◆ Improve the necessity and economy of energy storage

Necessity: 1. The global installed proportion of new energy has exceeded 20%, and it is expected to exceed 35% in 2027. The increase in the proportion of new energy will continue to impact the stability of the power system. The installation of energy storage before the table is the best solution to smooth the current fluctuations in the power system. Therefore, policies in multiple regions have proposed mandatory allocation and storage requirements for new power stations; "European electricity prices have fluctuated significantly, and China's electricity supply continues to be tight. Installation of off-meter energy storage can effectively reduce power consumption risks."

Economy: 1. The reform of the electricity market has been advanced, with peak valley price differentials, inter market price differentials, and domestic industrial and commercial price differentials continuing to increase. Energy storage can effectively improve the temporal and spatial rigidity of electricity and expand arbitrage space; 2. After the allocation and storage of power stations, costs will increase and profitability will be affected. However, in the future, the prices of silicon and lithium ore are expected to fall back to a lower level, the efficiency of power generation/energy storage will continue to improve, the costs of photovoltaic modules and cells will continue to decrease, and profitability will improve.

◆ In 2025, the global installed capacity of electrochemical energy storage will be close to 80GW, and the three major markets in China, America, and Europe will continue to grow rapidly to meet the new installed demand of about 300GWh

European market: 1. Policy: The EU plans to have a scenic area of about 1100GW by 2030, with both supply and demand promoting the development of energy storage. The promulgation of policies such as RE Power EU and carbon reduction 55 will increase the proportion of renewable energy in Europe's long-term structure to 45%. And provide financial support for research on battery energy storage technology. 2. Trend: Currently, the aftermarket is dominated by energy storage in Europe, with a significant increase in household storage demand. With the improvement of new energy installation, the pre table market is expected to take over as the core driving force for development in the future. In 2022/2023, the installed capacity of electrochemical energy storage in Europe is expected to be 5.1/7.0GW,+70.0%/+37.3% year-on-year. By 2025, the cumulative installed capacity of electrochemical energy storage is expected to be close to 40GW, and the CAGR for 2021-2025 is expected to be+53.796.

China's market: 1. Policy: The historical allocation and storage ratio of new energy is low, and policy mandatory allocation and storage boost the expectation of energy storage increment; Guided by the reform of the electricity market, the profit model for energy storage has gradually become clearer - the pre balance sheet market profits through four ways: capacity leasing, capacity compensation, ancillary services, and spot market arbitrage, while the post balance sheet market profits through peak and valley arbitrage. 2. Trend: Large electric deep side storage drives the development of energy storage in China. In 2022/2023, China's electrochemical energy storage capacity is expected to be 6.1GW and 13.8GW,+175.5% and+119.7% year-on-year. By 2025, the cumulative installed capacity of electrochemical energy storage will reach 70GW, and the CAGR for 2021-2025 is expected to be+88.9%.

US market: 1. Policy: Subsidy for energy storage based on the IRA Act. Energy storage becomes an independent subsidy entity and enjoys a 309% investment tax credit ratio for up to 10 years. 2. Trend: The United States is dominated by large pre table energy storage. In 2022/2023, the installed capacity of electrochemical energy storage in the United States is expected to be 6.0/16.6 GW,+71.4% year-on-year/+168.0%. By 2025, the cumulative installed capacity of electrochemical energy storage will exceed 75 GW, and the CAGR for 2021-2025 is expected to be+88.4%.

◆ Global energy storage forecast: More than 20GW of new installed capacity will be added in 2022, and the cumulative scale will reach 233GW in 2025

According to estimates, in 2022, the global installed capacity of electrochemical energy storage will increase by about 21.5GW/50GWh, or+113.6%/+108.9% year on year. The increase in installed capacity will be mainly contributed by the three major economies in China, the United States, and Europe. The new installed capacity of the three major economies will be 6.1/6.0/5.1 GW, or+175.5%/+71.4%/+70.0% year on year, respectively, representing a total increase of 17.2GW, or approximately 80% of the global total installed capacity.

In 2023, the installed capacity of energy storage is expected to further improve. According to estimates, the global installed capacity for electrochemical energy storage is expected to reach about 46GW in 2023, with a high growth rate of+112.1% year-on-year. The new installed capacity in China, the United States, and Europe is respectively 13.8/16.6/7.0GW, and+119.7%/+168.0%/+37.3% year-on-year. As the demand for new energy installation, distribution, and storage increases, the cumulative scale of global electrochemical energy storage is expected to reach 233GW by 2025, with an annual installed capacity of about 77GW and a CAGR of+52.5% from 2021-2025.

◆ Global energy storage: The total scale of energy storage has grown rapidly, with pumping and storage dominated and electrochemical technology emerging as a new force. The total increment in China, America, and Europe exceeds 80%

The total scale of global energy storage continues to grow rapidly. Since 2019, the cumulative growth rate of global energy storage has achieved sustained growth. According to CNESA's prediction, by the end of 2021, the cumulative installed capacity of global energy storage will reach 209.4GW,+9.6% year-on-year, with an increase of 18.3GW,+181.5% year-on-year.

Pumped storage is still the mainstream, and the proportion of electrochemical energy storage is increasing year by year, which will contribute to the main increment of global energy storage in the next few years. According to CNESA statistics, by the end of 2021, the total installed capacity of global pumped storage capacity reached 180.5GW, accounting for 86.2% of the total scale. The cumulative installed capacity of electrochemical energy storage increased from 3.0 GW/1.7% in 2017 to 24.5 GW/11.7% in 2021, with a CAGR of+69.39%. In 2021, the newly installed capacity of new energy storage will be 10.4GW,+119.6% year-on-year, accounting for about 57% of the total newly installed capacity, with electrochemical accounting for 55%, becoming the main driving force for the new installed capacity of global energy storage. According to BNEF's prediction, the global electrochemical installed capacity is expected to reach 148GW by 2025, with the electrochemical energy storage scale accounting for about 40%.

China, America, and Europe are the major global markets for new energy storage. In 2021, the newly installed capacity of new energy storage in China, the United States, and Europe will be 2.5/3.5/2.3 GW, accounting for 24%/34%/22%, respectively, with a total proportion of about 80%. It is expected that in the future, China, the United States and Europe will continue to control the major increase in global new energy storage installations.