With the global energy transition accelerating, new energy storage technologies, as a key solution to the intermittency of renewable energy and a means to improve energy utilization efficiency, are receiving unprecedented attention. In China, industrial and commercial energy storage, as an important component of the energy storage market, is currently exhibiting unique characteristics and trends in its investment and financing logic.
In these years, the industrial and commercial energy storage market in China has developed rapidly. With the gradual promotion of peak-valley electricity price differential policies and the continuous improvement of the electricity market, the demand for industrial and commercial users to install energy storage systems to achieve peak shaving, valley filling, and reduce electricity costs is increasing.
Especially in some economically developed regions with high electricity consumption, the market potential for industrial and commercial energy storage is enormous. According to public data, in the first half of 2024, the total number of industrial and commercial energy storage projects filed in China exceeded 4,200, with a scale of 6.2GW/14.7GWh and an investment amount exceeding 24 billion yuan. This data indicates that the industrial and commercial energy storage market is in a period of rapid growth, attracting significant attention from capital and enterprises.
**Core Elements of Investment and Financing Logic**
**Policy Guidance and Support**
Policy is a crucial factor guiding the development of the industrial and commercial energy storage market. In recent years, the Chinese government has introduced a series of policies to support the development of the energy storage industry, including peak-valley electricity price differential policies, the construction of electricity spot markets, and subsidies for energy storage projects. These policies provide a favorable policy environment and economic incentives for the development of industrial and commercial energy storage projects.
For example, many local governments have adjusted time-of-use electricity pricing policies to widen the peak-valley price differential, making it possible for industrial and commercial users to achieve peak-valley arbitrage by installing energy storage systems. The government also provides subsidies for energy storage projects and tax incentives to reduce investment costs and improve the economic viability of projects.
**Market Demand and Economic Benefits**
Market demand is a key driver of investment and financing in industrial and commercial energy storage projects. With the continuous rise in electricity costs and the gradual improvement of the electricity market, the demand for energy storage systems among industrial and commercial users is increasing. By installing energy storage systems, users can achieve multiple benefits, including peak shaving, valley filling, reducing electricity costs, and improving energy utilization efficiency.
In terms of economic benefits, industrial and commercial energy storage projects mainly achieve profitability through peak-valley arbitrage, demand-side response, and load management. Especially in regions with significant peak-valley electricity price differentials, the economic benefits of energy storage projects are more pronounced.
For example, in Guangdong and Zhejiang, the equivalent price difference for two daily charge-discharge cycles in industrial and commercial energy storage projects exceeds 1.2 yuan/kWh, with a theoretical IRR exceeding 15%, indicating excellent investment returns.
**Technological Maturity and Cost Reduction**
Technological maturity and cost reduction are important drivers of the development of the industrial and commercial energy storage market. In recent years, with the continuous advancement of energy storage technology and the ongoing reduction in costs, the performance and economic viability of industrial and commercial energy storage systems have significantly improved.
On one hand, the continuous advancement of key technologies such as energy storage batteries, PCS (bidirectional converters), and EMS (energy management systems) has significantly improved the efficiency, safety, and reliability of energy storage systems. On the other hand, with the emergence of scale effects and the optimization of the supply chain, the cost of energy storage systems continues to decline. It is predicted that by 2025, the average price of industrial and commercial energy storage systems will drop from the current 0.7 yuan/Wh to below 0.6 yuan/Wh, further enhancing the economic viability of projects.
**Investment Models and Risk Management**
In terms of investment models, industrial and commercial energy storage projects mainly adopt models such as Energy Performance Contracting (EMC), owner investment, and pure leasing. The EPC model is the mainstream, where a third-party investor is responsible for the investment, construction, and operation of the energy storage system, while the user only needs to provide the site and transformer resources and share the profits according to an agreed ratio. This model reduces the investment risk for users and enhances the replicability and scalability of projects.
In terms of risk management, investors need to pay attention to risks such as policy changes, market demand fluctuations, and technological updates. By strengthening market research, policy analysis, and technological innovation, investors can effectively reduce project risks and improve investment returns.
In the future, with the continuous advancement of technology and the ongoing reduction in costs, the performance and economic viability of industrial and commercial energy storage systems will further improve. At the same time, the government will continue to introduce supportive policies to promote the rapid development of the energy storage industry. Investors should closely monitor market dynamics and policy changes, actively seize investment opportunities, and promote the prosperity and development of the industrial and commercial energy storage market.
