Dual carbon targets accelerate, energy storage demand explodes, What are you waiting for? Accumulati

At present, it has become one of the core tasks of governments around the world to cope with global change and achieve carbon neutrality as soon as possible. With the introduction of the "3060" target, the timetable for global carbon neutrality has been gradually clarified. Currently, more than 120 countries and regions have proposed carbon neutral goals, most of which are intended to be carbon neutral by 2050.

01, the core of our country to achieve carbon neutralization is clean and low carbon energy structure, the energy structure will accelerate the transformation to non-fossil energy. According to the International Energy Agency (IEA), over the past three decades, 55% of the world's cumulative carbon emissions have come from the power sector, and 80% from coal-fired power generation. As the world goes electric, the share of electricity in secondary energy will increase in the future. Therefore, reducing the proportion of coal-fired power generation while vigorously developing clean energy becomes an important way to achieve carbon neutrality. According to the Institute of Energy, Environment and Economics at Tsinghua University, if China becomes carbon neutral by 2060, wind and light will account for nearly 50 percent of its primary energy and 60 percent of its electricity generation.

According to the data of the Global Energy Internet Development Cooperation Organization, the peak primary energy demand is expected to be about 6.1 billion tons of standard coal, and the energy consumption will show negative growth after 2035. The total energy consumption is expected to be 60.0 billion tons of standard coal in 2050 and 5.90 billion tons of standard coal in 2060. The proportion of non-fossil energy consumption in primary energy consumption is expected to reach 75% and 90%.

It has become a global consensus to build a new power system with new energy as the main body, and energy storage will be a core link to participate in it. In the new power system, from the supply side, the new energy gradually become the main body of installed power and electricity.

In a broad sense, energy storage is energy storage, which refers to the cycle process of using the same form of energy or converting it into another form of energy through a medium or equipment to store it and release it in a specific form of energy based on future applications. According to the form of energy storage, energy storage includes electric energy storage, thermal energy storage and hydrogen energy storage, among which electric energy storage is the most important way. Electric energy storage is divided into electrochemical energy storage and mechanical energy storage according to different storage principles. Electrochemical energy storage refers to secondary battery energy storage, including lithium ion battery, sodium ion battery, lead battery and liquid flow battery, etc. Mechanical energy storage includes gravity energy storage, pumped energy storage, compressed air energy storage and flywheel energy storage.

From the demand side, terminal energy consumption is highly electrified, and a large number of electricity "producers and consumers" have emerged.

From the system as a whole, the power system operation mechanism will occur profound changes: because the new energy power generation has volatility and randomness, unable to change by adjusting their efforts to meet the needs of the user side, the traditional pattern of load with "source" will no longer applies to new type of power system, must through the energy storage and other measures, depending on the source network charge store coordination interaction, realize the dynamic balance of electric power supply and demand.

Under the two-carbon strategy, the adjustment of global energy structure is imperative. A high proportion of solar power is connected to the grid, which impacts the security of the grid. Energy storage can calm the instability of solar power, which has gradually become a necessity. Therefore, the global policy is highly tilted towards the installed energy storage to ensure the security of the power system: European countries are limited in oil, natural gas and other natural resources, so they vigorously develop new energy and provide corresponding subsidies for energy storage. Current household energy storage has taken the lead in volume. The United States supports energy storage through tax breaks, fiscal subsidies and mandatory storage allocation, and has become the world's largest energy storage market. China will release the top-level policy of energy storage in 2021, and then continuously improve the implementation rules to promote the development of the industry.

Energy storage plays a role in different scenarios, and demand is becoming rigid.

Power generation side: energy storage and wind power installed together, solve the problem of new energy consumption, and smooth its volatility;

Power grid side: energy storage participates in the auxiliary service market to maintain the safety and stability of the power system;

Power side: Industrial and commercial users use energy storage to arbitrage the peak-valley price difference and assist the power system to achieve peak cutting and valley filling.

The energy storage market in our country is still in its initial stage, and the proportion of grid-connected renewable energy stored energy has increased rapidly. According to CNESA's statistics, by the end of 2021, the cumulative installed capacity of energy storage projects in China has reached 46.1GW, with a year-on-year growth of 29.5%. From 2015 to 2021, the ratio of China's cumulative energy storage in the global market increased from 11.0% to 22.0%, which is becoming more and more important year by year. From the perspective of subdivision structure, in 2021, the proportion of energy storage at the power supply side, the power grid side and the user side will be 41%, 35% and 24% respectively. The better profitability of industry and commerce will drive the rapid increase of the proportion of installed energy storage at the user side, which will increase by 22 percentage points compared with 2020.

The history of the development of Chinese energy storage is reviewed, and the future course is predicted in combination with the process of carbon neutralization. We think, energy storage development of our country can be divided into roughly four stages.

The first stage is before 2016: the permeability of new energy generation is low, the energy storage is mainly used for "peak cutting and valley filling" of the power system load, and the installed machine is mainly pumped storage.

The second stage is 2016-2020: electrochemical energy storage begins to enter the historical stage to solve the problem of wind and light abandonment caused by the increase of new energy generation permeability.

The third stage is expected to be 2021-2030: With the policy foundation and the gradual marketization of the power system, electrochemical energy storage will usher in a comprehensive explosion on the power generation side, the power grid side and the power side. It is expected that the energy storage demand of the domestic power system will reach 76GWh in 2025, with a CAGR of 111% compared to 2021.

The fourth stage is 2031-2060: unstable power supply, such as scenery electricity, will become the main power supply of the electric power system in our country, the energy storage will become the core of the electric power system to ensure the safe and stable operation of the electric power system.

At present, the bottleneck of China's energy storage development is mainly due to poor economic benefits: low energy storage utilization due to insufficient solar power generation, and lack of business model due to immature electricity market. China relies on strong distribution of energy storage at the power generation side to promote the installed energy storage, which lays a foundation for the time when the wind-wind power is connected to the grid in a large proportion, and can effectively make up for the short-term demand gap.

With the promotion of policies and the continuous improvement of product technology, energy storage economy is improving, ushering in explosive growth in the early stage of industrial growth. In the future, China's new installed wind power will continue to lead the world, and under the guidance of the two-carbon target, the proportion of power generation will continue to increase. In terms of economy, the policy end is continuing to exert force, the electricity market is constantly improving, and the economic benefit margin is improving.

02. In July 2021, the National Development and Reform Commission and the National Energy Administration jointly issued the Guidance on Accelerating the Development of New Energy Storage, pointing out that by 2025, the initial commercialization of new energy storage will develop to scale, with the installed capacity reaching 30GW, and by 2030, the full marketization of new energy storage will be realized. Formalize specific numerical planning objectives. In addition, this policy release mainly starts from the power supply side, planning and layout of a number of large-scale new energy power stations equipped with energy storage. It is expected that the policy end will push the power supply side to start production first, and gradually drive the user side to realize the overall layout of the energy storage system.

In February 2022, the National Development and Reform Commission and the National Energy Administration jointly issued the Implementation Plan for the Development of New Energy Storage in the 14th Five-Year Plan, requiring that the performance of electrochemical energy storage technology be further improved and the system cost be reduced by more than 30% by 2025.

In June 2022, the National Development and Reform Commission and the National Energy Administration jointly issued the 14th Five-Year Plan for the Development of Renewable Energy, which defined the position of new energy storage as an independent market player and promoted the application of energy storage in multiple scenarios on the power supply side, the grid side and the user side.

With the accelerated transformation of energy structure under the carbon neutral policy, the rapid development of wind power photovoltaic will stimulate the rapid growth of energy storage demand. Local governments have successively issued corresponding policies and signed related projects of "scenery storage integration", and the proportion of allocation and storage is basically between 10%-20%. According to the plan of 1.2 billion kW of wind power PV in 2030, and assuming that the distribution and storage ratio is 20%, the energy storage demand of new energy generation side in 2030 can be at least 240GW.

According to CNESA, the cumulative installed capacity of energy storage projects in operation in China in 2021 was 46.1GW, up 30% year on year. Among them, the cumulative installed capacity of new energy storage reached 5.73GW, a year-on-year growth of 75%. In 2021, the installed capacity of newly put into operation electric energy storage projects in China exceeded 10GW, among which pumped storage capacity increased by 8GW, up 437% year on year, and new energy storage capacity increased by 2.4GW, up 54% year on year. The number of new 100-trillion projects reached 78, nine times that of the same period in 2010.

According to CNESA forecasts:

Conservative scenario: Policy implementation, cost reduction, technology improvement and other factors fail to meet expectations. The cumulative scale of new energy storage will reach 48.5GW in 2026, with a CAGR of 53.3% in 2022-26.

Ideal scenario: The energy storage planning goal is achieved smoothly. With the gradual improvement of the power market, supporting energy storage supply chains and maturing business models, new energy storage has been successfully developed by virtue of its advantages such as short construction cycle, small environmental impact and low site selection requirements. The cumulative scale of new energy storage will reach 79.5GW in 2026, with a CAGR of 69.2% in 2022-26.

Energy storage can not only improve the efficiency, safety and economy of conventional power generation and transmission, but also realize the smooth fluctuation of renewable energy, peak and frequency regulation, and meet the large-scale access of renewable energy.

On the one hand, due to the volatility and intermittenity of wind power and photovoltaic power generation, when the proportion of the power generation increases, the power supply side will appear random fluctuation characteristics, which puts forward higher requirements for the safety and stability of the power grid, and the market demand for energy storage peak frequency regulation and stable operation increases.

On the other hand, some regions still face the problem of high light and power abandonment rate, such as Qinghai, Inner Mongolia and Hebei. With the construction of a new batch of large-scale wind and photovoltaic power generation bases, it is expected that large-scale new energy grid-connected power generation in the future will bring great pressure on the consumption and utilization of new energy. As a result, the energy storage market will see a significant window of opportunity in the future.

Under the background of carbon neutrality, the transformation of energy structure of various countries is accelerating, and the global energy storage market has maintained a rapid growth trend in recent years. According to the statistics of Zhongguancun Energy Storage Industry Technology Alliance (CNESA), in 2021, the installed capacity of newly put electric energy storage projects in the world reached 18.3GW, with a year-on-year growth of 185%, and the accumulated installed capacity of put in operation reached 209.4GW, with a year-on-year growth of 9%. Among them, the scale of new energy storage newly put into operation doubled to 10.2GW, and the total installed capacity put into operation reached 25.4GW, a year-on-year growth of 68%. The US, China and Europe are the top three markets, accounting for 80% of the global market (based on the scale of new energy storage projects in 2021).

03. Three application scenarios of energy storage:

Energy storage refers to the conversion of electric energy into other forms of energy (such as kinetic energy, potential energy, chemical energy, etc.), stored in the energy storage device, and released when needed. Among them, the new energy storage layout is flexible and is expected to accelerate its development in the future. From the perspective of location layout, compared with the traditional energy storage represented by pumped storage (most of which are on the power generation side), the new energy storage has higher flexibility in configuration. It can be distributed on the power generation side, the power grid side and the user side, so large-scale or distributed layout can be selected.

In addition, the new energy storage has a variety of functions at the same time, can play the role of peak regulation, frequency modulation, etc. Although the development of new energy storage technology is relatively slow at present, considering its wide application range, high flexibility of configuration, short construction cycle and other characteristics, we believe that new energy storage has huge development potential. In the future, driven by technology iteration and cost reduction, the permeability of new energy storage will be greatly improved.

Upstream energy storage industry chain mainly includes battery raw materials and production equipment suppliers; Midstream is mainly a supplier of batteries, battery management systems, energy management systems and energy storage converters. The downstream is mainly energy storage system integrators, installers and end users.

Energy storage Battery System: Battery Management System (BMS) is used to monitor the status of energy storage batteries. The BMS and the cell together form the battery system. A complete electrochemical energy storage system is mainly composed of batteries, battery management system (BMS), energy management system (EMS), energy storage converter (PCS) and other electrical equipment. Battery is the most important component of energy storage system; Battery management system is mainly responsible for battery monitoring, evaluation, protection and balance, etc. The energy management system is responsible for data acquisition, network monitoring and energy scheduling, etc. The energy storage converter can control the charging and discharging process of the energy storage battery pack and perform AC/DC conversion. The energy storage battery system is composed of battery and battery management system. Batteries are the highest cost component of the entire energy storage system, accounting for about 60% of the cost, while PCS accounts for 31%.

Energy Management System: EMS (Energy Management System) is the decision-making center of the energy storage system and acts as the "brain". The energy management system includes grid level energy management system and micro-grid level energy management system. The EMS mentioned in the energy storage system generally refers to the micro-grid level. The core basic functions of EMS are security optimization scheduling policies and visualization. Energy storage EMS should be responsible for optimizing scheduling, providing scheduling strategies for multi-scale coordinated control, and automatically maintaining voltage and frequency stability of microgrid. The core control strategy includes frequency regulation strategy, voltage regulation strategy, peaking and valley filling strategy, power network fluctuation calming strategy, target load real-time tracking strategy, planned energy storage processing strategy, etc.

Energy storage converter: PCS (Power Conversion System) is a bidirectional current controllable conversion device connecting the energy storage battery system and the power grid/load. It can either convert the DC of the battery to AC for transmission to the power grid, or convert the AC of the power grid to DC for battery charging.

In the grid-connected mode, in the load low period, the energy storage converter converts the AC power of the grid into DC power to charge the battery pack; in the load peak period, the energy storage converter converts the DC power of the battery pack into AC power and sends it back to the grid.

In off-grid mode, the energy storage converter is disconnected from the main grid to provide some local loads with electric energy that meets the power quality requirements of the grid.

Energy storage temperature control: Temperature control refers to the effective control and regulation of the temperature of something through heating or cooling technology. The temperature control system, in conjunction with BMS, controls the constant temperature and humidity of the lithium battery to maintain the battery within the range of safe operating parameters, improve the stability of the battery during operation, and avoid the thermal runaway state of the battery. Energy storage temperature control technology mainly includes air cooling, liquid cooling, heat pipe cooling, phase change cooling.

Among them, the air cooling system has the advantages of simple structure, high reliability, long life, low cost and easy implementation. It is the mainstream technology path in China at present. Liquid cooling system has high heat dissipation efficiency and high heat dissipation speed, and its advantages are prominent in the scenario of high rate and high capacity. Therefore, the global energy storage system is showing a trend of accelerating the penetration of liquid cooling and replacing air cooling. Heat pipe cooling and phase change cooling need to be used together with air cooling and liquid cooling. Due to their high prices, they are rarely used in the field of energy storage.

04. There are two key factors for energy storage to become a power system: the increasing demand for renewable energy to connect to the grid and the increasing frequency of extreme events. The global energy storage market is growing at an unprecedented rate. According to the research

At present, the cost of kilowatt-hour of energy storage in China is significantly lower than that in overseas countries. However, due to the immature power market, poor energy storage business model and outstanding user-side economy, the economy still cannot be achieved in the short term by relying on policy subsidies or installation targets to promote the development of the industry. But generally speaking, it is still in the early stage of development and lacks unified deployment and planning. If the later energy storage policy planning or implementation is not as strong as expected, the industry development will lack of driving force, which will have a negative impact on the overall performance.

In the long run, the driving force of energy storage industry will shift from policy subsidies to economy, and the speed of kilowatt-hour cost reduction of energy storage system is a key indicator of economy. In conclusion, under the guidance of carbon neutrality goal, global energy storage development is imperative.

In the future, the proportion of domestic new energy generation will steadily increase. The state has introduced a series of policies to improve the business model of energy storage, increase economic benefits, and improve the economic margin of energy storage. Supported by the booming development of global friendly policies and industrial chain, the trillion-scale energy storage market is rising.

Source: Hydrogen carbon neutral