Top Ten Development Trends of Industrial and Commercial Energy Storage
While the market size of industrial and commercial energy storage is growing rapidly, the underlying market problems are gradually surfacing. The multiple factors such as economic viability, safety, and policy variables are constantly hindering the healthy and sustainable development of the industry. Currently, there are ten major challenges that need to be addressed in industrial and commercial energy storage.
First, the uncertainty of time-of-use electricity price policy. Since the profit of industrial and commercial energy storage mainly comes from peak-valley arbitrage under the time-of-use electricity price mechanism, and this mechanism is often determined by macro policies, the policy shift is unpredictable for end-users. This has led many owners to adopt a wait-and-see attitude when purchasing equipment. Considering the 10-year warranty and 15-year design life of industrial and commercial energy storage cabinets, whether the time-of-use electricity price mechanism will remain in place throughout the project's life cycle is a major unknown. Currently, there is no definite profit model for energy storage similar to that of distributed photovoltaics to calculate the long-term return rate.
Second, the uncertainty of regulatory policies and investment returns, and the inability to measure the construction cost of power stations. Due to occasional accidents, both the power grid and government departments constantly propose new requirements for the acceptance standards of Energy Storage Power stations. National-level departments are considering conducting safety hazard investigations of energy storage power stations. As owners are concerned about the safety of energy storage, they are reluctant to invest. This also makes investors hesitant, unsure of what kind of power station would meet the standards, and thus they choose to wait and see.
Third, the electricity consumption patterns of industrial and commercial users are highly uncertain. The uncertainty of user load, whether it is an increase or decrease in load, or changes in peak and valley periods of the user load curve, is closely related to the return rate of energy storage, and this cannot be avoided by locking in contract periods and prices.
Fourth, industrial and commercial energy storage cabinets have not been verified through long-term operation. Unlike large-scale and household energy storage, most of the industrial and commercial energy storage cabinets currently in the market have not been in operation for more than three years and have not undergone extensive installation and long-term operation verification. Their failure rate remains an unknown factor that the industry avoids discussing.
Fifth, the cycle times of battery cells do not equal the cycle times of the system, which poses a hidden danger. For example, battery cell manufacturers may claim that they require constant operation at 25°C, and if this is not achieved, subsequent responsibilities are difficult to define. However, it is difficult to maintain a constant temperature of 25°C in reality. Can the operation platform record every charge and discharge cycle and detect each battery cell?
Sixth, energy storage assets are difficult to trade. In the industrial and commercial energy storage field, there are not many capital investors. Many investors achieve capital turnover through the "acquire permits - build power stations - sell power stations" model, but this approach has not yet been successful. Energy storage assets are not as easily tradable as photovoltaic assets.
Seventh, non-technical costs are constantly rising. The increasing number of energy storage project safety incidents is leading to tighter construction requirements for energy storage projects in various regions, resulting in the continuous increase of non-technical costs in project construction. For example, additional fire protection facilities and additional station room settings, among other non-technical costs, can even increase project costs by 0.2 yuan per Wh. However, current investment calculations for industrial and commercial energy storage projects often ignore various non-technical costs, which can easily lead to cost "out of control" during project execution.
Eighth, the chaos in intermediary services and equipment supply leads to blind investment in energy storage by owners. With the increasing activity in the industrial and commercial energy storage market, various "players" have flocked in, resulting in the accumulation of intermediary fees and seriously delaying project implementation efficiency. Some unprofessional equipment suppliers/investors encourage owners to blindly invest in energy storage, and some solutions even cause the energy storage cabinets to exceed the enterprise's demand limit during charging, resulting in higher demand charges than the savings from peak-valley arbitrage.
Ninth, it is also a major problem to collect funds. It is understood that the complete data requirements for industrial and commercial energy storage projects exceed 50 items, covering multiple dimensions such as land property rights, pipeline infrastructure, power facilities, historical electricity consumption, and policy subsidies. Offline management is highly prone to omissions. At the same time, the project involves multiple rounds of data collection and analysis and calculation. Offline management of project data forms information silos, leading to information opacity, prolonged transmission time, and difficulty in progress management. Moreover, the content standards of each enterprise's list are inconsistent, resulting in unclear data collection lists, unclear standards, and mixed versions.
The revenue from industrial and commercial energy storage with photovoltaic integration cannot support large-scale application. The application scenarios of industrial and commercial enterprises often have a high electricity load during the day, and the photovoltaic power generation during the day is basically consumed by self-use. The logic of storing the excess photovoltaic power generation in a storage cabinet seems rather forced. The logic of industrial and commercial energy storage with photovoltaic integration is apparently more reasonable, but the main reason for the current industrial and commercial energy storage is the peak-valley price difference. The logic of using photovoltaic power generation cost being lower than the grid electricity cost is not the starting point, and the revenue of the entire model cannot support the large-scale application of industrial and commercial energy storage.
Top Ten Development Trends of Industrial and Commercial Energy Storage
The explosion of industrial and commercial energy storage is closely related to electricity demand, policy incentives, and profitable business models. Although the industrial and commercial energy storage market is still in the nascent stage of development and the market structure is not yet mature, with the stability of policies and the gradual clarification of profit models, industrial and commercial energy storage will become an important growth point in the energy storage industry. The top ten development trends in the next few years are gradually becoming clear.
First, the requirements for the industrial and commercial energy storage market are becoming increasingly strict, gradually raising the industry threshold. According to statistics, there are currently over 300 industrial and commercial energy storage enterprises in China, mostly located in the eastern and southern regions, mainly consisting of lithium battery, 3S, and integration enterprises. At the same time, there are many cross-industry players, which have brought a huge impact on the original market structure. On the other hand, the requirements for the industrial and commercial energy storage market are becoming increasingly strict. With the emergence and development of professional integrators, the industry threshold will gradually increase. Some regions may continue to strengthen safety requirements, which also puts higher demands on enterprise brands and technologies.
Second, the industrial and commercial energy storage market is accelerating the shift from competing on price to competing on services and solutions. Unlike the large-scale energy storage market, the industrial and commercial energy storage market has been gradually developed rather than pre-planned. Due to the scattered nature of industrial and commercial users and their lack of understanding of the potential benefits of energy storage, manufacturers need to develop projects and communicate with users about the potential benefits of energy storage. In the next few years, the industrial and commercial energy storage market will continue to enhance software services and overall solution capabilities.
Third, the investment and construction model of industrial and commercial energy storage is expected to accelerate the transition to the owner self-investment model. In the current application scenarios of industrial and commercial energy storage, peak-valley arbitrage is the main "play", and the EMC model is the main investment and construction model. Demand management and electricity spot trading have higher requirements for energy storage operators, who need to make short-term load predictions based on enterprise electricity consumption and photovoltaic output, control the charging and discharging strategies of enterprise energy storage equipment based on predicted load conditions, and even build a small microgrid system with energy storage as the regulating source to make the entire enterprise's electricity load curve smoother. As the industry pays more attention to demand management and electricity spot trading, in the future, the core competitiveness of industrial and commercial energy storage will shift from channels and prices to software and services, and the investment and construction model is expected to accelerate the transition to the owner self-investment model.
Fourth, a 10-year service life is the standard for industrial and commercial energy storage equipment, and a 15-year service life will be an added advantage. From the perspective of industrial and commercial energy storage equipment, equipment with a service life of more than 10 years has become the standard. Industry insiders say that a 10-year service life is the "standard" for industrial and commercial energy storage equipment, and the longer the promised service life, the greater the product's competitiveness. A 15-year service life will be an added advantage.
Fifth, risks and pain points will force the rapid emergence of "differentiated competitiveness". Although high growth is a consistent "prediction" for the industrial and commercial energy storage market in 2024, industry insiders believe that there are risks such as time-of-use periods and power market reforms in the industrial and commercial energy storage market, and the core pain point of industrial and commercial energy storage equipment is that hardware solutions are largely similar. In a highly competitive environment, how to take a differentiated route has become the core competitiveness of the industrial and commercial energy storage market.
Sixth, the economic efficiency of industrial and commercial energy storage will continue to improve. Currently, nearly 30 provinces and cities in China have formulated demand response policies, and user-side special subsidy policies have been comprehensively introduced, further enhancing the economic efficiency of industrial and commercial energy storage. The main forms of special subsidies are capacity subsidies, discharge subsidies, and investment subsidies; the subsidy directions mainly encourage user-side energy storage in multiple scenarios such as distributed photovoltaic energy storage, industrial parks, data centers, and photovoltaic charging/ source-grid-load-storage integration. Among them, provinces and regions such as Zhejiang, Guangdong, Jiangsu, Anhui, and Chongqing have issued policies intensively, and local policies in places such as Wenzhou, Zhejiang, Lishui, Jiangsu, and Tongliang District, Chongqing have provided significant support. In the next few years, the economic benefits of industrial and commercial energy storage will continue to increase.
Seventh, virtual power plants will become the key to breaking through the industrial and commercial energy storage market. Virtual power plants can aggregate and optimize various distributed resources such as distributed power sources, energy storage, and adjustable loads through information technology and software systems. The effective functioning of their power management and coordination requires the participation and collaboration of high-quality energy storage systems, which will also be the key to whether commercial and industrial energy storage can break through successfully.
VIII. The penetration rate of energy storage in existing commercial and industrial photovoltaic systems will gradually increase. According to BNEF's forecast, the global installed capacity of new commercial and industrial photovoltaic energy storage systems in 2025 will be 29.7 GWh. Among existing commercial and industrial photovoltaic systems, the penetration rate of energy storage will gradually increase, and the installed capacity of existing commercial and industrial photovoltaic energy storage systems globally could reach 12.29 GWh in 2025.
IX. Product diversification based on local conditions. In the fields of household energy storage and commercial and industrial energy storage, the diverse application scenarios are giving rise to more opportunities in various细分细分 areas for energy storage system integration enterprises based on different demand logics and application changes. Therefore， formulating diversified product strategy plans based on local conditions according to the development of different application markets and the actual needs of specific segments will become the future development trend of commercial and industrial energy storage.
X. Commercial and industrial energy storage requires smarter operation and maintenance. From an operational perspective， the pain point of commercial and industrial energy storage operation is cost control. If the demand is not actively tracked and the charging algorithm of the energy storage system is not controlled after installation， the user's monthly maximum demand value will increase， and the basic electricity fee paid by the user will also increase. A normally operating commercial and industrial energy storage system does not exist independently but is closely coupled with the user's microgrid system and needs to be integrated with various power components such as distributed photovoltaic and electricity loads. It also needs to achieve the most optimized arbitrage based on internal load curves and external price curves. In the future， this differentiation will be more reflected in the software and digitalization and intelligence levels. The intelligence of commercial and industrial energy storage equipment and the digital and intelligent operation and maintenance of subsequent maintenance have become an inevitable trend.