Commercial and industrial energy storage is currently experiencing a boom in development. According to data from the White Paper on 2023 China Industrial and Commercial Energy Storage Development, the worldwide new energy storage capacity reached an impressive 46.2GW in 2022. Among this total, industrial and commercial energy storage systems accounted for 4.2GW, making up approximately 9.1% of the global new energy storage capacity. In terms of geographic distribution, the majority of global industrial and commercial energy storage is concentrated in the United States, Germany, Japan, and China, together comprising about 79% of the total global installed capacity.
Moreover, the White Paper forecasts that the newly installed capacity for global commercial and industrial energy storage will reach 1.5GW in 2023. Furthermore, it predicts that the cumulative installed capacity for global commercial and industrial energy storage will reach 11.5GW by 2025, with the United States and China emerging as the two major markets.
Cost: energy storage system expenses are on a downward trajectory.
Battery-grade lithium carbonate prices have been steadily decreasing since the end of 2022. As of September 18th, 2023, the average price of battery-grade lithium carbonate (99.50%, made in China) stood at 181,000 yuan/tonne, marking a significant 65.85% reduction from the end-of-December 2022 price of 530,000 yuan/tonne. Considering that a single GWh battery requires approximately 600 tons of lithium carbonate, a 100,000 yuan drop in the price of one ton of lithium carbonate translates to an approximate 0.06 yuan/Wh reduction in battery cell costs. Consequently, the current pricing of energy storage battery cells has decreased compared to the beginning of the year.
According to TrendForce, as of September 11th, 2023, the average price of square lithium iron phosphate energy storage battery cells is 0.59 yuan/Wh. The combination of declining raw material prices, increased battery capacity production, and heightened market competition has led to a noticeable decline in energy storage system pricing.
Regarding policies, numerous regions have introduced measures related to distributed PV installations and energy storage, along with offering special subsidies to boost the growth of industrial and commercial storage. According to statistics from the National Energy Bureau, during the first half of 2023, the newly installed capacity of distributed PV installations reached approximately 40,963,000 kilowatts, marking a remarkable year-on-year increase of 108.43%. Specifically, the top five regions in terms of the growth of distributed PV capacity are Henan, Jiangsu, Shandong, Anhui, and Zhejiang. Among them, Jiangsu and Zhejiang have shown significant growth in the capacity of industrial and commercial storage.
Currently, in the provinces leading in distributed PV capacity, many local governments have implemented policies related to distributed PV storage. In terms of energy storage allocation requirements, most regions have set the allocation rate of energy storage at 8% or higher, with some governments even requiring 15% or more. However, there is generally no specific requirement for the duration of energy storage allocation, although a few regions do mandate a minimum of 2 hours or more.
Moreover, various policies have been implemented to encourage the development of commercial and industrial energy storage and to create a favorable environment within the power market for their profitability. On one hand, the price gap between peak and off-peak hours is widening, serving as the primary source of profit for commercial and industrial storage, with increasing arbitrage opportunities. On the other hand, profit avenues for industrial and commercial storage are diversifying, expanding to include demand management and response on the demand side.
For instance, in terms of discharge subsidies, Ouhai District in Wenzhou, Zhejiang, and Longgang offer generous subsidies, providing 0.8 yuan per kWh to energy storage operators who operate projects in accordance with actual discharge amounts. Capacity subsidies for projects are also available. When it comes to subsidy duration, options include one-time subsidies and yearly regression subsidies over three years, with subsidy amounts typically ranging between 100-300 yuan per kW.
Some regions also provide investment subsidies. For instance, in Guangdong and select areas, the government offers subsidies for energy storage investments based on installed capacity or total investment amounts, with subsidy proportions ranging from 2% to 30%.
As electricity demand rises in the market, commercial and industrial energy storage may become an important means of realizing emergency power backup and reducing energy expenditure. The integrated photovoltaic and solar industrial and commercial energy storage system can shave peak load through PV installations. In this way, not only the utilization rate of photovoltaic power can be improved, but also the normal production can be ensured even in the power limit time. In order to ensure stable power consumption, the demand for roof-mounted PV and energy storage is rising among ordinary industrial and commercial users.
Industrial and commercial energy storage encompasses the deployment of energy storage equipment systems on the electricity consumption side of office buildings, factories, and similar facilities. These systems typically consist of PACK batteries, PCS (energy storage converters), BMS (battery management systems), EMS (energy management systems), and more. Depending on their power systems, they can be categorized into battery storage systems, supercapacitor energy storage systems, hydrogen energy storage systems, and others. It is important to note that industrial and commercial energy storage systems differ from large-scale energy storage and frequency adjustment power stations. They focus on maximizing the self-generation and self-consumption rates of PV installations while reducing electricity expenses for owners, thereby assisting enterprises in conserving energy and lowering emissions.
Presently, the domestic government is actively supporting the growth of the industrial and commercial storage market by implementing various measures and encouraging broader applications in this sector. Additionally, there is a noticeable increase in industry-related companies across the supply chain making proactive investments in this area. In light of the rapid expansion of industrial and commercial energy storage, lithium battery and system manufacturers, as well as companies within the photovoltaic industry chain, along with specialized energy storage integrators, are diligently expanding their presence in relevant fields. Their aim is to accelerate technological advancements and meet the burgeoning market demand.
