Recently, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued the "Opinions on Improving the Price Governance Mechanism," which emphasized the important direction of deepening market-oriented price reforms and explicitly proposed to establish and improve the energy storage price mechanism. The introduction of this policy will not only have a profound impact on the structure of the electricity market but also provide new market participation paths for industrial and commercial users, promoting efficient energy use and green transformation. How should we view the significance and impact of establishing and improving the energy storage price mechanism on the energy storage industry? At present, what difficulties still face the improvement of the energy storage price mechanism? According to the new regulations, the government will actively promote the establishment of the energy storage price mechanism, aiming to guide the market to form reasonable energy storage prices, thereby motivating more industrial and commercial users to participate in electricity market exchanges. To promote more industrial and commercial users to directly participate in market transactions, from a behind-the-scenes logic perspective, how should we understand the driving role this group plays in promoting electricity trading and the energy storage market?
Frost & Sullivan (hereinafter referred to as 'Frost & Sullivan') China regional executive director Xiang Weili was interviewed by Securities Daily to discuss the reconstruction of the energy storage value mechanism.
Q:How do you view the significance and impact of establishing and improving the energy storage price mechanism on the energy storage industry? At present, what difficulties still face the improvement of the energy storage price mechanism?
To power
Executive Director, Greater China, Frost & Sullivan
Establishing and improving the energy storage price mechanism is of great significance to the energy storage industry. On one hand, it helps to clarify the market value of energy storage, guide rational investment inflows, and promote the healthy development of the industry; on the other hand, the price mechanism can promote the optimal allocation of energy storage resources, improve system operation efficiency, and enhance the flexibility of the power system. However, there are still some difficulties in improving the price mechanism at present, such as: an imperfect cost recovery mechanism for energy storage, lacking a long-term and stable revenue model; market rules are not yet perfect, and price signals are unclear; at the same time, the diversity of energy storage value in different application scenarios also poses challenges to pricing. It requires coordinated efforts from policies, markets, technology, and other aspects to gradually establish a scientific, reasonable, and sustainable energy storage price mechanism.
Q:According to the new regulations, the government will actively promote the establishment of an energy storage price mechanism, aiming to guide the market to form reasonable energy storage prices, thereby motivating more industrial and commercial users to participate in electricity market exchanges. To promote more industrial and commercial users to directly participate in market transactions, from a behind-the-scenes logic perspective, how should we understand the driving role this group plays in electricity trading and energy storage markets?
To power
Executive Director, Greater China, Frost & Sullivan
Industrial and commercial users, who directly participate in power market transactions and energy storage markets, can significantly enhance market vitality and competitiveness. On one hand, as major electricity consumers, they are more sensitive to price changes and have the ability to participate in peak-valley arbitrage and ancillary services through flexible adjustment of electricity consumption behavior, thereby enhancing the application value and economic efficiency of energy storage. On the other hand, the widespread participation of industrial and commercial users will drive the transformation of energy storage from 'policy-driven' to 'market-driven', accelerate business model innovation and technological progress, and promote the mature development of the entire energy storage industry chain. Therefore, this group is not only an important participant in the power market but also a key force in constructing a new type of power system.
Q:Policy support will promote further innovation and application of energy storage technology, while also creating clear market demand for related enterprises. With the gradual implementation of policies, which segments of the energy storage industry chain will embrace development opportunities?
To power
Executive Director, Greater China, Frost & Sullivan
With the gradual implementation of policies, the energy storage industry chain will embrace all-round development opportunities, especially in the upstream key material and equipment manufacturing, midstream system integration, and downstream application segments (such as grid-side energy storage, commercial and industrial energy storage, household energy storage). After policies clarify market demand, they will accelerate the aggregation of capital and technology towards core links, promote breakthroughs in high-performance, low-cost energy storage technologies, and also spur the rapid development of value-added segments such as operation and maintenance services and energy management systems, helping to improve the overall quality and efficiency of the industry chain.
Q:The development of the energy storage market is not only promoted by policies, but market demand and technological progress are also indispensable factors. From the perspective of enterprises, we should pay more attention to which areas of technology their companies are making progress in?
To power
Executive Director, Greater China, Frost & Sullivan
From the corporate perspective, the key to promoting the development of the energy storage market lies in focusing on breakthroughs in core technologies and application innovation, especially in areas such as battery energy density improvement, optimization of charging and discharging efficiency, cost control, extension of battery life, and enhancement of safety performance. In addition, intelligent management systems, energy management algorithms, modular design, and system integration capabilities are also important directions for companies to achieve differentiated competition and expand their markets. These technological advancements not only enhance product competitiveness but also provide strong support for companies' implementation and application in diversified scenarios of energy storage.
Q:The introduction of Document No. 136 has also had a significant impact on the energy storage industry, which is currently in a policy transition period. As a necessary means for coordinating and regulating new energy, the industry believes that the configuration method of energy storage has shifted from the passive configuration required by past policies to an active configuration oriented towards value returns. What is your view on this?
To power
Executive Director, Greater China, Frost & Sullivan
This transformation marks a shift from policy-driven to market-driven development in the energy storage industry, which is a crucial step towards high-quality development. The issuance of Document No. 136 emphasizes that energy storage, as an important tool for new energy consumption and power system regulation, is shifting its allocation method from 'passive compliance' to 'value orientation'. This means that enterprises will pay more attention to the actual benefits of energy storage in peak shaving, frequency regulation, electricity price arbitrage, capacity services, etc. This not only helps to improve the economic efficiency and flexibility of energy storage allocation but also prompts enterprises to focus more on practical results in technological innovation and business models, driving energy storage from 'equipping up' to 'optimizing allocation'.
Q:In recent years, there has been a severe industry competition in energy storage. With the introduction of a series of policies, what changes are expected to occur in the industry's competitive ecosystem?
To power
Executive Director, Greater China, Frost & Sullivan
With the introduction of a series of policies, the competitive ecosystem in the energy storage industry will gradually shift from 'price war' to 'value competition'. In the past, companies generally focused on low prices to capture the market, leading to serious product homogenization. The implementation of new policies will push the market to place more emphasis on technological innovation, system integration capabilities, and full lifecycle service capabilities. In the future, companies with core technologies, stable supply chains, and sustainable business models will stand out in competition, and the industry will accelerate its evolution towards high-quality, standardized, and differentiated development.
*This interview has been published in 'Securities Daily', with reporters Xu Linyan and Feng Yuyao. The original title was: Market-oriented Reform of Energy Storage & 'Breaking Through and Establishing at the Same Time' to Embark on a New Journey of Value Competition
