In "Major Banks," China International Capital Corporation (CICC): The national capacity electricity price policy is beneficial for the long-term development of energy storage, recommending CATL

CICC research report indicates that the National Development and Reform Commission and the National Energy Administration released the "Notice on Improving the Capacity Pricing Mechanism for Power Generation Side" last Friday (30th), categorizing and improving the capacity pricing mechanisms for coal power, gas power, pumped storage, and new energy storage. This aims to promote the reliable supply of electricity during peak generation times and to make way for new energy during regular times, ensuring the safe and stable operation of the power system. The notice explicitly establishes an independent capacity pricing mechanism for new energy storage on the grid side for the first time, marking the recognition of the systemic value of new energy storage and highlighting its long-term investment value.

CICC notes that previously, Gansu, Ningxia, and Hubei have introduced capacity pricing mechanisms for new energy storage. Following the issuance of the national top-level design document, it is believed that more provinces will introduce relevant policies to further clarify compensation standards, and after the continuous operation of the electricity spot market, a reliable capacity compensation mechanism on the generation side will be established in an orderly manner.

CICC believes that independent energy storage in China has clearly formed three major sources of revenue: energy market, ancillary services market, and capacity pricing, with the business model gradually maturing and expected to further open up demand space. According to calculations, based on the latest compensation standards released by Gansu, capacity revenue could account for about one-third of the annual revenue of new energy storage. In addition, the notice specifies that capacity electricity fees will be included in the system operating costs borne by industrial and commercial users, and it is believed that this year, the decline in long-term contract prices on the generation side in most provinces, combined with the entry of new energy into the market, will also create space for energy storage capacity electricity fees.

CICC recommends the global energy storage leader CATL (300750.SZ), with a target price of 445 RMB, and a rating of "Outperform the Market." (hc/)