Recently, several international companies, including Solaredge, Enphase, Tesla, and Fluence, have released their semi-annual reports for the year 2023. Notably, these reports collectively highlight the sustained growth in the overseas energy storage sector during the first half of the year, with Europe and the United States witnessing particularly robust expansion.
The flourishing energy storage markets in Europe and the United States have played a pivotal role in driving the impressive performance of these companies.
In the first half of 2023, there was an exceptional surge in demand for large-scale energy storage solutions in Europe, indicative of a thriving market. Furthermore, the United Kingdom exhibited remarkable growth in large-size battery storage, with new installed capacity figures of 470MW and 413MW in Q1 and Q2 of 2023, marking year-on-year increases of 543% and 129%, respectively. Notably, the first half of 2023 saw higher new installed capacity compared to the previous year.
The project confirmation process is lengthy, and the price of raw material lithium carbonate has decreased. As a result, in the United States, there was a sluggish start to installed capacity in the first quarter. During Q1 and Q2 of 2023, the United States’ utility-scale energy storage capacity reached 461MW and 1510MW, respectively, marking a year-on-year decline of 39% and 52%. However, during the second quarter, installed capacity rebounded, showing signs of growth once again. The first half of 2023 still managed to maintain modest growth. In general, overseas energy storage companies continued to experience robust revenue growth in the first half of 2023, with positive operating margins.
In the first half of 2023, Solaredge achieved an impressive growth rate in energy storage revenue of 39.9%, coupled with a robust operating margin of 15.1%. Enphase, during the same period, exhibited even stronger growth, with a growth rate in energy storage revenue of 47.9% and an impressive operating margin of 23.6%. Tesla, on the other hand, attained a commendable operating margin of 10.5% in H1 2023. Furthermore, Tesla’s energy storage revenue saw a remarkable growth rate of 120.7%, with a gross profit margin of 14.7%. In H1 2023, Fluence achieved a substantial growth rate in energy storage revenue of 114.9% during FY23Q2 and FY23Q3. However, it’s worth noting that their operating margin decreased by 6.1%, despite a significant year-on-year increase of 15%.
Details of Corporate Operating Results
Solaredge: Profits Witness YoY Increase in H1 2023
In the first half of 2023, Solaredge reported revenue of 13.98 billion yuan, reflecting a substantial 40.0% year-on-year growth, driven in large part by increased shipments of inverter systems. More specifically, Q2 revenue amounted to RMB7.16 billion, marking a 36.2% year-on-year increase and a 5.0% quarter-on-quarter growth. In the European market, revenue surged by 18% year-on-year and constituted a significant 73% of the total revenue. Solaredge achieved record-high revenue figures in Germany, the UK, and Switzerland. However, the company’s revenue in the United States experienced a 23% quarter-on-quarter decline, accounting for 21% of the total revenue. Revenue from other regions contributed approximately 7% to the total, primarily originating from markets in South Africa and Thailand.
Solaredge’s Revenue
Data from Wind and Guojin Securities
Regarding operating profit, the first half of 2023 showcased a significant surge, with operating profit reaching RMB2.12 billion, marking an impressive year-on-year increase of 220.1%. Zooming in on Q2, the company reached new heights with operating profit amounting to RMB1.09 billion, signifying a remarkable 269.4% year-on-year growth. Notably, the operating profit margin for the second quarter soared to 15.2%. Moreover, driven by the substantial increase in Solaredge inverter deliveries, along with the impact of a stronger Euro, prices for European products become higher. Consequently, product profitability in the European markets remained at elevated levels. In terms of energy storage battery shipments, the first half of 2023 witnessed an impressive total of 490.4MWh, reflecting a robust year-on-year increase of 39.7%. Notably, the second quarter contributed significantly to this total, with shipments reaching 269.2MWh, marking a 7% year-on-year increase.
In general, it’s typical to pair one inverter with 2 to 3 batteries. Due to constraints in the availability of three-phase inverters, the company’s inventory of batteries has reached a notably high level, and as a result, there’s an anticipation of decreased battery shipments in the latter half of the year. During the second quarter, the average selling price of batteries stood at $479 per kWh, marking a modest 0.8% increase compared to the previous quarter. Additionally, there was a slight reduction in the price of single-phase batteries. The company foresees that battery prices will remain relatively stable with no significant changes expected in the second half of the year.
Solaredge’s quarterly shipments of batteries（MWh）
Enphase: NEM3.0 boosts the growth in the demand for household storage in Q4
Enphase achieved an operating revenue of RMB10.38 billion in the first half of 2023, reflecting a substantial year-on-year increase of 47.9%. This impressive growth was primarily driven by heightened shipments of microinverters, with the United States and international markets contributing 62% and 38%, respectively, to this growth.
Enphase ’s Revenue
Data from Wind and Guojin Securities
To delve into specifics, Q2 revenue amounted to RMB5.14 billion, marking a noteworthy 44.4% year-on-year increase. Within this quarter, the U.S. market accounted for 59% of the revenue, while international markets made up the remaining 41%. Notably, the European and Australian markets saw a significant increase in their share of Enphase’s revenue during this period.
Regarding operating profit, H1 of 2023 demonstrated remarkable growth, with operating profit reaching RMB2.45 billion, marking an impressive year-on-year increase of 117.4%. Focusing specifically on Q2 of 2023, the company achieved an operating profit of RMB1.23 billion, reflecting a substantial year-on-year increase of 95.2%. When we assess the gross margin, the company’s sales gross profit margin for H1 2023 reached an impressive 45.2%, with the gross profit margin for Q2 reaching 45.5%. This data suggests that the company’s quarterly gross profit margin continued to rise significantly.
In the first half of 2023, Enphase successfully shipped 10.029 million units of microinverters, marking a remarkable 62.1% increase, equivalent to 4.1GW in capacity. Looking ahead to Q3, Enphase anticipated local shipments of microinverters in the U.S. to reach 600,000 units, with its U.S. local OEM factory scheduled to be fully operational by the end of 2023. By the conclusion of 2024, the local microinverter production capacity is expected to reach an impressive 4.5 million units per quarter.
Evaluating the U.S. market, it’s worth noting that the household PV penetration rate currently stands at only 4% - 5%. Several factors, including the availability of 30% ITC tax credits, rising electricity prices, grid instability, climate change concerns, and an increasing adoption rate of electric vehicles, are poised to drive the popularity of household PV in the U.S. This trend signals a broad and promising market for Enphase.
In the European market, Enphase, as a relatively new player, has gained significant traction in terms of revenue growth. Among European nations, Germany stands out with the largest household market, boasting around 3GW in capacity, and an impressive household storage adoption rate of approximately 80%. As a result, Germany has emerged as a pivotal market for the company’s growth strategy.
Enphase’s Shipments in Energy Storage Batteries（MWh）
In Q2 of 2023, Enphase witnessed consistent growth in installed capacity, sales, and the activation rate of solar energy and battery systems in the German market. Additionally, the company has ambitious plans to expand its business, introducing IQ8 microinverters and batteries to more European countries, including the UK, Italy, and Sweden, during the second half of this year.
In the first half of 2023, Enphase’s energy storage battery shipments totaled 184.7MWh, marking a 26.9% year-on-year decrease, with 82.3MWh shipped during Q2. Additionally, by the close of Q2 2023, the company’s cumulative shipments had reached approximately 1GWh. Enphase holds the belief that its battery business hit the low point during Q2 and anticipates that shipments will stabilize, maintaining a range of 80-100MWh in Q3. Furthermore, with the launch of NEM3.0 in California (the new iteration of the net energy metering policy), Enphase expects shipments to rebound and grow during Q4.
Tesla: Energy Storage Shipments Increase and Energy Business Becomes Main Source of Profits
In the first half of 2023, Tesla’s revenue from the energy storage business surged to RMB 21.95 billion, marking an impressive year-on-year growth of 125.8%. Specifically, Q2 revenue reached RMB 10.90 billion, representing an 87.6% year-on-year increase and setting a new record for single-quarter revenue. Tesla’s total revenue for the first half of the year amounted to RMB 348.69 billion, with the energy storage business accounting for 6.3% of the total revenue, reflecting a 2.1% year-on-year increase. This increase was primarily driven by higher sales of Megapack units.
Tesla‘s Revenue
In H1 2023, Tesla achieved a gross profit margin of 18.74% for its sales, while the gross profit margin for the energy storage business stood at 14.7%, with gross profit margin in Q2 reaching 18.4%. Thanks to improvements in Megapack production and optimizations in the average cost per megawatt-hour, the energy business has emerged as a significant contributor to profits.
Tesla Megapack’s Energy Storage Products
In the first half of 2023, the installed capacity of energy storage reached an impressive 7.5GWh, marking a remarkable year-on-year increase of 281.1%. During Q2, Tesla saw shipments of 3.7GWh, reflecting a substantial 222.4% year-on-year growth. Tesla has ambitious plans to enhance the profitability of its energy storage products through economies of scale. Given the strong demand for Megapack, it already established a mega-factory in California with a 40MWh capacity, and its second assembly line is currently under construction. It is anticipated that Tesla will double its production capacity by 2024. Additionally, Tesla has announced the establishment of a new large-scale factory in Shanghai.
Fluence: Installed Capacity Reached 1.5GWh from April to June
Shifting our focus to Fluence, its revenue for the first half of 2023 reached RMB 8.67 billion, demonstrating a noteworthy year-on-year increase of 129.5%. The Americas market accounted for a significant 81% of this revenue, while Europe and the Middle East contributed 11%, and the Asia-Pacific region, along with Japan, accounted for 8%.
Fluence’s Revenue
In the third quarter of fiscal year 2023 (spanning from April to June 2023), Fluence’s operating revenue surged to RMB3.88 billion, marking an impressive year-on-year growth of 141.6%. Regarding its profitability, there was a 6.1% decline in the company’s operating margin during the first half of 2023, but it rebounded with a remarkable 15.0% year-on-year increase. The company’s gross profit margin on sales for the first half of 2023 stood at 4.3%, demonstrating a robust growth of 7.7% compared to the previous year. This boost in profitability can be primarily attributed to the higher gross margins generated by Fluenc’s latest product offerings, specifically the Sixth Generation Energy Storage Solutions, as well as the cost-saving gains from certain derivatives held by the company.
In the first half of 2023, revenue from Fluence’s energy storage products and solutions accounted for a significant 99% of the company’s total operating revenue. Furthermore, the revenue structure remained remarkably stable throughout each quarter. During the period from April to June in 2023, Fluence installed 1.5GWh energy storage products, which represented a slight decrease of 500MWh compared to the previous quarter. However, the company also secured 1,400MWh in new energy storage system orders, reflecting a quarter-on-quarter increase of 300MWh.
Summary
Based on the semi-annual reports of overseas energy storage companies in 2023, it’s evident that the demand in the global energy storage market remains robust, and the profitability of large-scale energy storage firms continues to show improvement. The worldwide energy storage market is experiencing rapid expansion. In particular, the U.S. energy storage market has gained significant momentum, thanks to the energy storage subsidy policy within the IRA bill. This policy has granted the U.S. energy storage market independent subsidy status and provided a 10-year investment tax credit incentive. Furthermore, Front-of-the-Meter (FTM) energy storage is currently the prevailing trend in the U.S. market. Turning to the European market, the European Union has set ambitious goals, aiming to achieve around 1100GW of wind and solar energy capacity. They are also committed to developing the energy storage sector from both the supply and demand perspectives. Initiatives like REPowerEU and the carbon reduction plan (referred to as “carbon reduction 55”) are driving research in energy storage battery technology and providing financial support for such research endeavors. Presently, the behind-the-meter market is the dominant trend in Europe, but as new energy capacity installations increase, the FTM market is expected to become the primary driving force for future development.
