Guangfa Securities: Price mechanism accelerates adjustment, strong growth momentum for new energy storage in Gansu

According to the Zhitong Finance APP, GF Securities has released a research report stating that by the end of 2024, Gansu's installed power generation capacity will exceed 90 million kilowatts, with new energy accounting for over 60%. Gansu is a typical power-exporting province, with the current proportion of exported electricity reaching 28.0%. Currently, Gansu's new energy storage participates in the electricity spot market and ancillary services market, achieving preliminary market-oriented operation. Taking a 100 MW/200 MWh storage project as an example, the estimated internal rate of return (IRR) for Gansu's grid-side storage capital is 9.9%. Considering the current significant pressure on Gansu's photovoltaic consumption, it is expected that by 2026, the demand for storage in Gansu is likely to reach 12 GWh, with a growth rate expected to reach 60%.

GF Securities' main viewpoints are as follows:

Current Situation of Gansu's Electricity: A Major New Energy Exporting Province with Initial Scale of Storage Development

By the end of 2024, Gansu's installed power generation capacity will exceed 90 million kilowatts, with new energy accounting for over 60%. Gansu is a typical power-exporting province, with the current proportion of exported electricity reaching 28.0%. To adapt to the large-scale development of new energy, Gansu has a significant installed capacity of new energy storage, ranking fifth in the country. Gansu's new energy storage participates in the electricity spot market and ancillary services market, achieving preliminary market-oriented operation.

Cost of Lithium Battery Storage in Gansu: Daily One Charge and One Discharge, Estimated LCOS is 0.29 Yuan/KWh

According to the "2024 Annual Report on the Development of China's Electricity Market," Gansu's storage has basically achieved one charge and one discharge daily, with some days achieving two charges and two discharges. Assuming a total of 360 charge and discharge cycles per year, the estimated LCOS for Gansu's lithium battery storage is 0.29 Yuan/KWh.

Gansu's Storage Revenue: A Multi-Dimensional Revenue System Formed by Spot Market Price Differences, Ancillary Services, and Capacity Prices

Spot Market Price Difference: Rapid Expansion in 2025, Reaching 0.27 Yuan/KWh. In recent years, the spot price difference in the Hexi region has slightly narrowed, while the decline in the Hedong region has been significant. In the first half of 2025, the peak-valley price difference is expected to widen, mainly due to the overall price increase of thermal power and the reduction of valley time electricity prices due to increased new energy output. The new capacity price regulations have lowered the upper limit of spot price quotes, but the impact is minimal.

Ancillary Service Revenue: In 2025, Gansu's ancillary service market scale will expand, with the average annual frequency modulation revenue for a typical 100 MW storage station estimated at 1.7 million Yuan. Currently, this mainly includes peak-shaving capacity market, demand response market, and frequency modulation ancillary service market, with the future focus primarily on the frequency modulation ancillary service market. In 2024, Gansu's ancillary service revenue from storage is expected to be 120 million Yuan, with rapid growth in the frequency modulation market's ancillary service space in 2025, mainly due to the increased proportion of new energy generation.

Capacity Price: Capacity Leasing and Capacity Compensation Mechanism Upgrade Capacity Price, Grid-side Storage Can Obtain 38.5 Yuan/(KWh·Year) Capacity Price. GF Securities analyzes that this capacity price mechanism has two characteristics: on one hand, the total scale of capacity fees is controllable and easy to implement; on the other hand, it introduces a competitive mechanism for power sources providing capacity support, promoting the selection of the best.

Estimated Gansu's Independent Storage Capital IRR Exceeds 9%, New Energy Storage Installed Capacity Expected to Continue High Growth of 60% in 2026 Taking a 100 MW/200 MWh energy storage project as an example, the calculated capital IRR for energy storage on the Gansu power grid side is 9.9%. Considering the current significant pressure on photovoltaic consumption in Gansu, it is expected that the energy storage demand in Gansu will reach 12 GWh by 2026, with a growth rate expected to reach 60%.

Investment Recommendations

Gansu is a microcosm of the three-north renewable energy provinces, with its energy storage station yields gradually improving and a large potential installed capacity, indicating a high prosperity of new energy storage demand in China by 2026, which is expected to drive the improvement of profitability across the energy storage industry chain. Recommended leading companies in energy storage batteries and materials: CATL (300750.SZ), EVE (300014.SZ), Hunan YN (301358.SZ), and Fulin Precision (300432.SZ). Suggested attention to: Dofluorid (002407.SZ), Tianji Co., Ltd. (002759.SZ), and Wanrun New Energy (688275.SH).

Leading integrated companies with site selection and operational advantages are expected to achieve higher yields from energy storage stations and increase market share. Recommended companies include Haibo Sichuang (688411.SH), CSG Technology (688248.SH), Sungrow Power (300274.SZ), and Canadian Solar (688472.SH). Suggested attention to: szclou (002121.SZ).

The ability to trade electricity is increasingly becoming a core technical barrier for the operation of energy storage stations. Recommended company: Guoneng Rixin (301162.SZ).

Risk Warning

Spot market price differentials decline more than expected. Capacity electricity price fluctuations exceed expectations. Energy storage costs rise more than expected