"New energy fund allocation" and "independent energy storage" are the main types of large-scale energy storage installations in china. Both are driven by the strong policy support for new energy, and there is a strong demand for scale growth.
According to the Zhixin Finance APP, Ping An Securities released a research report stating that the global demand for energy storage is growing vigorously, with emerging markets bringing new additions. The demand outlook for large-scale energy storage installations is high, and the growth certainty of new energy storage is strong. In 2023, global new energy storage additions will reach 46GW, doubling year-on-year. Among them, large-scale energy storage is the main type of energy storage globally, with 32.7GW of new large-scale energy storage installations in 2023, accounting for 71% of new energy storage installations. Currently, domestic large-scale energy storage has gained a certain market position in overseas markets, but the competitive landscape for large-scale energy storage overseas is more favorable, and leading companies are expected to actively enter overseas markets.
Ping An Securities' main points are as follows:
Domestic large-scale energy storage: Policy-driven installations, commercialization needs improvement.
China is the world's largest large-scale energy storage market, with 19.8GW of new large-scale energy storage installations in 2023, accounting for 60% of global installed capacity. The bank estimates that by 2024/2025, global new large-scale energy storage installations will reach 57.8/77.8GW, with growth rates of 77% and 35% respectively. In 2024/2025, China's new large-scale energy storage installations will reach 32.0/41.8GW, with year-on-year power growth of 62% and 31% respectively. "New energy fund allocation" and "independent energy storage" are the main types of large-scale energy storage installations in china. Both are driven by the strong policy support for new energy, and there is a strong demand for scale growth. Independent energy storage can generate revenue through market-oriented means, with higher utilization and better economic efficiency than new energy fund allocation, and may become the mainstream form of large-scale energy storage installations in china. Currently, the revenue structure of independent energy storage in china relies on capacity leasing, with revenue levels lower than those of large-scale energy storage in the USA and Europe. The commercial model needs improvement, and further development of ancillary services and electricity markets is required.
Overseas large-scale energy storage: Blossoming in developed and emerging markets.
Compared to the domestic market, the competitive landscape and profitability of overseas large-scale energy storage are relatively superior. Top domestic companies are seeking opportunities abroad, heading to markets in the USA, Europe, and the Middle East. The USA and Europe have a high degree of power market liberalization, where large-scale storage projects can achieve reasonable economic returns, with high market barriers and margins. The bank predicts that by 2024/2025, the USA will see new large-scale energy storage installations of 11.5/14.3GW, with year-on-year growth of 45% and 25%, respectively; while Europe will see new large-scale energy storage installations of 6.3/9.2GW, with year-on-year growth of 126% and 46%, respectively. The Middle East's emerging markets are growing rapidly, with governments driving centralized solar energy storage projects from top to bottom, involving large-scale individual projects; domestic companies are competing in emerging markets with excellent delivery capabilities and cost-effectiveness. Saudi Arabia has planned to tender 24GWh battery energy storage projects from 2024 to 2025, providing ample room for large-scale energy storage development. The USA, Europe, and the Middle East are seeing multiple developments in large-scale energy storage projects, presenting excellent opportunities for international expansion.
Technical roadmap: lithium battery is the main focus, while new routes are emerging.
Common energy storage technologies mainly include mechanical energy storage, thermal energy storage, electromagnetic energy storage, electrochemical energy storage, and hydrogen energy storage. At the current stage, pumped hydro storage in mechanical energy storage is the main form of global energy storage installation, while lithium battery storage is the main form of new energy storage (excluding pumped storage). The power levels and discharge times of different energy storage methods vary and are suitable for different scenarios in electrical systems. Pumped storage, flow batteries, and compressed air energy storage have large scales and low theoretical costs, suitable for long-term energy storage; flywheel energy storage and electromagnetic energy storage have fast response speeds and high cycling times, suitable for frequency regulation applications; lithium-ion batteries have a wide range of scales and discharge times, strong versatility, and a mature industry chain, making them the main force in energy storage construction for a considerable period.
Industry chain: overseas large energy storage system competition structure is relatively advantageous.
The main links of the lithium battery energy storage industry chain include energy storage batteries, PCS, system integration, temperature control, and fire protection. The demand side of each link is growing strongly, but the supply side competition is fierce. In the energy storage battery segment, there is a "one super, multiple strong" structure, with CATL leading in market share. The competition landscape in PCS and system integration segments is differentiated both domestically and internationally, with serious price competition in the domestic market and relatively high barriers in overseas markets, leading to a more favorable competition landscape than domestic. Domestic large energy storage system integration companies have gained certain market positions in overseas markets with their product strength and brand channels, poised to seize opportunities in the US, Europe, and emerging markets for large energy storage, and accrue substantial profits.
Investment recommendations: Recommend sungrow power supply (stock code: 300274.SZ), a global leader in the large energy storage market position; suggest paying attention to ATS (stock code: 688472.SH), which excels in overseas development and shows remarkable growth in the large energy storage sector; position in emerging markets and smooth overseas expansion with sineng electric (stock code: 300827.SZ).
Risk factors: 1. Risks of demand growth in various markets falling below expectations. 2. Risks of intensified global market competition. 3. Risks of tightening market restriction policies. 4. Risks related to subjective calculations.