Can shared energy storage break through the business model dilemma



Shared energy storage is an independent energy storage power station built by a third party, which is leased to the demander for income through capacity leasing. Shared energy storage provides a more flexible supply of new energy storage, and the way of paying for capacity leasing is considered an effective business model.

1. Advantages of shared energy storage

With the rapid increase in the penetration rate of new energy, the flexibility resources of the power system are becoming more and more insufficient. In order to make the new energy have a stronger adjustment ability, China will build energy storage as a precondition for the grid connection or approval of new energy. Although the way of new energy distribution of energy storage has spawned the growth of new energy storage.

However, the development model of focusing on grid integration and light operation has brought about problems such as increased investment in new energy, low quality of energy storage equipment, and less than expected actual operation results, which deviates from the original intention of the new energy storage service power system operation.

Advantages of shared energy storage


The self-distributed energy storage of new energy has caused widespread controversy in the industry, and the builders of new energy power plants also wait and see whether to build their own energy storage. Under this circumstance, there is a demand for leasing third-party energy storage to meet the needs of grid connection, and the mode of sharing energy storage is gradually emerging. In theory, shared energy storage has the following advantages:

  • Form an advantage of scale.
  • Flexible and win-win business model.
  • Alleviate the lessee's investment risk.

2. Is the basic business logic of shared energy storage clear

For a long time, the poor cost management of new energy storage has been a major problem hindering the development of the industry. Shared energy storage seems to be able to effectively solve the problem of revenue sources by obtaining rent through rental capacity. The business model of shared energy storage, compared with self-built energy storage, is to introduce third-party investment to achieve a more flexible source of capacity for the lessee.

Second, shared energy storage in some regions temporarily obtains capacity leasing and the benefits of participating in the electricity market are superimposed. However, the shared energy storage project itself still cannot solve the problem that the current market-based benefits of energy storage such as home energy storage cannot cover its costs, and the shared energy storage model has not achieved a closed-loop business model.

● How does the lessee pay?

The lessee leases the shared energy storage capacity, and the basis for payment is still the true value of the energy storage, or the comprehensive benefits of the energy storage. Only when the comprehensive benefit of the leased energy storage capacity is greater than the rent, the lessee will choose the way of sharing energy storage, thus returning to the original problem of the energy storage business model.

In summary, although shared energy storage provides a certain degree of flexibility for the lessee, the lease fee that the lessee can pay is still paid according to its value. This model has not magnified the market benefits of energy storage, so it is fundamentally difficult to solve the business model problem of energy storage.

● Other problems with shared energy storage

Beyond that, shared energy storage is similar to contract energy management, potentially complicating business models:

Is the basic business logic of shared energy storage clear


The first is to put forward higher requirements for the comprehensive benefits of the project. Shared energy storage projects need to have excess benefits. Only when the lessor and the lessee can share the excess benefits can the business model be sustainable.

Secondly, the shared energy storage model may bring many intermediate risks. The first is the risk of occupancy rate. Insufficient occupancy rate or discontinuous occupancy will sharply increase the risk of shared energy storage investors. At the same time, there may be more disputes between the lessor and the lessee in the business relationship.

Third, the connection in operation is more complicated. Due to the physical separation of the shared energy storage rental capacity, it is difficult to achieve synergy in the rapid adjustment capability, and its effect is necessarily lower than that of self-built energy storage.

3. Can the superposition of capacity leasing fees and operating income be sustainable

The purpose of developing new energy storage is to play a regulating role in the operation process to improve the consumption capacity of new energy, and at the same time to provide capacity support, emergency backup and other capabilities for the power system. It is extremely important to pay according to the operation effect. However, the existing method of strong distribution of energy storage for new energy uses new energy storage configuration as the threshold for grid connection, and has not yet formed the supervision and assessment of its operation effect.

As a result, the effect of the configuration of energy storage operation is insufficient, resulting in a waste of resources. At present, the separation of grid-connected capacity and operation effect brought about by the strong distribution of new energy energy storage enables shared energy storage to achieve superposition of benefits in many places. On the one hand, capacity leasing is used to meet the grid-connection threshold for new energy power stations to configure energy storage. On the other hand, shared energy storage still retains the benefits of participating in the auxiliary service market or spot market.

Can the superposition of capacity leasing fees and operating income be sustainable


But this obviously distorts the original intention of developing new energy storage. With the emphasis on the problem of low effective utilization of energy storage, compared with off-grid batteries systems, the separation of grid-connected capacity and operating effect will gradually reverse. After the operation mechanism of energy storage is improved, and with the improvement of the requirements for the grid-connected operation of new energy power stations, the payment for new energy leasing and shared energy storage will include its operation effect.

4. Conclusion

Shared energy storage has achieved innovation in investment models and provided the market with a more flexible energy storage supply, but it has not effectively solved the problem of new energy storage profit models. The fundamental reason is that only relying on the market attributes of energy storage, its excessive cost cannot be recovered in the current electricity market environment. On the other hand, the demand for energy storage is more urgent for the construction of new power systems, and it is more important to create a favorable policy environment for the development of the energy storage industry.

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