.6GW/12.3GWh, +167% YoY), Europe (4.4GW/7.0GWh, +103% YoY) and the United States (4.8GW/12.2GWh, +12% YoY ) The rapid growth of the energy storage market.

Battery pattern: Ningde era is the best in the world, and players from all walks of life are accelerating production expansion

Battery manufacturers are accelerating their deployment, and Ningde has obvious advantages. We expect the demand of the energy storage industry to reach 250-260gwh in 2023, and the global energy storage cell shipments in 22/23 will be 141.6/320.4GWh, a year-on-year increase of 130%/126%; among them, Ningde will ship about 50/90GWh, a year-on-year increase of 199% /80%, accounting for 35.3%/28.1%. Energy storage batteries have high requirements for mass production capacity, safety performance, and cycle life of products, and the industry concentration is expected to increase.

Inverter pattern: Dashu focuses on quality and service, and the regional differentiation of households is serious

Dachu inverter pays attention to product quality and service, and has high stickiness. Sunshine is firmly in the leading position in energy storage, and its profitability has also increased under the advantage of scale. Household storage inverters have strong regional characteristics and fierce competition among manufacturers. The United States tends to use all-in-one machines or inverters and batteries of the same brand, while Europe has high requirements for channel and product adaptability. Leading shipments all increased rapidly. In 2023, it is estimated that Sunshine/Jinlang/Goodway/Deye/shipment will be 60/40/40/800,000 units+.