2024: Top 10 Current Status and Four Trends in the Energy Storage Industry

In 2024, there are two completely different opinions about the energy storage industry.

On the one hand, as the energy storage industry has entered the "fast lane" in the past two years, energy storage has attracted a large amount of capital to "crazy" inflow, and they are optimistic about the huge growth space of energy storage, and the overall scale of the energy storage industry has expanded rapidly.

On the other hand, overheated investment has also brought about the problem of overcapacity. Especially when there are policy risks and insufficient downstream demand, inventory has increased significantly, leading to low-price competition in the market, the crisis of industry reshuffle has intensified, and there are many exits, and corporate profitability has been compressed.

According to incomplete statistics, since 2023, energy storage manufacturers have announced nearly 70 expansion plans, with a total investment of 471.719 billion yuan, and the planned expansion capacity of energy storage batteries and systems has exceeded 900GWh.

Overcapacity, weak demand, and capital hesitation are becoming the dark clouds that are constantly accumulating over the energy storage industry. However, in the field of energy storage, the rise of industrial and commercial energy storage, the rise of liquid flow batteries, the popularity of grid-type energy storage, etc. may become the key to "clearing the fog" in the industry.

Current situation 1：High growth in installed capacity

China is a rising star in the global new energy storage market. On January 25, 2024, the National Energy Administration held a press conference. Data shows that by the end of 2023, the cumulative installed capacity of new energy storage projects that have been built and put into operation nationwide has reached 31.39 million kilowatts/66.87 million kilowatt-hours, with an average energy storage time of 2.1 hours. In 2023, the newly installed capacity will be about 22.6 million kilowatts/48.7 million kilowatt-hours, an increase of more than 260% from the end of 2022, nearly 10 times the installed capacity at the end of the "13th Five-Year Plan".

According to the "Guiding Opinions on Accelerating the Development of New Energy Storage" issued by the National Development and Reform Commission and the National Energy Administration, by 2025, the installed capacity of new energy storage will reach more than 30 million kilowatts. It can be seen that by the end of 2023, my country's new energy storage has completed the 2025 installation target ahead of schedule.

This is mainly due to the intensive introduction of favorable national policies, the increasingly mature business model of new energy storage, and the continuous reduction of the initial investment cost of the system.

Current situation 2： Low price internal volume, the decline is close to halving

On the one hand, there is a rapidly expanding production capacity, and on the other hand, there is a market that is quietly stalling. It is not difficult to find out from the development context of 2023 that the price war in the energy storage field first started from the structurally oversupplied battery cell field, which then triggered the continuous decline in the price of the DC side system, and then the AC side system price war continued to fall.

The average price of energy storage batteries dropped from 0.9 yuan to 1.0 yuan/Wh at the beginning of 2023 to 0.4 yuan to 0.5 yuan/Wh at the end of the year, and the price was directly halved. At the same time, compared with the beginning of the year, the average price of energy storage systems dropped to about 0.8 yuan/Wh, a decrease of 40%, which is also close to halving.

Current situation 3: A "withdrawal wave" appears on the road to energy storage IPO

In August 2023, the China Securities Regulatory Commission announced a phased tightening of the IPO (initial public offering) rhythm to promote a dynamic balance between investment and financing. Many energy storage companies have begun to slow down their IPO pace.

According to incomplete statistics, there will be nearly 400 investment and financing events related to energy storage in 2023, and the financing scale may reach more than 100 billion yuan. More than 100 energy storage companies are queuing up for IPOs, and more than 20 companies have completed IPOs, but more than 20 energy storage-related companies have terminated their listings. The reason is that the China Securities Regulatory Commission believes that some energy storage companies lack core competitiveness.

Current situation 4: The development of industrial and commercial energy storage is accelerating

As the peak-to-valley price gap in various parts of China further widens, coupled with the decline in lithium battery costs, the IRR (internal rate of return) of industrial and commercial energy storage has steadily increased, and the economic efficiency has become more and more obvious. Industrial and commercial energy storage has become the fastest growing branch in the energy storage track. In 2023, the installed capacity of industrial and commercial energy storage (lithium battery energy storage system) on the user side may be close to 2GWh, and will maintain a high growth rate in 2024-2025. It should be noted that the total scale of this market in 2022 is only a few hundred MWh.

Industrial and commercial energy storage has attracted intensive capital in the past two years due to its blowout growth. Relevant data show that since 2023, my country has registered more than 50,000 new energy storage companies, with an average of more than 150 new companies entering the energy storage field every day. In terms of installed capacity, from January to June 2023 alone, my country's newly added industrial and commercial energy storage installed capacity reached 2826.7 kWh, a year-on-year increase of 1231%. The growth rate of industry scale/market demand cannot keep up with the growth rate of the number of companies/industry capacity.

2023 is recognized by the industry as the first year of industrial and commercial energy storage. Due to the wide range of application scenarios and the release of favorable policies such as peak and valley electricity prices and electricity spot, the industrial and commercial energy storage industry has seen a "rush" phenomenon. However, affected by different local time-of-use electricity price policies, subsidy policies, industrial development foundations, etc., the differences in the industrial and commercial energy storage market will continue to expand. In the short term, provinces and regions such as Jiangsu, Zhejiang, and Guangdong will occupy the vast majority of market demand, and some companies will take the lead in forming brand awareness and channel influence in the regional market.

Taking Zhejiang as an example, the Zhejiang Provincial Energy Bureau recently issued the "Guidelines for User-side Electrochemical Energy Storage Technology in Zhejiang Province", which is the first user-side energy storage technology guideline in the country. This is a signal, a regulation of market order, and a constraint on the frequent occurrence of chaos such as low-price competition and construction without investment.

Current situation 5 The household storage market "turned sharply downward"

Since 2023, the accelerated cooling of the household storage market has become a recognized fact in the industry, which can be described as "ice and fire" compared with the grand occasion in 2022. According to data from S&P Global, global household energy storage system shipments fell year-on-year for the first time in the second quarter of 2023, which was also the first decline since records began - a year-on-year decline of 2%.

The H1 shipments of household energy storage in 2023 were about 6GWh, and the full-year forecast was significantly lowered. Based on this, the first priority for household storage companies is to clear inventory. According to relevant statistics, the European household energy storage market will reach 9.57GWh in 2023, and the inventory digestion in the second half of the year will reach about 4.47GWh. It is expected that the household storage inventory clearance will continue until the end of 2023 and the beginning of 2024.

Current situation 6 Energy storage cells are iterating from 280Ah to 300+Ah

With the growing prosperity of the energy storage market, energy storage battery products are developing towards large capacity. Before 2023, 280Ah square batteries quickly penetrated the market with large capacity, high safety, high energy density and mature mass production technology. Starting from 2023, in order to adapt to the trend of larger scale and larger capacity of the future energy storage market, the energy storage market will mainly focus on 300Ah+ large-capacity batteries to compete. By the end of 2023, nearly 30 domestic battery manufacturers, including CATL, EVE Energy, CATL, Ripple, Narada, Penghui Energy, Haichen Energy Storage, and Ganfeng Lithium, have successively launched battery cell products with a capacity of more than 300Ah.

The intensive launch of 300Ah+ energy storage batteries reflects the positive growth and technological iteration of the energy storage market. Furthermore, in order to layout the future market, some battery companies have started technical reserves such as 500Ah+, 600Ah+, 1000Ah+, and blade batteries.

Current situation 7 Competition for 20-foot 5MWh liquid-cooled energy storage system

While the capacity of battery cells has increased, the era of 5MWh+ energy storage systems has also arrived. In 2023, at least 20 energy storage companies will successively release 20-foot 5MWh energy storage systems based on 314Ah/320Ah large batteries. As the scale of energy storage units increases, the number of battery clusters in parallel increases, battery heat dissipation and balancing issues become more prominent, and the requirements for safety and temperature control technology are also higher. Liquid cooling solutions are replacing air cooling as the mainstream energy storage system cooling technology. In 2023, there is no suspense about the battle between air cooling and liquid cooling, and liquid cooling has become a major manufacturer's competition to launch liquid cooling products. According to the forecast of Gaogong Industry Research Institute (GGII), the market share of liquid cooling solutions will exceed 50% in 2025.

Current situation 8 Energy storage goes overseas, and new changes are brewing in the global track

Going overseas has become a keyword for energy storage. From the perspective of the global market, China, the United States, and Europe are currently the top three energy storage markets in the world. According to the European Energy Storage Association, about 200GW of energy storage needs to be deployed by 2030, that is, 14GW will be added each year; by 2050, 600GW of energy storage needs to be deployed, that is, 20GW will be added each year after 2030. In terms of overseas markets, analysts said that the European and American markets have become an important business layout direction for China's leading energy storage industry chain companies due to their high degree of electricity marketization and good profitability. Listed companies that have deployed energy storage-related businesses overseas are mainly Sungrow Power Supply, Trina Solar, Kehua Data, Sineng Electric, Penghui Energy, EVE Energy, Xinwangda, Clou Electronics, GoodWe, Shenghong Shares, Risen Energy, Payne Technology, KSTAR, etc.

Current situation 9 Grid-type energy storage has entered the public eye

From "following the grid" to "building the grid", in 2023, grid-type energy storage has initially entered the public eye. This requires adding new control strategies to the energy storage system on the new energy side, so that it has the frequency regulation and voltage control capabilities of synchronous generators or similar synchronous generators, forming a grid-type energy storage system. The reason is that the proportion of new energy power generation has increased rapidly, and the power system has gradually shown the characteristics of "double high" (high proportion of renewable energy and high proportion of power electronic equipment). The production structure, operation mechanism, functional form, etc. of the power system are undergoing profound changes. Problems such as low inertia, low damping, and weak voltage support have become prominent, and the safe and stable operation of the power system faces severe challenges.

Current situation 10 The commercialization of flow batteries is accelerating

Flow batteries have the characteristics of intrinsic safety and have advantages in the field of energy storage with high safety requirements. Although flow batteries are in the early stages of commercialization, as the trend of long-term energy storage becomes clearer, the popularity of flow batteries will only increase. According to incomplete statistics, my country's planned production capacity of flow batteries in 2023 has exceeded 90GWh, with an investment of more than 41.7 billion yuan, and nearly 40 projects have been signed/under construction/put into production. The development of flow batteries has accelerated significantly. In 2025, domestic flow battery shipments will exceed 10GWh (calculated based on 4 hours, including exports), with a compound growth rate of more than 90%.

Now, standing at the starting point of 2024, can we "see the moon through the clouds"? Based on the price war background, there will be four "key points" in the development of energy storage in 2024:

① Battery cell companies move from "rolling" battery cells to "rolling" systems

As battery companies join the energy storage system integration track, industry competition is becoming increasingly fierce. Currently, many battery manufacturers including CATL, BYD, EVE Energy Storage, Ruipu Lanjun, Haichen Energy Storage, and Honeycomb Energy have begun to gradually get involved in the integration business. Battery cell manufacturers have developed new energy storage system products. In addition to DC side products, many companies have also developed new AC side system products. The application scenarios cover the power supply side, industrial and commercial side, user side, etc., and directly participate in the competition in the energy storage field. If battery cell manufacturers transform into full-system roles, they may compete with existing customers and will comprehensively compete in all aspects.

② Rather than rolling inward, it is better to go overseas

From the perspective of market share, the large demand in the overseas market has also led more and more energy storage companies to choose to go overseas to seek a way out. In addition to the traditional mainstream energy storage markets such as Europe, the United States, Australia, and Japan, Southeast Asia, Africa, and the Belt and Road countries have also become important target markets.

③ The energy storage industry is increasingly calling for a shift from price-driven to value-driven

Behind the internal circulation, the energy storage industry is accelerating towards value-driven. The market is not looking for low prices, but real cost-reduction capabilities. For example, on the industrial and commercial side, the back-end capabilities of energy storage companies are accelerating, using advanced technologies such as AI and big data analysis to increase the owners' income.

④ The market for tapping new energy storage is being tapped

First and foremost, in addition to the current domestic power generation side's new energy distribution storage, traditional user-side and other energy storage fields, industrial and commercial energy storage application scenarios are constantly being tapped. Again, continue to explore the scope of product use and break through the upper limit of lithium battery use.