Cailianshe news on July 24th (reporter Liu Mengran) in the past two years, the power consumption has reached a new high in many places, and the pressure of power supply guarantee has increased. Demand-side management is increasingly valued as an effective measure to alleviate the tension between power supply and demand, and has become the direction of the development of China's power system. In this context, commercial and industrial distributed photovoltaics, as an important part of participating in demand response, are developing rapidly.

In 2023, China's newly added commercial and industrial distributed photovoltaic installed capacity will reach 52.8 GW, achieving further growth. Jin Rui, CEO of Baobi New Energy Technology Co., Ltd., told Cailianshe reporters that in the next six to seven years, China is expected to have a 2000 GW photovoltaic installed capacity market, and distributed photovoltaics will account for more than 50% according to the current forecast, with a market potential of nearly 1000 GW.

As an important part of the photovoltaic market, the integrated development of commercial and industrial photovoltaic and energy storage has become a trend, and the penetration of small and micro distributed energy is also accelerating, including application scenarios in public facilities and transportation, as well as emerging fields such as wind and solar energy storage and charging, source-grid-load-storage, microgrids, and virtual power plants, all of which are huge potential markets. Jin Rui believes that in the next six to seven years, the commercial and industrial distributed photovoltaic market is expected to achieve an average annual growth of 50-70 GW.

The proportion of newly-added commercial and industrial photovoltaic installed capacity is expected to increase.

As an important part of renewable energy, photovoltaics maintain a fast development pace. Among them, under the new situation of supply chain fluctuations and tight power supply across the country, distributed photovoltaics have been further stimulated. Since it accounted for more than 50% of the newly installed capacity in 2021, it has consistently occupied a leading position in recent years.

Established in February 2022, Baobi New Energy's business mainly focuses on the investment, development and operation of commercial and industrial distributed energy assets. According to public information, the company has completed four rounds of financing of nearly 1.5 billion yuan since February 2023. At the same time, the company's business is also developing rapidly. Jin Rui told Cailianshe reporters that the company has already successfully locked in at least 1.5 GW of commercial and industrial distributed projects.

The rapid development of Baobi New Energy reflects the rapid development of China's commercial and industrial distributed photovoltaics. Some executives of listed companies told Cailianshe reporters that since its release last year, commercial and industrial energy storage scenarios have become more widespread, including photovoltaic power generation, peak shaving and filling, photovoltaic storage integration. In the future, both large-scale power plants and virtual power plants of commercial and industrial power stations will provide great opportunities for the development of commercial and industrial energy storage.

Public data shows that the global photovoltaic installed capacity last year was 444 GW, with China accounting for 216 GW, and commercial and industrial distributed photovoltaics reaching 53 GW. From January to April this year, the installed capacity of commercial and industrial distributed photovoltaics was 25 GW, and it is expected to exceed 50 GW for the whole year.

While the photovoltaic industry is developing rapidly, it has also caused problems such as high penetration rate regional load overload and imbalanced power dispatch caused by large-scale grid connection. How commercial and industrial distributed photovoltaics can better participate in the construction of the power market has always been one of the focuses of the power grid reform.

According to Pang Bo, general manager of Baobi New Energy, the power grid is relatively mature in high-voltage transmission (such as ultra-high-voltage power grid), but there are still challenges in low-voltage distribution, such as inadequate infrastructure of low-voltage distribution network and how to manage a more refined low-voltage distribution network. The advantages of distributed commercial and industrial energy self-generated and surplus electricity online are highlighted. On the one hand, it can reduce the loss of electricity transmission and greatly improve energy utilization efficiency. On the other hand, it can reduce the burden on the power grid, promote the development of renewable energy, and promote the transformation of energy structure from the demand side.

According to Jin Rui, in the commercial and industrial distributed scenarios, every kilowatt-hour generated can be directly supplied to the users in the load. In this way, the impact and load on the power grid are minimized. The consumption pressure of commercial and industrial distributed photovoltaics is relatively small. In large-scale power consumption scenarios, commercial and industrial distributed photovoltaics can achieve 70% to 90% of self-consumption, and this part of the generated electricity has a relatively small impact on the power grid.

Currently, distributed photovoltaics are facing policy adjustments, but due to the increase in market space, they are still the main driving force for the expansion of photovoltaic demand. Jin Rui believes that the distributed market may be adjusted this year, but the market scale is still expected to reach or even exceed 100 GW. The proportion of households and commercial and industrial sectors was about 4 to 6 last year, and it is expected to reach 3 to 7 this year.

It should be noted that although distributed photovoltaics are developing rapidly, at the end of last year, many places encountered filing obstacles due to consumption and faced uncertainties. The incremental space of the original market is limited, and the participation of distributed projects in market-oriented transactions, as well as relevant policies such as time-of-use tariffs, make the actual electricity price decline, which challenges the benefits of distributed photovoltaics.

Integration of photovoltaic power generation and energy storage has become a "standard feature".

In Pang Bo's view, the primary task of service providers is to make the photovoltaic-storage system a stable power source with investment return value. In order to ensure the continued stable development of the photovoltaic demand side, more application scenarios need to be explored. Energy storage, charging stations, and comprehensive energy form a small microgrid, and then respond to the grid frequency regulation demand through the grid. This is more effective and flexible in some virtual power plant scenarios.

2023 is considered the first year of industrial and commercial energy storage development. Institutional reports show that distributed energy still has good returns on project income. In the first half of this year, the average electricity price of photovoltaic in-use business users of 1~10kV in Jiangsu and Zhejiang provinces during peak electricity consumption period is above 0.7 yuan/kWh, and it is expected that the annual income of distributed photovoltaics in the two provinces will exceed 800 yuan/kW and 700 yuan/kW respectively. The investment of self-investment projects can be basically controlled within 3 yuan/W, and the investment recovery period can be controlled within 3-4 years. With more than 10 years of operation, the project IRR will exceed 20%.

Due to the large number of distributed energy participants and decentralization, nearby consumption is the best way out. Pang Bo said that industrial and commercial photovoltaic storage projects need to be held and operated for 20 years. Faced with the adjustment of policy electricity prices, it is necessary to respond in real time. At present, a more effective approach is to build a virtual power plant integrating photovoltaic storage and even comprehensive energy to provide value-added services to owners.

It is understood that the current under-construction industrial and commercial photovoltaic projects have basically achieved matching storage. The reasons behind this are that energy storage prices have dropped sharply, and the cost of kilowatt-hours of energy storage plus photovoltaics is roughly close to 0.5 yuan. At the same time, in economically developed areas such as Jiangsu, Zhejiang, Shanghai, and Guangdong, where electricity prices are relatively high, the comprehensive efficiency of electricity consumption is highest, and the integrated photovoltaic energy storage project has the best income. Therefore, industrial and commercial distributed photovoltaics have good income expectations. In terms of payback period, the lifecycle of photovoltaics is 25 years, and the payback period is currently mostly about 8-9 years; the lifecycle of energy storage is 15 years, and the fastest payback period is 4-5 years. In the specific project development, service providers will conduct surveys to detect enterprise power loads, power habits, and consider actual power consumption scenarios to provide customized solutions to achieve premium prices.

Therefore, industrial and commercial distributed photovoltaics have good income expectations. In terms of payback period, the lifecycle of photovoltaics is 25 years, and the payback period is currently mostly about 8-9 years; the lifecycle of energy storage is 15 years, and the fastest payback period is 4-5 years. In the specific project development, service providers will conduct surveys to detect enterprise power loads, power habits, and consider actual power consumption scenarios to provide customized solutions to achieve premium prices.

Plant investment is also being "internalized".

Currently, the photovoltaic industry is at the bottom of the cycle, and the low prices of modules are also a concern. It is reported that in May last year, the price of modules was about 1.6 yuan/W, and the current price is only about half of last year. From 2021 to 2022, many listed companies have crossed into photovoltaic manufacturing, the production capacity has grown rapidly, and the industry has entered a period of adjustment. The adjustment is still ongoing.

The downward trend of industrial chain prices has accelerated the clearance of production capacity, but on the other hand, the downward trend of module prices has further enhanced the economic efficiency of photovoltaic power generation, continuously improved the return on investment of photovoltaic investment, and helped stimulate high demand growth for photovoltaics worldwide.

According to institutional data, by the fourth quarter of 2023, the price of photovoltaic modules will fall to 1 yuan/W, and even below 0.9 yuan/W, a decrease of about 1 yuan/W compared with 2022; under other conditions unchanged, the project rate of return will increase by about 3 percentage points, and the investment recovery period will be shortened by 2-3 years. The decline in the cost of domestic social capital also promotes project investment.

While the supply chain prices are "internalizing", the investment side is also "internalizing". Pang Bo said that previously the main investors were state-owned enterprises' "five big and six small" groups. Later, market-oriented investment institutions such as Liansheng New Energy, Honghua Smart Energy, Baobi New Energy, and local state-owned assets investment platforms such as Xiamen ITG Group, Jianhua Group, and Jingneng appeared. With the strong support of the government, new energy has become a hot investment field. Concentration of funds may lead to irrational behavior in the market.

However, Pang Bo also said that with the continued "internalization" of the photovoltaic industry chain and the deepening of price competition, the photovoltaic industry will further move towards efficient and low-cost development. The active participation of market-oriented investment institutions such as Baobi New Energy and local state-owned asset platforms can inject new vitality and capital into the industry, promote technological innovation and industrial upgrading.