At a Glance
Industrial Goods and Manufacturing
Sustainability and Energy Management Strategy
Net Present Value:
Zhu Wang conducted market analysis of the largest regional electric power market operator in the US, in preparation for future market penetration of BYD’s energy storage products.
BYD, the world’s largest manufacturer of electrical vehicles, was exploring opportunities around the world to expand its market penetration of new energy storage products. For the past two years, BYD’s Electric Power Research Institute (EPRI), which is primarily responsible for developing battery energy storage products in the European and American markets, has been working with the PJM (Pennsylvania-New Jersey-Maryland) market to sell energy storage products. EDF Climate Corps fellow Zhu Wang was hired to conduct targeted market analysis for the profitability of BYD’s proposed product launch in PJM market.
Zhu collected operation data and reports of PJM market, consulted relevant research reports and communicated with supervisors in order to determine the formula for calculating FM service income. In his analysis, Zhu calculated the FM service income of PJM market in 2016 and showed the fluctuation trend of the electricity price in the PJM market in 2016.
Because the energy storage power in PJM market is owned by Independent Power Producers for Frequency Modulation (FM) services, Zhu further analyzed the response signal mechanism, profit calculation model and electricity price fluctuation of the FM services.
At the end of his analysis, Zhu conducted a forecast analysis for the capital pay-off of launching the battery products in this market.
Thanks to Zhu’s analysis, BYD can forecast the profitability of FM services in the next few years under the condition that FM revenue is 40% higher than 2016 and operating cost refers to the data of the PJM market in previous years. The results show that equity investment recovers costs in the fourth year, and the net present value of the eighth year is 10.27 million US dollars.