With the continuous growth of the energy storage market and the maturity of the industry manufacturers, more and more attention has been paid to the business model and financing mechanism of the energy storage system. These models may involve alternatives to traditional asset sales methods that reduce the market entry costs of potential customers and reduce the cost of capital for energy storage companies.
Younicos, a German photovoltaic energy storage developer, highlighted this trend when it announced its energy storage leasing service. Considering that its parent company, Aggreko, leases power generation equipment globally, its leasing of energy storage equipment is an obvious move for Younicos. Younicos hopes to expand its energy storage service market by reducing energy costs. The idea is that renting energy storage equipment in many cases is much lower than buying and owning it.Younicos, a German photovoltaic energy storage developer, highlighted this trend when it announced its energy storage leasing service. Considering that its parent company, Aggreko, leases power generation equipment globally, its leasing of energy storage equipment is an obvious move for Younicos. Younicos hopes to expand its energy storage service market by reducing energy costs. The idea is that renting energy storage equipment in many cases is much lower than buying and owning it.
Tim Grejtak, an analyst at Lux Research, a research firm, said, “The main driving force behind this business model is to help the economy by reducing customer capital expenditure. Many companies use the discounted cash flow model because any deferred payment to the future will help them cash flow.
In the first phase of the marketing effort, Younicos said it would launch leasing services for hybrid systems and microgrids in the commercial and industrial markets, rather than leasing large utility energy storage equipment. Grejtak says Younicos’s new business model is part of a broader trend in the industry. The energy storage company used to distinguish from energy storage technology, especially before lithium-ion batteries became dominant. Then they focused on the control software of their energy storage system. Nowadays, enterprises are increasingly emphasizing their financial and business models. In addition to Younicos, several companies are taking different approaches to changing the traditional pattern of requiring customers to buy energy storage systems directly. Although the cost has been declining, the energy storage system is still very expensive. And the higher the initial cost of deploying energy storage systems, the higher the barrier to an acceptable return on investment.
In areas where electricity prices are high or energy storage is limited, the rate of return on investment is not very concerned. But these markets are relatively few and far apart. Finding multiple sources of income for a single energy storage asset is a lot of discussion about solutions, but layering or “stacking” multiple sources of income is often easier said than done.
1、Learning from solar energy industry
In some ways, the financial differences in energy storage systems reflect everything that happens in the solar industry ten years ago. Sales of rooftop solar panels fell as solar companies offered consumers alternatives to buy them.In some ways, the financial differences in energy storage systems reflect everything that happens in the solar industry ten years ago. Sales of rooftop solar panels fell as solar companies offered consumers alternatives to buy them.
However, this is not a direct comparison. It is difficult for the residential energy storage system to provide the same cost reduction. But the solar industry’s financing model has found more fertile ground in the commercial and industrial (C&I) energy storage markets.
In addition to Younicos, Advanced Microgrid Solutions (AMS), ENGIE Storage (formerly Green Charge Networks), Stem, Power Edison and other companies have such business models, without the need to buy energy storage systems directly. On the contrary, they can enable customers to reduce their demand cost through some form of energy storage and service. Grejtak said that for those customers who are often keen on cash flow, this simplifies investment decisions.
“We’ve reduced our customers’bills and cost savings, and we’ll get a service charge.” Vishvesh Jhaveri, director of project financing and strategy at AMS, said, “This model also allows AMS to optimize its financing structure.”
In addition to providing customers with equipment that reduces demand costs, AMS also aggregates these energy storage equipment and sells capacity to Edison Electric under the contract. The model allows AMS to offer lower-cost products to commercial and industrial (C&I) customers and utilities because they do not have to pay the high capital costs that can lead to energy storage systems.
2、Expanding financing options
The model also has another potentially less important benefit. It provides a predictable source of contractual revenue for AMS company to enable it to ensure financing. This allows AMS companies to move from relatively expensive venture capital funded companies to low-cost options funded companies, such as non-recourse project financing.
A year ago, AMS completed the first recourse project financing for the first energy storage system. Financing with CIT bank supports the establishment of a 50 megawatt energy storage system. The CIT banking deal is part of a broader agreement signed by AMS and Macquarie Capital in the summer of 2016 to jointly develop and build a range of energy storage projects. The result, says Jhaveri, is that AMS’s prices are lower, enabling it to price its products competitively. Stem has also adopted a similar model to provide energy storage as a service. It is now extending this model to the East Coast market and establishing partnerships with Constellation, which will allow its businesses and industries (C&I) to reduce their capacity costs. However, energy storage services and leasing modes may depend on favorable regulatory environment. They may work in energy-storage restructuring markets like California and New York, but they may face regulatory barriers in other jurisdictions. It is a relatively new phenomenon to be able to provide services in the wholesale energy market and to provide customized user-side distribution markets from the same equipment, which has not been fully tested or reviewed by regulators. It raises a number of complex issues, such as how to set rules that allow the owners of energy storage equipment to mine multiple revenue streams without allowing them to pay twice for the same service. Grejtak said this could be one of the reasons the Federal Energy Regulatory Commission postponed its decision on distributed energy when it issued its February energy storage order. One solution to this problem is to avoid potential jurisdictional conflicts and not to try to tap resources in different markets, such as wholesale and distribution markets, but rather to concentrate on a single jurisdictional market.A year ago, AMS completed the first recourse project financing for the first energy storage system. Financing with CIT bank supports the establishment of a 50 megawatt energy storage system. The CIT banking deal is part of a broader agreement signed by AMS and Macquarie Capital in the summer of 2016 to jointly develop and build a range of energy storage projects. The result, says Jhaveri, is that AMS’s prices are lower, enabling it to price its products competitively. Stem has also adopted a similar model to provide energy storage as a service. It is now extending this model to the East Coast market and establishing partnerships with Constellation, which will allow its businesses and industries (C&I) to reduce their capacity costs. However, energy storage services and leasing modes may depend on favorable regulatory environment. They may work in energy-storage restructuring markets like California and New York, but they may face regulatory barriers in other jurisdictions. It is a relatively new phenomenon to be able to provide services in the wholesale energy market and to provide customized user-side distribution markets from the same equipment, which has not been fully tested or reviewed by regulators. It raises a number of complex issues, such as how to set rules that allow the owners of energy storage equipment to mine multiple revenue streams without allowing them to pay twice for the same service. Grejtak said this could be one of the reasons the Federal Energy Regulatory Commission postponed its decision on distributed energy when it issued its February energy storage order. One solution to this problem is to avoid potential jurisdictional conflicts and not to try to tap resources in different markets, such as wholesale and distribution markets, but rather to concentrate on a single jurisdictional market.
3. Hire public utility services.
Power Edison also wants to provide a business model that reduces costs by providing energy storage customer leasing and storage as a service model and ownership model. But the company focuses on single market segments. Shihab Kuran, CEO of Power Edison, said the “regulatory barriers” between the utility market and the customer service market did not converge, but Power Edison focused on specific applications in the utility market. Kuran said: “the most valuable use of fixed energy storage is the extension of transmission and distribution (T&D). But this delay will not last forever and will become a grounded asset once a permanent energy storage system is not needed. Many energy storage applications rely on energy arbitrage, but wholesale electricity prices are usually very low. But its reliability creates a compelling value proposition for obligatory utilities. Power Edison’s business model requires leasing energy storage equipment. It’s a model from a project announced a year ago that NRG Energy and Edison United Electric are investing $7.6 million to deploy batteries on trucks. For example, if Edison United Electric uses batteries to ease power shortages or provide emergency power, NRG, for example, can connect them to the grid and use them to provide ancillary services. “The Younicos statement confirms our partnership with NRG and ConEd, and we formed Power Edison around the rental business,” Kuran said. We believe this is a feasible way. ” Kuran said Power Edison would not cross regulatory barriers between market segments by selling energy storage services simultaneously, but by selling services with the same assets several times in a row. The mobility of these systems also contributes to the financing mode of Edison joint electric company. He points out that because these systems are mobile, they are cheaper because they can be recovered. In addition, when regulatory or market conditions change, its energy storage assets will not be in trouble. Kuran cites frequency regulation in PJM’s interconnected market, which began to rise when PJM created a new category for rapid response resources. Developers enter the market to deploy the battery energy storage system and do well in a short time. But eventually it was overwhelmed by the market. “We like to anchor our projects with utilities,” Kuran says. “They buy the most storage space and are more reliable.” This is a business model that can operate in markets like New York, where the energy vision reforms aim to create a new electricity paradigm that can inspire utilities to save money. Kuran acknowledges that in more traditional markets, utilities may be more inclined to use ownership models for return on investment. Edison Electric also works with several utility customers and develops financing solutions, partly financed by private equity and infrastructure funds, Kuran said. He said, “we need to find a case of energy storage without incentive or authorization.”
New business models and financial structures can help achieve this goal by reducing capital expenditure and capital costs, making more jurisdictional reserves more affordable and attractive.

In daily life, we have had such experience.：The battery that is exhausted in the toy car is loaded into the TV remote controller, and the battery can be used normally.In fact, the battery has not been depleted of electricity, but the current is too small to drive the toy car, television remote control power demand is relatively small, so the battery can continue to use.
Battery is not a trivial matter.
This is in daily life through the “cascade utilization” to achieve full use of batteries.Nowadays, social life seems to be inseparable from batteries, ranging from remote control to new energy vehicles, data center rooms, substations and so on.At present, China’s battery consumption is huge every year, and a large number of batteries are eliminated.
So the question is, how can we realize the “cascade utilization” of power resources in the social system and give full play to the “waste battery” waste heat?
What about waste batteries? The Chinese government gives the best!
In terms of power battery recycling, the Ministry of industry and information released the data:”After 2018, the new energy vehicle power battery will be decommissioned on a large scale, and it is expected to accumulate more than 200,000 tons (24.6 GWh) by 2020,If 70% can be used for cascade utilization, about 60 thousand tons of accumulative batteries need to be scrapped. ”
Based on these retired batteries, which have environmental impacts, potential safety hazards and resource recovery pressures,At the end of February 2018, the Ministry of Industry and Information Technology, the Ministry of Science and Technology, the Ministry of Environmental Protection and the Energy Bureau jointly issued the Interim Measures for the Recycling and Utilization of Power Storage Batteries for New Energy Vehicles (Ministry of Industry and Information Technology Joint Section [2018] 43).Encourage the society to make rational and creative use of waste batteries, and provide an important guarantee for the healthy development of new energy vehicle power battery recycling industry.
However, in the recycling of other batteries, there is still a lack of domestic policy support and business model exploration.
“Retirement battery” get “again on duty” opportunities
China’s first “cascade utilization of substation decommissioning batteries”Kehua Hengsheng New energy development
In Guangzhou area, about 100 VRLA batteries are decommissioned from Guangzhou Power Supply Bureau of Southern China Power Grid every year. After repairing, 5 800 VRLA batteries can be used with a total capacity of 3.5 MWh.These are enough for a laptop to run for 60 thousand hours.
In order to improve the utilization efficiency of power resources and realize the green and sustainable development of energy ecology,Kehua Hengsheng and Guangzhou Power Supply Bureau of China Southern Power Grid try to use the decommissioned batteries of substations as energy storage stations to build a demonstration project of cascade utilization and energy storage of decommissioned batteries in Guangzhou Baitu substation.
As the first cascade utilization project of decommissioned batteries in substations in China, the demonstration project is required to be constructed in accordance with the Notice of National Key R&D Program for Key Special Projects of Smart Grid Technology and Equipment in 2016 (No. 55, Production and Distribution [2015]), and belongs to the State Key R&D program.
The first phase includes 30 sets of energy storage systems and 5 energy storage containers. Nearly 30 decommissioned batteries in substations have been re-installed.
The project flexibly uses the solutions of Kehua Hengsheng SPH series energy storage converter and EMS intelligent energy management system to realize the management testing and monitoring of peak-valley operation, scheduling response strategy, problem battery management, storage tank operation and group operation.——This is like wearing an “intelligent stethoscope” for “re-work battery”. Through the EMS intelligent energy management system, the operation of the decommissioned battery cascade utilization system is monitored, analyzed and tracked remotely, and the problem battery is automatically isolated and laid off. The system is intelligent, informational and unattended. Run, optimize and reduce energy costs.       More efficient and more sustainable                                                                                                                                                                                                                                                          Since the demonstration project was put into operation in December, 2017, the Guangzhou Power Supply Bureau of Kehua Hengsheng Power Supply Co., Ltd. has realized the reuse of 30 sets of retired batteries, with a total of more than 60 cycles.On the one hand, the cascade utilization of decommissioned batteries in substations is explored technically, and a breakthrough is achieved in the ecological design, system construction and value extraction of the cascade utilization of batteries.On the other hand, it has made a useful attempt to establish an effective cooperation mechanism with enterprises and a market-oriented mechanism for the cascade utilization of retired batteries. It has realized the recycling of electric power resources in the social system and solved the problems of environmental protection, safety and resource recovery brought about by retired batteries. It has gained the leadership of the Ministry of Science and Technology and the South Grid. Evaluation and full recognition.
Technology, a new green hope for the world
At present, the development of green circulation and low carbon has become the main direction of scientific and technological revolution and industrial transformation in the times.Premier Li Keqiang also pointed out in his report on the work of the government that the development target of reducing energy consumption per unit of gross domestic product by more than 3% should be achieved by 2018, and that higher quality, more efficient, fairer and more sustainable development 。
Cascade utilization of retired batteries, as an important means to promote the fundamental transformation of resource utilization, has promoted the reduction, reuse and reuse of production, circulation and consumption processes, embodied the green production capacity of Kehua Hengsheng New Energy Solution, and left behind for the recycling of social resources and the creation of a harmonious and unified ecological environment. More space, more green.

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