Core Viewpoint - The article emphasizes the urgent need to establish a new capacity pricing mechanism for energy storage in China to support the growing demand for renewable energy and ensure grid stability [2][8]. Group 1: New Energy Storage Capacity Support - The construction of a new power system in China is accelerating under the "dual carbon" goals, with significant increases in installed capacity for wind and solar energy. However, the intermittent and volatile nature of these energy sources poses challenges for grid capacity during peak load periods [6][8]. - In 2023, the State Grid's summer peak demand for new energy storage reached a maximum discharge capacity of 44.53 GW, equivalent to nearly three Three Gorges hydropower stations, providing substantial support during evening peak electricity usage [7]. Group 2: Need for Capacity Mechanism - The previous revenue models for independent energy storage included energy market revenue, ancillary service market revenue, capacity leasing revenue, and compensation revenue in some regions. However, recent policy changes have significantly impacted the demand and pricing space for capacity leasing, making it difficult for independent storage projects to cover their investment and operational costs [9]. - The current market rules do not fully reflect the value of new energy storage capacity, which could deter social capital investment and affect the stability of electricity supply and grid operations [9]. Group 3: Provincial Capacity Compensation Policies - Multiple provinces in China have begun to implement capacity compensation policies for new energy storage to address the lack of revenue mechanisms. These policies primarily adopt capacity compensation mechanisms, transitioning towards capacity market mechanisms in the future [12]. - Compensation methods vary across provinces, including: 1. **Discharge Volume Compensation**: Inner Mongolia has set a compensation standard of 0.35 CNY/kWh for 2025, while Xinjiang's compensation starts at 0.2 CNY/kWh in 2023, decreasing annually [13][14]. 2. **Capacity Compensation**: Hebei has established a capacity price of 100 CNY/kW for projects connected to the grid by May 31, 2024, with a gradual reduction thereafter [14]. 3. **Mixed Compensation**: Shandong and Gansu have implemented compensation mechanisms that consider both discharge and capacity [15][16]. Group 4: Summary and Outlook - The ongoing exploration of capacity compensation policies across various provinces is accumulating valuable practical experience for establishing a unified national capacity pricing mechanism. However, significant differences in compensation forms and fee structures exist, and many provinces have yet to implement such policies [17]. - It is recommended to adopt a phased and regional approach to policy implementation, considering local power supply and demand characteristics, to lay the groundwork for future market-based capacity trading [17].

Summary of Key Points from the Conference Call Industry Overview - The discussion revolves around the **new energy sector**, specifically focusing on the **capacity pricing mechanism** and its implications for **energy storage** and **renewable energy** consumption. Core Insights and Arguments 1. **Capacity Pricing Mechanism Implementation** The national policy promotes a capacity pricing mechanism aimed at effectively transmitting market price signals to end users, with provinces allowed to set their own prices based on local conditions [2][4][18] 2. **Impact on Residential Electricity Prices** The introduction of a time-of-use pricing mechanism will not directly lead to an overall increase in residential electricity prices, although adjustments to peak and valley pricing systems may occur [3][18] 3. **Revenue Sources for Energy Storage** Capacity subsidies or energy consumption subsidies have a relatively minor impact on the revenue of energy storage stations, with independent storage primarily relying on spot market arbitrage rather than capacity price subsidies [1][6] 4. **Optimization of Energy Storage Utilization** To enhance the utilization rate of energy storage paired with renewable energy, it is necessary to optimize scheduling mechanisms, allowing renewable energy plants to autonomously declare output curves [1][7] 5. **Long-term Sustainability of Independent Storage** The capacity market mechanism will provide long-term sustainable revenue guarantees for independent storage, similar to the treatment of thermal power plants, offering investors more certainty [11] 6. **Expected Growth in New Energy Installations** It is anticipated that new energy installations will grow by approximately 50% by 2026, necessitating a solution to the consumption issue to meet the national target of 3,600 GW installed capacity by 2035 [3][19] 7. **Adjustments to Existing Capacity Compensation Policies** Existing capacity compensation policies in various provinces will be adjusted to align with the new national guidelines, transitioning from generation-side to consumption-side transmission [4][5] 8. **Differences in Revenue Models Across Provinces** The capacity subsidy policies will vary by province, with regions like Jiangsu and Zhejiang requiring higher subsidies to stimulate independent storage development due to lower spot market income [10] 9. **Challenges in Current Policy Environment** Current scheduling regulations limit the autonomous adjustment capabilities of renewable energy sources, but new policies aim to revise these management systems to enhance consumption efficiency [13] 10. **Quality Improvement of Energy Storage Stations** The quality of energy storage stations has significantly improved since 2023, particularly in western provinces, addressing previous issues of low availability and operational inefficiency [14][15] Other Important Insights - **Market Dynamics** The introduction of independent storage is not expected to significantly squeeze the market capacity for independent storage, as the economic viability of integrated storage projects remains limited [16] - **Impact of Coal Power Pricing** The increase in coal power capacity pricing is leading to a decline in the competitiveness of coal power, with new electricity demand being met primarily by renewable sources [21] - **Future Policy Developments** Many provinces are expected to release detailed policies regarding the capacity pricing mechanism in the coming months, with a focus on ensuring that the costs are shared among commercial and residential users [18]

Core Viewpoint - The storage industry is gaining attention due to overseas demand recovery, price rebound, and the implementation of the new energy storage "doubling plan" which ensures continuous installation support [1][2] Group 1: Market Dynamics - The new energy storage "doubling plan" aims for over 100 million kilowatts of new installed capacity nationwide within three years, reaching over 180 million kilowatts by the end of 2027, driving direct project investments of approximately 250 billion yuan [2] - The expected installed capacity growth of 2.44 times compared to the cumulative installed capacity of 73.76 million kilowatts in 2024 indicates a robust domestic market demand in the next five years [2] - Overseas demand is improving, with the impact of tariffs diminishing and the OBBBA Act driving increased installation expectations in the U.S. for 2026 [2] Group 2: Economic Transition - The storage sector is transitioning from a cost item to a profit item as the economic viability of storage becomes evident [2][3] - The cancellation of mandatory storage policies has created substantial revenue opportunities for storage, with the 136 document expected to mark a profitability turning point for large-scale storage [3] Group 3: Long-term Mechanisms - The capacity market is seen as a sustainable mechanism for storage installation, addressing issues like subsidy fixation and resource misallocation [3][4] - The establishment of a national unified capacity market framework is anticipated, with pilot programs expected in provinces like Shandong, Shanxi, and Guangdong [4]