As the penetration rate of new energy power generation systems such as photovoltaics and wind power continues to increase, the peak mismatch of power generation and power grid instability has intensified, and the demand for electrochemical energy storage has accelerated under the background of new energy distribution and storage. A complete electrochemical energy storage system is mainly composed of a battery pack, battery management system (BMS), energy management system (EMS), power conversion system (PCS) and other electrical equipment.
Among them, the power conversion system determines the quality and characteristics of the output electric energy, which greatly affects the life of the battery. At present, China's power conversion system market is still in the initial stage of quality improvement, cost reduction, and large-scale development. The market structure is still undecided, and the competition of latecomers is fierce. With the rapid growth of the installed capacity of electrochemical energy storage, the power conversion system, as the core link of the industrial chain, has benefited significantly.
1. Overview of the power conversion system industry
Power conversion system (PCS) is a bidirectional current controllable conversion device connecting the energy storage battery system and the grid. It can accurately and quickly adjust the voltage, frequency, and power between the grid and the energy storage system, realize constant power constant current charging and discharging, and smooth fluctuating power output.
PCS can not only meet the inverter requirements of traditional grid-connected converters for converting DC power to AC power, but also meet the bidirectional conversion requirements brought about by the "charging + discharging" of the energy storage system, and has the function of charging and discharging batteries. It can be used in various occasions such as photovoltaic, wind power smoothing, peak shaving and valley filling, micro-grid, etc.
In the grid-connected mode, during the low load period, the power conversion system rectifies the alternating current of the grid into direct current to charge the battery pack. During the peak load period, the PCS inverts the DC power in the battery pack into AC power and sends it back to the grid. In the off-grid mode, the PCS is disconnected from the main grid to provide local partial loads with electric energy that meets the power quality requirements of the grid.
2. Industrial chain of power conversion system
The upstream of China's electrochemical energy storage industry chain is raw materials, the midstream is core component manufacturing and system integrators, and the downstream is system operation and application. The upstream of the power conversion system is mainly composed of IGBTs, printed circuit boards, and wires and cables. The midstream is the power frequency step-up PCS and the high-voltage direct-mounted PCS. Downstream are wind power plants, photovoltaic power plants, power grid systems, substations, etc.
① Upstream of power conversion system
The upstream raw materials of power conversion systems are mainly power electronic components such as IGBTs, capacitors, resistors, reactors, PCBs, cabinets, chassis and other structural parts, and other auxiliary materials. Among them, IGBT (insulated gate bipolar transistor) is the core component, and its performance determines the performance of the power conversion system. The market competition in the upstream industry of power conversion systems is relatively full.
Except for IGBTs, which are still mainly imported, other major power electronic components have basically achieved localization in China. The cost of structural parts and auxiliary materials is mainly the material cost, which is mainly affected by the fluctuation of commodity prices. In power conversion systems, material costs account for about 93%, of which structural parts account for the highest proportion, followed by inductors and semiconductor components.
② Midstream of power conversion system
The midstream of power conversion systems is an power conversion system companies responsible for the R&D, production and sales of PCSs. The midstream of converters mainly provides PCSs adapted to various application scenarios. PCSs corresponding to different scenarios have certain technical barriers to each other, and the degree of short-term competition is low, but they will face competitive pressure from various segments of the energy storage industry in the long run. Power conversion system products can be divided into two types: string type and centralized type.
The string type is mainly used in small and medium-sized energy storage systems, and the centralized type is used in large-scale energy storage systems. Different application scenarios have relatively different requirements for the functions and performance parameters of power conversion systems. Therefore, different technical types of power conversion systems are required for different scenarios. Benefiting from the high demand for distributed photovoltaics and the trend of large-scale string power, the penetration rate of string inverters is expected to increase rapidly.
Centralized power conversion systems are mostly used on the power generation side and in the supporting energy storage system on the grid side. The energy storage system has a relatively large installed capacity and a certain scale, which can spread the comprehensive construction cost, and the corresponding market demand is also more. This type of energy storage system mostly participates in power grid services such as peak regulation and frequency regulation.
The power conversion system is mostly integrated with other modules inside the container, and the power of a single unit is relatively large. The new installed capacity of centralized energy storage is expected to bring demand for high-power PCS. String inverters have a crowding out effect on centralized inverters in large-scale ground-mounted photovoltaic power plants, and China's large wind and solar bases will benefit from policies that will support the development of centralized inverters. As a new technology route, micro-inverters are still in the development stage, with high technical threshold and few suppliers.
③ Downstream of power conversion system
The downstream of the PCS is mainly the supplier of the battery energy storage system solution, which has four major application fields: the power generation side, the user side, the grid side and the microgrid. Due to the large scale of the energy storage system on the power generation side and the grid side, the construction cost will be diluted, and it is more economical than the user side and the micro-grid, which will promote market development in the short term.
With the further increase of industrial and commercial demand for stable power supply and the successive implementation of distributed energy storage pilot projects, distributed industrial and commercial energy storage has gradually released its potential. The power conversion system is different from the one-way DC-to-AC conversion of the photovoltaic inverter, which can control the two-way conversion between the energy storage battery and the grid. Its power topology is more complex and its technical barriers are higher, and it is expected to benefit from the rapid increase in the installed capacity of downstream energy storage.
According to the application scenarios, it can be divided into four categories: home energy storage, industrial and commercial, centralized and energy storage power stations, corresponding to small, medium, large and ultra-large rated output power.
3. Industry pattern of power conversion system
With the high demand for energy storage, entrants in the power conversion system segment are gradually increasing, the overall market concentration is high, and companies focus on differentiated markets. Companies with channel and cost advantages are expected to benefit first. Since power conversion systems and photovoltaic inverters have a high degree of overlap in terms of technical principles, application scenarios, and upstream and downstream, the suppliers of power conversion systems also highly overlap with photovoltaic inverters, and the industry structure is also highly similar.
However, the gross profit margin of energy storage PCS is higher than that of photovoltaic grid-connected inverters. The PCS session focuses on three core competitiveness: iterative cost reduction capabilities, brand power and bankability, and channel capabilities. With the rapid development of Chinese inverter enterprises, the competitive advantage of Chinese domestic inverters overseas is highlighted. Affected by policy fluctuations in the Chinese market, Chinese inverter companies have accelerated the expansion of overseas channels and overseas deployment. As a key device between the energy storage device and the grid, the power conversion system is irreplaceable.
Supported by policies in recent years, the scale of China's chemical energy storage has continued to grow, driving the market demand for energy storage converters to rise, and the market scale has continued to expand. Due to the current high concentration of China's power conversion system industry, the market has not yet been fully developed. Benefiting from the two-wheel drive of the European and Chinese markets, the demand for power conversion systems is expected to usher in rapid growth, and there will be broad development opportunities for the power conversion system industry in the future.