China Securities Co., Ltd.: Energy storage on the user side overseas is booming, and the outcome of the industrial and commercial energy storage sector is worth watching.

China Securities Co., Ltd. released a research report stating that the current market tracking of the household energy storage and commercial energy storage industries is mainly focused on the number of shipments as a core indicator. However, this method easily overlooks the capacity growth that comes from longer configuration times and increases in single unit power, leading to underestimation of the true shipment volume. Additionally, the rigidity of channel costs and the underestimation of individual stock performance elasticity may occur. Furthermore, this report is the market's first construction of a household energy storage/commercial energy storage space calculation model, with the conclusion that over the next three years, the demand ceiling and slope of commercial energy storage will be much higher than household energy storage, making it the second growth engine and competitive advantage for household energy storage companies. Key points from China Securities Co., Ltd. include: - The increase in capacity of individual household energy storage units and the increase in configuration time of commercial energy storage drives nonlinear growth in demand and performance. - In 2021, mainstream module single unit capacity has increased from below 5kWh to 5-12kWh, and with a modular, stackable design, providing flexible configuration options, the system capacity can expand to 40-100kWh+, allowing entry into small and medium-sized commercial projects after multiple units are connected. Large commercial energy storage units primarily use a 261kWh single cabinet, increasing energy storage duration to 2-4 hours, equipped with a standard 314Ah large battery cell and actively developing 5 series large battery cell solutions. Therefore, tracking only the number of shipments often underestimates the actual demand growth. Additionally, due to the one-time investment and long-term reuse characteristics of energy storage channel construction, the marginal channel cost for new categories is extremely low, and the performance elasticity of revenue scale increase is often underestimated. - Current household energy storage scale is larger and growth is stable, while the future space and slope of commercial energy storage is more favorable. - According to the bank's calculations: 1) the cumulative installed capacity of commercial energy storage in the future (4592GWh) > household energy storage (2842GWh), fundamentally due to the fact that global commercial electricity consumption is much greater than residential electricity consumption; 2) Global penetration rates: household energy storage (3%) > commercial energy storage (1%); at the same time, the bank predicts that in 2026/2027, overseas household energy storage and commercial energy storage demand will increase by approximately 45/58 and 16/26GWh, with a year-on-year growth of 56%/28% and 82%/63%, and starting in 2029, the demand for commercial energy storage in multiple markets will begin to surpass household energy storage. - Recently, the market has been concerned about the sustainability of demand due to the drop in oil prices, but the bank believes that the macro variables driving the overseas small energy storage market are still on a positive development track, and excessive concerns may be refuted by fundamental trends in the next six months: 1) Policy drive: Several countries create and stimulate demand through mandatory storage ratios (Thailand 15%/Philippines 20%), net metering tapering (Netherlands/Italy), subsidies (Australia/UK/Eastern Europe), which do not disappear with the drop in oil prices; 2) Essential electricity consumption: Asia, Africa, and Latin America have weak electricity infrastructure, and power outages are not alleviated by the drop in oil prices; 3) Economics: The drop in oil prices may indeed narrow the profit gap between solar energy storage and diesel power generation, but solar energy storage solutions are still more economical. - Commercial energy storage has a higher competitive advantage, and whether it can enter the volume market will become the determining factor for household energy storage companies to sustain high growth in performance. - Investment recommendation Focus on the forward-looking layout of the commercial energy storage market at Ningbo Deye Technology Corporation, Jiangsu Goodwe Power Supply Technology Co., Ltd., Ginlong Technologies, SolaX Power Network Technology and household energy storage companies; Guangzhou Great Power Energy and Technology, Contemporary Amperex Technology, Shenzhen Highpower Technology, Eve Energy Co., Ltd. and battery companies. As lithium carbonate prices transmit downward, recommend global leading companies such as Sungrow Power Supply, Beijing HyperStrong Technology, etc.