In 2022, energy storage will drive into the fast lane, flatten peak and valley power generation, and ensure the safety of the power grid. Due to the two-way impact of supply chain disruptions and numerous favorable policies, and as China’s “dual carbon” strategy gradually unfolds, the proportion of energy storage continues to rise. 2022 can be regarded as the first year of energy storage explosion, so can energy storage investment continue to flourish in 2023?
Energy storage has become the focus of attention of major securities companies, harboring new investment opportunities
According to the 2023 A-share investment strategy report of securities companies, “new energy” has become a high-frequency word of concern for many securities companies such as Ping An Securities, Guotai Jun’an Securities, and Huaxi Securities. They have expressed that the new energy field will breed more investment opportunities in 2023, with energy storage being highlighted as one of the three major segments of the new energy field.
New Material Intelligence NMT | 2023 Can Energy Storage Investment Continue Its Glory?
Energy transformation is a development trend in China and even the world. “The 14th Five Year Plan for Modern Energy System” proposes that by 2025, China’s electrification level will continue to improve, with electric energy accounting for about 30% of the total terminal energy consumption, which also promotes new investment opportunities in the energy storage industry in 2023. With the increasing share of new energy, photovoltaic, and wind power in power generation, the instability of renewable energy power generation has created a demand for energy storage. At the same time, new energy storage has become an important way to solve the problem of grid consumption in the context of the rapid development of renewable energy. With the growth of installed capacity of new energy sources such as wind and electricity, the demand for energy storage in the power system has also increased rapidly.
Continuous policy benefits and broad energy storage market space
The global energy storage market is mainly divided into three major markets, namely, China, the United States, and Europe. Currently, more and more people are accepting energy storage as a mainstream power technology, and driven by the net zero goal, energy storage systems are growing rapidly. In 2022, the global newly installed capacity is expected to reach 35.5 GWh. According to the analysis of GlobalDate data, it is estimated that the global electrochemical energy storage will reach 92.2GW in 2026. It not only has a large demand for installation, but also has a very broad development space. It is predicted that in 2023, the growth rate of China’s large reserves may be the fastest, followed by the United States and Europe. The development of domestic energy storage is divided into three stages: the first stage is the early subsidy stage, the second stage is the stage of entering practical application, and the third stage is the stage of meeting economic applicability. With the continuous introduction of favorable domestic allocation and storage policies, large-scale energy storage installations are expected to usher in rapid development. Since 2022, China’s Inner Mongolia, Shaanxi, Shandong, Henan, and other places have successively introduced mandatory allocation and storage policies.
New Material Intelligence NMT | 2023 Can Energy Storage Investment Continue Its Glory?
In terms of development model, with the introduction of supporting policies for energy storage and the impact of the good business model of “new energy+energy storage”, the integration of “photovoltaic+energy storage” and household light storage may become a new trend in the future development path. From the perspective of segmented application scenarios, domestic user side energy storage mainly focuses on industrial, commercial, and industrial parks. In 2021, the proportion of user side energy storage in domestic new energy storage reached 24%, with industry, commerce, and industrial parks occupying the absolute main force, accounting for more than 80% in total. It is also the mainstream use of user side applications. For overseas household energy storage, the market space is expected to further expand in 2023 under the catalysis of geopolitical factors. For large-scale energy storage in China, which is still in the early stages of industry development, the profitability of the industry is expected to continue to increase in 2023, driven by various factors such as follow-up policies, technology, and scale.
Cost is expected to decrease and industry investment prospects are promising
From the perspective of the energy storage industry, it is mainly divided into three major links. The first is the upstream battery materials, which have a certain overlap with the upstream industrial chain of new energy vehicles; The second is its own link, with battery packs accounting for over 60% of the entire cost, inverters accounting for 10% of the cost, as well as battery management systems and energy management systems. The third is downstream customers, including some large power generation groups, and industrial and commercial distributed users. On January 7th, according to the latest news released by the National Energy Administration, with the continuous increase in the production of lithium energy storage batteries in China, the cost per kilowatt hour of lithium iron phosphate batteries is expected to decrease. At the same time, in the past 10 years, the cost of lithium ion battery packs has decreased by more than 80%. Due to the improvement of the upstream supply and demand structure, it may drive down the system cost and improve the performance.
Currently, domestic energy storage has entered the stage of economic applicability. Since 2022, whether on the power generation side or the power consumption side, the on-grid price, including the terminal price, has basically met the economic applicability. In the future, it will enter a market-oriented stage, and its dependence on subsidies will become lower and lower. At the same time, the reduction of energy storage costs and the continuous growth of demand in 2023 will inevitably bring more industry investment opportunities. Many energy storage system integrators that have transformed from electric power equipment, such as Xinfengfeng, Kehua Data, Shangneng Electric, and Jinpan Technology, have emerged in succession. Their main business of electric power equipment is robust and strongly related to new energy. They not only have the technical advantages of system integration and grid connection, but also have partial overlap in customer channels between energy storage customers and the main business of electric power equipment.
In summary, in 2022, energy storage was in the early stage of the industry explosion, and the stock price performance presented a logical verification stage and a boom spillover stage. With the continuous growth of the energy storage industry, companies such as the South Potential New Blue Chip have been relocating energy storage. In 2023, the energy storage industry is expected to continue to be strong, and there is much room for development and investment opportunities.