At present, the overall situation shows that the profitability of industrial and commercial energy storage includes the income of peak-to-valley price difference on the one hand, and the income obtained from demand electricity fee management and demand-side response services on the other hand. From this point of view, the feasibility of the energy storage business model, in addition to the changes in external peak and valley electricity prices and the fluctuation of enterprise operations, from the perspective of energy storage system solutions, how to interpret and understand a better solution?On the one hand, it is reflected in the throughput capacity of the energy storage system for electricity, which includes the power throughput depth (DOD), whether it is 90%, 95% or 100%. On the other hand, it is reflected in the throughput efficiency (AC side charging and discharging efficiency), which can be understood as whether 100 kWh of electricity can be discharged 85 kWh or even 90 kWh. There is also the attenuation of the real cell capacity at the number of cycles. In addition, the advantages and disadvantages of the system solution are not only reflected in the difference in system cost, although cost control is very important, but also to pay attention to multi-dimensional factors, such as safety strategy, such as after-sales service, such as asset utilization, whether the actual operation effect of energy storage can match the financial model, we also need to pay attention to asset utilization, average failure recovery time, better operation of the system, whether it can help investors reduce insurance rates, these are energy storage system solutions** Business should take the initiative to think about things. Start planning for my 2024What is a virtual power plant:
1.Virtual Power Plant (VPP) is a power supply coordination management system that realizes the aggregation and coordination optimization of distributed energy resources such as distributed power sources, energy storage systems, controllable loads, electric vehicles, and charging piles through advanced information and communication technologies and software systems, so as to participate in the power market and grid operation as a special power plant. The virtual power plant is not a real power plant, but a smart grid technology, which applies a distributed power management system to participate in the operation and scheduling of the power grid and realize the aggregation and optimization of "source-load-grid".
2.Structure-adjustability is the core of the resource layer, and the regulation ability and quality of the resource layer determine the ability of the virtual power plant to complete the dispatching instructions, and industrial and commercial energy storage, as one of the high-quality regulation resources, is an important prerequisite for the development of the virtual power plant.
Source: At present, the access resources are represented by distributed photovoltaics, which do not have the ability to adjust themselves, and can be regarded as a whole with industrial and commercial loads, constituting an adjustable load.
Load: Adjustable loads have their own capacity limitations, and industrial loads are often forced by the production plan and have a slow response speedThe air conditioning load cannot be shifted in the time dimension, there is basically no valley filling capacity, and the adjustment range is limited by factors such as user experience and weatherAs a load directly facing the C-end, the charging pile has a strong adjustment ability. Storage: Adjustable capacity, response speed and reliability are relatively high-quality regulation resources, and at the same time have peak shaving and valley filling capabilities, which are necessary resources for high-frequency and large-scale response of virtual power plants.
Why do you need a virtual power plant:1.The demand for valley filling brought about by the rapid increase in scenery.
The rapid growth of wind and solar installed capacity has exacerbated the uncontrollability of the power system. The output of new energy is mainly affected by the incoming wind and light, and the human intervention effect is small. Therefore, when the output of new energy does not match the characteristics of load consumption, there is a problem of new energy power consumption, which will lead to power system safety accidents and waste of investment if not properly handled. The speed of photovoltaic construction far exceeds that of wind power, and distributed photovoltaic has become the main force. Distributed construction, simple site selection, short project cycle, and fast installation upgrade. Due to the high concentration of its output time and the relatively low degree of control by power grid dispatching, the problem of consumption is emerging, and Shandong, Henan and other large provinces with distributed installed capacity have issued distributed distribution and storage documents.
The "duck curve" has become a "canyon curve", and the increase in photovoltaics has brought about the demand for valley filling. The "duck curve" was first proposed by California grid operator Caiso, which states that the net load curve decreases at noon during the peak of PV output, and then rises sharply in the evening when PV generation falls. With the increase in PV installations, the net load curve of CAISO has shifted to a "canyon curve", that is, the net demand is lower at noon, falling to zero or even negative;In the evening, the load increase is steeper, and other power sources must quickly ramp up to accommodate the sharp increase in load.
Some provinces in China, represented by Shandong, also have obvious demand for grain filling. Shandong's installed capacity structure is similar to that of CAISO, and by the end of 22, the proportion of photovoltaic installed capacity reached 225%。During the May Day holiday in 2023, the electricity load in Shandong Province dropped by about 15%, triggering a continuous negative electricity price phenomenon. It is worth noting that from April 29th to May 1st, the spot ** curve is similar to a duck curve, and negative electricity prices are particularly frequent from 10 to 15 o'clock during this period, and this period is the peak of photovoltaic power generation.
Combined with the previous division of Shandong into the noon period of electricity prices, the increase in new energy installed capacity has changed the original load curve, so that the net load of the power grid has a deep valley during the period of concentrated new energy generation, and the load needs to be transferred (valley filling) in time to smooth the change and promote the consumption of new energy.
2.Peak shaving demand due to record load peaks.
The growth rate of tertiary industry and residential electricity consumption is faster than that of industry, and the growth rate of peak load is greater than that of electricity consumption. In the past decade, the growth rate of China's secondary industry has been relatively low, and the proportion of electricity consumption structure has decreased significantly, from 73% in 2013 to 66% in 2022, while the sum of the tertiary industry and urban and rural residents' domestic electricity consumption has increased from 25% in 2013 to 33% in 2022. Changes in the structure of electricity consumption bring new changes in loads:
1) The difference between daily load peaks and valleys is larger
2) Affected by factors such as extreme weather and consumption capacity, the annual load curve presents the characteristics of double peaks in summer and winter3) The electricity load of the secondary industry is stable and continuous, the volatility of the tertiary industry and residential electricity consumption is strong and the time concentration effect is obvious, and the pulling effect of the maximum load in a fixed period is stronger than the pulling effect of the electricity consumption in the whole period, so under the change of electricity consumption structure, the growth rate of the maximum load of the whole society will be significantly higher than the growth rate of electricity consumption, and the load needs to be transferred in time (peak shaving) to ensure the power **. The China Electricity Council predicts that under normal weather conditions in 2023, the maximum electricity load in the country in summer will be 13700 million kilowatts, an increase of 80 million kilowatts year-on-year, if there is a long-term period of large-scale extreme high temperature weather, the country's maximum electricity load may increase by nearly 100 million kilowatts year-on-year.
3.New types of loads, such as charging piles, increase the complexity of the load side.
With the rapid increase of new energy vehicles, the number of charging piles has changed the form of the distribution network. As of 2023H1, the number of public charging piles in China is 214860,000 units, +4063%。In 2023H1, the sales volume of new energy vehicles was +44 year-on-year13%, maintaining rapid growth, it is foreseeable that in the future, as the sales of new energy vehicles continue to increase rapidly, the number of charging piles will continue to increase. The large increase in charging piles will have an impact on the distribution network, and compared with conventional AC charging piles, fast-charging DC piles will have a greater impact due to their higher power and shorter charging time.
Charging piles exacerbate the peak increase of residents' daily electricity load. The impact of charging piles on the distribution network mainly includes: (1) the peak power consumption of charging piles is also the original peak electricity consumption of residents, which will lead to the continuous increase of the original load peak and produce a short time and high peak load;
2) Configure the transformer capacity according to the peak load, resulting in idle resources for the rest of the time(3) Network loss caused by fluctuation of charging load.
Therefore, the development of charging piles has led to an increase in the demand for peak shaving and valley filling, but at the same time, charging piles and new energy vehicles themselves are good adjustable loads, and if they can be aggregated and optimized through virtual power plants, it is a win-win choice to reduce charging costs and reduce grid investment.
4.Achieve the long-term goal of highly flexible interaction between the user side and the power system.
In June 2023, the National Energy Administration (NEA) issued the Blue Book on the Development of New Power Systems, marking an important stage of comprehensive launch and acceleration of the construction of new power systems. The Blue Book proposes that one of the user-side goals during the acceleration period of the transformation of the new power system (current-2030) is the continuous emergence of new power consumption models, the further integration of decentralized demand response resources, and the improvement of flexible adjustment and response capabilities on the user side to more than 5%, so as to promote the development and utilization of new energy and efficient consumption in the vicinity. In the long term, it will achieve a high degree of flexible interaction between the user side and the power system.
5.The demand-side response capacity strives to reach 3%-5% of the maximum load
The goal of demand-side response capacity building is clear. Before the 14th Five-Year Plan, virtual power plants stayed in the pilot stage of individual regions and projects, first, the proportion of new energy installed capacity was not high, and the power system did not have a strong demand for flexible resourcesSecond, there is a lack of quantitative targets. In 2022, the "14th Five-Year Plan for Modern Energy System" proposed that by 2025, the power demand-side response capacity will reach 3% of the maximum load, of which East China, Central China, South China and other regions will reach about 5% of the maximum load.
The intensive release of virtual power plant policies has become an important part of the construction of new power systems, and the policy intensity is expected to continue to increase.
How Virtual Power Plants Generate Revenue:
1.Demand-side response.
Three benefits of a virtual power plant**:Demand-side response, ancillary services market, electricity spot marketAt present, China's virtual power plants are in the transition stage from invitation type to market type. The invitation-type stage is mainly organized by the ** department or dispatching agency, which sends an invitation signal, and the virtual power plant organizes resources to respond and obtains capacity subsidies. Many provinces in China have issued detailed rules for demand response, among which Jiangsu, Shanghai, Guangdong and other provinces and cities have carried out better.
The unit price of demand-side response subsidies is high but the frequency is low, and the degree of marketization is low. Demand response is mainly based on peak shaving, which mainly occurs during the peak summer, and the main purpose is to ensure supply. Taking Guangdong Province as an example, in 2022, 9 times of invitation-based market-based demand response (all of which occurred in July and August) will be carried outThe maximum peak load is 2.77 million kilowatts, and the maximum response declaration volume is 6.09 million kilowattsEffective response to call earnings 16.3 billion yuan. It can be seen that although the subsidy reaches up to 5 yuan kWh (interruptible load), demand response is not normalized, occurs less frequently, and has a strong planning color. Therefore, with the gradual improvement of China's power market system, virtual power plants are also transitioning from the invitation stage to the market stage.
2.Ancillary Services Market.
New power systems continue to generate demand for ancillary services. Traditional power sources (thermal power, hydropower, etc.) have certain regulation capabilities, while new energy sources have the characteristics of output fluctuations and reactive power loss, resulting in an increase in the demand for power auxiliary services in power systems with a high proportion of new energy installations. Virtual power plants mainly play the role of peak regulation and frequency regulation. In December 2021, the National Energy Administration revised and issued the Administrative Measures for Auxiliary Services of Electric Power, which pointed out that power users can participate in the power ancillary service market in the form of entrusting virtual power plants**. At present, the main function of virtual power plants is the time transfer of electrical energy, corresponding to peak shaving servicesIn the future, with the increase in the penetration rate of industrial and commercial energy storage, virtual power plants are expected to make greater breakthroughs in frequency modulation services. Judging from the 2023H1 national auxiliary service operation data, peak regulation and frequency modulation are the main body of auxiliary service costs, accounting for 80% of the total cost.
3.The spot pilot project of the electricity spot market continues to advance, and the general trend of implementation across the country is inevitable. In 2017, eight regions, including Southern, Mengxi, Zhejiang, Shanxi, Shandong, Fujian, Sichuan and Gansu, became the first batch of spot pilot areas, and the first batch of pilot areas have completed the trial operation of long-term settlementIn 2022, the second batch of 6 pilot areas will start trial operation;In addition, non-pilot areas such as Ningxia, Shaanxi, and Hebei South Power Grid have also introduced spot plans to promote the construction of spot markets. At present, 20 provincial-level power grids in the business area of the State Grid Corporation of China have carried out trial operation of the spot market, and the power spot market in the southern region has also entered the full-model trial operation of the five provinces and regions.
The profitability of the spot model is more volatile, which puts forward requirements for the trading ability of virtual power plants. The spot market has 96 ** time points throughout the day, the upper and lower limits are relatively wide, and the fluctuation frequency is high and the amplitude is large, which is more difficult to carry out**. Judging from the spot ** situation in Shandong Province from February 2022 to January 2023 for a total of one year, in the four-hour interval, the lowest price and the most ** appear the most at 10-13 o'clock and 17-20 o'clock respectively, but the probability of the lowest price and the most ** falling outside these two intervals are 46% and 45% respectively, that is, if a fixed 4-hour interval peak regulation strategy is adopted, nearly half of the probability can not obtain the complete spread arbitrage. Therefore, virtual power plants need to have strong computing power, advanced ability and trading ability to participate in spot arbitrage to obtain profits. Virtual Power Plant Case:
1.Hebei Virtual Power Plant - the first market-oriented project in China.
Jibei Virtual Power Plant is the first market-oriented transaction project of virtual power plant in China, which was built by State Grid Jibei Electric Power and officially put into operation in December 2019. The virtual power plant in northern Hebei has aggregated 11 types of adjustable resources, such as regenerative electric heating, smart buildings, and adjustable industrial and commercial resources, with a total capacity of 358MW and a maximum regulation capacity of 204MW. As of the beginning of November 2022, the North Hebei Virtual Power Plant has continuously provided peak shaving services for more than 4,800 hours, with a total of 37.01 million kWh of additional new energyThe total revenue of virtual power plant operators and users reached 673700,000 yuan, with an average yield of 182 MWh.
2.The Southern Regional Virtual Power Plant – the first inter-provincial and regional-level project.
Recently, the distributed source-load aggregation service platform of China Southern Power Grid Corporation has simultaneously carried out multi-functional joint regulation and control of virtual power plants in Guangzhou, Guangdong, Shenzhen, and Liuzhou, Guangxi, and has realized rapid response such as frequency modulation and direct control in multiple provinces and regions, marking the first regional-level virtual power plant in China to be put into operation. The virtual power plant of China Southern Power Grid was upgraded from the virtual power plant of "Yue Energy Investment".
Launched in April 2022, the "Yueengtou" virtual power plant management platform is the first practical load aggregation virtual power plant of China Southern Power Grid and the first commercial operation platform of virtual power plant in Guangdong. The platform aggregates various user-side resources such as photovoltaics, energy storage, charging and swapping stations, air conditioning, industrial and commercial loads, and participates in the market-oriented demand response market of the Guangdong Provincial Exchange Center. The upgraded distributed source-load aggregation service platform of China Southern Power Grid has aggregated various distributed resources such as new energy storage, electric vehicle charging and swapping facilities, distributed photovoltaics, non-productive air conditioners, and wind and solar storage and charging microgrids in Guangdong and Guangxi, with an aggregate distributed resource scale of 10,751MW, of which the adjustable capacity is 1,532MW.
Calculation of virtual power plant market space:It is expected that the operating scale will be at the level of 10 billion yuan in 2025
From the operational side, the scale of the virtual power plant:
1.Ancillary Services Market:
1) According to the China Electricity Council**, the electricity consumption of the whole society will be 9 by 2025500 million kWh;(2) Assuming that the average electricity consumption ** is 065 yuan kWh;
3) According to China Energy News, the proportion of ancillary service costs in the whole society's electricity costs in China has risen to 2 in the past two years5%, assuming that this proportion will further increase with the increase of new energy installed capacity in the future, and increase to 3 by 20255%；(4) Assume that virtual power plant revenue accounts for 10% of the ancillary services market;
5) The share ratio of virtual power plant operators is 20%-80%. It is estimated that under the profit model of the ancillary service market, when the proportion of virtual power plant operators is 50%, the operating market size of virtual power plants in 2025 will be 10.8 billion yuan.
2.Electricity spot market:
1) According to the China Electricity Council**, the electricity consumption of the whole society will be 9 by 2025500 million kWh;(2) It is assumed that the electricity traded in spot accounts for 10% of the electricity consumption of the whole society;
3) There is not always a price difference in the spot market, assuming that the virtual power plant can carry out 4 hours of arbitrage of electricity in a single day (referring to the strategy of two charging and two discharging of industrial and commercial 2H energy storage systems), referring to the recent peak-to-valley price difference of power purchase, and assuming that the average peak-to-valley price difference is 07 yuan kWh;
4) It is assumed that the arbitrage electricity of virtual power plants accounts for 20% of the arbitrage electricity available in the spot market;(5) It is assumed that the share ratio of virtual power plant operators is 20%-80%.
It is estimated that under the profit mode of the electricity spot market, when the share ratio of virtual power plant operators is 50%, the operating market size of virtual power plants in 2025 will be 11.1 billion yuan. There is a partial overlap between the two profit channels of ancillary services and electricity spot, and the electricity spot basically replaces the largest ancillary service - peak shaving service. Regardless of the way to obtain revenue, we estimate that when the operator's share ratio is 50%, the scale of the virtual power plant operation market in 2025 will be at the level of 10 billion yuan.
Who benefits from the construction of virtual power plants
We divide virtual power plant-related companies into three categories:
1) Power grid informatization is expected to be the first to benefit: this type of company has been engaged in power informatization business for the power grid for a long time, has a deep understanding of power dispatching, trading and marketing, and has advantages in [aggregation control design] and [opening up large power grids] at the station control level. In addition, such companies are expected to directly benefit from the construction of the pilot project of the virtual power plant of the power grid and the construction of the dispatching platform of the virtual power plant, and it is expected that the virtual power plant business on the grid side will advance relatively faster, but this type of business is often project-based and has certain volatility. 2) The form of electricity solutions is expected to evolve further: as a leading provider of electricity solutions, this type of company is deeply engaged in the power side, has certain technical strength and rich industrial and commercial enterprise resources, and its advantages are [intelligent terminals] at the control level and [user-side resources] at the resource level.
3) Aggregation operation of long slopes and thick snow: This type of company was originally a user-side distributed energy operator (distributed photovoltaic, industrial and commercial energy storage, charging pile, etc.), and can expand the operation varieties and service types around the existing industrial and commercial customer resources, and carry out cross-user aggregation with the support of technical strength to form a virtual power plant operator. The advantages of this type of enterprise are mainly in the [user-side resources] and [operation and maintenance capabilities] at the resource level