Household battery storage business model and demand analysis
New energy power generation is unstable, and the demand for energy storage arises at the historic moment. Electric energy is generated and used immediately. The power system needs to maintain dynamic balance.
When the generating capacity is too high, it needs to convert electric energy into chemical energy or potential energy and other forms of energy to store. At present, the installed capacity of household battery storage has maintained a high growth. Europe, the United States, Japan and Australia dominate the market.
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The installed capacity of global household battery storage has steadily increased in recent years. This article will introduce household battery storage in various aspects including industry chain, business model, global development, demand analysis and so on.
Analysis of household battery storage industry chain
The upstream of household battery storage is battery industry and electrical equipment industry, while the downstream is household users. The structure of household battery storage system includes battery PACK, BMS, EMS, PCS and temperature control system.
Upstream raw materials are mainly divided into two parts, namely, battery system raw materials+energy storage converter raw materials. Downstream can be divided into narrow household battery storage and broad household battery storage.
The narrow household battery storage is for household users, and broad household battery storage includes industrial and commercial users on the user side, EV charging piles, industrial parks, etc. The profitability of companies in all links of the industrial chain is different, the battery/PCS difference is large, and the profitability of software systems is high.
In terms of batteries, lithium iron phosphate battery is the mainstream energy storage battery. At present, the most common batteries on the market are ternary batteries and lithium iron phosphate batteries. Lithium iron phosphate batteries have a high cycle number of 4000 and high safety. The temperature of thermal runaway is 270 ℃, higher than 150 ℃ of ternary.
The unit investment cost is 1600 RMB/KWh, and the ternary battery cost is 2000 RMB/KWh. Therefore, as an energy storage battery, lithium iron phosphate has great advantages and is the mainstream trend of energy storage batteries.
In the long run, sodium ion battery is expected to become the future technology trend. At present, the sodium ion battery is at the initial stage of development, and the industry is not yet mature.
In terms of converter, the technology of PCS of energy storage converter is highly coincident with that of inverter, and the overall technology is relatively mature, with a high degree of coincidence in terms of technical principles, use scenarios, suppliers and customers.
The all-in-one optical storage machine is the development trend of the household battery storage system. Therefore, as the system structure, the energy storage converter will develop the adaptive system into a Hybrid optical storage inverter.
BMS and EMS
In BMS/EMS, the management scope, automation and security are increased. BMS can be divided into:
● No management stage
● Simple management stage
● Overall management stage
For the core battery of household battery storage and the household battery storage converter, different companies have different profitability. The key lies in customer stickiness, channel construction and compatibility, which will promote the integration of the industrial chain. And the leading companies that have improved channel construction will have integration advantages.
In terms of software, in the future, with the industrial chain integration of battery companies, converter companies and integrated system companies, the survival space of third-party pure system companies will be squeezed, and the profits of the industrial chain will gradually converge to the head companies.
Three business models for household battery storage
Household battery storage is generally used in combination with roof photovoltaic. At present, there are three main profit models:
● Self use, margin online
As FIT price is higher than household electricity price, some European and American countries promote roof photovoltaic installation with “benchmark price and full grid connection”. With the rise of household electricity and the gradual decline of FIT subsidies, the difference in electricity prices has widened, and rooftop photovoltaic users have turned to energy storage to achieve a higher proportion of spontaneous self use.
● Peak valley arbitrage
California, Australia, major European countries, China, etc. have set up a time of use electricity price mechanism. Under this mechanism, the energy storage system charges the energy storage during the low valley of the power grid at night, and discharges during the peak of power consumption during the day. The purpose of saving power consumption costs is achieved by using the peak valley price difference.
● Virtual power plant
In virtual power plant, based on the energy software management platform, the distributed energy storage system integrator integrates distributed energy storage systems on the user side, analyzes, controls and optimizes the operation of the energy storage system, and participates in grid services to obtain application benefits.
Influencing factors of household battery storage system profitability
In the economic analysis of household battery storage, the main products include photovoltaic, energy storage and all-in-one optical storage machines. In general, there are two sources of income from photovoltaic or energy storage, one is to generate electricity or discharge for saving living electricity bills, and the other is to sell excess electricity to the grid to earn electricity bills.
The household electricity charge is higher than the online electricity charge, so the most economical way for consumers to use photovoltaic/energy storage is to use all power generation to offset the electricity charge. The core of the development of household battery storage system is the profitability, which is affected by:
● Electricity price for residents;
● Power peak valley price difference;
● Domestic electricity consumption per capita;
● Cost of household battery storage system.
The cost of household battery storage system and residential electricity price are highly sensitive.
Development of global household battery storage market
The household battery storage market is concentrated in developed countries in Europe and the United States and Europe, accounting for nearly 50% of the market. In terms of the proportion of new installed units in the world, the United States and Europe are the main markets of the household battery storage industry, accounting for about 26% and 23% respectively.
Japan and Australia followed closely, accounting for 17% and 6% respectively. From the perspective of the German market, the household battery storage industry is highly concentrated. Top 5 companies are sonnen, BYD, E3/D3, SENEC and LG, accounting for 20%, 18%, 17%, 17% and 7% respectively, totaling 79%.
The data shows that the proportion of household battery storage has stabilized at 20% – 30% in recent years. Due to the rising electricity price and power consumption, household battery storage will become the main force to drive the global energy storage installation in the future.
Ideally, with the continuous promotion of distributed photovoltaic installation and the continuous improvement of household battery storage economy, the new installed capacity of global household battery storage will reach 159.1GW in 2026.
Analysis of the reasons for the outbreak of household battery storage demand
The outbreak of household battery storage demand in energy storage industry is affected by many factors:
● Energy inflation superimposes on the geographical situation to increase the power price
Since July 2021, due to the rise in energy prices, the price of electricity in Europe has soared all the way, which has now reached 2-4 times the price in the same period. The economy of distributed PV+household household storage investment has improved rapidly, and the demand for household household storage purchase remains high. It is estimated that European household storage will still be in a high boom and high growth stage in the next 2-3 years.
● Time of use electricity price is applied normally, and the difference between peak and valley prices is widened
Time of use electricity price is widely used. In recent years, China has issued regulations that the maximum system peak valley difference exceeds 40%. In principle, the peak valley price difference is not less than 4:1.
The latest EU policy requires that power selling companies above a certain size must formulate and publish time of use electricity price packages for end users. In the United States, most users in California, Michigan and Maryland participate in the TOU tariff.
● Per capita domestic electricity consumption is high, and the growth trend is expected to continue
With the continuous improvement of economic level and quality of life, the global average power consumption per capita has been rising in the past 50 years. The average domestic power consumption in the United States has reached 4576 kwh/person, while that in major European countries is about 1500-2500 kwh/person. It is expected that the global per capita electricity consumption will continue to grow.
● Popularization of new energy vehicles as a new power for household electricity
In recent years, with the rapid development of the global electric vehicle industry and the rapid growth of electric vehicle ownership, the demand for vehicle charging arises at the historic moment.
Installing a household battery storage system at and near the household charging pile can alleviate the impact of electric vehicle charging on the power grid and improve the household electricity economy. The integration of charging and storage will become the future development direction of the household charging pile system.
● Heat pumps gradually replace heating, driving new demand for electricity
As an efficient and environment-friendly thermal energy terminal, heat pumps can be used for heating in winter and cooling in summer. For most regions in Europe and the United States, heating is required in cold winter, and air-conditioning is required in summer. Heat pumps have higher heating/cooling efficiency, which is more energy-saving and environmental friendly.
● The cost of optical storage and electricity has entered the channel of decline, which is expected to be further reduced in the future
Benefiting from the continuous decline of battery prices and photovoltaic costs, the cost of optical storage and electricity without subsidies has reached 0.456 US dollars/kwh in 20 years, a 65% drop compared with 2015. It is estimated that the cost of household battery storage system will continue to decline in the next 10 years.
The initial investment cost of household battery storage system in 2030 will decrease by about 38% compared with that in 2020, greatly improving the economic level of household battery storage installation.
● Policies stimulate the demand for household battery storage and reduce investment costs in a disguised way
In order to promote the installation of household battery storage, countries have introduced relevant policies to reduce initial investment costs, mainly including direct subsidies, tax relief, support for research and development, etc.