Is investing in energy storage a good business?

Accumulations analysis to recent years, the energy storage market, household energy storage, outdoor storage, industrial and commercial storage appear unusually hot, besides traditional energy enterprises, rechargeable batteries, extend business layout, environmental protection, science and technology co., LTD., food co., LTD., education and even real estate companies are cross-border marketing into the storage industry.

"In recent years, the state and various provinces and regions have introduced policies to encourage the preparation of energy storage, and the development of new energy policies related to energy storage has obvious dividends. In order to seize the good development opportunity of new energy, the company decided to increase the capital of Tianson New Energy by 500 million yuan and accelerate the construction of its lithium battery production base in Nanjing." -- Once the announcement of the cross-border investment in energy storage by Southern Black Sesame Group, which created countless childhood advertising memories, was made public, it immediately triggered heated discussions in the industry. The stock market even increased the closing price by more than 20% in three consecutive trading days. Along with the Shenzhen exchange inquiry: asked the South Black Sesame Group to explain whether there is a "hot spot" situation.

Since the beginning of this year, the energy storage market has been extremely hot. In addition to the traditional energy companies and battery companies to expand their business layout, environmental protection companies, technology companies, food companies, education companies and even real estate companies have entered the field of energy storage. Why the energy storage boom? Is investing in energy storage a good business?

Potential racetrack entry still has a chance

Domestic is boosted by the "dual carbon" target and new energy distribution and storage policy. Foreign countries are affected by energy shortage and soaring electricity prices, and internal and external demand is driven by both. Energy storage has become a potential track, and enterprises are scrambling for layout.

In March this year, Yongtai Energy announced that it will jointly invest in the construction of energy storage projects in Henan province with Yangtze River Power and Henan Branch of Three Gorges Group. It is expected that by 2030, the total installed capacity of energy storage and other new energy projects under the investment, construction, operation and management will reach 10 gigawatts. In May, Midea Group, which is famous for home appliances, officially announced its entry into the field of energy storage, and won the real control of Kelu Electronics through the way of "proxy voting rights + private placement". The latter is one of the earliest enterprises to enter the field of energy storage system integration in China. In August, construction machinery giant Sany Group set up Sany Lithium Energy Co., LTD in Changsha, with businesses including battery manufacturing and energy storage, officially announcing its entry into the lithium and energy storage circuit. In October, ST New Century, an online vocational education company, announced that Luyuan Nengcai, a wholly-owned subsidiary, planned to establish Changsha New Century Commercial Energy Storage Company together with Jarett, Anrui Technology and Hengyutai, to cooperate in the field of energy storage business. It's fair to say that this year has been a busy time for companies to jump on board the energy storage crossover news.

"This year, there have been more than 120 investment and financing events in the field of energy storage batteries and materials, with the investment and financing scale reaching 100 billion yuan, and more than 20 listed companies have made cross-border investment." Liu Yong, Secretary-General of Energy Storage Application Branch of China Chemical and Physical Power Supply Industry Association, analyzed that the enthusiasm of the capital market, on the one hand, stems from the optimism of new energy and energy storage track; On the other hand, some traditional business growth encountered bottlenecks, forced to change lanes to overtake.

"The heat in the energy storage market actually started last year, with two investment and financing peaks: late last year and around July this year. At the end of last year, the National Energy Administration revised and issued the Regulations on the Administration of Grid-Connected Power Operation and the Administrative Measures for Auxiliary Power Services, adding the auxiliary service varieties such as moment of inertia and climbing slope. Based on this, the capital market pays particular attention to the short-time high-power energy storage technology of flywheel energy storage. This summer, power shortages in many parts of the country have increased the interest in long-term energy storage technologies such as flow batteries and compressed air." Zheng Hua, associate professor at the School of Electrical and Electronic Engineering, North China Electric Power University, pointed out that energy security has been promoted to a strategic level as important as food security. As a key support technology for new power systems, energy storage is worth deploying and has a promising future.

According to Liu Yong, although some segments have already gone out of the top companies, the energy storage market pattern has not yet been finalized, and there are still opportunities for new entrants.

Profits are hard to guard against vicious competition

In our country, competition in the electrochemical energy storage market, most energy storage projects have not formed a stable and reasonable revenue mode.

"It's still too early to talk about profitability, the energy storage business model is not fully integrated yet, and the subsidy and tax policies are not set in stone." Liu Yong further said that at present, the capacity utilization rate of energy storage batteries is not high, some enterprises' capacity utilization rate is only 20%, and only a few leading enterprises' capacity utilization rate has reached more than 80%. Repeated investment in battery capacity will also exacerbate competition for raw materials upstream, resulting in wasted resources. He warned that cross-border entry should be cautious, some enterprises into the energy storage circuit is hype, these enterprises do not have enough technical reserves and professional talent team, simply through investment, it is difficult to guarantee the quality of energy storage products.

Some enterprises frankly to reporters, with the help of capital strength, the current energy storage system low bid phenomenon is more common. The influx of a large number of enterprises is likely to lead to uneven and mixed energy storage products and systems, which can easily lead to vicious competition. Once there is a security accident, it will drag down the process of the whole industry.

The reporter noted that because the investment area is far from the main business, listed companies choose to bundle professional energy storage companies. "You can use their technology and talent. Specialist energy storage companies are better able to focus on technology and quality improvement, as well as diversify the risk of investing in the enterprise." At the same time, Liu Yong reminded that enterprise diversification cannot guarantee stable capital flow, energy storage project investment scale is large, there are unknown risks, coupled with lack of experience, it may be difficult to complete the life cycle management and operation of energy storage projects, and even affect the safety of the project.

Zheng Hua pointed out that the energy storage industry is not a one-off deal, and the capital is also looking at the long-term trend. Enterprises do not have to end up in person. They can cultivate core technologies or support potential enterprises according to the investment purpose and capital strength layout.

Clear standards and raise the threshold of entry

According to Liu Yong, China's energy storage industry is still in the early stage of commercialization, and the characteristics and differences of energy storage technology in different application scenarios are large. Therefore, it is necessary to establish the access threshold of energy storage enterprises through technical standards, and reshuffle is inevitable for the sustainable and healthy development of the industry.

The above entrepreneurs also suggested that the energy storage industry has high technical barriers, so it is necessary to clarify the energy storage safety standards and raise the entry threshold of suppliers to ensure project safety.

"In order to make energy storage bigger and stronger, we must have real skills, real technology and innovative talent team. The lack of knowledge and experience will restrict the industry and development to a certain extent, and the accumulation of big data for energy storage project operation also needs time to analyze and summarize." According to Liu Yong, investment in energy storage must be superior in technical standards, and must have a complete knowledge management system and technical procedures based on product development experience.

According to Liu Yong, Chinese energy storage industry has made great progress in recent years. Electrochemical energy storage has basically realized the whole industrial chain localization, and the production scale is enough to support the development of the current demand side. In fact, energy storage technology is multi-route, with unique advantages and suitable application scenarios. For example, the industry chain of flywheel energy storage, liquid flow battery energy storage, sodium ion battery energy storage and other fields is not complete, so it needs to be further supplemented, extended and strong chain, and enterprises with independent technological innovation are required to join in.

This view is also shared by Zheng Hua. He further pointed out that Chinese provinces and cities have different policies on energy storage, and there are also great differences in the progress of power market construction and trading rules. In addition to paying attention to the technology, it is also very important to grasp the market environment and policy trends.