China Securities Co.,Ltd.: Domestic energy storage installations in 2026 fall short of expectations; domestic utility-scale storage still has growth drivers in 2027

China Securities Co.,Ltd. released a research report stating that since 2026, the pace of domestic utility-scale energy storage installations has been relatively slow, with actual project implementation falling short of expectations and clearly diverging from bidding data. The bank has lowered its forecast for new domestic utility-scale storage installations in 2026 to 230-250GWh, a year-on-year increase of approximately 21%-32%. Looking ahead to 2027, with lithium carbonate price declines, demand growth in North China, Northeast China, South China and other regions, as well as new scenarios such as computing power synergy, the bank expects that domestic energy storage will still have growth momentum and potential in 2027. China Securities Co.,Ltd.'s main views are as follows: Since 2026, the growth rate of domestic utility-scale storage installations has fallen short of expectations, with the core reason being the decline in peak-valley price spreads in the Northwest region From January to September 2026, domestic new energy storage installations totaled 35.3GW/102.3GWh, down 3% and up 6% year-on-year, respectively. The installation growth rate fell short of expectations, with the core reason being the narrowing of peak-valley price spreads in the Northwest region: for example, the average peak price in West Inner Mongolia from January to April declined by approximately 40%-47% year-on-year. The bank judges the reasons to be: (1) Northwest load growth has been relatively slow this year, which is partly related to economic structural adjustment and cooler summer weather, affecting the intensity of evening peak electricity prices; (2) Inner Mongolia's operational energy storage installations have reached 22GW, while the peak load of East Inner Mongolia plus West Inner Mongolia is approximately 51GW, and the suppression of evening peaks by energy storage nighttime discharge can no longer be ignored; (3) Wind power has become the dominant new energy installation in the Northwest, and its "anti-peaking" characteristics also suppress evening peaks. Other important reasons include rising system operation fees, slow implementation of capacity electricity prices, and stricter and slower grid connection approvals The average system operation fee across provinces nationwide increased by 3 fen/kWh compared with last year, equivalent to reducing the peak-valley price spread actually obtainable from energy storage operations. The actual implementation progress of capacity electricity prices has also been slow, with issues of delayed disbursement. Stricter and slower grid connection approvals, and the relatively obvious rise in lithium carbonate prices in the first half of the year, have also had an impact. The bank has lowered its forecast for new domestic utility-scale storage installations in 2026 to 230-250GWh, a year-on-year increase of approximately 21%-32%. Domestic utility-scale storage still has growth drivers in 2027 (1) Lithium carbonate price declines are expected to boost the economics of energy storage investment. Lithium carbonate prices of approximately 3 fen/Wh would raise the all-investment IRR by approximately 0.5% and the equity IRR by approximately 2%; (2) Demand is shifting to Shanxi, Shandong, Hebei, Northeast China and other provinces. Peak-valley price spreads in Shanxi, Shandong, Hebei and the Northeast region are 0.3-0.4 yuan/kWh, and the investment economics of independent energy storage are relatively good; (3) Business models such as joint market participation of new energy paired with storage and computing-power synergy are gradually being established. Investment recommendations Lower this year's forecast for new domestic utility-scale storage installations to 230-250GWh, but factors such as system operation fees, capacity electricity prices, grid connection approvals and lithium carbonate have begun to ease, and multiple drivers will still support growth next year. The domestic utility-scale storage market is shifting from pure volume competition to refined operation and maintenance capabilities and project implementation capabilities across multiple scenarios. Recommendations include focusing on Beijing HyperStrong Technology, Sungrow Power Supply, Contemporary Amperex Technology, Guangzhou Great Power Energy & Technology and others that are positioned in computing-power synergy, AIDC power supplies, AIDC energy storage, and direct green power connections. Risk analysis 1) Demand: Domestic and overseas energy storage demand falls short of expectations, and the pace of energy transition slows. 2) Supply: Rising lithium prices increase costs, or excessively rapid price declines cause downstream wait-and-see sentiment. 3) Policy: Overseas subsidy policies fall short of expectations, and implementation of domestic energy storage marketization policies falls short of expectations. 4) International situation: International trade barriers deepen, exports are hindered; localization production requirements increase, raising costs for overseas factories; international conflicts disrupt overseas transportation and increase freight costs. 5) Market: Intensified competition causes gross margins and profitability of energy storage batteries, integrators and PCS manufacturers to fall below expectations. 6) Technology: New product R&D is hindered, and product homogenization leads to declining competitiveness.