Huafu Securities released a research report stating that leading companies stand to benefit more from the surge in overseas energy storage demand, which will effectively smooth out fluctuations on the domestic demand side. The report suggests that the current moment presents a crucial opportunity to focus on absolute return investments in leading energy storage companies, such as Contemporary Amperex Technology Co.,Ltd. (CATL) (300750.SZ) representing the top lithium battery firm for energy storage, and Sungrow Power Supply Co.,Ltd. (300274.SZ) representing a leading energy storage system company, while their stock prices are at relatively low levels. The main viewpoints of Huafu Securities are as follows.
The National Development and Reform Commission and the National Energy Administration have officially issued the "Notice on Improving the Capacity Tariff Mechanism for the Generation Side." Regarding this policy introduction, the report addresses several core concerns of the capital market from the perspectives of policy, industry, and investment.
The background for the policy's introduction is that Document No. 136 explicitly promotes the full market entry of new energy sources while clarifying that mandatory energy storage allocation is not enforced. This signals a shift for new energy storage from being a "policy necessity" with mandatory allocation during the 14th Five-Year Plan period to becoming a "market demand" during the 15th Five-Year Plan period. The "Guiding Opinions on Promoting New Energy Consumption and Regulation" explicitly states that new energy storage should be categorized alongside coal power and pumped hydro storage, which already have established capacity tariff mechanisms, and clearly proposes improving the capacity tariff mechanism for these three types of adjustable resources.
The policy's objective, drawing from the experience of mature countries, is to establish capacity tariffs—particularly long-term capacity contracts—as a significant revenue source for new energy storage. The capacity tariff mechanism ensures that the value of energy storage in guaranteeing the regulatory capability of the power system is recognized and facilitates a reasonable Internal Rate of Return (IRR).
Regarding provincial expectations for energy storage capacity tariffs under this mechanism, the proportion of fixed costs for coal power units recovered through capacity tariffs will be increased to no less than 50%. Following the principle of "equivalent compensation for thermal and storage," and assuming a capacity tariff of approximately 165 RMB/kW-year in most provinces, an independent energy storage station with a capacity of 100MW/4h could expect capacity compensation revenue of around 17 million RMB annually per province, calculated based on Gansu province's effective capacity methodology.
Document No. 114 mandates provincial-level inventory management for source-grid-side projects, meaning only projects included in the inventory will receive priority for construction. Reliable capacity is strictly defined as "the capacity that a unit can stably and continuously supply during the system's peak load periods throughout the year." The reliable capacity factor for domestic thermal power is approximately 0.94. Taking Gansu's energy storage as an example, where the system's net load peak duration is 6 hours, the reliable capacity factor for a 4-hour energy storage system would be 4/6, or 67% (this factor may vary in practical applications).
The costs for the aforementioned capacity compensation will be included in system operation fees, to be borne by downstream commercial and industrial enterprises. The policy emphasizes establishing an "electricity price affordability assessment system" to strictly control project applications in regions where the power system's reliability and energy adequacy are weak, and user economic affordability is low. Using Gansu as an example, with over 160 billion kWh of commercial and industrial electricity consumption projected for 2025, an increase of 0.01 RMB per kWh in system operation fees could support approximately 10GW/40GWh of new energy storage capacity installation.
Regarding recent energy storage market conditions, the rise in lithium carbonate prices has indeed created a "negative feedback" effect, impacting the IRR calculated based on "integration prices & EPC prices" and "capacity tariffs." Currently, lithium carbonate futures prices have fallen back below 150,000 RMB per tonne, and the previous negative feedback impact is expected to weaken. Investment willingness, reflected in tendering and installation decisions, is recovering. Furthermore, production schedules for leading energy storage cell manufacturers in February showed a month-on-month decrease of about 10%, indicating overall market stability.
Risk warnings include policy risks, energy storage demand falling short of expectations, and significant fluctuations in raw material prices.
