Energy storage companies suspend taking orders-what’s the reason

Energy storage companies suspend taking orders-what’s the reason

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Affected by the shortage of batteries, some energy storage companies have suspended receiving orders. This year, the energy storage market is hot. Many energy storage companies are running projects around the world, but now they have to finish ahead of schedule.

Since the end of September this year, the battery supply has been in continuous shortage, and the suspension of orders by companies is quite common and the situation is getting worse. Data shows that in the first half of 2022, China’s energy storage battery output exceeded 32 GWh. In 2021, China’s new energy storage capacity increased by 2.4 GW/4.9 GWh. It is reasonable to say that the output can fully meet the market demand.

Why is there a shortage of battery supply? With the large-scale development of energy storage imminent, will battery supply become the bottleneck of the rapid growth of the industry? In this article, we will discuss the answer.

Energy storage project construction is forced to be delayed due to battery shortage

In fact, the shortage of energy storage batteries is foreseeable. In the first half of 2022, some new energy projects delayed the pace of construction based on the cost of upstream raw materials and cell prices.

In the fourth quarter, in order to complete the grid connection requirements at the end of the year, the companies had to purchase batteries collectively. Some manufacturers are really out of stock. Even if available, the quantity is very limited.

Behind the shortage of energy storage batteries is the rapid growth of new energy vehicles and energy storage market. Last year, the battery shortage in the field of new energy vehicles was reflected in the collective delay in delivery of the vehicle companies.

In addition, in order to get the battery smoothly, the management stayed in the battery manufacturer for a week. This year, with the help of policies, the energy storage industry, another major application market of batteries, has accelerated its development, and the number of energy storage projects has surged, which has exacerbated the shortage of battery supply to a certain extent.

The data shows that in the first half of the year, China’s lithium ion battery output exceeded 280 GW, with a year-on-year growth of 150%. Among them, the output of energy storage battery exceeds 32 GWh, accounting for 11% of the total output.

Compared with the demand scale of new energy vehicles, the market of energy storage batteries is still small and the bargaining power is weak. An company personage revealed that the cost of energy storage construction has risen by a large part compared with the project planning. Even if they try to get the battery, they will pay a high price. Therefore, some new energy projects have been delayed to the first quarter of next year.

Energy storage project construction is forced to be delayed due to battery shortage

A number of lithium energy storage battery manufacturers said that the supply of energy storage batteries could not meet the demand, and the spot has been scheduled for next year. At present, the main shortage is 280Ah large cell.

Compared with 50-100Ah cell products, 280Ah cell has higher volume energy density and less use of parts, which can greatly save costs. At present, energy storage battery procurement or project bidding generally requires single cell capacity to reach 280Ah or above.

It is understood that the 280Ah battery cell was first introduced by CATL in 2020 and has become the standard configuration for energy storage project construction. Battery companies including EVE, Great Power, and Gotion high tech have capacity layout, but it will take some time to fully release the capacity.

The profits of Chinese energy storage companies are affected and turn to the global market

However, even if it can continue to receive orders, it will not necessarily increase net profits for energy storage companies. In the first half of the year, the energy storage market was basically in the planning and development stage.

According to statistics, the scale of new energy storage projects newly planned and under construction was close to 130 GWh, while the actual operation volume was less than 1.5 GWh. The profits of energy storage companies are affected by the double pressures of the rising prices of upstream raw materials and the lower prices of downstream projects.

Energy storage companies generally show a situation of “increasing income without increasing profit”. Their system business has risen sharply, while gross profit margins have declined. Energy storage system integrators that do not produce electric cells are more passive.

In the first half of the year, the operating revenue of CATL energy storage system reached 12.74 billion RMB, up 171.5% year on year, but the gross profit margin dropped 30 percentage points to 6.43%; EVE achieved a revenue of 14.926 billion RMB, a year-on-year increase of 127.54%, and the gross profit margin of lithium ion battery industry chain related businesses was 14.96%, a year-on-year decrease of 10.34%.

The profits of Chinese energy storage companies are affected and turn to the global market

In this case, many energy storage companies are looking to the global market. For example, SUNGROW will maintain the basic installed capacity of energy storage in China, but focus on the market of other countries.

A large part of China’s energy storage capacity is exported to the global market. In particular, the global business volume of leading manufacturers is large. In 2021, the global shipment of CATL energy storage batteries accounted for about 85% of the total shipment of energy storage batteries. The price difference of electricity in Europe and the United States is large, and energy storage products can be sold at a good price.

Especially since this year, Europe has experienced an energy crisis, the price of fossil energy has risen significantly, the market demand for energy storage products has surged, and China’s battery export has witnessed explosive growth. Data shows that in the first eight months of this year, China’s lithium ion storage battery exports totaled US $29.926 billion, up 82.97% year on year.

It is expected that the shortage of energy storage batteries will be alleviated next year

To cope with the shortage, the top priority is to increase the supply of energy storage batteries. At present, the production lines of most battery companies are basically in a state of full production and full sales. The energy storage project announced now has a large scale.

Considering the security factors and the collaboration with the new power system, the owner’s requirements for the project are also getting higher and higher, which makes companies produce batteries for the project, and puts forward higher requirements for battery companies. Some battery manufacturers are also comprehensively evaluating the feasibility of the production line.

It is expected that the shortage of energy storage batteries will be alleviated next year

On the whole, based on the current supply capacity of battery companies, the future capacity planning of major battery manufacturers, and the market growth expectation in the next five years, battery supply will not become a weak point hindering the development of the energy storage industry.

Based on the promising prospect of the energy storage market, battery companies such as CATL, EVE and BYD have intensively expanded their capacity this year, and 10 billion RMB investment projects have emerged frequently. The insiders believe that this is a process of market game. If the battery price rises too high and the supply is short, the new energy companies will not be able to pay for it, and some projects would rather not do it.

However, some professionals said that the shortage of energy storage batteries is phased, and the absolute capacity of batteries is sufficient. With a large number of new production lines reaching capacity, it is expected that the supply shortage will be alleviated next year.

In the current situation of supply shortage, the early binding mode of new energy and energy storage industry has been further deepened. Recently, CATL and SUNGROW signed a strategic cooperation agreement. The two sides will expand cooperation in energy storage system product innovation and global applications to jointly promote industrial collaboration.

Besides, Great Power and Electric Times signed a strategic cooperation agreement to jointly develop a new energy storage market. This industry integration can play a role of “1+1>2”. On the one hand, it can ensure the stability of energy storage battery supply; On the other hand, it can also extend the business circle.

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