With the gradual implementation of China's carbon peaking and carbon neutrality goals, the proportion of new energy sources such as photovoltaics and wind power in the energy structure continues to increase, and the power system has an increasingly urgent need for flexible resources. As an important option to improve system flexibility, energy storage has ushered in an unprecedented period of development opportunities.
Among them, electrochemical energy storage will become the mainstream energy storage technology development direction in the future due to its advantages such as less impact on the natural environment, short construction period, convenient installation, and flexible use. This paper analyzes the market structure and technology trends of each link of China's electrochemical energy storage industry chain.
1. An introduction to electrochemical energy storage
Electrochemical energy storage is an energy storage technology and measure that uses chemical batteries to store electrical energy and release it when needed. From the perspective of technical route, it can be divided into lithium-ion batteries, lead batteries, flow batteries and sodium-sulfur batteries, etc., with lithium-ion batteries with outstanding technical economy as the mainstream. From the perspective of the industrial chain, it can be divided into upstream battery materials, midstream energy storage systems and integration, and downstream power system energy storage applications.
2. Analysis of upstream links of electrochemical energy storage
The upstream raw materials of the electrochemical energy storage industry chain mainly include cathode materials, anode materials, electrolytes, and separator. Taking lithium-ion batteries, the mainstream technology of electrochemical energy storage, as an example, the performance of cathode materials directly affects various performance indicators of lithium-ion batteries. Facing the rise of other battery technology routes, it is urgent to accelerate product iteration.
The anode material is also a key determinant of battery performance, and the large-scale application of new anode materials still needs to solve the matching problem with other lithium battery materials. Electrolyte is the most mature variety among the four main raw materials of batteries, and its development direction revolves around stability and safety. The separator is the component with the highest technical content among the four major materials, and the current global market share exceeds 70%.
① Cathode materials
The cathode material is one of the key materials of lithium-ion batteries, accounting for more than 40% of the cost of lithium-ion batteries. It is the material with the largest scale and the highest output value in the lithium-ion battery industry chain, and its performance directly affects the performance indicators of lithium-ion batteries. Mainstream cathode materials include lithium iron phosphate, ternary lithium, lithium cobaltate, lithium manganate, etc.
Among them, lithium iron phosphate batteries have obvious advantages in safety performance, cycle life, cost, etc., so they are more widely used in the field of energy storage . Improving energy density is still the main direction of future lithium-ion battery technology development. Through improved technologies such as positive lithium supplementation, silicon doping and the use of solid-liquid mixed electrolytes, the energy density of lithium iron phosphate battery products is expected to increase by 20%.
② Anode materials
The anode material holds the lifeline of battery safety, and the cost accounts for about 20% of the battery cost. Our website has organized top 10 lithium ion battery anode material companies to help you further understand the development of the anode material industry. Common anode materials include carbon anode materials, tin-based anode materials, lithium-containing transition metal nitride anode materials, alloy anode materials and nanoscale anode materials. Among them, carbon materials are the most mature anode materials for lithium-ion batteries in the current market due to their low electrochemical potential, good cycle performance, non-toxicity, low cost, and stability. Carbon materials are divided into two categories: graphite and non-graphite.
Due to its excellent cycle performance and consistency, artificial graphite in graphite has continued to increase its market share in recent years, with a market share of 84% in 2021. In order to improve the energy density of batteries as much as possible, many Chinese companies have begun to increase the research and development and application of silicon carbon anode materials. However, during the charging and discharging process of lithium-ion batteries, the volume of silicon changes greatly, resulting in material pulverization, increased internal resistance, loss of electrical contact, and rapid capacity decay. In addition, the new anode material has certain matching problems with other lithium battery materials, and its large-scale application still has certain obstacles.
The electrolyte is the carrier of ion transport in the battery, and it is the guarantee for the lithium-ion battery to obtain the advantages of high voltage and high specific energy. Its cost accounts for about 10% to 15% of the cost of the entire lithium-ion battery. The electrolyte is generally composed of high-purity organic solvents, electrolyte lithium salts, additives and other raw materials.
The electrolyte lithium salt is the core component of the electrolyte. Common electrolyte lithium salts include lithium hexafluorophosphate, lithium perchlorate, lithium tetrafluoroborate, etc. Due to its advantages in performance, safety and cost, lithium hexafluorophosphate has become the lithium ion battery electrolyte with the highest market share, accounting for about 44% of the electrolyte cost.
The separator is one of the four main materials of lithium-ion batteries. Its main function is to isolate the cathode and anode to prevent short circuits, while allowing lithium ions in the electrolyte to pass through. Its performance determines the interface structure and internal resistance of the battery, which directly affects the capacity, cycle and safety performance of the battery, and the cost accounts for about 8% of the lithium-ion battery.
In 2021, China's lithium-ion battery separator shipments will reach 7.8 billion square meters, a year-on-year increase of over 100%, and the global market share will exceed 70%. Among them, affected by the market's increased requirements for battery energy density, the superimposed production capacity continued to be released, and the wet-process separator firmly dominated the market, with the proportion of shipments rising to 74%.
3. The midstream link of electrochemical energy storage
The midstream of the electrochemical energy storage industry chain is mainly the integration and manufacture of energy storage systems. For a complete energy storage system, it generally includes four major components: energy storage battery, BMS, EMS and PCS. The real maturity and growth of the energy storage market is inseparable from the improvement of energy storage system efficiency, the extension of cycle life and the reduction of system cost.
At present, energy storage lithium-ion battery cells and modules are developing in the direction of large cells and high integration. PCS is developing in the direction of high power and large capacity. The future development of the EMS system will focus on the intelligent operation and maintenance and refined management of energy storage power stations. Chinese manufacturers of BMS have gradually acquired the ability to substitute product imports. Standardized design will become the next technological direction of energy storage system integration.
① Energy storage battery
The energy storage battery is the energy storage unit in the energy storage system and belongs to the core link of the energy storage industry chain. As the mainstream electrochemical energy storage technology on the market, the current installed capacity of lithium-ion battery energy storage accounts for about 90% of the total installed capacity of electrochemical energy storage.
Driven by a series of favorable policies and continued strong market demand, China's energy storage lithium-ion battery market will show explosive growth in 2021. The output of energy storage lithium-ion batteries is 32 GWh, a year-on-year increase of 146%. Energy storage lithium-ion battery companies generally enter a state of full orders, insufficient production capacity and plans to significantly expand production.
As an electronic component with real-time monitoring, automatic balancing, and intelligent charging and discharging, BMS system plays an important role in the energy storage system, such as ensuring safety, extending battery life, and estimating remaining power. Since 2004, Chinese companies such as top 5 energy storage BMS companies have begun to develop and manufacture BMS.
In recent years, the technology of China's BMS industry has developed rapidly, and the scope of application has continued to expand. According to statistics, in 2012, the scale of China's BMS market demand was only 100 million to 200 million RMB. With the vigorous development of the new energy industry, the market demand in 2021 will reach 10.8 billion RMB. The industry predicts that in 2022, the scale of China's BMS market demand will exceed 12 billion RMB.
EMS, also known as power grid dispatch automation system, is a system that uses automation, informatization and other professional technologies to implement dynamic monitoring and digital management of energy supply, storage, and transmission of energy storage systems. It can be divided into grid-level EMS and micro-grid EMS.
The EMS in the energy storage system mainly refers to the micro-grid EMS. At this stage, the application ratio of electrochemical energy storage energy management systems in China is relatively low, and the market size in 2021 is only 600 million yuan. With the improvement of the digitalization level of the energy industry, the proportion of EMS applications will gradually increase.
PCS is a bidirectional current controllable conversion device connecting the energy storage battery system and the grid. As a key device connecting the energy storage device to the power grid, it can quickly and accurately adjust power, voltage, and frequency in the power grid and energy storage system, improve power quality and transmission efficiency, and ensure the stability and safety of the power grid. The PCS industry in China started in 2012, and it is mostly based on the construction of demonstration projects.
With the successful exploration of demonstration projects, the maturity of energy storage technology, the decline in the cost of energy storage systems, and the guidance of policy subsidies, the PCS market has gradually matured. In recent years, the scale of electrochemical energy storage has continued to grow, driving the demand for PCS market to rise, and the market scale has continued to expand. In 2021, the scale of China's PCS market will be 3.67 billion RMB.
⑤ Energy storage system integration
Energy storage system integration is to select appropriate energy storage technologies and products according to user needs, and combine energy storage batteries, BMS, EMS, PCS and other units. Create a one-stop solution for various scenarios such as household, industrial and commercial, power generation side, grid side, etc., so that the overall performance of the energy storage power station can be optimized.
In 2021, the new installed capacity of new energy storage in the world will be 10.2 GW, a year-on-year increase of 117%, and the new installed capacity of new energy storage in China will be 2.4 GW, a year-on-year increase of 54%, both setting historical records. Energy storage is entering a new era of large-scale development, driving the rapid development of the energy storage system integration market.
4. Development of downstream links of electrochemical energy storage
The downstream application scenarios of the electrochemical energy storage industry chain mainly include energy storage on the power generation side, grid side and user side. In recent years, the proportion of installed electrochemical energy storage capacity on the power generation side in the total installed capacity of downstream applications has been increasing, while the proportion of installed electrochemical energy storage capacity on the user side has shown a downward trend.
In addition, due to issues such as cost grooming, the grid is not as enthusiastic about electrochemical energy storage as it is for pumped hydro energy storage. With the rapid development of new energy sources, the demand for energy storage power stations is increasing, and the application scenarios of electrochemical energy storage will become more and more abundant.
① Power generation side
On the power generation side, energy storage is a supporting facility used by power plants to promote the safe and stable operation of the power system. The main application scenarios include grid-connected renewable energy, power peak regulation, auxiliary dynamic operation, and system frequency regulation. Since 2021, China has intensively introduced relevant policies, creating sufficient market space for the development of electrochemical energy storage on the power generation side.
From 2018 to 2021, the proportion of the installed capacity of electrochemical energy storage on the power generation side in the total installed capacity of downstream applications in China continued to increase, from 28.1% to 67.3%, while the proportion of installed capacity of electrochemical energy storage on the user side showed a downward trend.
② Grid side
On the grid side, energy storage can improve the security of the power system. It can alleviate grid congestion, delay the expansion and upgrade of power transmission and distribution equipment, and participate in peak and frequency regulation of the system or serve as backup capacity.
③ User side
On the user side, energy storage mainly plays the roles of peak shaving and valley filling, demand side response, dynamic capacity expansion, and emergency backup. The current main revenue models are peak-valley spread arbitrage, compensation for auxiliary services for peak regulation and frequency regulation, demand response compensation, and basic electricity cost savings.
5. Electrochemical energy storage industry outlook
As the perception and decision-making core of electrochemical energy storage, BMS and PCS have relatively high core technical barriers in the industry. The core of PCS lies in topology and IGBT. Its IGBT technology has the same origin as photovoltaic inverter technology. Most of the suppliers in the industry are photovoltaic inverter manufacturers. China, including SUNGROW and Huawei, occupy a certain market share. In the long run, with China's energy storage industry ushering in new changes, the energy storage industry, as a potential blue ocean market of trillions, will take the lead in ushering in the outbreak of China's localization demand in the future in the core components such as BMS and PCS.
At this stage, commercial lithium-ion batteries cannot fully meet the performance, cost and other requirements for energy storage. In order to meet the needs of mobile energy storage and large and medium-sized energy storage applications, electrochemical energy storage technology is gradually expanding from lithium-ion batteries to more technical routes. Such as solid-state lithium batteries, sodium-ion batteries, potassium-ion batteries, zinc-ion batteries and other fields, and are expected to achieve market applications after 2025.