Under the current pricing system, it's difficult to achieve photovoltaic (PV) + energy storage parity on the power generation side. Although overseas implementation difficulties are higher due to high costs, as technology efficiency improves and costs decrease, the PV to storage ratio will still be a key factor in driving demand beyond expectations.
According to a research report released by GF SEC, the continuous breakthrough of the PV + energy storage parity ratio promotes a new round of demand beyond expectations driven by consumption agreements. The rapid growth of PV installations has led to a more severe grid congestion, thereby restricting the growth space of PV. The PV + energy storage parity can realize almost the same controllability as thermal power. Therefore, it will drive a new round of PV demand beyond expectations, and the core lies in the PV to storage ratio. Although it's difficult to achieve the parity of PV + energy storage on the power generation side under the current pricing system, the difficulty of realizing it is even higher overseas due to high costs. However, as technology efficiency improves and costs decrease, the PV to storage ratio will still be a key factor in driving demand beyond expectations.
The continuous breakthrough of the PV + energy storage parity ratio driven by consumption agreements promotes a new round of demand beyond expectations. The rapid growth of PV installations has led to a more severe grid congestion, thereby restricting the growth space of PV. The PV + energy storage parity can realize almost the same controllability as thermal power. Therefore, it will drive a new round of PV demand beyond expectations, and the core lies in the PV to storage ratio. Based on the calculation that PV EPC costs in China are 3.1 yuan/W and energy storage costs 1.1 yuan/Wh, the cost of PV and energy storage is 0.23/0.54 yuan/kWh, meaning that when the PV to storage ratio reaches 26.4%, the cost of PV + energy storage will be equal to the benchmark coal power price. Considering that user-side electricity prices are 0.2-0.3 yuan/kWh higher than those on the power generation side and there is an even higher gap overseas, there is an imminent full parity on the user side, driving distributed PV + energy storage capacity; however, it's difficult to achieve PV + energy storage parity on the power generation side under the current pricing system, and the difficulty of realizing it is even higher overseas due to high costs. However, as technology efficiency improves and costs decrease, the PV to storage ratio will still be a key factor in driving demand beyond expectations.
The growth of electricity demand combined with the construction of adjustability resources gradually opens up the space for PV installations. Based on the calculation of power balance, consumption capacity, and PV + energy storage parity, GF SEC creatively builds a PV installation upper limit calculation framework, which split new PV installations into three parts: growth of midday demand, growth of traditional adjustability capacity, and growth of new energy storage. Among them, the midday demand growth rate considers a 1% higher time-of-use electricity tariff than the electricity consumption, traditional adjustability capacity includes flexible transformation and absorption, and new energy storage requires considering a dynamic adjustment of the PV to storage ratio. Comprehensive calculation resulted in a maximum domestic PV installation of 285/321/327GW from 2024 to 2026. This is compared to the 216GW new PV installations in 2023 and still has room for growth. Considering the blockage of the power transmission network, it's expected that the scale of PV and energy storage installed in China will be 260GW/76GWh, respectively, in 2024, with a YoY increase of 20%/73%, and the global scale will be 516GW/182GWh, respectively, with a YoY increase of 28%/68%.
PV: demand space is still breaking through. China: the promotion of consumption rate, acceleration of ultra-high pressure, and continuous breakthrough of PV + energy storage parity ratio will gradually break through the installation limit. Europe: component price reduction and policy incentives drive demand upwards, and high inventory will gradually ease. The United States: although the installed capacity is rising, the uncertainty of anti-dumping and countervailing investigations has increased. Developers adopt a wait-and-see attitude. In this situation, domestic factories will benefit for a longer period of time. Asia, Africa, and Latin America: under the context of power shortages and energy transition, there is room for growth.
Energy storage: rapid development of new energy drives multiple scenarios and opportunities. Large storage: electricity reform drives a new round of quantity and benefit exceeding expectations in China and Europe; the upgrade of the US power grid and optimization of grid interconnection rules support the acceleration of large storage. Commercial and industrial storage: adjustment of time-of-use electricity tariffs, widening of peak-to-valley price differences, and bottoming of system prices will gradually demonstrate commercial and industrial storage demand. Household storage: inventory has reached the bottom, and the high prosperity in Asia, Africa, and Latin America has strengthened its profitability.
Risk warning: demand below expectations, industry chain price risk, and intensification of competition risk, etc.