Can energy storage save the battery industry chain with overcapacity

Since 2022, the demand for energy storage has grown rapidly. The capacity expansion of all links from the cell to the key raw materials is also causing the energy storage industry to worry about a new round of overcapacity. This article will discuss whether energy storage can support the battery industry chain.

How much energy storage is required

According to statistics, in China, since the second half of last year, the total scale of energy storage demonstration projects planned and released by various regions has reached 19.1GW/48.4GWh.

Compared with the installed capacity of 2.4GW/4.9GWh in 2021, China’s energy storage demand is indeed developing by leaps and bounds this year. However, considering the progress of project construction and various uncertain factors in the process of implementation, the procurement bidding does not mean that the system can be shipped and installed immediately.

The project scale actually put into operation this year cannot achieve the effect created by various bidding procurement scales. According to preliminary estimates, the scale of grid connection is expected to be about 11GWh this year.

In addition, the rapid growth of the global household market and the installed capacity of large energy storage projects has further driven the export of China’s batteries and energy storage systems. Judging from the orders announced by various household energy storage companies, the energy storage orders of other countries are expected to exceed those of China.

In addition, considering that the global battery supply chain is mainly concentrated in China, the export scale of China’s energy storage battery modules and DC side systems will exceed that of energy storage systems.

Development of energy storage industry chain

According to data, the output of energy storage batteries in China last year was 32GWh, while in the first eight months of 2022, the total output of energy storage batteries in China reached 52GWh.

The output of energy storage batteries in the first eight months has exceeded 1.6 times the total output of last year. It can be seen that various battery companies have started to increase the production of energy storage batteries since this year.

Energy storage cell products

In terms of products, the 280Ah cell in the Chinese market has almost become the industry standard. At present, REPT, Great Power, EVE, Hithium, CALB, HIGEE, NARADA, ZTT and other energy storage companies are expanding 280Ah battery production lines.

In the bidding document of energy storage system released this year, a large number of developers have explicitly required that the energy storage cell must be 280Ah in the procurement of energy storage system.

In addition, various companies have also released a new generation of cell products for energy storage applications, and the size of the cell has a growing trend.

Hithium released 300Ah special battery for electric energy storage and large cylinder special battery for household energy storage this summer, and planned to start delivery in the first quarter of 2023.

The new products of EVE further increase the size of the battery cell to 560Ah, and a single battery can store 1.792kWh of energy, which is expected to be delivered in the second quarter of 2024;

SVOLT’s prospectus clearly stated that the energy storage product uses lithium iron phosphate square laminated battery. BYD is planning to use its blade battery technology in the energy storage field, so as to further improve the energy density of the energy storage system, reduce the use space and floor area.

Energy storage business layout

In order to keep up with the rapid development of the energy storage market, various battery companies have also adjusted their strategies and made efforts to store energy. For example:

Battery companies that traditionally produce flexible cylindrical battery products and focus on power or consumer markets, such as Farasis, BAK and Desay, have also increased the capacity of square lithium iron phosphate, so as to ensure the loss of energy storage in this important market.

Hithium, Pylon Tech and other companies have been determined and focused on energy storage since they entered the field.

During the period of rapid development of the sodium ion battery industry, all companies that have entered the sodium ion battery industry also place high hopes on the energy storage market in the future.

How fast is the expansion of battery capacity

According to statistics, 12 representative battery companies in China have announced that their factories and production capacity have exceeded 3600GWh. Considering that there are a large number of other manufacturers in the industry, it is no doubt that the total planned capacity of Chinese battery companies exceeds 5TWh.

In addition, Gotion High Tech, CALB, SVOLT and other companies have proposed the goal of reaching 500 or 600GWh capacity by 2025, which also means that a large number of new planned capacity is on the way.

Considering the cycle of battery expansion, if more than half of the planned capacity of 5TWh can be realized, a new round of overcapacity by 2025 should be a certainty.

Energy storage is still a relatively small market segment

According to data, from January to August 2022, the total output of lithium ion batteries in China reached 425GWh, compared with that of energy storage batteries, accounting for only 12%. On the other hand, in the first eight months of 2022, China’s power battery load has exceeded 162GWh.

It can be seen that although the output of energy storage batteries has achieved a substantial growth year on year, it is still a relatively small market segment in the entire lithium battery industry, and the installed capacity of energy storage batteries is still not on an order of magnitude compared with power batteries.

In terms of companies, the business and revenue focus of the first and second tier battery companies are still in the field of automotive power batteries, but the revenue scale and proportion of energy storage business have grown rapidly since last year.

Taking CATL as an example, the revenue of energy storage business in the first half of this year increased by 171.41% year on year, accounting for 11% of the total revenue.

The proportion of Great Power’s energy storage business has increased from 18% in 2020 to 50% in the first half of this year, and it plans to increase to more than 80% in the long term. Among them, the household storage business (including household storage and portable power station) with relatively good profitability contributes a lot to the revenue of energy storage, reaching 70%.

Summary

Although there has been a rumor in the energy storage market that “energy storage batteries are in short supply and companies stop taking orders”.

However, it can be predicted that, as companies have launched into the energy storage market and gradually completed the construction of new capacity, the scarce energy storage battery market like this year will no longer exist, and the competition in the field of energy storage batteries will become increasingly fierce.

The supply of energy storage batteries will truly enter a competitive stage in which comprehensive strength such as performance, price, capacity and supply capacity will be fully considered.