Driven by the European energy crisis and the domestic policy of compulsory allocation and storage, the energy storage industry has been heating up since 2022, and it has become even more popular this year, becoming a veritable “star track.” Faced with such a trend, a large number of companies and capital naturally rush to enter, trying to seize the opportunity in the rapid development period of the industry.
However, the development of the energy storage industry is not as good as expected. It only took just two years from the “industry heating up” to the “combat stage”, and the industry’s turning point has arrived in the blink of an eye.
It is obvious that the barbaric growth cycle of the energy storage industry has passed, large-scale reshuffle is inevitable, and the market competition environment is becoming increasingly unfriendly to companies with weak technology, short establishment time, and small company scale.
In a rush, who will be responsible for the safety of energy storage?
As a key support for building a new power system, energy storage plays a vital role in energy storage and balancing, grid dispatch, renewable energy utilization and other fields. Therefore, the popularity of the energy storage track is closely related to the market demand driven by policies. Very important.
As the overall market is in short supply, in recent years, established battery companies including CATL, BYD, Yiwei Lithium Energy, etc., as well as new energy storage forces such as Haichen Energy Storage and Chuneng New Energy have begun to focus on energy storage batteries. The substantial expansion of production has boosted investment enthusiasm in the energy storage field. However, since the leading battery companies have basically completed their main production capacity layout during 2021-2022, from the perspective of overall investment companies, the main entities actively investing in production expansion this year are mostly second- and third-tier battery companies that have not yet carried out production capacity layout, as well as new entrants.
energy storage, new energy, lithium battery
With the rapid development of the energy storage industry, energy storage batteries are becoming a “must compete” for various enterprises. According to data from the “White Paper on the Development of China’s Energy Storage Battery Industry (2023)” jointly released by research institutions EVTank, Ivey Economic Research Institute and China Battery Industry Research Institute, in the first half of 2023, global energy storage battery shipments reached 110.2GWh , a year-on-year increase of 73.4%, of which China’s energy storage battery shipments were 101.4GWh, accounting for 92% of global energy storage battery shipments.
With the huge prospects and multiple benefits of the energy storage track, more and more new players are pouring in, and the number of new players is staggering. According to Qichacha data, before 2022, the number of newly established companies in the energy storage industry has never exceeded 10,000. In 2022, the number of newly established companies will reach 38,000, and there will be more new companies established this year, and the popularity is evident. A spot.
Because of this, against the background of the influx of energy storage companies and strong capital injection, industrial resources are pouring into the battery track, and the phenomenon of overcapacity has become increasingly obvious. It is worth noting that there are many followers among the new investment projects, claiming that each company has greater production capacity than the other. Once the supply and demand relationship is reversed, will there be a big reshuffle?
Industry insiders said that a major reason for this round of energy storage layout boom is that the future market expectations for energy storage are too high. As a result, some companies have chosen to invest in capacity expansion and cross-border development after seeing the role of energy storage in the dual carbon goals. The industry has entered the industry, and those who are not related are all engaged in the energy storage business. Doing it well or not will be done first. As a result, the industry is full of chaos and safety hazards are prominent.
Battery Network noticed that recently, Tesla’s energy storage project in Australia caught fire again after two years. According to news, one of the 40 large battery packs at the Bouldercombe battery project in Rockhampton caught fire. Under the supervision of firefighters, the battery packs were allowed to burn out. It is understood that at the end of July 2021, another energy storage project in Australia using Tesla’s Megapack system also had a fire, and the fire lasted for several days before it was extinguished.
In addition to fires in large energy storage power stations, household energy storage accidents have also occurred frequently in recent years. Overall, the frequency of energy storage accidents at home and abroad is still at a relatively high stage. The causes of accidents are mostly caused by batteries, especially when they are put into operation. Energy storage systems years later. Moreover, some of the batteries used in energy storage projects that have experienced accidents in recent years come from leading battery companies. It can be seen that even leading companies with deep experience cannot guarantee that there will be no problems, let alone some new companies entering the market.
Wu Kai, chief scientist of CATL
Image source: CATL
Recently, Wu Kai, chief scientist of CATL, said in a speech abroad, “The new energy storage industry is developing rapidly and is becoming a new growth pole. In recent years, not only those who make consumer batteries and automobile batteries have begun to make energy storage batteries, but other industries such as real estate have also begun to make energy storage batteries.” , home appliances, clothing, food, etc. are all cross-border energy storage. It is a good thing for the industry to flourish, but we must also see the risks of rushing to the top.”
Due to the entry of many cross-border players, some companies that lack core technologies and manufacture products at low costs are likely to produce low-end energy storage and may not even be able to do post-maintenance. Once a serious accident occurs, the entire energy storage industry may be affected. The development of the industry has slowed down significantly.
In Wu Kai’s view, the development of new energy storage cannot be based on temporary gains but must be a long-term solution.
For example, this year, many listed companies have “died” in their cross-border energy storage battery development, including some small and medium-sized enterprises, which are not having an easy time. If these companies gradually withdraw from the market and have actually installed energy storage products, who will have safety issues? Come to tell the truth?
Price involution, how to maintain the industry ecology?
From ancient times to the present, one of the most typical features of industry involution is the “price war”. This is true no matter which industry, as long as it is cheap, there will be a market. Therefore, the price war in the energy storage industry has intensified since this year, with many companies trying to grab orders even at a loss, focusing on low-price strategies.
Battery Network noticed that since last year, the bidding prices of energy storage systems have continued to fall. Public bidding announcements show that at the beginning of 2022, the peak bid price of energy storage systems reached 1.72 yuan/Wh, and dropped to about 1.5 yuan/Wh by the end of the year. In 2023, it will fall month by month.
It is understood that the domestic energy storage market attaches great importance to the performance of enterprises, so some enterprises would rather quote a price close to the cost price, or lower than the cost price to grab orders, otherwise they will have no advantage in the later bidding process. For example, in China Energy Construction’s 2023 lithium iron phosphate battery energy storage system centralized procurement project, BYD quoted the lowest prices of 0.996 yuan/Wh and 0.886 yuan/Wh in the 0.5C and 0.25C bid sections respectively.
Some analysts believe that the reason for offering the lowest price may be that BYD’s previous focus on energy storage business was mainly overseas. The low-price bidding is a signal for BYD to enter the domestic energy storage market.
According to the China National Securities Securities Research Report, the number of domestic lithium battery energy storage system winning projects in October this year totaled 1,127MWh. The winning projects were mainly centralized procurement and shared energy storage projects by large energy companies, and there were also a small number of wind and solar distribution and storage projects. From January to October, the scale of domestic lithium battery energy storage system winning bids has reached 29.6GWh. The weighted average winning bid price of 2-hour energy storage systems in October was 0.87 yuan/Wh, which was 0.08 yuan/Wh lower than the average price in September.
It is worth mentioning that recently, the State Power Investment Corporation opened bids for the e-commerce procurement of energy storage systems in 2023. The total procurement scale of the bidding is 5.2GWh, including a 4.2GWh lithium iron phosphate energy storage system and a 1GWh flow battery energy storage system. . Among them, among the quotations for the 0.5C system, the lowest price has reached 0.644 yuan/Wh.
In addition, the price of energy storage batteries has been falling again and again. According to the latest bidding situation, the centralized procurement price of energy storage cells has reached the range of 0.3-0.5 yuan/Wh. The trend is as Dai Deming, chairman of Chuneng New Energy, previously said It is said that by the end of this year, energy storage batteries will be sold at a price of no more than 0.5 yuan/Wh.
From the perspective of the industry chain, there are many reasons for the price war in the energy storage industry. First, leading companies have significantly expanded production and new players have made huge leaps, which has confused the competitive landscape and caused companies to seize the market at low prices; second, technology Continuous development will promote the cost reduction of energy storage batteries; third, the price of raw materials fluctuates and falls, and the overall price reduction of the industry is also an inevitable result.
In addition, since the second half of this year, overseas household savings orders have begun to decline, especially in Europe. Part of the reason comes from the fact that the overall energy price in Europe has dropped to the level before the Russia-Ukraine conflict. At the same time, the local government has also introduced policies to stabilize energy supply, so the cooling of energy storage is a normal phenomenon. Previously, the expanded production capacity of domestic and overseas energy storage companies was nowhere to be released, and the backlog of inventory could only be sold at low prices.
The impact of price wars on the industry is a series: in the context of falling prices, upstream suppliers’ performance continues to be under pressure, which can easily affect the company’s operations and R&D; while downstream purchasers will compare price advantages and easily ignore products. Performance or security issues.
Of course, this round of price war may bring about a major reshuffle in the energy storage industry, and may increase the Matthew Effect in the industry. After all, no matter what industry, the technical advantages, financial strength, and production capacity scale of leading enterprises are beyond the ability of small and medium-sized enterprises to continue to compete. The longer the price war lasts, the more beneficial it will be for large enterprises, and the less energy and energy that second- and third-tier enterprises will have. Funds are used for technology upgrades, product iterations, and production capacity expansion, making the market more and more concentrated.
Players from all walks of life are pouring in, product prices are falling again and again, the energy storage standard system is imperfect, and there are safety risks that cannot be ignored. The current involution of the entire energy storage industry has indeed hindered the healthy development of the industry.
In the era of large-scale energy storage, how should we read business scriptures?
Performance of listed lithium battery companies in the first three quarters of 2023
According to the performance of A-share lithium battery listed companies (only midstream battery manufacturing companies, excluding companies in the upstream materials and equipment field) sorted out by Battery Network in the first three quarters of 2023, the total revenue of the 31 listed companies included in the statistics is 1.04 trillion yuan, with a total net profit of 71.966 billion yuan, and 12 companies achieved both revenue and net profit growth.
What cannot be ignored is that among the listed lithium battery companies included in the statistics, only 17 had positive year-on-year operating income growth in the first three quarters, accounting for approximately 54.84%; BYD had the highest growth rate, reaching 57.75%.
Overall, although the demand for power batteries and energy storage batteries has continued to grow since the beginning of this year, the growth rate has slowed down. However, due to the continuous destocking in the early stage, the demand for consumer and small power batteries has not seen a significant recovery. The above three categories are superimposed. There are varying degrees of low-price competition in the battery market, as well as significant fluctuations in upstream raw material prices and other factors. The overall performance of listed lithium battery companies is under pressure.
Of course, the energy storage industry is ushering in a major explosion. Electrochemical energy storage represented by lithium batteries will occupy a major position in the energy storage industry. This is already a certain event. Some people in the industry said that the current situation of the energy storage industry is exactly the same as that of steel, photovoltaics and other fields. Good industry conditions have led to overcapacity and price wars are unavoidable.
Power battery, energy storage battery, lithium battery
According to EVTank, the global demand for power (energy storage) batteries will be 1,096.5GWh and 2,614.6GWh respectively in 2023 and 2026, and the nominal capacity utilization rate of the entire industry will drop from 46.0% in 2023 to 38.8% in 2026. EVTank said that with the rapid expansion of industry production capacity, the capacity utilization indicators of the entire power (energy storage) battery industry are worrying.
Recently, regarding the turning point of the lithium battery industry, Yiwei Lithium Energy stated in the reception agency’s survey that starting from the third quarter of this year, it is expected that the lithium battery industry will reach a more rational and benign development stage in the fourth quarter. Generally speaking, industry differentiation will come this year. The good ones will be better. Companies that cannot make profits may face a more difficult situation. The value of existence of companies that cannot make profits will continue to decline. At the current stage, battery companies need to achieve high-quality development and strive for technology, quality, efficiency, and digitalization. This is a healthy way of development.
As for price wars, no industry can avoid it. If any company can reduce costs and increase efficiency without sacrificing product quality, it will actually promote the development of the industry; but if it is disorderly competition, it would rather sacrifice Product performance and quality have to compete for orders, but that will not stand the test of time. In particular, energy storage is not a one-time product and requires long-term operation and maintenance. It is linked to safety and is closely related to corporate reputation.
Regarding price competition in the energy storage market, Yiwei Lithium Energy believes that price competition must exist, but it only exists among some companies. Companies that only reduce prices but do not have the ability to continuously iterate products and technologies cannot be among the better companies in the long term. to compete in the market. CATL has also responded that there is currently some low-price competition in the domestic energy storage market, and the company relies on the performance and quality of its products to compete, rather than on low-price strategies.
Statistics show that dozens of provinces and cities across the country have successively announced energy storage development plans. The domestic energy storage market is in a critical period from the early stage of application to large-scale application. Among them, there is huge room for the development of electrochemical energy storage, and to a certain extent This has stimulated the upstream and downstream of the industrial chain to accelerate the layout of related industries. However, judging from the current domestic application scenarios, most of them are still in the stage of mandatory allocation and storage, and the situation of allocation but not use and low utilization rate is relatively obvious.
On November 22, in order to standardize the management of new energy storage grid connection, optimize the dispatching operation mechanism, give full play to the role of new energy storage, and support the construction of new energy systems and new power systems, the National Energy Administration organized the drafting of the “On Promoting New Energy Storage Notice on Grid Connection and Dispatch Operation (Draft for Comments)” and publicly solicit opinions from the public. These include strengthening the management of new energy storage projects, providing new energy storage grid connection services, and promoting the use of new energy storage in a market-oriented manner.
In overseas markets, although household storage orders have begun to cool down, the huge drop in demand caused by the energy crisis is normal. In terms of industrial and commercial energy storage and large storage, overseas market demand remains unabated. Recently, CATL and Ruipu Lanjun have , Haichen Energy Storage, Narada Power and other companies have successively announced that they have obtained large energy storage orders from overseas markets.
According to a recent research report by China International Finance Securities, energy storage is becoming economical in more and more regions. At the same time, domestic requirements and proportions for new energy distribution and storage continue to increase, Europe’s policy support for large-scale storage has increased, and Sino-U.S. relations have marginally improved. , is expected to promote the rapid development of large-scale storage and user-side energy storage next year.
Everview Lithium Energy predicts that the growth rate of the energy storage industry is expected to accelerate in 2024, because battery prices have dropped to the current level and have good economics. The demand for energy storage in overseas markets is expected to maintain high growth. .
Post time: Dec-21-2023