interface news reporter | ma yueran Gao Jing

"The energy storage industry is intriciled and lacks development norms."

A lithium-electric energy storage head company described its feelings about the energy storage industry in 2023.

After the rapid growth of last year, the energy storage industry at the beginning of the year is still the darling of capital, ready to go. In the middle of the year, the wind direction changed, and the industry began to face the embarrassment of "surplus at the beginning" and entered the battle of life and death.

Energy storage is seen as the cornerstone of a new power system. With wind power, photovoltaic and other new energy scale online, the industry hopes to store energy to solve their volatility and intermittent problems, the state and local governments have issued a number of policies to encourage new energy storage.

Energy storage can be roughly divided into two ways: pumped storage and new energy storage. New types of energy storage, including lithium batteries and other chemical energy storage, are the focus of attention of the energy storage sector.

last year, the domestic new energy storage finally ushered in the outbreak, especially lithium energy storage, capital rushed into the track, the number of enterprises geometric growth, once criticized high energy storage system prices have finally ushered in a sharp decline.

At the same time, the drawbacks of the industry are highlighted-due to the lack of a mature market mechanism for compulsory allocation and storage projects, the excessively rapid decline in market prices leads to poor energy storage economy, which largely restricts the development of the industry.

Big price dive

Chen Haisheng, chairman of Zhongguancun Energy Storage Industry Technology Alliance (CNESA), predicts that the new energy storage capacity will reach 15-20 GW this year, exceeding the sum of the last ten years. The cumulative installed capacity is between 23-31 GW, which is generally in line with expectations.

According to CNESA statistics, the new installed capacity of new energy storage from January to November 2023 is 15.1 GW/32.9 GWh. Among them, the new energy storage installed capacity in November 2.7 GW/7.2 GWh, up 237/350 percent month-on-month, power and energy scale are the highest since the second half of this year.

downstream demand outbreak, energy storage enterprises are not easy.

"Involved", this is the most common vocabulary in major energy storage industry conferences or forums this year. One of the main manifestations is the sharp decline in the price of energy storage systems.

according to incomplete statistics of CNESA DataLink global energy storage database, taking November as an example, the average bid price of 2-hour lithium iron phosphate battery energy storage system (excluding user-side applications) fell to 800.46 yuan/kWh, down 47% year on year. The lowest bid price for the 4-hour energy storage system was 638 yuan/kWh, a record low.

"The price of energy storage cells and systems has hit the bottom line of most energy storage battery companies." Wang Yanqing, Chairman of Pilot Intelligence, pointed out at the 2023 Energy Electronics Industry Development Conference and Guangdong New Energy Storage Industry Development Summit Forum held in November.

As a result, the profitability of the business has weakened significantly. According to Wind data quoted by the Caixin News Agency, among the 52 A- share energy storage listed companies, 30 companies had a month-on-month decrease in net profit in the third quarter.

For example, the leading enterprise Ningde Times (300750.SZ) in the third quarter net profit for the first time since the listing of the ring down, the mother net profit of 10.428 billion yuan, down 4.28; Guoxuan Gaoke (002074.SZ) single-quarter net profit fell nearly 40 percent.

Wind data show that the net profit growth rate of the energy storage sector will reach a high of nearly 70% in 2022, decline to 40% in 2023, and will drop to about 20% in 2024-2025.

Image source: Wind data

Upstream lithium carbonate prices continue to decline, is an important driving factor in the decline in energy storage prices.

Lithium carbonate is an important raw material for lithium-ion energy storage systems. In the first half of the year, the domestic battery-grade lithium carbonate price range was 170000-510000 yuan/ton, and the average price was 326300 yuan/ton, a decrease of 32% compared with the average price of last year.

According to data from Shanghai Nonferrous Metals Network, as of December 29, the average price of battery-grade lithium carbonate has fallen to about 100000 yuan/ton, which has fallen by more than 80% compared to the high of 500000 yuan/ton.

a number of industry insiders said to the interface news, the current price of lithium carbonate still has downward space.

Image source: IFC

Many cross-border companies have entered the market, and the industry's "price war" has intensified, which is another important factor in the decline of energy storage systems.

the interface news reporter inquired about the APP data, showing that in 2023, there were more than 70000 newly established enterprises related to energy storage in the country, which is nearly the total since 2013-2022.

The large number of new players has led to overcapacity in the industry. According to incomplete statistics of China's energy storage network, as of December 18, 137 expansion projects have been signed and started in the energy storage industry chain this year, with an investment amount exceeding 700 billion yuan, and the expansion scale of energy storage batteries and systems exceeding 2 TWh (I .e. 2000 GWh).

According to Bloomberg New Energy Finance and other institutions predict that by the end of 2030, the global cumulative installed capacity of energy storage will exceed 1 TWh.

"The energy storage market is growing rapidly, but the growth rate of production capacity and market entities exceeds the growth of the market, bringing the industry's internal volume." Tian Qingjun, senior vice president of Vision Group, told reporters at the interface.

Tian Qingjun said that if the industry wants to continue to develop on a large scale, it is a long-term process to reduce prices and reduce initial investment costs. According to its calculation, the electricity cost of lithium battery energy storage is close to 0.2 yuan, and the electricity cost of 0.1 yuan is just around the corner.

The utilization rate is less than half

Along with the downward trend of energy storage price, it is the problem of low quality and low price of energy storage system and low utilization rate.

"The industry's nominal capacity utilization rate is less than half and is still declining." Zhu Gongshan, chairman of GCL Group, said at this year's Shanghai Energy Storage Exhibition.

according to the incomplete statistics of CNESA's DataLink global energy storage database, in the first three quarters of this year, the domestic mainstream lithium battery manufacturers have made public the planning scale of energy storage lithium battery capacity close to 300 GWh, and the overall utilization rate of the capacity reached in the second half of the year is less than 50%.

In the first ten months of this year, domestic energy storage lithium battery shipments were about 163 GWh; in the first three quarters of this year, new energy storage lithium battery installations were about 25 GWh. It can be seen that the capacity planning of energy storage lithium batteries is much higher than the actual shipments, and much higher than the actual installed scale of operation.

In recent years, energy storage has been facing the dilemma of low utilization rate. According to the 2022 research report of the CLP, the average equivalent utilization coefficient of electrochemical energy storage projects is 12.2, and the new energy storage coefficient is only 6.1.

Tian Qingjun also told the interface news that the low utilization rate of energy storage is an indisputable fact. The construction of energy storage power stations without use has become a cost item for investors and a sunk asset, which is a waste of resources.

"and because of the construction and not use, can not produce value, investors only from the perspective of reducing the initial investment cost to choose suppliers, resulting in low quality and low price winning, bad money to drive out good money." Tian Qingjun said that this has also laid a lot of "thunder" for the safe and sustainable development of the industry ".

This is the after-effect of the mandatory allocation and storage policy. New energy compulsory allocation and storage means that when enterprises develop new energy projects locally, they must allocate a corresponding proportion of energy storage according to local policies if they want to be connected to the grid.

New energy compulsory storage is the most important driving force for the development of domestic energy storage. "However, due to the domestic energy storage market policy is not yet mature, energy storage power station operation can not obtain reasonable income, and eventually lead to become a sunken asset." Tian Qingjun said.

Compared with Europe and the United States, China's electricity price gap is insufficient, subsidies are small, and the economy of energy storage systems is still poor.

Tian Qingjun proposed that the most important thing to solve this problem is to speed up the reform of the power system and open the power spot market faster, so that energy storage can participate in the power spot market and auxiliary service market as the main body, and realize value by participating in transactions.

The above-mentioned energy storage companies also told the interface news that the energy storage market has yet to be regulated. In the short term, the market demand for mandatory allocation of energy storage is mostly low-cost, and the demand for product safety and performance is low, and many energy storage projects have not been fully applied in the early stage of the market, resulting in project bidding more in favor of low prices. More companies adopt low-price strategies.

"the winning bid of enterprises whose products are seriously uncompetitive or even have great security risks has become a huge obstacle to the standardized and orderly development of the industry." The company said.

At the same time, the substantial role of the energy storage system on the scenery has also been questioned by the industry.

"Randomness, intermittency, and volatility are the basic and normal characteristics of new energy. They should not be eliminated, and they cannot be eliminated." In August this year, Zheng Yaodong, a full-time member of the expert committee of China Southern Power Grid Co., Ltd., put forward the above point of view, believing that energy storage is difficult to solve the problem of new energy development.

he pointed out that China's wind power utilization rate will be 96.8 and photovoltaic utilization rate will be 98.3 in 2022. if energy storage is to solve the problem of power abandonment, it is very difficult to find living space from the 4% and 2% of wind power and photovoltaic power abandonment.

"There is indeed talk in the industry that 'energy storage plays a very limited role in the new power system." The above-mentioned enterprises said that on the one hand, this is because the compulsory allocation and storage driven by the policy has not been fully applied, only on the premise of grid connection.

On the other hand, as the application scenarios and operational best practices for new energy batteries are still evolving, the entire industry still has a learning period. The overall development of energy storage is just like that of power vehicles. Once the policy is pulled and a certain scale is formed, the above two problems will be well improved, and energy storage will show the core role of efficient energy operation.

Shuffle period

On

"In the next two or three years, energy storage will definitely enter a reshuffle period." A number of industry insiders said to the interface news that the final energy storage industry will be the same as the power battery industry, forming a pattern of a few head enterprises focusing on serving the market and customers.

At present, there are four main types of players on the energy storage track, first of all, Ningde era (300750.SZ), Xinwanda (300207.SZ) and other lithium-electric taps, with upstream resource advantages. Followed by solar power (300274.SZ), Trina Solar (688599.SH), Jinfeng Technology (002202.SZ) and other wind power photovoltaic giants, for power trading or performance growth points and other needs, the layout of energy storage.

the third is haibosi chuang and haichen storageCan and other industry unicorns, in recent years, the rapid development, and more in the IPO sprint listing stage. The fourth is many cross-border players.

"There are energy storage enterprises in this year has begun to stop production, production reduction, layoffs. In the next three years, the rapid growth of the energy storage market and industry reshuffle coexist, industry concentration will also increase rapidly in these three years, and ultimately only enterprises with core technology and strong comprehensive strength can be the king of the leftovers and occupy a dominant position in the market." Tian Qingjun said.

Capital markets are also gradually showing concerns about energy storage. The Zhongguancun Energy Storage Industry Technology Alliance recently pointed out that the energy storage index experienced the largest monthly decline since its establishment in November, reaching 11.23 percent. The agency pointed out that under the pressure of inventory clearance, the industry will accelerate differentiation, and second-tier manufacturers will enter the stage of capacity integration and survival of the fittest.

In this process, difficulties and opportunities coexist.

Subdivided to the type of energy storage, the large storage track is more volume, the economy is insufficient, industrial and commercial energy storage will receive more and more attention. Large storage refers to the pre-table energy storage, subdivided into grid side and power side energy storage, its project investors are mostly large power generation enterprises.

Compared with large storage, the qualification requirements and technical standards of industrial and commercial energy storage are lower, and the demand side pays more attention to the economic issues of investment. At present, the domestic multi-land peak and valley price difference further widened, the time-sharing electricity price mechanism improved, virtual power plant and power spot market gradually improved, giving the industrial and commercial track more space. At the same time, distributed photovoltaics are also facing difficulties such as "access difficulties" and are in urgent need of energy storage configuration.

The White Paper on China's Industrial and Commercial Energy Storage Development in 2023 predicts that the new installed capacity of global industrial and commercial energy storage will reach 1.5 GW in 2023 and 11.5 GW in 2025.

Due to the pressure of destocking, the demand for overseas energy storage market has slowed down this year, but "going to sea" is still an important strategic layout for Chinese energy storage companies in the future.

Because overseas markets have higher electricity prices, energy storage systems have greater profitability. According to previous research by Gaogong Energy Storage (GGII), the gross profit level of the same 280Ah power energy storage battery in foreign and domestic markets can differ by 10%-20%.

"Domestic and foreign markets are equally important and indispensable." Tian Qingjun said that Chinese energy storage companies need to establish a global perspective, build an international talent system, face the international market, build international suppliers, achieve international delivery, and better feed the domestic market.

Although there are difficulties, the industry is mostly optimistic about the future of the energy storage industry. "It is difficult for China to find a better track than the new energy storage. Periodic overcapacity is a natural phenomenon in the market and will be slowly digested with the rapid growth of the market." Tian Qingjun said that as the third type of new energy assets after wind and light, the value of energy storage has begun to really highlight, and the role of energy storage in the future new power system is irreplaceable.

The above-mentioned energy storage companies pointed out that in 2024, safety and life are the most noteworthy issues and risks for energy storage, which is also the highest barrier in the current industry. "Reliable" is still the underlying logic that should be focused on in the long-term development of the energy storage industry, which has a very high technical threshold. In the future, with the market for product performance, safety, project operation and other comprehensive capacity demand, the new energy storage industry is bound to focus on the head.

"As the demand for safety and longevity of products continues to increase, safety and longevity will eventually form a watershed for companies." The company said.

Guojin Securities said that looking ahead to 2024, the cost of energy storage has fallen sharply, project yields have increased, and the expectation of a US interest rate cut is superimposed, and global energy storage installations are expected to continue to grow at a high rate.

The brokerage expects new global energy storage installations to be 94.6 GWh and 173.4 GWh in 2023-2024, up 101 percent and 83 percent year-on-year, respectively.

among them, the installed capacity of large storage was 74 GWh and 138 GWh respectively, up 111 percent and 86 percent year-on-year. Industrial and commercial energy storage was 6.2 GWh and 14.4 GWh respectively, up 107 percent and 132 percent year-on-year. Household storage was 14.4 GWh and 21.0 GWh respectively, up 60% and 46% year-on-year.