Two major lithium battery and energy storage exhibitions, namely the China International Battery Fair (CIBF) in Shenzhen and the Shanghai New Energy Industry Expo (SNEC), took place in May, showcasing the market's vibrancy and industry's vitality with an overwhelming number of participants. The energy storage market has been booming since 2021, with companies entering the industry, and the contention for cells boosting demand. After the SNEC, the market is still robust, but noticeable changes emerge in supply chain relationships, product technologies, and market demand compared to last year. Prior to the upcoming Intersolar Europe, InfoLink summarizes key trends in the energy storage industry observed during the SNEC 2023.
Cell and ESS technology
1. Large-capacity cells increase energy density and reduce cost
Manufacturers upgrade the capacity of their existing 280Ah prismatic cells to 306Ah, 314Ah, and 320Ah, such as BYD‘s 350Ah blade battery and EVE Energy’s LF560K. Increasing cell capacity from 280Ah to 320 Ah allows 10-15% of improvement in energy density. Additionally, manufacturers optimize system design to make the most use of containers, accommodating over 5 MWh of ESS in a 20’ container. For instance, CHINT unveiled Power Block 2.0, a 20’ ESS container with a capacity of 5.1 MWh, BYD launched the MC Cube, and SYL Battery introduced an integrated ESS container based on liquid cooling batteries. BYD's MC Cube uses blade batteries, omitting the battery pack segment. Its modular design of container assembly reduces material and assembly costs and increases the versatility of ESS containers. With other companies following suit and introducing blade or blade-like cells, the design concept of the MC Cube is gaining traction.
2. Residential ESS up for large-capacity cells?
Manufacturers strive to break product similarity by introducing battery pack solutions with high-capacity battery cells, shifting from the previous 3-5-kWh single-module to the 7-kWh multi-module. Battery packs for residential ESS are up for higher capacity as well. Huawei's residential ESS employs 280Ah battery cells, while BYD presented a wall-mounted, integrated, residential ESS based on blade batteries with a thickness of only 80mm. The conventional notion that energy storage does not require higher energy density is overthrown. For now, energy density is the key to product differentiation.
3. High-temperature batteries affect dominance of liquid cooling technology
CATL, Trina, and other manufacturers introduced high-temperature lithium-ion battery energy storage systems without air conditioning. CATL released the world's first solar-plus-storage integrated solution with zero auxiliary power supply, increasing cycle life under high temperatures and reducing LCOE significantly. The product is superior despite higher cell cost and production costs. Whether it will open up a new technology route for lithium battery-based ESS is worthy of note. If more companies adopt the high-temperature technology, liquid cooling and immersing cooling ESS markets will be affected.
Steady market expansion with new application scenarios and emerging markets coming to the limelight
Global energy storage market has seen rapid growth over the past two years, resulting in heightened competition and a more chaotic competitive landscape. In mature markets, in addition to competition among leading companies, entry barriers are higher due to policy and regulatory requirements. Therefore, emerging application scenarios, such as C&I energy storage, and emerging markets, such as the Middle East, Southeast Asia, and Africa, become the more appealing targets for business expansion.
In China, C&I energy storage has received heated discussion since 2H22. However, actual market activity is relatively rational. Corrections are likely, given the overly optimistic expectations.
Emerging markets include Latin America, the Middle East, Southeast Asia, Africa, and some European countries. Countries like South Africa, Italy, Spain, Greece, Chile, Algeria, Lebanon, Vietnam, and the Philippines attract much attention. But it is much thunder and little rain, given the scale and mid to long-term demand of these markets that are still far behind mature markets.
Price trend and supply chain corrections
In April, price quotes for DC battery ESS fell below RMB 1.1/Wh, then rebound to RMB 1.2-1.3/Wh in May due to the increase in lithium carbonate prices, indicating a clear correlation between lithium prices and ESS prices. As lithium-ion battery supply-demand stabilizes, cell manufacturers rapidly release production capacity, and cell and ESS manufacturing technologies advance, a price war in 2H23 is on the brink.
In the past year, utility-scale and residential energy storage has witnessed an influx of competitors, evident not only at the SNEC but also at the Zhongguancun Energy Storage Exhibition and other related industry events in April. This trend has now extended to the commercial and industrial sectors. As equipment resources become abundant, price competition intensifies, technological advantages emerge, and sales channels become more established, the supply chain will inevitably see manufacturers reshuffling.
The energy storage industry is growing rapidly. As the supply-demand relationship of relevant supply chains stabilizes, technology, prices, distribution channels, and services become the key to product differentiation and establishing competitive advantages. Meantime, policies should be reviewed and updated regularly to avoid hindrances to market development. With the sophistication of technology, market dynamics, and policy, the energy storage market is expected to advance and mature as the EV market does.
Image: Comparison of blade cells and prismatic cells with capacity ≥ 300Ah