Fueled by robust market demand, 2023 has emerged as a pivotal growth year for numerous companies, witnessing a surge in new players entering the energy storage market. The proliferation of energy storage companies has led to a dramatic increase in competition for market share at an accelerated pace. The overseas market, known for its higher profit margins, has become a strategic focus for many Chinese companies eager to expand.
A Glance At the Overseas Orders of Energy Storage Businesses in Q3
Companies like CATL, BYD, Sungrow Power, Trina Solar, Hithium Energy Storage, and EVE are actively advancing their global presence. In the third quarter of 2023, based on partial statistics, several companies, including Lishen Battery, REPT, Great Power, and Sungrow Power, sequentially secured overseas orders. This trend signifies the swift global expansion of domestic companies. For instance, on September 12th, REPT finalized an 8.4GWh cell purchasing agreement with POWIN in Indonesia, an energy storage integrator. Similarly, on September 18th, Narada Power, speaking on the investor relations platform, highlighted that a substantial portion of their sizable energy storage orders originated from the overseas market, underlining the global momentum in the industry.
Statistics of Overseas Orders of Some Companies in Q3
Our country has robust industrial development, boasting a well-established industrial chain that spans every facet and product within the sector. Chinese companies enjoy a comprehensive energy storage industrial chain, anchored by lithium batteries, and boast numerous large-scale manufacturing bases dedicated to Li-ion battery production. Moreover, in the realm of battery technologies, many Chinese companies concentrate on the development of LFP (lithium iron phosphate) batteries, affording them a pioneering edge in cost control, battery performance, safety, and technological evolution. This focus has positioned them as leaders in various aspects of battery technology, contributing to their competitive advantage in the global market.
The overseas market is predominantly influenced by key players in major regions, including the United States, Europe, and Australia. In terms of application scenarios, aside from the notable advantages in household energy storage, domestic companies are actively venturing into the development of large-scale grid-side and power-side markets. In the realm of products, local suppliers have transitioned from merely offering single products to becoming versatile providers capable of delivering comprehensive solutions and integrated developments across various scenarios, featuring a wider array of products.
For enterprises, the domestic energy storage market is primarily propelled by policies. While the development trajectory is positive, the industry remains in the early stages of commercialization, leading to a situation where revenue grows, but profits don’t follow suit. This challenge is attributed to the current lack of a streamlined model for energy storage projects to quickly generate profits.
In contrast, regions such as Europe, the United States, and Australia boast more established energy storage policies and business models, resulting in more substantial economics for their energy storage projects. Some countries in these regions have even introduced energy storage subsidies. For instance, the Spanish government plans to allocate 160 million euros in funding for energy storage projects, while the United Kingdom has implemented new electricity market services like capacity markers, creating additional income sources for energy storage.
What benefits do energy storage companies reap as they expand into the overseas market?
Several domestic enterprises have already reaped the rewards of their global ventures, achieving notable success in their energy storage businesses. According to Sungrow Power's financial report for the first half of 2023, the revenue from its energy storage system products reached 8.523 billion yuan, marking a remarkable year-on-year increase of 257.26%. Notably, more than 80% of this revenue is attributed to overseas business, and the gross profit margin for energy storage system products stands at 30.66%, reflecting a year-on-year increase of 12.29%.
On the other hand, Gotion High Tech, by strategically focusing on enhancing its energy storage business and pursuing internationalization, has forged collaborations with several international enterprises. This proactive approach has led to a significant boost in its overseas business revenue, with a remarkable year-on-year increase of 296.74% in the first half of the year. The proportion of its overseas revenue has surged from 8.94% in the first half of 2022 to 20.09% at present. Additionally, its overall energy storage revenue reached RMB 4.147 billion, marking a substantial year-on-year increase of 224.33%.
In the first half of 2023, Pylon Technology, specializing in household energy storage, demonstrated robust performance in the overseas market. Its overseas business revenue soared to 2.472 billion yuan, constituting an impressive 96.69% of the total revenue. The overseas market, with its high adoption rate for household energy storage, presents a promising outlook for Pylon Technology's residential storage business. In May of this year, its wholly-owned subsidiary collaborated with Energy, an Italian company, in a joint investment for the construction of an energy storage plant—a groundbreaking move for Pylon Technology.
CATL and BYD, prominent players in the energy storage sector, have experienced rapid growth in their businesses, particularly in regions where electricity prices are high, and carbon emissions policies are stringent. Consequently, these industry giants are making significant strides in lithium batteries for energy storage and energy storage systems. In 2022, CATL took the lead in advancing the field of energy storage in the North American market. The company has forged enduring partnerships with numerous local enterprises to meet the increasing demand for renewable energy in the United States.
As the global energy storage market experiences a surge in demand, Chinese energy storage enterprises are expanding into various domains. On one front, they leverage their inherent strengths to conduct research on a diverse range of high-quality products. Simultaneously, concerted efforts are being made to construct a robust channel system, aiming to establish a presence in key regional markets on a global scale. Currently, China's energy storage industry finds itself in the early stages of development, necessitating further enhancements in aspects such as industrial chain pricing, technical equipment, professional expertise, awareness of standards, and more. In the face of this evolving trend, success hinges on effective planning and strategic positioning to seize opportunities proactively.