The development of new energy storage is accelerating, and many domestic listed companies are optimistic about the future

The "Development Blueprint for New Power Systems", recently released by the National Energy Administration, provides guidance on the development and application of new energy storage technologies.

Prior to this, with the rapid expansion of China's renewable energy power generation market, the development of the new energy storage industry, as an important component of building a new power system, has received increasing attention. On the policy front, since 2022, a number of significant documents have been issued, including the "Notice on Further Promoting the Participation of New Energy Storage in the Power Market and Dispatch and Operation" and the "14th Five-Year Plan for the Development of New Energy Storage".

On June 6, a reporter from the Securities Daily contacted Huaneng International in the capacity of an investor. A relevant person in charge stated that the company is actively promoting several projects involving new energy storage businesses. Several are in the preparatory stages, and one, an independent energy storage (lithium battery) project, has already been put into operation. "To ensure the consumption of renewable energy power generation, the market demand for new energy storage projects is expected to be very large in the future. However, policies vary across regions. Several projects that Huaneng International has invested in Shandong have already started construction, while another project in Guangdong is still in the preparatory stage."

Wang Chengyang, senior investment manager at Kuwang Investment, in an interview with a Securities Daily reporter, stated that energy storage is a key facility for improving the reliability and stability of the new generation of smart grids. As the external environment for the development of new energy storage in China gradually matures, the trend of large-scale development is becoming increasingly prominent. At the same time, new energy storage technologies are showing a diversified development trend, with industrial chains extending from multiple technological routes accelerating their layout, and future growth is worth looking forward to.

The prospects for new energy storage are becoming clearer.

The "Blueprint" mentions "new energy storage" 23 times. By the end of 2021, the cumulative installed capacity of new energy storage exceeded 4 million kilowatts. At the same time, in terms of overall architecture and key tasks, the "Blueprint" clarifies the need to create a "new energy +" model, accelerate the improvement of renewable energy's reliable replacement capacity, deeply integrate the application of long-time scale renewable energy resource assessment and power prediction, intelligent control, and new energy storage technologies, promote the construction of system-friendly "new energy + energy storage" power plants, achieve coordinated operation of new energy and energy storage, and significantly improve power generation efficiency and reliable output levels.

Luo Timing, senior investment consultant at Donggao Technology, told a Securities Daily reporter that with the continuous and certain growth in demand for renewable energy installations, the market for new energy storage, which can play a variety of functions such as peak regulation, frequency regulation, emergency backup, and capacity support in all links and various application scenarios, such as the generation side, supply side, and consumption side, has a very attractive and sustainable development prospect.

“In terms of new installations, in 2022, the newly installed capacity of power storage projects in China exceeded 15GW for the first time, reaching 16.5GW. Among them, the newly added capacity of pumped hydro storage was 9.1GW, a year-on-year increase of 75%; the newly added capacity of new energy storage reached a historical high of 7.3GW/15.9GWh, with power capacity increasing by 200% year-on-year and energy capacity increasing by 280%; among new energy storage, lithium-ion batteries occupy an absolute dominant position, accounting for 97%. In addition, projects using other technological routes such as compressed air energy storage, flow batteries, sodium-ion batteries, and flywheel energy storage have also made breakthroughs in scale, and application models are gradually increasing.” Luo Timing further stated that China has several inherent advantages in developing the new energy storage industry. First, policy support and promotion have never stopped; second, China has already formed a complete and mature industrial chain in lithium battery energy storage. Considering the latest global installed capacity and newly added capacity of energy storage, China accounts for about 25% of the world's total, and its growth rate is the fastest in the world; third, China has natural advantages in terms of population size and electricity consumption, and the huge demand for various downstream application scenarios objectively exists; finally, China's iteration speed of new energy storage technology is very fast, and the technology maturity is also very high.

Xu Shengxiong, public fund product operation manager of Private Equity PaiPai.com, added that continuous policy support makes the prospects of the new energy storage industry clearer, and it can also attract numerous industrial capitals to flock to it, driving the rapid development of the industry.

So, which new energy storage technology routes are more worthy of attention? Wang Chengyang said that there are many new energy storage technology routes, in addition to the several mentioned above, there are also several technology routes including gravity energy storage. "In the short term, we are more optimistic about the development of electrochemical energy storage technology, which can be further divided into lithium battery energy storage, sodium battery energy storage, and flow battery energy storage. From the comparison of the current development status, electrochemical energy storage is a cost-effective technology direction in terms of safety, energy density, cost, and development path."

Companies are optimistic about the future market.

The reporter learned in the interview that many A-share listed companies are actively deploying new energy storage projects, and the companies are also very optimistic about the development prospects of the new energy storage market.

A relevant person in charge of Dehong Shares revealed to a Securities Daily reporter that its subsidiary is currently responsible for promoting new energy storage projects. The project mainly involves portable energy storage power supplies and various aspects of the energy storage industry chain. The equipment has been debugged and raw materials have been purchased, and trial production is being arranged. "The company is working hard to push the new energy storage project on track as soon as possible, and has high expectations for the future market development of the industry."

Similar to Dehong Shares, the aforementioned person in charge of Huaneng International is also full of expectations for the future development of the company's many new energy storage projects: "Most of the projects currently being promoted by the company are located in Shandong Province, and based on the current input-output situation, the return on investment can be calculated to be about 7% to 8%." When asked why new energy storage projects are only set up in Guangdong and Shandong, the person in charge said that the company's independent energy storage business is based on the needs of the power grid in each province and region and the support of local policies.

In addition to the above two companies, many A-share listed companies, including Xizi Clean Energy, Fuchun Environmental Protection, and Pluton, are exploring new energy storage businesses. A relevant person in charge of Xizi Clean Energy stated in response to investor inquiries that its subsidiary, Hangzhou Dehai Aike, has undertaken the Xizi Clean Energy Chongxian Factory's new smart energy storage project, including 1MW/4MWH vanadium flow battery energy storage, which has been put into operation; a relevant person in charge of Fuchun Environmental Protection also clarified in response to investor inquiries that the company is actively considering and exploring the promotion and application of new energy storage in the company's existing thermal power cogeneration, hazardous waste disposal, and other industrial sectors and their parks, and recently invited a team of experts from China United Engineering Co., Ltd. to give a special lecture on molten salt energy storage technology, industrial applications, and related learning and exchanges, and conducted in-depth exchanges on the safety and technical requirements of this technology.

Regarding the market expectations for the new energy storage track, Luo Timing said that based on the project planning information submitted by energy storage equipment manufacturers, integrators, and operators, and also referring to the "14th Five-Year Plan" for new energy storage and new energy development plans of various provinces, under a conservative scenario, it is estimated that the cumulative scale of new energy storage will reach 97GW by 2027, with a compound annual growth rate of 49.3% from 2023 to 2027; under an ideal scenario, the above two sets of data are expected to reach 138.4GW and 60.3%, respectively. It is estimated that in the next 5 years, the annual newly installed capacity of energy storage will show a steady upward trend. Under a conservative scenario, the average annual newly installed capacity of energy storage will be 16.8GW; under an ideal scenario, it is expected to be 25.1GW.

(Source: Securities Daily)