Analysis of the current status of industrial and commercial energy storage

Industrial and commercial energy storage has not yet formed an industrial scale

Commercial and industrial energy storage refers to energy storage equipment installed on the electricity consumption side of office buildings, factories, etc. Its main objectives include self-generation and self-use or arbitrage of peak-valley price differences. Commercial and industrial energy storage systems mainly include PACK batteries, PCS (energy storage converters), BMS (battery management systems), EMS (energy management systems), etc.

Commercial and industrial energy storage is a typical application of distributed energy storage systems on the user side. Its characteristics are that it is close to both the distributed photovoltaic power supply and the load center, which not only effectively improves the consumption rate of clean energy, but also effectively reduces the loss of power transmission.

With the gradual enrichment of scenarios, it is expected to reach maturity in 2045, achieving the coordinated operation of multiple types of energy storage covering the entire cycle, which will greatly improve efficiency. Among them, industrial and commercial energy storage accounts for most of the market share of user-side energy storage, and has not yet reached industrial scale.

Classification of energy storage types
Divided according to the power system			purpose
Energy storage before a meter	Power-side energy storage		Smoothly generating wind power to solve the problem of new energy consumption Providing frequency modulation auxiliary services for traditional thermal power units
	Grid-side energy storage		Achieving system frequency modulation can alleviate grid congestion and improve transmission and distribution capacity. When the load on a line exceeds the line’s capacity, the line becomes congested and cannot transmit power. An energy storage system upstream of the line can store power that cannot be transmitted. When the load on the line is less than the line’s capacity, the energy storage system can then discharge power back to the line. Delaying the construction of new power transmission and distribution equipment. In power transmission and distribution equipment where the load is close to the line capacity, the energy storage system can delay the expansion and construction of new power transmission and distribution equipment by increasing the power transmission and distribution capacity.
storage after table	user-side energy storage	Energy storage for industry and commerce	Self-generation and self-consumption of electricity ensures the stability and reliability of electricity use Reduces electricity costs by flattening the peak and valley demand and arbitrage on the price difference between peak and valley
		Energy storage for households

Installation volume continues to grow

With the further improvement of time-of-use electricity pricing and the additional increase in electricity prices for high-energy-consuming enterprises, the economics of energy storage for industrial and commercial users has significantly improved. In 2023, China’s energy storage market will have a cumulative installed capacity of 22,545 MW. The cumulative installed capacity is predicted to reach 25,305 MW in 2024, with a CAGR of 12%.

In December 2023, 688 new energy storage projects were completed and filed, including 446 user-side energy storage projects with a total capacity of over 1.38GW/2.51GWh and 39 power-side projects with a total capacity of over 2.75GW/2. 26GWh, 15 grid-side projects with a total capacity of over 1.10GW/3.65GWh; 88 standalone/shared energy storage systems with a total capacity of over 13.57GW/29.43GWh; and 100 integrated projects.

According to statistics, user-side energy storage projects could account for 8.04% of grid-connected projects in 2022. Although the current proportion is not high, thanks to the continued widening of the peak-valley price difference and the optimization of periods, the market interest in user-side energy storage is rising, and the number of filed projects has increased significantly.

New energy storage technology becomes a new driving force for the industry

New energy storage technologies mainly include electrochemical energy storage, thermal (cold) energy storage, compressed air energy storage, flywheel energy storage and hydrogen (ammonia) energy storage. Different from the intrinsic characteristics of new energy storage technologies, each has its own advantages, disadvantages and applicable scenarios. Among them, electrochemical energy storage has a wide power range, high energy density, and is more mature than other new energy storage technologies, so it can be used in a wider range of scenarios. Compared with traditional pumped hydro storage, electrochemical energy storage is easier to install, not restricted by location, and is more suitable for the energy storage needs of industry and commerce. It also has broader development prospects in the future.

Among the various types of electrochemical energy storage technologies, lithium-ion battery technology has the advantages of fast response, high capacity, low pollution and long life, and is widely used in new energy power generation side distribution storage and user side energy storage. Currently, lithium-ion batteries account for the largest share, but there are still safety risks such as thermal runaway and flammability during large-scale applications.

Comparison of major electrochemical energy storage technologies
	Response time	Discharge time	overall efficiency	Lifespan (years)	Advantages	Disadvantages
Lithium-ion battery	Millisecond-minute level	1 min – 8h	70%-80%	5~15	Large capacity, low pollution	High cost, safety hazard
Lead-acid battery	Millisecond-minute level	1 min – 8h	75%-90%	5	Cost-effective, highly reliable	Short lifespan, pollution problem
Sodium-sulfur battery	Millisecond level	1 min – 8h	80%-90%	10~15	Large capacity, long life	High cost, high temperature hazard
Flow battery	Millisecond level	Hours	60%-85%	5~10	High safety, individually designed power capacity	High operation and maintenance cost, low efficiency
Super capacitor	Millisecond level	Milliseconds and minutes	90%-95%	20+	High efficiency, long life	High cost, small capacity

Energy storage market profit channels

The main source of profits for commercial and industrial energy storage is peak-valley arbitrage. For users without photovoltaic systems, profits mainly come from peak-valley arbitrage using energy storage; for users with photovoltaic systems, they can save on purchased electricity costs by self-consumption, achieving the effect of shifting energy in time. At the same time, commercial and industrial energy storage can be used as a backup power supply during power shortages and power restrictions, which does not generate direct economic inflows but can effectively avoid losses from work stoppages and production halts.

Demand management + virtual power plants (spot electricity trading, ancillary services) have become important supplementary means of generating profits. In the context of electricity reform, for users who implement two-part tariffs (a system that combines a basic tariff corresponding to capacity and a tariff corresponding to electricity consumption to determine the price of electricity), demand management can be used to reduce electricity costs for commercial and industrial users. At present, commercial and industrial users can participate in electricity market transactions in an aggregated manner through virtual power plants (VPPs). Demand-side response has become an important channel for improving economic efficiency, and in the future it is expected to participate in spot trading in the electricity market and provide ancillary services.

Profitable channels for industrial and commercial energy storage
Energy time shifting	When the output of photovoltaic power generation is high, the excess power is stored in the battery. When the output of photovoltaic power generation is insufficient, the power in the battery is released to the power load for use, maximizing the proportion of self-generation and self-use of photovoltaic power generation and minimizing power costs
Bee Valley arbitrage	Purchasing low-priced electricity from the grid during off-peak hours and supplying it to the load during peak hours, reducing the company’s electricity costs
Capacity management	Two-part tariffs are used for large industrial users with a transformer capacity of 315 kVA and above. The two-part tariff includes a power tariff and a capacity tariff. The power tariff is calculated based on the actual power consumption of the user, and the capacity tariff can be calculated based on the fixed capacity of the transformer or the maximum demand of the transformer.
Backup power	For applications with high requirements for grid continuity, industrial and commercial energy storage systems can be used as backup power sources during power outages, replacing traditional UPS power sources. They provide backup power for critical uninterruptible power supply loads in industrial and commercial parks to deal with sudden power outages.
Spot trading of electricity	Relevant policies have clearly stated that energy storage and other market participants will be introduced in due course to participate in green power trading
Electricity ancillary services	Ancillary services will become an important part of the trading varieties in the power market, and industrial and commercial energy storage can also provide ancillary services in the power market as a new profit channel

Analysis of the demand side of industrial and commercial energy storage

Commercial energy storage scenarios have more diversified demands

The main application scenarios for industrial and commercial energy storage can be divided into three categories: standalone energy storage, integrated energy storage (charging) and microgrids. For factories, industrial parks, charging stations, commercial buildings, data centers, etc., distributed energy storage is a just-in-time necessity, and they also have three types of needs at the same time: reducing costs in high energy consumption scenarios, increasing the proportion of green electricity used through integrated energy storage and transformer expansion.

Separate storage for industrial and commercial enterprises

The independent storage model for industrial and commercial enterprises is currently the most basic application scenario. Factories, shopping malls and other medium-sized industrial and commercial premises are currently the most common application scenarios with the largest number of implemented projects.

With the improvement of time-of-use electricity pricing, the price difference between peak and valley periods is increasing in various regions. The installation of commercial and industrial energy storage is becoming increasingly effective in reducing electricity costs, and the economic benefits are obvious. Therefore, electricity costs can be reduced through energy storage peak shaving and valley filling, and demand management. In addition, commercial and industrial energy storage used as a backup power supply can effectively alleviate the anxiety caused by power restrictions and meet the excessive power demand of enterprises.

Application scenarios and requirements
Scenario requirements	peak shaving	capacity management	backup power supply	emergency load	green and low-carbon	Time-of-use tariff management	characteristic
Large shopping malls	√	√	√				√
Factories	√	√	√	√	√	√	√
Hospitals	√		√				√
Schools	√		√				√
Data centers	√	√	√	√	√	√	√
Overall, the current demand for independent storage in the industrial and commercial sectors focuses on peak shaving, standby power and time-of-use tariff management. The demand for green and low-carbon is not yet strong enough, but with the introduction of policies and the development of the market, green and low-carbon will receive increasing attention.

Scenarios and requirements to be developed
Scenario requirements	peak shaving	capacity management	backup power supply	emergency load	green and low-carbon	Time-of-use tariff management	characteristic
Residential area	√	√	√				√
5G base station	√	√	√	√	√	√	√
Household	√		√				√
Emergency energy storage power supply			√	√
Currently, commercial and industrial energy storage is mainly concentrated in the fields of commercial and industrial, public infrastructure, etc. Residential areas, home use, etc. have not yet been promoted focusing on life-related energy storage equipment, and its role is mainly to serve as a backup power supply and manage time-of-use electricity prices. 5G base stations operate in a similar way to data centers.

Pain points of industrial and commercial energy storage

The application scenarios of separate storage for industry and commerce have certain power loads, obvious power consumption habits, and involve many industries. The project demand is basically less than 5MWh. Installing energy storage for peak shaving and valley filling and demand management can reduce electricity costs and serve as a backup power source.

Although industrial and commercial energy storage can meet the relevant needs of many scenarios and customers. But at the same time, the energy storage market is currently in its early stages, and equipment, technology, operation and maintenance have not yet reached a mature stage. In the current application scenarios of separate storage, there are generally safety, high power consumption costs, emergency needs, and green and low-carbon needs that have not yet been resolved.

Commercial complexes

Due to their large building volume, complex building structure, dense flow of people, multiple business entities, and complex management levels, large commercial complexes have become a difficult point for electricity safety supervision. The building volume is large, the power consumption cost is too high, there are many cases of excessive power consumption, and it is impossible to reasonably distribute electricity.

Public facilities (hospitals, schools, etc.)

For scenarios such as hospitals, the requirements for backup power are high, and it is more important to maintain the stability of power. In addition to maintaining power stability, public facility scenarios have high requirements for the capacity of energy storage equipment and power conversion.

Living infrastructure (residential areas, household use, etc.)

Residential areas and other scenarios involve more densely populated people, and the safety and noise level of equipment operation require more stringent screening. Some community power facilities are old, power supply lacks timeliness, and voltage instability and power outages need to be resolved. The roofs of scattered customers are more complex, the design and construction are more complex, and the channel selection is limited.

Large factories

Factory parks with large areas, numerous industrial equipment such as cabinets and computer rooms have the problem of extremely high power consumption and electricity costs. Green factories are the future development trend. At present, solving the ultra-high energy consumption is the prerequisite for becoming green factories. The risk of accidental power outages can easily lead to production line interruptions and safety risks.

Large factories

Summary of pain points in scenarios

Safety: mainly focuses on the safety of power consumption of equipment.
High power consumption cost: most scenarios will have an oversupply of power consumption costs and uneven power distribution.
Emergency: most places have a strong demand for backup power supply.
Green and low-carbon: factories and high-energy consumption scenarios have strategic deployment for low-carbon.

Analysis of photovoltaic charging stations and integrated scenarios

The photovoltaic (storage) integrated power station is one of the main scenarios for applying 400V industrial and commercial energy storage. It involves many industries and expands the economic space of energy storage in the application scenario of separate configuration, improves the flexibility of power generation and electricity consumption of photovoltaic users, and reduces the impact of photovoltaic grid connection on the power grid while expanding the profit mode of industrial and commercial energy storage. However, the photovoltaic (storage) integrated power station, especially the supercharging station, puts higher requirements on the performance and safety of the energy storage system.

In the long run, with the increase in the existing industrial and commercial photovoltaic projects, photovoltaic (storage) integration will be the key application scenario of the future industrial and commercial energy storage comprehensive energy solution.

Application scenarios and requirements
Scenario requirements	Balancing the load on the power grid	Reduce operating costs	energy self-sufficiency	green and low-carbon	peak shaving	demand management	Scene characteristics
New energy charging stations	√	√		√	√	√	Charging stations do not require high power because they are parked for a long time; plug and play to avoid impacting the power grid.
Highway service areas	√	√		√			High-power charging piles are required to complete fast charging
Industrial parks	√	√	√	√	√	√	Safety is the primary consideration, offsetting carbon emissions; high power consumption, high load.
Current characteristics of the application scenario of photovoltaic power storage and charging: Maximize self-consumption of photovoltaic power, store surplus power for backup or direct use for charging: promote local consumption of photovoltaic power; improve the comprehensive utilization rate of urban space through integrated construction and layout of photovoltaics on carports.

Scenarios and requirements to be developed
Scene requirements	Balancing the load on the power grid	Reduce operating costs	energy self-sufficiency	green and low-carbon	peak shaving	demand management	Scene characteristics
Residential communities	√		√	√	√	√	It is difficult to distribute power in old communities, so reducing reliance on the traditional power grid
Remote areas			√				Not limited by the coverage of the power grid, providing stable power to remote areas
Commercial buildings	√	√		√	√	√	Reducing reliance on the power grid
Public infrastructure	√	√			√		Further stabilizing power facilities and reducing operating costs
Special scenes	√	√	√	√	√	√	Offsetting carbon emissions, high power consumption, high load.
The integration of photovoltaic power generation, energy storage and charging is suitable for commercial parks, industrial products, commercial residential buildings, etc. Building photovoltaics on the roof can generate enough energy to meet the needs of the charging station, while taking advantage of peak and valley electricity prices to reduce costs.

Microgrid scenario analysis

A microgrid is a localized small-scale power generation and distribution system with its own power generation capacity. It is mainly found in industrial park microgrids, island microgrids, and remote area microgrids. A microgrid can either operate independently of the primary grid or in coordination with it. For a microgrid operating independently of the primary grid, energy storage can smooth out new energy generation and be a backup power supply. For a grid-connected microgrid, energy storage can achieve energy optimization, energy conservation, and emission reduction.

Distributed energy storage is a necessity for industrial parks, charging stations, commercial buildings, data centers, etc. They mainly have three needs: reducing costs in high energy consumption scenarios, increasing the proportion of green electricity usage through integrating photovoltaic and energy storage, and expanding transformer capacity.

Application scenarios and requirements
Scenario requirements	Reduce diesel consumption	green energy	Data acquisition monitoring	self-sufficient in electricity	backup power supply	peak shaving	Scene characteristics
Island	√	√	√	√	√		Natural conditions are harsh, making it impossible to connect to the power grid; conventional photovoltaic power generation or wind power generation cannot generate enough power;
industrial park	√	√	√		√	√	power distribution is complicated, power supply reliability is low, energy use is extensive, and energy costs are high
remote residential area				√	√	√	far from the mainland or in remote areas, making it difficult for residents to use electricity
Current characteristics of microgrid application scenarios: Microgrids are an integral part of the future smart energy grid and an inevitable development trend. Islands and remote areas may not have access to stable electricity due to their geographical location and natural environment. However, the combination of microgrids and energy storage systems can solve this problem very well.

Scenarios and requirements to be developed
Scenario requirements	Reduce diesel consumption	green energy	Data acquisition monitoring	self-sufficient in electricity	backup power supply	peak shaving	Scene characteristics
Data centers	√	√	√	√	√		It is difficult to distribute power in old communities, so reducing reliance on the traditional power grid
Medical equipment	√				√		Not limited by the coverage of the power grid, providing stable power to remote areas
Remote areas				√	√		Reducing reliance on the power grid
Military camps			√	√	√	√	Further stabilizing power facilities and reducing operating costs
The current promotion of microgrid energy storage is still in its infancy, and the application of energy storage technology in more scenarios requires further improvement in user acceptance. Compared with microgrids, independent distribution and storage cabinets and integrated photovoltaic systems are more accepted by users and have relatively lower construction costs.

Profit cost, scenario operation and green and low carbon are the main pain points

By screening and dividing the industrial and commercial energy storage scenarios, it is concluded that the current advantageous development scenarios focus on new energy charging stations, highway fast charging stations, industrial parks, 5G base stations and data centers in some conventional areas. The common characteristics of the priority development scenarios are high electricity demand, more urgent demand for energy storage systems, easier peak-valley arbi, trade, relatively simple geographical conditions, and easy to install and building.

Analysis of the supply side of industrial and commercial energy storage

Investment cost of electrochemical energy storage power station

The cost of an energy storage system is mainly composed of five parts: battery modules, BMS systems, containers (including PCS, etc.), civil engineering and installation costs, and other design and commissioning fees. Batteries are the largest cost of energy storage systems. The cost of the battery pack is the main cost of electrochemical energy storage systems and is the main link in the future technological selection and cost reduction of the industry chain. In a complete electrochemical energy storage system, the cost of the battery pack accounts for up to 59%, followed by the energy storage inverter at 16%, and the battery management system and energy management system accounting for 13% and 5% respectively.

Battery components

In the current energy storage industry, electrochemical power generation is the mainstream, and lithium and sodium battery technologies have the highest market share and the highest maturity. Batteries and PCS account for 60% and 20% of the cost of electrochemical energy storage power plants, respectively. In the cost of lithium batteries, the cathode material accounts for the highest proportion (40%): followed by the separator (20%), anode (15%) and electrolyte (10%). Like lithium-ion batteries, sodium-ion batteries also have four main materials: cathode, anode, separator and electrolyte.

IGBT insulated-gate bipolar transistors are the upstream raw materials for energy storage inverters. The performance of the IGBT determines the performance of the energy storage inverter and accounts for 20%–30% of the inverter’s value.

Raw material
	Including	Main function	Representative companies
positive pole	lithium iron phosphate, ternary materials, lithium manganese oxide, lithium cobalt oxide	Overall performance such as energy density, cycle life and rate performance	Hunan Youneng, German Nano, Ningbo Rongbai, Hubei Wanrun
negative pole	graphite, graphene, SIC stone silicon, mesocarbon microbeads, nitrides, lithium titanate	Lithium storage function, which has a direct impact on battery cycle performance	Zhongke Xingcheng, Guangdong Kaijin, Xiangfenghua, Hebei Kuntian
separator	polyolefin, polyethylene, polypropylene	Determines the battery’s interface structure, internal resistance, etc., which directly affects the battery’s capacity, cycle and safety performance	Yunnan Enjie, Xingyuan Materials, Sinoma Lithium Membrane, Hebei Jinli
electrolyte	solute, solvent, additives	Affects the battery’s overall performance such as energy density, cycle life and safety	Guangzhou Tinci, Capchem, Jiangsu Ruitai, Xianghe Kunlun
structural component	steel foil, aluminum foil, electrode, insulation sheet, battery cell, cap, tab, washer, safety valve, packaging material	Reduces physical space and further enhances the safety of the battery	Keda Li, Zhenyu Technology, Jinyang

Parts and components
	What’s included	Main functions	Representative enterprises
IGBT components	IGBT single transistors, IGBT modules and intelligent power modules (IPMs)	Voltage conversion, frequency conversion, alternating conversion	CRRC Times, Silan Micro, Times Electric, BYD
PMIC power chips	AC-DC and DC-DC conversion, linear voltage regulators (LDO), charging management, protection, wireless charging, LED lighting drivers	Select and distribute power to various parts of the main system for use when multiple power sources are present	Mingwei Electronics, Lixin Micro, Xidi Micro, Shengbang Micro
Passive components	Resistors, inductors and capacitors	Work in the circuit without the need for a power supply when there is a signal	Fenghua Hi-Tech, Sunlord Electronics, Sanhuan Group, Faratronic
Program development	Data security, hardware gateways, data analysis, data calculation, data acquisition, containerized server clusters, third-party applications	Obtain data through algorithmic support to further control energy storage equipment	Hi-Power, Yongtai Digital Energy, Yizhao Energy
Semiconductor components	Integrated Circuits (AFE, ADC, MCU), Digital Isolators, Sensors, PCBs, etc.	Signal acquisition and sorting, data acquisition, swing control, voltage isolation, etc.	Beiling, Cirp, Shengbang Micro, CoreOcean Technology

Analysis of the current status of industrial and commercial energy storage

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