Recently, many business owners have been asking: Is it really cost-effective to install energy storage systems in factories? The answer may be more optimistic than expected—under the right conditions, an energy storage project could break even within 3-5 years and then continue to operate stably for many years, bringing continuous net benefits.

The core profit logic lies in arbitrage of peak and valley electricity price differences. Simply put, it means charging the energy storage system during the low electricity usage period of the power grid (when electricity prices are cheap) and discharging it for factory use during the high electricity usage period (when electricity prices are expensive), making money from the price difference in between.

The energy storage system is like a "super power bank" customized for factories. Its business model is very straightforward: buy low and sell high.

Taking Shanghai as an example, the peak electricity price for large industrial users may reach over 1.2 yuan per kilowatt-hour, while the off-peak electricity price may be as low as around 0.3 yuan per kilowatt-hour. The price difference per kilowatt-hour may exceed 0.9 yuan.

Assuming a factory's energy storage system completes a full charge and discharge cycle once a day, consuming 1000 kWh of off-peak electricity (cost 0.3 yuan/kWh) and releasing 900 kWh of electricity during peak hours (selling price 1.2 yuan/kWh) for the factory's use. Then the arbitrage profit for that day would be: 900*1.2-1000*0.3=780 yuan.

This is just the basic income. In regions with policy support such as Zhejiang and Guangdong, the income can be significantly increased through the clever "two charge and two discharge" strategy (that is, conducting two charge and discharge cycles during multiple peak and valley periods each day).

Let's simulate the revenue situation of a medium-sized industrial and commercial energy storage project with a capacity of 5MW/10MWh.

Investment Cost: Currently, the unit investment cost of energy storage systems has significantly decreased. The EPC cost range for a 2-hour energy storage system may be between 1.376-2.226 yuan/Wh, and we take an average value of 1.64 yuan/Wh for calculation. For a 5MW/10MWh power station, the total investment is approximately 16.4 million yuan.

Core benefits: Arbitrage through peak and valley price differences. Assuming the peak electricity price is 1.2583 yuan/kWh and the valley electricity price is 0.3160 yuan/kWh.

Other income: It may also include savings on capacity electricity costs, participation in demand-side response to obtain subsidies, etc.

Break-even period calculation: Based on the above model, in the Zhejiang region, a well-designed 5MW/10MWh energy storage station has a static payback period of approximately 3.9 years. This means that in less than 4 years, the net income generated by the project can cover the initial investment.

It is worth noting that the lifespan of energy storage systems is usually much longer than the payback period. High-quality energy storage products promise that the usable capacity will still be no less than 70% after 6000 cycles. This means that after the payback period, the energy storage system will continue to generate considerable net benefits during its remaining lifespan.

Not all factories are suitable for installing energy storage, and the payback period is influenced by the following key factors:

1. Local peak-valley electricity price difference: This is a decisive factor. The larger the price difference, the greater the arbitrage space. Currently, the peak-valley price difference in many regions across the country has exceeded 0.7 yuan/kWh. The following chart shows the peak-valley price difference in some regions in June 2023, and you can compare it with the policies in your area.

2. Characteristics of enterprise electricity load: The electricity load of the factory during the day needs to be sufficiently large and stable, capable of timely absorbing the power released by the energy storage system during peak periods; otherwise, it will result in waste of "electricity that cannot be sold."

3. The cost and performance of the energy storage system itself: The charge and discharge efficiency, cycle life, and decay rate of energy storage batteries directly affect returns. At the same time, with technological advancements and economies of scale, the initial investment cost of energy storage systems is continuously decreasing, which further improves the project's economic viability.

4. Government subsidy policies: Some regions provide capacity subsidies or discharge subsidies to encourage energy storage development, which can effectively shorten the investment payback period.

If you are interested in energy storage investment, you can follow the ideas below for a preliminary judgment:

Check the recent electricity bills of the enterprise, focusing on the peak and valley electricity price periods and prices, and calculate the average peak-valley price difference. Assess whether the factory's electricity load during the day is sustained and sufficiently large.

The economic assessment of energy storage is a professional process that requires a comprehensive consideration of initial investment, operation and maintenance costs, electricity fee structure, subsidy policies, and capital costs. It is recommended to contact professional energy storage system integrators or energy service companies, provide them with basic data, and obtain a customized investment return analysis report.

Step 3: Choose a cooperation model. In addition to complete self-investment, enterprises can also consider cooperating with energy service companies, adopting models such as Energy Management Contracting (EMC), where the other party invests and operates, and the enterprise shares energy-saving benefits, reducing its own investment risks and financial pressure.

We provide free preliminary calculation services for interested enterprises. You only need to provide the electricity bills from the last three months to receive a personalized investment return analysis report.

【About Us | About Us】

Our company is a high-tech enterprise focused on the research and development, manufacturing, system integration, and solutions of advanced energy storage systems. We are committed to deeply integrating cutting-edge energy storage technology with practical application scenarios to customize safe, efficient, and economical energy storage solutions for commercial and industrial use, home energy storage, microgrids, outdoor power supplies, and integrated solar storage and charging solutions for our customers.