Classification of energy storage
Based on system capacity, energy storage can be divided into: large-scale power energy storage, industrial and commercial energy storage, and residential energy storage; the three product types target vastly different customer groups and application scenarios.
Energy storage product classification
| Parameters | Large-scale energy storage | Industrial and commercial energy storage | Residential energy storage |
| System unit capacity | 3-10MWh | 100KWh-1MWh | 5KWh-10KWh |
| Typical installation scale | 20MWh-GWh | 100KWh-20MWh | 5KWh-50KWh |
| Supporting PCS power | ≥1MW | 50-500KW | 3-30KW |
| Battery cells used | ≥280AH | ≥280AH | 50-100AH |
| Electricity application stage | Power generation side/Grid side | Consumer side | Consumer side |
| Usage scenarios | Peak shaving and frequency regulation; Electricity trading | Peak-valley arbitrage | Self-consumption |
| Business model | Investment by grid companies or power generation enterprises, generating revenue through electricity market services | Owner investment, recovering costs by saving on electricity bills | C-end users, reducing electricity costs, ensuring household electricity supply, possessing certain consumer attributes |
| Product form | 20-foot container | Integrated cabinet type | stackable/rack-mounted/integrated/wall-mounted |
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Main customers |
power generation groups, power grid companies | factories, shopping mall | operators, and ordinary residents |
Comparison of Three Types of Energy Storage Products
In terms of energy storage installation application scenarios in 2024, grid-side energy storage was the main driver of new installations, accounting for 60.0%, an increase of 7.6% compared to 2023.
Among these, stand-alone energy storage accounted for 57.6%, making it the most prevalent application scenario. With the advancement of policies promoting the conversion of distributed energy storage to stand-alone energy storage in various regions, the proportion of new stand-alone energy storage installations is expected to continue to increase in the future. Power source-side energy storage accounted for 32.3%, with photovoltaic and wind power distribution and storage accounting for 30.9% combined.
User-side energy storage accounted for 7.7%, with factory distribution and storage being the most prevalent scenario. In addition, the application of energy storage in scenarios such as industrial park distribution and storage, and photovoltaic-storage-charging systems is also gradually increasing.
Economic Profit Models of Three Energy Storage Modes
Economic Value of Large-Scale Energy Storage
| Independent Energy Storage Power Stations | Based on peak-valley electricity price differences, they independently participate in electricity price arbitrage and capacity compensation. |
| Grid Frequency Regulation | Provides primary and secondary frequency regulation, enabling rapid response to grid dispatch and obtaining market ancillary trading revenue. |
| Renewable Energy Distribution and Storage | Energy storage(supports) photovoltaic and wind power plants, improving the absorption and output stability of new energy sources. |
| Multi-Energy Complementary Dispatch | Combined with traditional power generation such as thermal power, it improves the overall system dispatch efficiency and facilitates flexible cross-regional power dispatch. |
| Generation Side | Replaces or delays the construction of new generating units, assisting in dynamic operation. |
| Transmission and Distribution Side | Reactive power support, delaying line congestion, and DC power supply for substations. |
Commercial and Industrial Energy Storage Profit Models
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Peak-Valley Arbitrage |
Peak-valley arbitrage is one of the main profit models for commercial and industrial energy storage. This model utilizes the price difference between peak and off-peak electricity periods for arbitrage. During peak hours, the energy storage system releases stored electricity to meet the electricity demand of commercial and industrial users and obtains higher electricity price revenue. During off-peak hours, the energy storage system charges itself, taking advantage of off-peak electricity price discounts, thereby reducing overall electricity costs. With the improvement of time-of-use pricing and the widening of the peak-valley price difference, the economics of the peak-valley arbitrage model have significantly improved. |
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Photovoltaic Power Grid Integration and Storage |
By combining photovoltaic power generation and energy storage systems, commercial and industrial users can achieve self-consumption of electricity, reducing dependence on the external power grid. When photovoltaic power generation exceeds load demand, the excess electricity can be stored in the energy storage system; when photovoltaic power generation is insufficient, the energy storage system supplies power to the load, maximizing the utilization of photovoltaic power generation. In addition, photovoltaic power grid integration and storage can also improve the photovoltaic power consumption rate and reduce the user’s electricity costs. |
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Demand Management |
Demand management is a method of optimizing electricity demand-side management through energy storage systems. Under a two-part tariff system, users need to pay a basic electricity charge and a per-unit charge. The basic electricity charge is usually calculated based on the user’s transformer capacity or maximum demand. By installing energy storage systems, industrial and commercial users can reduce their grid supply demand during peak electricity demand periods, thereby reducing demand charges. Energy storage systems monitor real-time transformer power and automatically discharge when real-time power exceeds maximum demand, reducing transformer output and ensuring that transformer power does not exceed limits, thus achieving the goal of reducing demand charges and electricity costs. |
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Demand Response |
Demand response refers to the behavior of electricity users proactively changing their electricity consumption based on price signals or incentive mechanisms to promote electricity supply and demand balance and ensure the stable operation of the power grid. Industrial and commercial energy storage systems can receive incentives by participating in demand response projects. When there is power shortage or system demand, energy storage systems can reduce electricity demand or adjust discharge strategies to respond to grid dispatch needs. In this way, industrial and commercial users can not only obtain direct compensation or preferential electricity prices, but also contribute to the stable operation of the power system. |
| Ancillary Services |
Ancillary Services for Electricity Ancillary services for electricity refer to services provided by power generation companies, grid operators, and electricity users, in addition to normal electricity production, transmission, and consumption, to maintain the safe and stable operation of the power system and ensure power quality. Commercial and industrial energy storage systems can generate revenue by providing ancillary services such as frequency regulation and peak shaving. For example, in frequency regulation services, energy storage systems can automatically adjust their charging and discharging power according to grid frequency fluctuations, helping the grid maintain a stable frequency. |
| Electricity Spot Trading Electricity spot trading | Electricity Spot Trading Electricity spot trading refers to a trading mechanism in which market participants such as power generation companies provide electricity services through market-based transactions. With the gradual improvement of the electricity market, commercial and industrial energy storage systems can participate in electricity spot market transactions through aggregation via virtual power plants (VPPs). |
Economic Value of Residential Energy Storage
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Self-Consumption
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By integrating energy storage with photovoltaic (PV) systems, the core value lies in increasing energy self-sufficiency, reducing grid purchases, and lowering household electricity costs. Self-consumption is the primary application scenario for residential energy storage; its value increases with higher electricity prices and greater differences in tiered pricing. Self-consumption means that PV, batteries, and loads form a household internal cycle. When PV power is sufficient, surplus electricity is fed into the grid; when PV and batteries cannot support the load, electricity is purchased from the grid.
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| Off-Grid Backup | In some remote or grid-unstable areas, off-grid energy storage systems can operate independently of the public grid. Their core value lies in solving problems such as power shortages and lack of electricity, while also replacing high-pollution, high-cost diesel generators. |
| VPP (Vehicle Power Planner) | Intelligent control and coordination of energy storage systems within a region enables power allocation and trading, helping users realize benefits. |