Commercial and industrial energy storage: a key piece of the energy transition puzzle

In recent years, industrial and commercial energy storage development momentum, what factors contributed to this prosperous scene?    Shenzhen GSL Energy Co., Ltd. will be in this article with you to discuss this in depth.

Commercial and industrial energy storage as the core of distributed energy systems, through optimizing the balance of power supply and demand, and improving the rate of clean energy consumption, is becoming an important driving force of the global energy transition.    According to market forecasts, by 2025, the new installed capacity of commercial and industrial energy storage is expected to reach 6.1GW/15.26GWh globally, of which China’s market size will lead the world with 4.8GW/10.56GWh.

Its core value lies in the flexible deployment of energy resources, effectively solving the problems of fluctuating electricity prices, poor grid stability, new energy intermittency, etc., and promoting the transformation of energy structure to low-carbon and intelligent.    Industrial and commercial energy storage can not only reduce the operating costs of enterprises but also enhance the participation of enterprises in the power market, playing a pivotal role in the energy transition process.

Four core application scenarios of industrial and commercial energy storage

1、Tariff optimization and peak/valley arbitrage

With the help of the time-sharing tariff mechanism, charging in the valley time and discharging in the peak time, thus reducing the cost of electricity for enterprises.    For example, Shandong and other places have entered the stage of “two charging and two discharging”, and the arbitrage space of energy storage is further expanded.

2、Backup power and emergency protection

Provide emergency support for power outages in critical facilities such as factories, data centers, hospitals, etc. to ensure business continuity.2024    The frequent occurrence of extreme weather around the world is greatly driving the growth in demand for backup power.

3、Microgrids and Energy Autonomy

Combined with renewable energy sources such as photovoltaics and wind power, industrial park-level microgrids are being constructed to achieve energy self-sufficiency.    For example, some industrial parks in Southeast Asia have reduced their reliance on conventional power by 70% through microgrids.

4、Electricity Market Participation and Auxiliary Services

Participate in the electricity spot market through frequency regulation, peak regulation, capacity leasing, etc. to realize diversified income.    In the U.S., some energy storage projects can earn 15% – 20% of their investment annually by providing auxiliary services.

Five factors driving the outbreak of industrial and commercial energy storage

1、Continuous release of policy dividends

Policies such as the Energy Conservation and Carbon Reduction Action Plan have vigorously promoted the development of the energy storage industry, and many local governments have provided subsidies and carried out demonstration projects.    For example, the U.S. Inflation Reduction Act (IRA) gives tax credits to energy storage projects, and Europe has introduced similar incentives.

2、Declining costs and technological advances

By 2025, the cost of energy storage systems is expected to drop to $0.6 / Wh.    The application of large-capacity cores (400Ah +) and 6MWh + systems will reduce the cost of electricity by 30%, greatly enhancing the economics of energy storage.

3、Accelerated power market reform

The time-sharing tariff mechanism continues to improve, and the virtual power plant (VPP) model is gradually promoted, so that energy storage from a single peak and valley arbitrage mode expands to capacity leasing, demand response, and other diversified profit models.

4、Rigid demand for new energy distribution and storage

Many places require distributed photovoltaics must be equipped with energy storage, light storage charging integration has become an important incremental market.    For example, Germany requires more than 50% of new PV installations to be equipped with energy storage and provides long-term financing support.

5、International Market Opportunities

The Middle East, Europe, and the United States market due to high electricity prices and policy subsidies, become China’s energy storage enterprises export key direction.

The booming development of industrial and commercial energy storage is both an opportunity and a challenge for industrial and commercial energy storage manufacturers.    In this trillion-dollar energy change, those companies that can take the lead in breaking through technical bottlenecks and building differentiated business models will seize the global market opportunity and become industry leaders.