Zhongjin: Natural gas prices rise, distributed energy storage demand expected to increase.

Zhongjin released a research report stating that as of March 2, the European natural gas benchmark, Dutch near-month futures prices surged by over 50%, breaking through 49 euros per megawatt-hour intraday. Based on the current instability in natural gas supply, the foundation of European electricity prices is the natural gas price, and the probability of electricity prices fluctuating upwards in the future is high. The escalation of the situation in the Middle East has affected regional power supply stability, and there is expected to be an increase in off-grid energy storage demand in the short term. Q2 is the traditional peak season for household energy storage, with global household energy storage projects blossoming, and European and Middle Eastern distributors are fully laying out plans. It is recommended to focus on distributed energy storage inverter companies that can provide a variety of 10-20kWh grid-connected and off-grid energy storage systems. Zhongjin's main points are as follows: Event: Qatar Energy announced that due to unmanned drone attacks from Iran on two energy facilities owned by the company, it has decided to temporarily suspend the production of liquefied natural gas. Qatar ranks third in the world in natural gas reserves, with a total of 82.2 million tons of liquefied natural gas exported last year. The fluctuation of natural gas prices intensifies, triggering an increase in electricity prices, driving the installation of household and commercial photovoltaic and energy storage systems Based on the current instability in natural gas supply, the foundation of European electricity prices is the natural gas price, and the probability of electricity prices fluctuating upwards in the future is high. The 2022 Russia-Ukraine incident mainly drove the installation of household photovoltaic systems, but the energy storage ratio is insufficient. Taking Germany as an example, the installed capacity of energy storage in 2022-2023 is only 1.92GW and 5.64GW, with room for improvement. In addition to many European countries providing subsidies for household energy storage, it is expected that demand will increase in the short term due to event-driven factors. The escalation of the situation in the Middle East has affected regional power supply stability, and there is expected to be an increase in off-grid energy storage demand in the short term Referring to the situation of energy storage demand in Ukraine, when there is pressure on power supply, the demand for household off-grid energy storage will increase in the short term. If the situation continues for a long time, supermarkets, hospitals, and other public facilities will need continuous power supply, and the demand for commercial energy storage is expected to continue to increase. Subsidy policies drive the continuous development of household energy storage installation This year, countries such as the UK, Poland, Hungary, and Australia have supported household energy storage through subsidies. The Polish draft requires a minimum subsidy capacity of 12kWh; while Australia's subsidies are aimed at addressing battery over-capacity issues, with a subsidy focus on capacities of 0-14/14-28kWh, where demand will be concentrated. Hungary's OETP Household Energy Storage Program provides subsidies for energy storage systems of 10kWh and above; and the UK's Warm Homes Plan, combined with future residential standards, requires energy storage capacities of 5-15kWh. Based on the current situation, there will be an increase in user application willingness, and the overall installation process is expected to accelerate. Driven by subsidies, Q1 household energy storage companies are not in a slack season Zhongjin believes that Q2 is the traditional peak season for household energy storage, with global household energy storage projects blossoming, the UK's household energy storage subsidies are about to be implemented, and production is expected to continue to increase month-over-month, boosting the performance expectations of household energy storage companies by 2026. It is recommended to focus on distributed energy storage inverter companies in Europe and the Middle East that have laid out plans and can provide a variety of 10-20kWh grid-connected and off-grid energy storage systems. The current sector is valued at approximately 20-25x 2026 P/E, and it is expected that the sector's valuation may be revised upwards to 25-30x 2026 P/E. Risk factors Geopolitical risks, intensified industry competition risks, and other irresistible factors.