Driven by multiple economic factors, overseas household savings demand explodes
Energy inflation and geopolitical tensions drive up electricity prices
In 2009, the benchmark photovoltaic on-grid electricity price in major European countries represented by Germany, France, Italy and Spain was basically 0.4 euros/kWh. It declined at a constant rate in the following 10 years, reaching around 0.1 euros/kWh in 2019, which was significantly lower than the 0.2862 euros/kWh in the same year. With the European average electricity price, household photovoltaics can no longer meet the profit needs of European households with "benchmark electricity prices, full grid access". Before 2021, the main rankings of global household electricity prices are Europe > Japan > Australia > United States > China, all of which are on a steady upward trend year by year. However, starting from July 21, due to rising energy prices and later due to the tense geopolitical situation, Electricity prices in Europe have been soaring and have now reached 2-4 times the price during the same period. The economics of investment in distributed photovoltaic + household storage are improving rapidly, and the demand for household storage purchases remains high. Amid the hidden danger of energy decoupling between Russia and Europe, we expect that European household storage will remain at a high level in the next 2-3 years. growth stage.
Time-of-use electricity prices are applied regularly, and the peak-valley price difference widens.
Time-of-use electricity prices are widely used in a wide range of areas. Domestic regulations have been introduced in recent years. Where the maximum system peak-to-valley difference rate exceeds 40%, in principle, the peak-to-valley electricity price difference should not be less than 4:1. In 2020, 75%-90% of users in Italy Time-of-use electricity prices are adopted, and this figure is 50% and 40% in France and Spain respectively. The latest EU policy requires electricity sales companies above a certain scale to formulate and publish time-of-use electricity price packages for end users. In the United States, most customers in California, Michigan, and Maryland participate in time-of-use tariffs.
Main types of time-of-use electricity prices
The application of time-of-use electricity prices is constantly developing in a more flexible and market-oriented direction.
For peak electricity consumption caused by predictable severe weather and specific events, many countries adopt peak electricity prices to further widen the gap between peaks and valleys based on the original time-of-use electricity prices, thus stimulating demand response to cope with unexpected emergencies and consumption. More volatile renewable energy. France's CRE issued a specific decision in May 2021. For small users, at least 50% of the retail price should be linked to the hourly price of the day-ahead spot market to reflect changes in market prices and increase the fluctuation range of electricity prices. Peak and valley arbitrage space.
Per capita electricity consumption is high, and the growth trend is expected to continue
With the continuous improvement of economic level and quality of life, the global average per capita electricity consumption has been rising in the past 50 years. North America leads the world in per capita electricity consumption, while China's per capita electricity consumption also surpassed the global average in 2009. In 2020, the top five countries in the world with per capita electricity consumption are the United States, Canada, Australia, France, and Japan, which are similar to the ranking of newly installed household savings. The per capita electricity consumption in the United States has reached 4576kwh/person, while the per capita electricity consumption in major European countries is also about 1500-2500kwh/person. In view of the irreversibility of living and electricity consumption habits and the continuous pursuit of quality of life, it is expected that global per capita electricity consumption will continue to grow, and the economics of household savings for self-use are further highlighted.
Per capita electricity consumption in various countries in 2020
The popularization of new energy vehicles has become a new driving force for increasing household electricity consumption.
In recent years, the global electric vehicle industry has developed rapidly, the number of electric vehicles has increased rapidly, and the demand for car chargers has emerged. Installing household energy storage systems in and near home charging piles can alleviate the impact of electric vehicle charging on the power grid and improve the economy of household electricity use. Charging and storage integration will become the future development direction of home charging pile systems. According to BNEF's forecast, the number of new energy vehicles will reach 77 million in 2025 and will further increase to 229 million in 2030. At the same time, the demand for car chargers continues to increase. The global construction scale of public charging piles for electric vehicles will be 1.3079 million in 2020, with a five-year average annual compound growth rate of 47.98%. Currently, passenger cars are the main type of family cars. According to BNEF estimates, the global light passenger car stock is about 1.2 billion. By the end of 2022, only slightly more than 2% of light passenger cars will be electric vehicles. In the future, the penetration rate of new energy passenger cars will increase rapidly, from 6.6 million in 2021 to 21 million in 2025. There is a huge demand for integrated charging and storage for family cars.
Heat pumps gradually replace heating, driving new electricity demand
As an efficient and environmentally friendly thermal energy terminal, heat pumps can be used for heating in winter and cooling in summer. For most areas in Europe and the United States, heating is needed in cold winters and air conditioning is needed in summer. Heat pumps have higher heating/cooling efficiency and are more energy-saving and environmentally friendly. In the context of energy transition, fueled by energy inflation and geopolitical tensions, energy prices in Europe have skyrocketed, and demand for heat pumps has exploded. In 2021, heat pump sales in 21 European countries reached 2.2 million units, a year-on-year increase of 37.5%. In 2021, the total sales of heat pumps accounted for 21.35% of the total sales of European heating equipment (heat pump + boiler), an increase of 10.15pct compared with 2010.
New energy vehicles and heat pumps will bring an additional 3898kWh of household electricity consumption each year
In terms of new energy vehicles, assuming that private cars drive 10,000 kilometers per year and consume 12.6kWh of electricity per 100 kilometers, new energy vehicles will bring an electricity demand of 1,242.7kWh. In terms of heat pumps, heat pumps are used to replace heating in winter. Based on the calculation of an 80-square-meter house with a heating area ratio of 60% and a heat pump COP of 250%, the power consumption of the heat pump for summer cooling is 921.6kWh, while the air conditioner requires 1584kWh. The heat pump will save electricity in the summer. 662.4kWh. Taken together, the heat pump will bring 3898.1kWh new household electricity demand.
The cost of optical storage electricity has entered a downward channel and is expected to be further reduced in the future.
Benefiting from the continuous decline in battery prices and photovoltaic costs, the cost of solar energy storage without subsidies has reached US$0.456/kwh in 2020, a 65% decrease compared to 2015. According to BNEF, the cost of household storage systems will continue to decline in the next 10 years, with battery costs declining the most. In 2022, due to the sharp increase in the price of lithium carbonate, battery costs will rise. NREL predicts that with the subsequent decline in raw material prices, battery costs It is expected to gradually decline, and will drop by 66% in 2030 compared with 2020. Inverters followed, with a cost reduction of about 33%, and soft and installation costs dropped by a smaller 22%. According to estimates, the initial investment cost of household savings systems will drop by about 38% in 2030 compared with 2020, significantly improving the economic level of household savings installations.
Policies stimulate household savings demand and reduce investment costs
In order to promote household storage installations, various countries have introduced relevant policies to reduce initial investment costs, which mainly include direct subsidies, tax exemptions, and support for research and development. Policies such as tax exemptions and exemptions are gradually implemented in Europe, the United States, Japan and Australia. For example, the United States provides up to 30% investment tax rebates and exemptions for energy storage systems with more than 5 kilowatt-hours of electricity and extends the period to 2026. The United Kingdom will increase the value-added tax for household photovoltaic systems from 2022 to 2026. 5% is reduced to 0% and is valid for 5 years to stimulate the purchase of household energy storage systems. The Brandenburg region of Germany provides a financial subsidy of no more than 50% of the total cost of household savings systems, and relevant Swedish policies can cover 60% of household savings installation costs.
Power supply reliability promotes household storage development
Accidents occur frequently, energy storage maintains stable power supply
Large blackouts with sudden onset, impacting more than 100,000 people, and lasting more than 1 hour have occurred repeatedly around the world. The United States, Canada, Australia, Brazil, India and other countries have the most blackouts, which are generally characterized by vast land areas, large power supply spans, and complex power operation conditions. The North American power grid system facilities are old, and Asia, Africa and Latin America lack strong investment in power facility construction, resulting in frequent power outages and power shortages. Coupled with the frequent occurrence of extreme climates such as global warming, cold waves, tornadoes, high temperatures and droughts, local residents have a rigid demand for emergency power backup. Household storage provides emergency power in power plant accidents or extreme natural disasters, improving the stability of electricity use. Global distributed photovoltaics and household storage are still in the low-level starting stage, and the penetration rate of photovoltaic storage in most regions is below 10%, with great room for development.
Domestic household savings have started, and the future prospects are good
Electricity market-oriented reform broadens electricity price fluctuations
On the one hand, the electricity market-oriented reform has broadened the fluctuation range of electricity prices, prompting all coal-fired power generation to enter the electricity market in principle, and forming an on-grid electricity price within the range of "base price + fluctuation" through market transactions, with the fluctuation range not exceeding 20%. On the other hand, users are liberalized, industrial and commercial users have fully entered the market, electricity sales prices in industrial and commercial catalogs are cancelled, electricity is purchased at market prices, and the fluctuation range of fixed electricity prices for residential and agricultural electricity is further expanded, which strengthens domestic power from both the participation mechanism and electricity prices. The possibility of benefiting from household savings.
Policies clarify the positioning of energy storage, and mechanism improvement is on the agenda
The National Development and Reform Commission and the National Energy Administration issued the "Notice on Further Promoting New Energy Storage's Participation in the Electric Power Market and Dispatch Application" in June 2022, further clarifying the positioning of the new energy storage market and proposing to establish and improve relevant market mechanisms, price mechanisms and operations. Mechanism etc. The "Notice" points out that new energy storage can participate in the power market as independent energy storage. At the same time, it attempts to solve the problems of transmission and distribution prices and how to price additional funds in energy storage charging and discharging, which will help speed up the implementation of new energy storage projects and use domestic The electricity spot market provides the necessary soft environment for new energy storage, paving the way for the large-scale popularization of household energy storage.
Policy promotion has further widened the peak-to-trough price gap.
On July 29, 2021, the National Development and Reform Commission issued the "Notice on Further Improving the Time-of-Use Electricity Pricing Mechanism" to promote the improvement of system adjustment capabilities from the user-side demand side, requiring a reasonable determination of the peak-to-valley electricity price difference, and the maximum system peak-to-valley expected in the previous year or current year. Where the difference exceeds 40%, the peak-to-valley electricity price difference is in principle not less than 4:1, and in other places it is not less than 3:1. At the same time, all localities are required to implement a peak electricity price mechanism on the basis of peak and valley electricity prices, and reasonably determine the peak period mainly based on the highest load of the system. In principle, the peak electricity price will increase by no less than 20% based on the peak electricity price.
Before the release of this policy, 29 provinces across the country had implemented the time-of-use electricity price mechanism. After the announcement, China Southern Power Grid, Guangdong, Guangxi, Guizhou, Ningxia, Anhui, and Shanxi all issued notices to improve the current peak and valley time-of-use electricity price policy. As of the end of August 2021, more than two-thirds of the country's regions have not implemented peak electricity prices, and most of the regions that have implemented them do not meet the increase ratio requirements. More than 70% of regions do not meet the minimum peak-to-trough price difference requirement of 3:1, with the largest peak-to-trough price difference in Beijing, Shanghai and Guangzhou. It is expected that with the implementation of the policy, the peak-to-trough price difference will further increase in most areas across the country, creating favorable conditions for the introduction of household savings into the market.
As the quality of life improves, per capita electricity consumption enters an upward channel
With economic development, China's per capita electricity consumption has been rising since it surpassed the global average in 2009. In 2020, China's per capita electricity consumption was 5,317kwh, an increase of 3.9% from the previous year, which is approximately 17 times the world average. China's per capita domestic electricity consumption is 878kwh, an increase of 5.1% over the previous year, slightly higher than the world average. From 1980 to 2020, China's per capita electricity consumption and per capita domestic electricity consumption averaged annual growth rates of 7.6% and 11.3% respectively, the fastest growth among major countries.
The global market has entered the "fast lane", and the blue ocean space of trillions is vast
China's power-side energy storage market: includes household and industrial and commercial energy storage. According to Huajing Industry Research data, it currently accounts for about 14.18%. We expect it to grow at a constant rate of 2.7% per year in the future and reach 25% in 2026. %.
China’s household energy storage market: Currently there are few household energy storage installations in China. It is expected that with the advancement of policies, benchmark electricity prices will continue to decline and the peak-to-valley electricity gap will further widen. We predict that the optical storage system will gradually penetrate in 2023 and reach 8% in 2026.
Global household energy storage market: According to BNEF data, the proportion of household storage has stabilized between 20% and 30% in recent years. Due to the continuous improvement of electricity prices and power consumption, household storage will become the driver of global energy storage installations in the future. As the main force, we estimate that the proportion of global household savings will gradually increase to 42% in 2026.
According to calculations, under ideal circumstances, with the continuous advancement of distributed photovoltaic installations and the continuous improvement of the economics of household savings, the newly installed capacity of global household savings will reach 159.1GW in 2026, which is approximately 25 times that in 21 years, and the five-year CAGR is 91 %. China's newly installed household storage capacity is expected to increase rapidly after household storage products are introduced into the market. According to our calculations, under ideal circumstances, it will reach 2.39GW in 2026. In terms of market space, based on the calculation of household storage system of 1 US dollars/Wh (6.7 yuan/Wh), we predict that the global new household storage installed capacity in the five years from 2022 to 2026 will bring a market space of 2.5 trillion yuan, of which 2026 will Reaching a market space of 1.1 trillion.
