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Analysis of the Household Energy Storage Industry Chain
2022/11/30
What is the new track of household energy storage like?
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New track for household energy storage
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Household energy storage is a necessary auxiliary for distributed energy systems.
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Core components
The core of a household optical storage system is photovoltaic+battery+energy storage inverter. Household energy storage and household photovoltaic are combined to form a household optical storage system, which mainly includes multiple parts such as battery cells, energy storage inverters (bidirectional converters), and component systems.
△ Household energy storage solution system
A typical system typically consists of a 5kW (component+inverter) paired with a 10kWh (energy storage battery) or 10kW+10kWh, with the battery cell being the core of the energy storage system, accounting for approximately 45-50% of the cost; The energy storage converter can control charging and discharging, perform AC/DC conversion, and the cost accounts for about 10-15%; The component system, also known as photovoltaic system, is used for solar power generation, with a cost accounting for about 20-25%; The installation cost has increased from 10000 in 2021 to around 20000, accounting for 15-20%.
Cost splitting of energy storage systems
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product type
Household energy storage system products include integrated machines and split types.
Integrated machine: The family style photovoltaic energy storage and inverter integrated machine is an integrated system that places the photovoltaic inverter, battery, and controller inside. It can display the working status quickly and intuitively through the touch screen, modify parameters, and have multiple working modes, making it easy to use. There are generally three working modes: solar priority mode, AC (city power) priority mode, and SE priority mode (staggered peak power consumption mode).
Home energy storage integrated machine framework
Split type (inverter+battery system): The battery of the household split machine is installed separately from the inverter. Users can match the household energy storage inverter according to their own needs, and can also match the switching power supply or inverter as a backup power supply. It generally includes four types: hybrid home photovoltaic+energy storage system, coupled home photovoltaic+energy storage system, off grid home photovoltaic+energy storage system, and photovoltaic energy storage energy management system.
Household energy storage split frame
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technology roadmap
The mainstream technology route for household energy storage is lithium iron phosphate, with sodium ions and lithium manganese iron as new paths in the future.
The technical route of energy storage batteries includes lithium-ion, lead-acid batteries, liquid flow batteries, etc. Currently, lithium iron phosphate lithium batteries, due to their high safety and long cycle life, are more in line with the design requirements of energy storage batteries compared to ternary lithium batteries. They are the mainstream development route of energy storage batteries, and Tesla energy storage batteries are gradually shifting from the ternary route to the iron lithium route. In addition, some companies such as Ningde and Paineng are already conducting research and testing on sodium ion and manganese iron lithium batteries. We anticipate that the technical route of energy storage batteries is expected to be further improved in the future.
Classification of energy storage battery technology routes
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business model
The sales model includes direct sales and distribution, as well as brand and channel building advantages. The sales models of three types of players in the household energy storage industry chain are as follows:
1) Battery cell/energy storage inverter suppliers: divided into To C and To B. To C generally integrates home storage systems, builds its own channels, promotes its own brand, and has certain consumption attributes. To B is a general product supplier who sells products to integrators without consumption attributes, earning material costs and processing fees.
2) System integrators: Without complete product production capabilities, they can purchase battery cells or energy storage inverters, or some companies can produce a certain component themselves for simple system product integration. However, they have channel sales resources and rely on existing channels to cooperate with local distributors and installers.
3) Distributors/installers: Connect with upstream integrators, deliver to end users after installation and construction, and earn sales and installation fee commissions.
Sales methods of different manufacturers
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Pricing Model
The price difference between domestic and foreign energy storage for household use is large, higher than that of industrial and commercial energy storage and MW level energy storage. Foreign energy storage is nearly 133% higher than domestic energy storage (based on the high price), with CIF pricing as the main method, and sellers bear the main risk.
At present, domestic prices for household storage products within 30kWh range from 1.0 to 1.5 yuan/Wh, while foreign prices range from 2.0 to 3.5 yuan/Wh, including battery cells, BMS, and casing, as well as a 10-year warranty for connecting wiring harnesses. There are four quotation methods: EXW factory price, FOB quotation, CIF quotation, and DDP quotation. The quotation consists of goods pricing, accessories, FOB/CIF/DDP, etc. At present, CIF quotations are the majority, and sellers bear high risks.
Different types of energy storage market prices
Overseas terminal pricing is higher, with distributors and installers increasing prices by 30% -50%.
At present, the domestic pricing is relatively low, with a gross profit of 20% -30%. The gross profit of all-in-one machines is higher than that of only selling batteries or inverters. Under the overseas pricing model, labor wages and overseas travel expenses increase costs, and in addition, around 5% of repair/after-sales expenses need to be considered. Overseas sales prices are increased by 30-50% by distributors and installers respectively.
Markup mode
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Demand volume
The demand for household energy storage is growing rapidly, with a year-on-year increase of 56% in 2021. According to BNEF data, the global installed capacity of energy storage in 2021 was approximately 10GW/22GWh, a year-on-year increase of 84%/105%. Among them, the installed capacity of distributed energy storage was approximately 2.5GW/5.6GWh, a year-on-year increase of 45%/40%, and the installed capacity of household energy storage in distributed energy storage was approximately 1.9GW/4.4GWh, a year-on-year increase of approximately 53%/56%. Global household energy storage is booming, mainly driven by two factors: continuous policy support and high-yield economic growth.
Tax reduction and financial subsidies provide policy support, and the economic efficiency of household storage has improved due to the continuous increase in electricity prices for residents. Countries around the world have introduced relevant policies to incentivize household energy storage installations. The relevant policies can be divided into indirect tax exemptions and direct financial subsidies, thereby reducing the installation cost of household storage. In addition, in the trend of increasing electricity prices for overseas residents, the spontaneous use of household storage can save more electricity expenses. Therefore, the yield of household storage is constantly increasing, which stimulates the continuous increase of household storage and installation.
New installed capacity and growth rate of global distributed energy storage
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Analysis of household energy storage demand
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Due to the maturity of energy storage technology and the decrease in costs, energy storage began to grow rapidly in 2021. In 2022, due to the annual increase in energy costs and electricity prices in Europe, coupled with the Russia Ukraine War and large-scale power outages overseas, residential electricity costs were high and power supply stability was poor, resulting in a high increase in household photovoltaics, leading to an unexpected outbreak of the household energy storage market. Household storage has entered a new stage of explosion, with a global increase of 1.9GW/4.4GWh of household storage installed capacity in 2021, an increase of 53%/56%, accounting for about 20%. Global household storage is thriving.
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The cost of electricity is high and continues to rise
Under the energy crisis, the cost of electricity consumption overseas is constantly rising. In recent years, the electricity prices in Europe and the United States have been rising year by year. Affected by events such as the Russia-Ukraine conflict, the cost of natural gas has soared, and the cost of electricity prices has risen rapidly in the short term. The average price of the spot market in Europe has risen from about 50 euros/MWh at the end of 2019 to more than * 300 euros/MWh. The electricity prices of European countries in May 2022 have increased by 100-330% from the beginning of 2021. According to ING's prediction, the basic energy prices of European economies such as France, Germany, Belgium, and the Netherlands will remain high at around 150-170 euros/MWh throughout 2022.
The per capita electricity consumption overseas is much higher than domestically. The per capita electricity consumption of overseas countries such as Canada, the United States, and South Korea far exceeds that of China. Among them, the main countries for household storage, the United States, Germany, and Australia, had an annual per capita electricity consumption of 12235/9857/6771KWh in 2020, far exceeding the per capita consumption of 5297KWh in China. With the continuous rise of electricity prices, the demand for self use renewable energy and energy storage overseas is rapidly growing.
Comparison of electricity prices in major countries in September 2021 (USD/KWh)
Germany's electricity prices continue to rise (EUR/MWh)
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Weak coordination ability of the power grid and insufficient power supply stability
Overseas areas are affected by the weather and weak coordination ability of the power grid, resulting in poor power supply stability for residents. Household storage can provide emergency power supply in case of power plant accidents or natural disasters, improving power stability.
In recent years, various large-scale power outages have occurred overseas. According to EIA statistics, the average power outage duration per customer in the United States in 2020 was as high as 492 hours, of which 373 hours were caused by major events such as severe weather and emergencies. In 2022, a power plant accident will occur in Taiwan, China, China, affecting 5.49 million households and losing 10.5 million kilowatts, accounting for about 1/3 of the power in Taiwan.
Frequent power outages in various regions
Annual average power outage duration per customer in the United States (hours)
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Gradually implement supportive policies such as tax reductions and exemptions
Overseas countries have introduced policies such as tax reductions or direct subsidies to promote development.
The relevant policies can be mainly divided into two categories. One is to implement tax exemptions. For example, Yidali will increase the tax exemption for home storage equipment to 110%, and the United States will provide a 30% investment tax exemption for energy storage systems above 5kWh by 2026; Another type is to implement financial subsidies, such as Japan providing 66% cost subsidies for households and merchants installing lithium-ion batteries, and the state of Bavaria in Germany providing 500 euros (550 US dollars) subsidies for each energy storage system with a capacity of more than 3kWh.
Sorting out subsidy policies for household energy storage in some countries
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High yield
The household savings yield is relatively high, and without considering subsidies, the yield can reach over 15%, with a payback period of 6 to 9 years. Germany, the United States, and other countries that are among the top in the global development of household energy storage due to their high electricity price returns.
Taking Germany as an example, assuming a scale of 5KW and a storage capacity of 50% * 2h, the cost of household photovoltaic+energy storage is 2.06 euros/W. After calculating the retail electricity price of 0.4 euros/KWh and the grid electricity price of 0.06 euros/KWh, the IRR reaches 22.55%.
IRR simulation calculation under different costs and electricity prices of household storage in Germany (Euro)
Data source: PV Magazine
Taking California, USA as an example, assuming a scale of 5KW, 30% * 4h distribution and storage, and a household photovoltaic+energy storage cost of $4.63/W, the IRR calculated based on the peak electricity price of $0.6/KWh and the average electricity price of $0.23/KWh reaches 18.9%. With the decrease of system costs and the increase of electricity prices, the IRR will further increase, and high overseas returns and short payback periods will stimulate the rapid development of household storage.
IRR simulation calculation under different costs and electricity prices for household storage in the United States (USD)
Data source: PV Magazine
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The grid electricity price is lower than the electricity consumption price
The policy of grid connected household photovoltaic electricity prices is gradually shifting towards self consumption, promoting residents to allocate energy storage on the basis of photovoltaic technology.
At present, there are three main types of policies for grid connected household photovoltaic electricity prices: the grid connected electricity price policy (FiT), net metering, and self consumption. In recent years, the prices of FiT subsidies in countries such as Germany, Japan, and Australia have been continuously decreasing. In Germany, the electricity price of FiT surplus electricity has decreased by more than 80% in the past 15 years. In Japan, household photovoltaic FiTs have successively expired in November 2019, and the subsidy electricity price after expiration has significantly decreased. At present, some states in the United States have terminated their net measurement plans, and countries such as the Netherlands and Italy will also withdraw from their net measurement policies. Under the German self consumption model, the grid electricity price is only 0.06 euros/kWh, while the self use part is equivalent to profiting from the electricity price of 0.4 euros/kWh. Therefore, after allocation and storage, self use can better improve the yield. While the FiT and net measurement policies are gradually declining, the self consumption policy is gradually promoted, and the economic efficiency of residents' layout and storage continues to improve.
Photovoltaic grid electricity price policy
Data source: PV Magazine
The gap between the cost of light storage LCOE and household electricity has widened, highlighting the economic benefits of household light storage.
According to SPE, the average cost per kWh (LCOE) of photovoltaic and energy storage equipment in Germany in 2021 was 14.7 euro cents/kWh, which is close to half of the household electricity price during the same period, with a difference of 17.2 euro cents/kWh in LCOE. We expect the price difference between the two to gradually widen in the future. By 2023, the LCOE of light+storage is expected to decrease to 12.8 euro cents/kWh, and the gap with the LCOE of household electricity prices will increase to 18.9 euro cents/kWh during the same period, further highlighting the economic benefits of household light storage.
Comparison of German Light+Storage LCOE (Euros/KWh)
Data source: SPE
Assuming the system is composed of a 5kW inverter and a 10kWh energy storage battery, the system price is the sum of the inverter, battery, components, and installation costs, totaling 66000 yuan ≈ 10000 euros. Assuming only self use of 10kWh/day is considered, without considering internet access, the daily electricity cost will be saved by 4 euros, with a return period of 6-9 years. If subsidy factors are considered, the investment cycle can be further shortened to 2-3 years.
Cost splitting and payback period calculation
The new installed capacity of global household storage has maintained a high growth rate of over 50% in the past few years.
In 2021, the global scale of newly added household storage and installation capacity was 1.91GW/4.36GWh, an increase of 56% based on the MWh caliber. Currently, household energy storage is mainly concentrated in countries or regions with high electricity prices. In 2020, global household energy storage was mainly concentrated in European countries such as Germany, Italy, and the United Kingdom, as well as other countries such as Japan, Australia, and the United States. Among them, Germany, the United States, Japan, and Australia collectively account for 74.8% of household energy storage.
New installed capacity for global household storage
Data source: BNEF
The penetration rate of household energy storage is expected to continue to increase.
The global household storage penetration rate is expected to accelerate. We expect it to reach 28% by 2025, with the United States and Europe being two important growth points. We expect the US household storage penetration rate to increase from 8% in 2021 to 36% in 2025, and Europe's household storage penetration rate to increase from 8% in 2021 to 56% in 2025.
Household energy storage penetration rate
Data source: BNEF
The global installed capacity of household energy storage is expected to reach 50GW/122.2GWh by 2025, with the rapid growth of household energy storage in the United States and Europe. It is expected that household energy storage will experience a high growth rate. By 2025, the global installed capacity of household energy storage is expected to reach 50GW/122.2GWh, with a CAGR of 126%/130% from 2021 to 2025, a global shipment of 80GW/195.5GWh, and a CAGR of 126%/130% from 2021 to 2025. Among them, the installed capacity of household energy storage in the United States/Europe is 18.2/73.1GWh, and the CAGR of the United States and Europe from 2021 to 2025 is 112% and 145%, respectively.
Global Energy Storage Installation Forecast
Data source: BNEF
Prediction of household storage and installation machines in various countries or regions
Data source: BNEF
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Analysis of Household Energy Storage Markets in Various Countries
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The scale of household storage and installation in Europe is constantly increasing. In 2021, the household storage in Europe reached 2045MWh, a year-on-year increase of 73%. The average annual compound growth rate from 2015 to 21 reached 63%, an increase of
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