China’s large-scale storage market accounts for a high proportion and grows rapidly, which is the main battlefield of the energy storage industry. In 2023, China added 42.9GWh of new installed capacity of front-of-meter energy storage, a year-on-year increase of 339%, accounting for 45% of the world's newly installed capacity. For energy storage companies, whoever can gain a firm foothold in the fiercely competitive domestic large storage market is expected to win and take a larger share in the global market.
Unlike the China market, which is expanding rapidly in the short term, the overseas energy storage market may show a relatively modest but more durable growth trend. Although energy storage companies need a long cultivation period to go overseas, their profitability is significantly higher than that in China.
Independent energy storage is a major trend, and 2024 may be a key year for the industry reshuffle.
With the launch of the capacity leasing mechanism, the application scenario of large storage has a clear trend of transformation from mandatory distribution and storage to independent energy storage. Independent energy storage on the grid side are about 54% of the new energy storage installed capacity in 2023, and the scale of independent energy storage that completed equipment procurement in the first half of 2024, reached 37.4GWh, accounting for 55%.
The market scheduling mechanism has been improved to improve the utilization rate, and the project bidding requirements have been continuously improved. For example, Shandong has carried out a pilot project to switch from energy storage to independent energy storage, Hebei has clearly required new energy projects to no longer build energy storage below 100MW/200MWh, and Gansu has allowed independent energy storage self-dispatch to participate in the real-time spot market. With the continuous improvement of the power market and independent energy storage dispatching mechanism, the utilization rate of new energy storage in China has increased significantly in the first half of 2024, and the equivalent utilization hours have increased by 100% year-on-year.
When energy storage is really used, the owner's requirements for system equipment will continue to increase, and the industry may bid farewell to the state of only "volume price" in the past. Enterprises with advantages in products, R&D, operation and maintenance, and after-sales are expected to stand out, and 24 years will be an important year for the reshuffle of the energy storage industry.
Three major links: system integration, energy storage cells, and PCS
In the energy storage system, battery cells and PCS are the two items with the highest cost proportion. With the sharp decline in lithium carbonate prices in 2024, the average bid price of China's 2H lithium iron phosphate energy storage system fell to 0.59 yuan/Wh, a year-on-year decrease of nearly half percent. Batteries and PCS are the two core components of the energy storage system. The current average price of energy storage batteries is about 0.32 yuan/Wh, and the average price of energy storage PCS booster all-in-one machine is about 0.10 yuan/Wh.
System integration is the core link of the energy storage industry chain, which needs to connect with upstream equipment manufacturers upward, serve downstream owners downward, and be responsible for project operation and maintenance, after-sales and safety. The overall design of the system, the integration of various equipment, and the control of cell consistency will directly affect the product performance, and the integrator needs to ensure the high performance of the product while reasonably controlling the cost.
The energy storage cell is the component with the highest proportion of system cost, accounting for about 54% of the value, and directly affects the safety and economy of the energy storage power station. Reliable quality cells are the safety foundation of energy storage, and the life of battery cells is related to the number of cycles in the whole life cycle of the system, which is the key variable of LCOS energy storage.
Energy storage PCS is a bridge connecting the energy storage system and the power grid, and although the value accounts for only 16%, it plays a key role in the operation efficiency, safety and stability of the entire system, and the quality of power output. With the continuous improvement of the penetration rate of new energy, the power grid has higher and higher requirements for energy storage power stations, which requires the upgrading of the PCS link, so that the energy storage power station can form a network construction capacity, and gradually have the power generation characteristics of synchronous motors to ensure the stability of the power grid.