Over the past two years, the energy storage sector has witnessed a surge in interest, attracting numerous companies eager to carve out a niche in this flourishing field. However, recent sentiments within the industry have taken a downturn. Some voices claim a lack of market orders, asserting that the industry is entering an off-season prematurely or that its prosperity is not as robust as perceived. Consequently, many companies are approaching this sector with caution. The question arises: what is the true state of affairs in this dynamic industry?
In the short term: the energy storage sector is grappling with profitability challenges as it undergoes a transformative phase.
The entire industry is in the midst of a significant evolution.
In 2022, the global market experienced a surge in demand, leading to a more established framework for energy storage markets. Simultaneously, energy storage technology made steady advancements, propelling the global energy storage industry into a phase of rapid development. With the installed capacity reaching record highs, a growing number of investors are now entering the scene, contributing to a gradual transformation of the industry landscape.
Towards the end of 2022, European electricity prices took a dip, causing a corresponding decrease in the anticipated demand for energy storage. In the fourth quarter of that year, the gradual ramp-up of polysilicon production capacity eased the previously intense supply and demand dynamics. In addition, the PV industrial chain prices have been changed, and thus the expected installations of PV and solar has been affected.
As for the industry chain, since the first quarter of 2023, the production capacity of the battery enterprises have increased gradually, thus easing the shortage of the batteries. Simultaneously, an influx of investors into the market exacerbated the issue of homogeneity in energy storage products. Consequently, the prices of energy storage systems continued their downward trend, leading to a decline in company profits. This has heightened concerns among industry insiders about the overall state of the industry. At present, following the exuberant growth of the energy storage sector, it is poised for a round of intense competition that will undoubtedly impact numerous companies.
Opportunities for Expansion: Robust market demand continues to underpin industrial development, offering ample room for further growth.
The global commitment to achieving carbon neutrality and peaking carbon emissions underscores the rapid growth of the new energy industry. Energy storage, essential in power systems, retains significant untapped potential for future expansion. Examining global demand, many countries are unveiling their outlined objectives for energy storage along with supportive policies, signaling clear and well-defined plans for the medium and long term.
According to TrendForce statistics, the global new energy storage capacity is projected to hit 106GW by the close of 2023 and soar to 212GW by 2025. Turning our focus to China, it is anticipated that the new energy storage capacity will reach 40GW by the end of 2023 and surge to 85GW by 2025.
Regarding large-scale storage, the surge in policies and major projects coming online is set to accelerate the demand for large-scale installations. With outdated production capacity being phased out amid price competition, the industry is poised for a shift towards healthy competition, potentially resulting in a rebound in energy storage system prices.
In the realm of industrial and commercial energy storage, 2023 marks the inaugural year of its development. The rise of virtual power plants is anticipated to introduce new profit models, ushering in a qualitative transformation for industrial and commercial energy storage. On the household energy storage front, Europe, the United States, and other major regional markets are still a long way from reaching the peak of demand. There remains significant untapped potential for long-term growth in the demand for energy storage.
Key Points: High-quality products, stronger brands and larger market
In dissecting the industrial chain development, energy storage battery companies have essentially delved into both power batteries and storage batteries. In the initial years, revenue from power batteries has dominated among relevant battery enterprises. However, as the demand for energy storage continues to grow, energy storage batteries will become increasingly vital and irreplaceable. Simultaneously, the industry is set to focus more on energy storage battery technology, engaging in extensive research and development.
Presently, the primary weakness in the energy storage industry lies in product homogenization. Some companies are slashing their product prices to secure more orders, resulting in diminished product profits. Ultimately, this trend is poised to trigger a decline in both shipments and profits for energy storage enterprises. Consequently, enterprises may find themselves ensnared in a predicament where orders and profits become scarce.
In the future, the turning point for the energy storage industry will be determined by companies capable of offering consistent and competitive tender and bidding prices, along with those providing distinctive products. While companies produce top-notch and efficient products, they should concurrently enhance their brand influence in overseas markets, establish stable collaborative channels, and prioritize product quality as the cornerstone. Furthermore, highlighting the unique characteristics of their brands is crucial for building a robust brand identity.
Sustainable industry development hinges on advanced technologies, urging energy storage companies to adhere to independent innovation and diverse product offerings to boost competitiveness in the market. The pursuit of high-quality products, stronger brands, and increased market share should not be mere slogans. It necessitates companies taking incremental steps, enhancing the value of the energy storage industry, and propelling its high-quality development.
