Tianfeng Securities: which companies benefit most from the high growth of the energy storage market in the United States?

This report mainly answers three questions: why did the US energy storage market start to soar in 2020? Who are the main investors in the US energy storage market and what are their main uses? Which companies benefit most from the high growth of the energy storage market in the United States?

Why did the US energy storage market start to soar in 2020?

With the new energy installation increasing year by year, the demand for consumption is increasing day by day, but the American Electroweb is old and the renovation cost is high, so it is difficult to meet the requirements of new energy for Electroweb dispatching, so the demand for battery storage (BatteryStorage) in new energy power stations is rigid.

With the passage of the FERC841 Act in 2018, battery energy storage is allowed to participate equally in power auxiliary services and power wholesale market, which enables the establishment of a profit model for battery energy storage and starts an upsurge of energy storage installation.

Natural gas accounts for 40% of the electricity generated in the United States. at present, on the Electroweb side, the peak shaving effect and economy of light storage projects are better than those of natural gas on the Electroweb side, while on the generation side, as long as the power ratio of energy storage is controlled within 50%, most optical storage PPA projects begin to be competitive compared with natural gas power stations, so power companies are more motivated to invest.

Who are the major investors in the US energy storage market?

Because independent power plants (IndependentPowerProducer, referred to as IPP) are the largest investor in wind power stations in the United States, accounting for 83%, and most independent power plants have insufficient natural gas peak-shaving power stations, it is necessary to configure energy storage. 83% of the energy storage power stations are owned by IPP, of which the top five are Vistra, LSPOWER, NEE, AES and Ventura,CR5=53%.

Take AES, the largest independent power plant in the United States, as an example, in the past, part of the company's pre-balance sheet energy storage project was to obtain income from power auxiliary services, but recently it has been converted to optical storage PPA (electricity purchase agreement, long-term electricity purchase agreement signed between the power user and the power supplier, setting electricity price in advance, and the power supplier has to meet the real-time power demand of the power user), resulting in a substantial improvement in revenue stability.

Which companies benefit most from the high growth of the energy storage market in the United States?

From the perspective of market space, according to WoodMackenzie's forecast, the size of the US pre-balance sheet energy storage market will be 1.1 billion yuan in 2020, and it is expected to reach 5.3 billion yuan in 2025, with a CAGR of 36% in 5 years. According to EIA, the installed capacity of US energy storage will be 0.5GW in 2020, and it is expected to be above 4GW in 2021-2023.

From the point of view of the choice of the main energy storage power station investors, Ningde era, Yiwei Lithium Energy, LG, Samsung, are the mainstream choices of owners, while in terms of PCS, domestic solar power mainly won the energy storage projects in the United States.

Investment suggestion

It is recommended to focus on battery leaders [Ningde Times], [Yiwei Lithium Energy] and PCS [Solar Power] (this report focuses on the US pre-balance sheet market and does not involve distributed energy storage targets for the time being). At the same time, it is recommended to focus on manufacturers who benefit from the volume of the US market and the increase in battery factory orders and then increase the purchase of materials from manufacturers [Enjie shares], [China Baoan], [Dangsheng Technology], [Diansheng Materials], etc. And spare parts companies [Zhongrong Electric], [Hongfa shares], [Liangxin Electric]; It is recommended to pay attention to [Nord shares] and [Farah Electronics].

Risk hint: the demand for energy storage is lower than expected, the policy is not as strong as expected, the price of lithium battery is lower than expected, and other ways of energy storage are developing faster than expected. The calculation is subjective and can be used as a reference only.