Chapter 1 China Energy Storage
China’s energy storage bidding demand is strong, and 24 years have started well
In 2023, China’s energy storage market was strong in bidding, laying the foundation for a good development in 2024. In the second half of 2023, a total of 39.20GW/101.20GWh of energy storage bidding was achieved, an increase of 13%/28% over the same period last year. In 2023, a total of 59.70GW/159.30GWh of energy storage bidding was achieved, of which the EPC scale was 31.20GW/78.10GWh, accounting for 52.3%/49.0%; the energy storage system scale was 28.50GW/81.20GWh, accounting for 47.7%/51.0%. At the beginning of 2024, the energy storage bidding market was not slow in the off-season, and the scale continued to grow rapidly. In January-February 2024, the scale of China’s energy storage market bidding was 10.53GWh/16.24GWh, respectively, up 139%/+577% year-on-year. Energy storage EPC accounts for a relatively high proportion, with bidding scales of 6.74GWh/12.95GWh, accounting for 64%/80%.
China’s energy storage bid scale has increased significantly, and the average bid price of the system has dropped by half
China’s energy storage bid market has grown rapidly. In 2023, the annual energy storage bid was 22.7GW/65.7GWh, up 257%/383% year-on-year. In February 2024, the bid scale of the energy storage system was 1.73GW/5.41GWh, up 189%/390% month-on-month, and up 164%/274% year-on-year, continuing to maintain a high growth rate. In 2023, the average storage time of energy storage fluctuated between 2 hours and 4 hours, with an annual average of 2.89 hours. In February 2024, the average storage time of the energy storage system was 3.13 hours. The bid price of energy storage has been falling, giving full benefits to the project party. In February 2024, the average price of energy storage EPC bids was 1.32 yuan/Wh, down 13% from the previous month and down 31% from the previous year; the average price of energy storage system bids was 0.90 yuan/Wh, down 15% from the previous month and down 37% from the previous year. The decline in energy storage system and EPC prices is mainly due to the downward trend in upstream lithium carbonate prices, which are expected to stop falling in the future as lithium carbonate prices stabilize.
China’s energy storage installed capacity quadrupled in 2023, with a total of 47GWh
In 2023, China’s new energy storage installed capacity was 21.5GW/46.6GWh, up 193%/194% year-on-year. Among them, 23Q4 installation showed an accelerated trend, achieving new energy storage installed capacity of 9.2GW/21.1GWh, up 119%/148% from the previous month and up 48%/57% from the previous year, accounting for about 45% of the full year. As of December 2023, China has put into operation a total of 86.5GW of power storage projects, up 45% year-on-year; pumped storage has a total installed capacity of 51.3GW, up 11% year-on-year, and the proportion is lower than 60% for the first time; the proportion of new energy storage has increased by 18.2 percentage points year-on-year; among new energy storage, the proportion of lithium batteries has further increased, from 94% in 2022 to 97.3% in 2023.
Energy storage cell quotations remain low, and energy storage battery exports decline
The price of battery cells is still on a downward trend, and the rate of decline has slowed down. According to the latest data from SMM, household energy storage cells are 0.45 yuan/Wh, down 0.01 yuan/Wh from the beginning of the year; power storage cells are 0.43 yuan/Wh, down 0.01 yuan/Wh from the beginning of the year. According to the data statistics of the Power Battery Industry Innovation Alliance for registered sample companies, the cumulative sales volume of domestic energy storage batteries in 2023 was 113.4GWh, of which domestic sales were 88.2GWh, accounting for 78%; exports were 25.2GWh, accounting for 22%. The total sales volume of energy storage batteries in January-February 2024 was 10.6GWh, of which domestic sales were 10.3GWh and exports were 0.3GWh. The export overseas data was significantly weaker, which was related to the high inventory level and weak demand in Europe.
The peak-to-valley price difference of electricity in various parts of China has dropped slightly, which may affect the demand for industrial and commercial storage
According to statistics, the average peak-to-valley price difference of agency electricity prices across the country in February 2024 was 0.66 yuan/KWh, a month-on-month decrease of -0.078 yuan/KWh, a large decrease; 13 provinces and cities had a peak-to-valley price difference exceeding the threshold value of 0.7 yuan/KWh, a decrease of 4 provinces from January. Since February, most areas such as Zhejiang, Shanghai, and Jiangsu no longer implement peak electricity prices, resulting in a significant reduction in the difference between peak and valley electricity prices, which is expected to rebound in the summer. Among the top five provinces with energy storage installed capacity, Xinjiang, Inner Mongolia, and Hunan decreased by 0.05, 0.31, and 0.19 yuan/KWh month-on-month, respectively. Only Gansu Province increased by 0.06 yuan/KWh month-on-month, and Guizhou Province remained the same as last month. The export volume and price of inverters fell, indicating that overseas household storage demand continued to be weak. China’s inverter exports in 2023 showed a high opening and low closing, and continued to decline in 2024. The export value of inverters in 2023 was US$9.957 billion, an increase of 11% year-on-year; the number of inverter exports was 51.31 million units, an increase of 2% year-on-year; the average export price of inverters throughout the year was US$194/unit, an increase of 9% year-on-year. In January-February 2024, China’s inverter export value was US$570 million/450 million, respectively, a year-on-year increase of 47%/-48%; the inverter export quantity was 3.93 million/3.07 million units, respectively, a year-on-year decrease of 28%/-6%; the inverter export unit price was US$144/147 per unit, respectively, a year-on-year decrease of 27%/-45%.
Chapter 2 US Energy Storage
The US has strong growth in large-scale storage capacity in 2023, and the installed capacity in many states has increased significantly
The overall growth rate of US energy storage installed capacity in 2023 is impressive. According to EIA, the installed capacity of energy storage (large storage) above 1MW in the United States will be 6.36GW in 2023, a year-on-year increase of 64%. Energy storage installations are concentrated in June, July and December, which are 1.06/1.51/1.36GW respectively, accounting for 62% of the annual installed capacity, mainly due to the significant increase in wind and solar installations in the same period. The states with the largest installed capacity in the United States in 2023 are still California and Texas, with installed capacity of 2.94GW and 1.33GW respectively, a year-on-year increase of 20%/+3%, and the growth rate has slowed down. The total installed capacity has dropped from 90% in 2022 to 65% in 2023. The energy storage installed capacity in other states has grown rapidly, such as Arizona, Nevada, Hawaii, etc., which increased by 841MW (0 installed capacity in 22 years), 285MW (+380% yoy), and 212MW (+544% yoy) respectively compared with 2022.
The average storage duration of energy storage in the United States has increased, and the proportion of large storage has further increased
The average storage duration of energy storage in the United States has increased, and regional differences are obvious. According to WoodMackenzie, the installed capacity of energy storage in the United States in 23Q1-3 was 4.82GW/15.07GWh, with an average storage duration of 3.13 hours, which is an increase from 2.93 hours in 2022. The storage duration varies greatly among states. The average storage duration in California is close to 4 hours, while the duration in Texas is about 2 hours, mainly due to differences in energy storage usage scenarios in various states. From the perspective of energy storage installed capacity structure, the United States is dominated by pre-meter energy storage, and independent energy storage accounts for more than half of pre-meter energy storage. In Q1-3 of 23, the installed capacity of large-scale storage/household storage/commercial and industrial energy storage in the United States was 4.21/0.47/0.14GW, up 36.2%/1.2%/32.1% year-on-year, accounting for 87.3%/9.8%/2.9% of the total installed capacity, which is a further increase compared with the large-scale storage in 2022. From the perspective of the pre-meter structure, the pre-meter energy storage in the United States in 2022 is mainly independent energy storage and photovoltaic matching, with the power caliber accounting for 51.5%/36.7% respectively.
Due to multiple factors, the installed capacity of energy storage in the United States has been lower than expected for a long time
Although the installed capacity of energy storage in the United States has achieved high growth, there is a large gap with the expected value announced by the EIA. In January 2023, the US EIA predicted that the annual energy storage installed capacity would be 8.64GW, and it was continuously raised in the following months until the annual installed capacity forecast reached the highest value in May, which was 9.77GW, far higher than the actual installed capacity of 6.36GW in 23 years. Affected by factors such as the complexity of energy storage grid connection, transformer shortage, high interest rates and lithium carbonate prices, the completion rate of energy storage installation in the United States in each month of 2023 has always been lower than expected. Compared with the expectations at the beginning of the year, the completion rate for the whole year of 2023 is 74%. From a single month perspective, the completion rate of most months is less than 50%, and many projects are constantly delayed.
The strong demand for auxiliary power grids in the United States promotes the development of multiple application scenarios
The strong demand for auxiliary power systems in the United States has prompted the energy storage industry to develop a variety of application scenarios. According to EIA, as of 2022, the energy storage equipment in operation in the United States can be divided into 12 different application scenarios. Among them, the larger ones are frequency regulation, arbitrage, ramp/rotating reserve, and energy time shifting, which are 6.7, 5.2, 4.9, and 3.0GW respectively, accounting for 26%, 20%, 19%, and 11%. From the perspective of increment, the application scenarios with the largest growth in 22 years are frequency regulation, ramp/spinning reserve, arbitrage, and energy time shifting, which increased by 3.7, 2.9, 2.5, and 1.5GW, respectively, accounting for 29%, 23%, 19%, and 12% of the total increment. These functions can help the power grid quickly balance temporary differences between power supply and demand. In addition, backup power and load tracking have also achieved rapid growth, +315%/+102% year-on-year, respectively.
Under the ITC policy subsidy, the economic efficiency of energy storage projects has improved
In August 2022, Biden signed the $750 billion Inflation Reduction Act, which provided $369 billion for corporate energy production investment, significantly stimulating investment demand for energy storage projects. In the same month, the registered capacity of unconnected energy storage in the United States increased to 22.68GW, a month-on-month increase of +35.0%, and a significant increase compared with previous months. In addition, 37 of the 50 states in the United States have formulated renewable energy portfolio standards and targets, and 17 states have introduced energy storage-related subsidy policies. Among them, the more powerful policies include Nevada’s NV Energy Storage Incentive Program and California’s Self-Generation Incentive Program (SGIP), which have successfully promoted the development of the local energy storage industry.
The decline in lithium prices has driven down the cost of energy storage equipment, and owners are waiting for the bottom
The price of lithium carbonate has continued to fall, triggering a wait-and-see attitude among owners. In 2023, due to the release of global lithium carbonate production capacity and loose supply, prices have been falling all the way. The price of lithium carbonate in the United States fell from $80,000/ton at the end of 22 to $15,000/ton, driving the price of energy storage equipment to fall. Taking Tesla MegaPack 2h as an example, the price dropped from $1.88 million/unit in April 23 to $1.28 million/unit in March 24, a drop of more than 30%. In the stage of rapid decline in raw material prices, some owners may want to wait for costs to fall further and maintain a wait-and-see attitude. At present, the price of lithium carbonate is close to the bottom, and projects that were postponed in the early stage due to waiting for the price of lithium carbonate are expected to start construction faster.
Chapter 3 European Energy Storage
Looking at European energy storage from the perspective of the German household storage market: Maintaining cautious optimism
According to EESA’s forecast, the overall household storage scale in Europe in 2023 will be about 9.2GWh, and the German household storage market will account for 47% of the total scale in Europe, which has a strong guiding significance. In 2023, the cumulative installed capacity of German energy storage will reach 7.4GW/11.5GWh, an increase of 3.5GW/5.3GWh from the end of 2022. The growth rate will gradually slow down in the second half of the year, from more than 200% in the middle of the year to -23% in December. In January 24, Germany added 35.7MWh of large storage capacity, 18.1MWh of industrial and commercial capacity, and 333.0MWh of household storage capacity; the total new capacity in that month was 386.8MWh, a year-on-year decrease of -10%. The year-on-year growth rate is in a continuous downward trend, and it has been negative for three consecutive months, which confirms our previous cautious forecast for European energy storage.
European electricity prices generally fall, and the impact of natural gas decreases
According to TRADINGECONOMICS, the electricity prices of Germany/Italy/UK, the top three energy storage installed countries in Europe, are 68.54/95.75/61.00 euros/MWh respectively. Although there are certain price fluctuations on a monthly basis, they are at a low level compared with the peak during the energy crisis in 2022. Last Friday, the natural gas price index was quoted at $1.6822/MMBtu, and it continued to fluctuate downward after the new year. In the short term, it is difficult for European electricity prices to rise sharply.
Energy storage subsidy policy maintains the bottom line of European household storage demand
The fluctuation of European electricity prices determines the upper limit of energy storage demand, while the subsidy intensity and stability of European policies maintain the lower limit of energy storage demand. Taking Italy as an example, the government suspended the Superbonus subsidy plan due to deficit pressure from February to April 23, and reduced the Superbonus subsidy intensity in 2024 and 2025 after restarting, resulting in the construction of thousands of construction sites being suspended. In the end, the government had to extend the Superbonus plan to a limited extent. It can be seen that the current European energy storage market demand is relatively fragile and highly dependent on policies. The current policy disturbance will become the core contradiction of Europe’s energy storage demand.
Chapter 4 Global Energy Storage Installed Capacity Forecast Global Energy Storage Installed Capacity Demand in 24-26 Years is expected to be 223/343/456GWh
In 24-26 years, the global energy storage installed capacity is expected to be 223/343/456GWh, up 48%/+54%/+33% year-on-year. Among them, the installed capacity on the power generation side is expected to be 114/179/271GWh, a year-on-year increase of +71%/+57%/+52%; the installed capacity on the grid side is expected to be 15/20/21GWh, a year-on-year increase of +34%/+30%/+5%; the installed capacity on the user side is expected to be 69/112/123GWh, a year-on-year increase of +29%/+63%/+9%; other installed capacity is expected to be 25/32/41GWh, a year-on-year increase of +31%/+26%/+30%.
