The downstream application scenarios of energy storage can be mainly divided into power generation side, grid side, user side, etc. On the power generation side, it mainly plays the role of matching power production and consumption, reducing grid pressure, etc.; on the power grid side, it is mainly used to reduce or delay investment in grid equipment. , alleviate grid congestion, and provide auxiliary services such as peak shaving and frequency modulation for the power system; on the user side, it helps users implement modes such as peak shaving and valley filling or self-use of photovoltaics to reduce electricity expenses. In this issue, China exportsemi net will explain to you the business model of user-side energy storage.
The main body of energy storage at the power end is power users, mainly including industrial and commercial users and household users. The development of user-side energy storage can help save power costs and ensure the stability of power consumption.
Household energy storage
Household energy storage (household energy storage) refers to energy storage systems used by home users. Household energy storage systems are usually installed in combination with household photovoltaic systems to provide electrical energy to home users. Its working principle is to give priority to photovoltaic power generation for local loads during the day, store excess energy in the battery, and selectively integrate it into the grid when there is still excess power; when the photovoltaic system is not operating at night, the battery is discharged to supply local loads. Load usage. Household energy storage systems can improve the degree of self-use of household photovoltaics, reduce users' electricity bills, and ensure the stability of users' electricity consumption in extreme weather and other conditions. For users in areas with high electricity prices, peak-to-valley price differences, or old power grids, purchasing household storage systems is more economical, and household users have the motivation to purchase household storage systems.
The core of the home energy storage system is a rechargeable energy storage battery, usually based on lithium-ion or lead-acid batteries, which is controlled by a computer and realizes the charging and discharging cycle under the coordination of other intelligent hardware and software. The home energy storage system can usually be combined with distributed photovoltaic power generation to form a home photovoltaic storage system.
According to the different coupling methods of photovoltaic and energy storage systems, they are divided into DC coupling systems and AC coupling systems, which are respectively suitable for the incremental market of newly installed photovoltaic systems and the stock market of installed photovoltaic systems. Depending on whether the system is connected to the grid, home energy storage systems can be divided into grid-connected systems and off-grid systems. The core difference lies in whether they are connected to the grid. Different systems have different characteristics and are suitable for different types of households (Table 16)
Table 16 : Classification and characteristics of household savings systems
According to IHS Markit data, the global installed capacity of household storage has grown significantly since 2017, with the annual growth rate of new installed capacity increasing significantly. By 2020, the global total installed capacity exceeded 1GW for the first time, reaching 1.3GW/3.2GWh, a year-on-year increase of 30%; it is expected to reach 1.6GW/4.1GWh in 202159 .
From the perspective of shipments, global new home energy storage shipments in 2020 were 4.44GWh, a year-on-year increase of 44.2%, mainly led by European and American countries (Figure 18). Among the European markets, the German market has developed the fastest. Germany's shipments exceeded 1.1GWh, ranking first in the world, and the United States' shipments also exceeded 1GWh, ranking second.
Figure 18 : Household energy storage shipments in 2020, MWh
High electricity prices, cost reductions and policy support boost the overseas household storage market scene
High electricity prices are a strong driving force for the rapid development of overseas household storage markets
Judging from the household electricity prices in major countries and regions in 2021, household electricity prices in European countries represented by Denmark, Germany, and the United Kingdom are all above US$0.3/KWh, which is double that of the United States and nearly three times that of China (Figure 19) . Entering 2022, as the extreme drought weather in many European countries in the summer combined with the rise in natural gas prices caused by the Russia-Ukraine conflict, European electricity prices hit new highs. Data from the European Energy Exchange (EEX) shows that the price of electricity delivered next year in France and Germany exceeded the 1,000 euro/MWh mark on August 26 and August 29 respectively, both for the first time in history. In addition, the forward electricity price in the UK has soared from 242 pounds/MWh in June to around 1,000 pounds/MWh now. In the past year, electricity prices in Europe have increased approximately 10 times60 . The application of household photovoltaic + energy storage systems can increase the level of self-consumption of electricity to delay and reduce the risks caused by rising electricity prices.
Figure 19 : Average household electricity price in major countries and regions in 2021, USD/KWh
The continued growth of photovoltaic penetration and the decline in installed costs will generate future market size.
Due to the high urbanization process in European and American countries, housing is mainly detached or semi-detached houses, which are suitable for the development of household photovoltaics. At the same time, due to the accelerated pace of energy transformation, various countries have also introduced policies to encourage the spontaneous use of household photovoltaics. Taking Europe as an example, its photovoltaic power generation implements a net metering policy. Consumers who own renewable energy power generation facilities can deduct a portion from their electricity bills based on the amount of electricity delivered to the grid, and only calculate net consumption. The policy has greatly improved the economics of generating distributed photovoltaic power for self-consumption into the grid. In 2021, the average household photovoltaic installed capacity in the 27 EU countries will be 355.3 watts per household, a 40% increase compared with 2019 (Figure 20). From the perspective of penetration rate, the current household photovoltaic installed capacity in Australia, the United States, Germany, and Japan accounts for 66.5%, 25.3%, 34.4%, and 29.5% of the total photovoltaic installed capacity respectively, which is more than ten times that of China. It has good Household savings basis.
Figure 20 : Per capita household photovoltaic installed capacity in 27 EU countries
A typical home energy storage system is mainly composed of energy storage batteries, inverters, photovoltaic modules, etc., which account for about 48%, 24% and 22% of the equipment cost respectively. In addition, household energy storage products require installers to install, and the equipment installation fee is expected to be 12%-30% of the equipment cost. According to data from Bloomberg New Energy (BNEF), the price of lithium-ion battery packs, which account for the largest share of household storage equipment costs and are currently the most widely used, has dropped year by year from US$684/kWh in 2013 to 2021. of US$132/kWh, a decrease of 81%, and a decrease of 6% compared with 2020. Due to the recent rapid increase in the price of upstream raw material lithium, BNEF has adjusted back the original forecast point of battery pack price falling by US$100/kWh in 2024 by two years to 2026 (Figure 21).
Figure 21 : Volume weighted average lithium battery pack price, USD/kWh
Case Study: Economic Analysis of Home Energy Storage
Due to its good lighting conditions, vast territory, sparse population, and frequent wildfires and extreme weather conditions, Australia has sufficient market conditions for the development of distributed energy and energy storage, and there is considerable room for development in the future.
Take a family of four in Sydney with both working-class parents as an example61 . Assume that the daily electricity consumption of the family is 22kWh, and the installed home energy storage system is 7kW photovoltaic modules + 13.3kWh energy storage battery. The energy storage battery mainly uses photovoltaics to charge from 04:00 to 18:00 when there is sufficient sunshine, and discharges after get off work to the peak hours of nighttime electricity prices (usually 14:00 to 20:00). At the same time, the energy storage battery can also be charged when the photovoltaic modules are not working but the electricity price is at the trough period (usually 22:00-07:00) (Figure 22). The use of photovoltaic + energy storage systems reduces households' dependence on grid power supply by 71%, and there is almost no need to pay peak electricity prices. The annual carbon emission reduction of households is equivalent to taking 2.2 fuel vehicles off the road every year.
Figure 22 : Charging and discharging working time diagram of household photovoltaic + energy storage system, kWh
According to estimates, due to the rapid decline in the cost of photovoltaic systems in recent years, the investment return period for Australian households installing only photovoltaic systems is the fastest, about 5.5 years; the return period for installing photovoltaic + energy storage batteries is about 7.4 years. It is expected that if electricity prices rise further in the future, and as the cost of energy storage batteries decreases and their lifespan increases, their return cycle will be further shortened (Table 17).
Table 17 : Economic analysis of household optical storage system, US dollars
Industrial and commercial side
Industrial and commercial energy storage is another important component of user energy storage. For users who do not use photovoltaics, its economics is mainly reflected in the use of energy storage for peak and valley arbitrage; for photovoltaic users, they can save electricity purchase costs through spontaneous self-use. Help enterprises save energy and reduce emissions. Industrial and commercial energy storage mainly makes money through energy time shifting, peak-valley price difference arbitrage, capacity electricity fee reduction and demand response.
According to Wood Mackenzie's forecast, by 2031, industrial and commercial energy storage will account for 10% of China's energy storage market, with a total installed capacity of 442GWh, an increase of 4 percentage points from 2021, making it a major incremental market. While the proportion of power generation/grid side remains unchanged, the proportion of household energy storage will only be 4% in 2031, a decrease of 3 percentage points from 2021 (Figure 23).
Figure 23 : Industrial and commercial energy storage will be the main increase in China’s energy storage market in the future
Market driving force of industrial and commercial energy storage With the further improvement of time-of-use electricity prices and the further increase of electricity prices for high-energy-consuming enterprises, the economics of energy storage for industrial and commercial users have significantly increased. At the same time, power cuts in some provinces and cities in my country in 2021, as well as tight power supply caused by drought and other extreme weather, have disrupted industrial and commercial production and operations and boosted energy storage demand.
Time-of-use electricity prices increase peak and valley arbitrage space
On July 26, 2021, the National Development and Reform Commission issued the "Notice on Further Improving the Time-of-Use Electricity Price Mechanism" (hereinafter referred to as the "Notice"), clarifying that on the basis of maintaining the basic stability of the overall level of sales electricity prices, the catalog time-of-use electricity price mechanism will be further improved. , to better guide users to cut peaks and fill valleys, improve the power supply and demand situation, and promote the consumption of new energy (Table 18). Based on the time-of-use electricity price policy, the energy storage system purchases low-priced electricity from the grid during the electricity price valley and supplies it to the load during the electricity price peak, thereby reducing electricity expenses. It can also balance the grid load peak and delay the expansion of the grid line. The role of investment.
Table 18 : Summary of key points of the " Notice on Further Improving the Time-of-Use Electricity Pricing Mechanism "
After the "Notice" proposed that the market transaction price of high energy-consuming enterprises will not be subject to a 20% increase, more than a dozen provinces including Jiangsu Province, Heilongjiang Province, Shanxi Province, Jiangxi Province, Hubei Province, Liaoning Province, and Gansu Province have successively issued The document clarifies that all industrial and commercial users will enter the electricity market, and the electricity purchase price for high-energy-consuming enterprises will be implemented at 1.5 times. The further increase in the electricity cost of high-energy-consuming enterprises will also further stimulate their energy storage needs.
New energy consumption
New energy has the characteristics of periodicity, randomness and volatility. In order to ensure the stability of the power grid, when the power generated by new energy exceeds the load consumption capacity, excess power must be given up; when the output of new energy is insufficient, industrial and commercial users They also have to purchase electricity from the grid, resulting in industrial and commercial users still having to bear higher electricity costs even if they have been equipped with photovoltaics.
Photovoltaic + energy storage can store electrical energy that cannot be absorbed temporarily at the peak of new energy output, and release it when new energy output is insufficient, achieving "peak shaving and valley filling" of new energy energy, and overall reducing enterprise electricity costs.
- Capacity management
China's electricity price system implements different electricity prices for different electricity users. Among them, large industrial electricity users with a receiving transformer capacity of 315 kVA or above adopt a two-part electricity price, and other industrial and commercial users can choose to implement a single or two-part electricity price. The two-part electricity price includes the electricity price for quantity and the electricity price for capacity. The electricity price for quantity is calculated based on the actual electricity consumption of the user, and the electricity price for capacity can be calculated based on the fixed capacity of the transformer or the maximum demand of the transformer. The two electricity charges are calculated separately and added together to obtain the total electricity charge that the user should pay (Figure 24).
Figure 24 : Two-part electricity price structure
Main application scenarios of industrial and commercial energy storage
Industrial and commercial energy storage has a wide range of application scenarios, including industrial parks, data centers, communication base stations, government buildings, shopping malls, hospitals and other industries. Among them, the industrial park has the characteristics of large factory floor area, and the photovoltaic power generation time coincides with the peak power consumption. After configuring the combined photovoltaic and storage system, it can effectively reduce the cost of power purchase, reduce the impact of photovoltaic on the system, and reduce power deviation in the power market environment. The economic losses caused are more representative industrial and commercial energy storage scenario applications. Reported in January 201862 , in the Xingzhou Industrial Park in Wuxi, Jiangsu Province, the Singapore Industrial Park Intelligent Distribution Network Energy Storage Power Station has an energy storage capacity of 20MW/160MWh, which was the largest commercial energy storage power station in the world at that time. This project is the first large-scale energy storage power station to be connected to the customer-side energy storage interactive dispatching platform of the State Grid Jiangsu Electric Power Company. It is also the first grid-connection acceptance in accordance with the "Customer-side Energy Storage System Grid Connection Management Regulations" of the Jiangsu Electric Power Company. project.
59 Strong growth ahead for battery storage, PV Magazine, April 13, 2021
Report source: KPMG analysis
How much do you know about the development background of the energy storage industry?
Energy storage market overview (Part 1): Main energy storage technologies
Energy Storage Industry Report: Energy Storage Business Model: Power Generation Side Energy Storage
Energy storage industry report: Grid-side energy storage in energy storage business model (Part 1)
Energy Storage Industry Report: Energy Storage Business Model: User-side Energy Storage
Energy Storage Industry Report: Multiple Challenges on China's New Energy Storage Fast Track
