CICC: The global large-scale optical storage installation momentum continues to be strong, bullish on large PCS manufacturers to achieve both quantity and profit.

CICC releases research report stating that with the continuous growth of renewable energy installations, the fluctuation of output from photovoltaic and wind power causes pressure on the grid. Therefore, the urgent demand in various countries to enhance grid stability and promote sustainable development of new energy sources has led to the need for new energy storage solutions. Through analyzing the current situation of centralized photovoltaic storage and independent storage in four regions - the United States, the United Kingdom, India, and the Middle East, it is believed that photovoltaic storage installations can sustainably grow. Additionally, it has been observed that Brazil and Turkey meet the conditions for triggering growth in energy storage installations and have the potential to become high-growth markets for energy storage. Benefitting from the strong growth in global large-scale storage installations, it is expected that leading manufacturers of power conversion systems will achieve dual benefits from volume and profit by 2025. Key points from CICC include: The United States, the United Kingdom, India, and the Middle East are expected to be key growth markets for energy storage in the next 25 years, with sustainable growth in installations. Global energy storage installations are expected to reach 72/92 GW by 2024/2025, with a year-on-year growth of 63%/31%. The United States, Australia, and the United Kingdom are seeing rapid growth in energy storage installations, with an addition of 10.43 GW, 1.7 GW, and 1.3 GW respectively by 2024. Overseas energy storage installations are expected to increase by 36.4/51.5 GW by 2024/2025, with a year-on-year growth of 61%/42%. By 2025, the United States, the Middle East, and India are expected to be key growth areas for energy storage installations, driven by rising electricity prices in the United States and the need for energy transition in the Middle East and India. Furthermore, this trend is expected to continue by assessing the power generation structure, grid conditions, policy guidance, and actual installations and industry developments in four stages. 1) Power generation structure: The demand to adjust the power generation structure for securing power supply in the Middle East and India is relatively rigid, indicating stronger sustainability. 2) Grid conditions: Wind and solar power account for over 10% of electricity supply in the United Kingdom, the United States, and India. Due to the fluctuating and intermittent nature of wind and solar power generation, energy storage is crucial to mitigate grid impact. 3) Policy guidance and actual installations: The United Kingdom and the United States maintain stable installation growth rates, with increased policy support for new energy installations in the Middle East and India. 4) Industry developments: The United Kingdom and the United States already have mature electricity financial derivatives, with India expected to develop financial derivatives based on the electricity spot market, enhancing trading activity in the electricity market. Moreover, profitability of large-scale photovoltaic storage projects will increase with rising electricity prices and decreasing CAPEX for photovoltaic storage equipment. It is estimated that the IRR for large-scale photovoltaic storage projects in the United States is 12%, while the returns for projects in the Middle East and India range from 6% to 8%, indicating initial economic viability. Brazil and Turkey meet the conditions for high growth in energy storage installations and have the potential to become potential high-growth markets. The main conditions triggering significant growth in energy storage installations include: 1) Significant gap between current installation levels and levels required to achieve carbon neutrality goals. 2) High proportion or volume of centralized project installations. 3) Wind and solar power account for over 10% of electricity supply, requiring energy storage to alleviate grid pressure or increase storage capacity. Based on these conditions, it is predicted that Brazil and Turkey have the potential to significantly increase their energy storage installations and become potential high-growth markets. Risk warning: Underperformance in photovoltaic storage installations, increased industry competition risk, and risks associated with overseas trade policies and exchange rate fluctuations.