The new energy storage industry has emerged as a prominent player among various emerging sectors. Driven by both industrial policies and increasing market demand, this industry is expected to undergo rapid development. Technological advancements and intensified market competition will further accelerate the industry's progress, leading to significant shifts in the market landscape.
The industry is on the stage from its infancy towards the rapid growth; During this Journey, the market will witness consolidation and clearance
Downstream applications of lithium-ion batteries primarily include consumers, power, and energy storage. To gauge the evolution of the entire industry’s lifecycle, it is meaningful to examine the competitive landscape, which can be compared to the stages experienced by phone manufacturers. These stages include: First, competition between established companies and new entrants. Second, emergence of new entrants overtaking established companies. Third, new entrants entering a knockout stage. Last, the industry stabilizing after a shakeout period, leading to long-term development. Presently, the energy storage market finds itself in an oligopoly, indicating a market structure characterized by a small number of dominant firms.
In early 2023, the automotive OEMs found themselves embroiled in an intense price war. Leading the charge were Tesla and BYD, who decided to slash their prices. Following suit, various other brands also adjusted their prices. As prices neared the cost line, the industry began experiencing consolidation.
Turning to the energy storage sector, many integrators become part of the energy storage system. However, the industry’s concentration remains relatively low at this point. The situation is expected to change with the introduction of standardized full life cycle measures for the industry. These forthcoming policies will provide clarity, ensuring that companies lacking core technologies or failing to meet safety standards will face exclusion from the market.
Graph: Evolution of life cycle of Energy storage system integration industry
Currently, the energy storage system is still in its early stages of development, and there are two main modes of progress in the industry.
The first mode involves professional integrators who specialize in their respective fields and position themselves as third-party suppliers. Prominent examples include companies like Hyperstrong and Clou Electronics. Their competitive edge stems from the absence of conflicts of interest with certain integrators, enabling them to access more sales channels and thus achieve rapid growth through partnerships with integrators.
The second mode revolves around integration development. In this approach, Power Conversion Systems (PCS) and battery manufacturers vertically extend their value chains, allowing them to independently produce critical modules like PCS and batteries for the energy storage system. Moreover, they handle the system integration services through their own design departments. The key advantage in this mode lies in the product sales integration, which facilitates cost reduction and profit maximization.
As more companies enter the market, competition intensifies. Besides specialized system integration enterprises, midstream companies, focusing on the four major modules and possessing technical advantages in equipment production, are also expanding their presence downstream. Notable names such as CATL, EVE, Great Power, BYD, and SVOLT are among them.
Graph: Typical development path classification of energy storage system integrators
This year, CATL made significant strides by participating in the first batch centralized procurement with 5GWh bidding capacity opened by SPIC Bole, Yuneng Holdings, and Huadian Group. In addition, CATL announced its groundbreaking solar-plus-storage solution, which is the world’s first zero auxiliary power supply of DC coupling solution. This system cycle life can reach 15,000 cycles, achieving the same life cycle as optical storage. The cells in the solution can tolerate high temperature by adopting high-temperature-resistant graphite anode material and special electrolyte, without the need for a cooling system.
Furthermore, BYD has been actively engaged in system integration at an earlier stage and has continued to strengthen its competitive advantages through the development of new products. During the SNEC exhibition, BYD made a significant announcement by launching its first blade energy storage product, BYD MC Cube.
The concept of “Neijuan” (involution or intense competition) has gained popularity among industry insiders. The competition is not only limited to the domestic market but has also extended to the overseas market, with overseas exhibitors showing great enthusiasm. For instance, during the Germany Intersolar Europe exhibition held last month, several domestic manufacturers participated actively. The robust growth of the energy storage market is anticipated to further elevate the potential of new energy construction, opening up new opportunities and possibilities for the industry.