What are the exciting prospects for energy storage going global?

With the global rise of renewable energy sources like wind and solar power, what is the role of energy storage? What role do Chinese energy storage companies play in this? This article will analyze the global layout of Chinese energy storage companies, from technology to market.

Going global has become a keyword for energy storage.

In 2023, Chinese energy storage companies have been making rapid progress overseas, especially with recent large overseas orders won by companies such as Honeycomb Energy, Sungrow Power Supply, and RuiPu LanJun, which have become a highlight of the industry.

This means that the global energy storage sector is brewing new changes.

What are the reasons behind the increased investment in the overseas energy storage market? What competitive advantages do Chinese players have in going global? Can lithium iron phosphate batteries carry the flag for Chinese energy storage?

——High overseas demand and high export profits

Currently, energy storage is considered one of the hottest sectors.

According to data from the National Energy Administration, in the first half of 2023, China's newly installed capacity of new energy storage reached approximately 8.63 million kilowatts/17.72 million kilowatt-hours, equivalent to the sum of the cumulative installed capacity in previous years.

While booming domestically, it also shows signs of acceleration internationally.

In August 2023, a total of five energy storage companies won overseas orders, setting a new high for the year. Among them, Honeycomb Energy's energy storage business in Europe has continuously received orders from multiple companies, covering various fields such as industrial and commercial energy storage and portable power supplies, with a total volume exceeding 20 GWh.

There are two main reasons for this.

First, there is high overseas demand.

Due to various reasons, China's large-grid approach is not mainstream overseas. In underdeveloped regions and island countries, microgrids are the standard configuration, making energy storage a necessity.

In fact, even in developed regions, energy storage has great potential applications.

For example, negative electricity prices have repeatedly occurred in Europe. Since 2023, negative electricity prices have been observed in developed European countries such as the Netherlands, Norway, Finland, Germany, and Belgium.

For another example, power outages or load shedding occurred in several Southeast Asian regions due to high temperatures, affecting the normal operation of industrial parks and involving multiple multinational companies.

The reason is that the surge in renewable energy sources such as wind, solar, and hydropower has led to a lack of flexibility in the power supply structure, resulting in a surplus of electricity during certain periods. However, power generation cannot be stopped immediately, so electricity has to be sold at low or negative prices.

However, with energy storage, peak regulation and frequency regulation can ensure stable power supply.

It is clear that the overseas energy storage market is vast.

According to the European Energy Storage Association's calculations, approximately 200 GW of energy storage needs to be deployed by 2030, meaning an annual increase of 14 GW; by 2050, 600 GW of energy storage needs to be deployed, meaning an annual increase of 20 GW after 2030.

On the other hand, overseas profits are high.

According to data from CNESA, China, Europe, and the United States are the three major energy storage markets, with China accounting for 1/3 and overseas markets accounting for 2/3.

Neither Europe nor the United States are major producers of energy storage. Most battery cells need to be imported, and with high subsidies, the export profits are even more substantial.

According to data from the China Automotive Battery Innovation Alliance, in the first half of 2023, China's cumulative energy storage battery exports reached 6.3 GWh, showing a positive trend.

——Lithium iron phosphate batteries lead the way for China's energy storage

It is worth noting that the global energy storage sector was once a three-way competition between China, Japan, and South Korea.

In the early days, ternary lithium batteries were not only the mainstream for power batteries but also the choice for overseas energy storage. Companies such as Panasonic, LG Energy Solution, and CATL were all competing.

However, the stability and reliability of ternary lithium batteries were not satisfactory, and especially after frequent safety incidents, the energy storage market underwent subtle changes.

At that time, lithium iron phosphate batteries entered the market's view.

Lithium iron phosphate batteries are safer and more economical than ternary lithium batteries. After a period of competition, they became dominant, and China took the lead in lithium iron phosphate batteries, surpassing South Korea and Japan.

CBEA Battery China stated: "As the advantages of lithium iron phosphate batteries in terms of cost-effectiveness, safety, and long cycle life are gradually recognized, major global energy storage system integrators are beginning to favor cooperation with leading global companies that develop lithium iron phosphate batteries."

In this context, China has stood out, becoming the undisputed "king" of the global energy storage sector and gaining undeniable industry dominance.

According to data from SNEResearch, in 2022, CATL, BYD, and EVE Energy secured the top three positions in the global energy storage battery market, while the energy storage battery sales of RuiPu LanJun, Puhui Energy, and Guoxuan High-tech all exceeded 5 GWh.

——Lithium iron phosphate batteries: China's unique advantage

Despite this, there are still challenges on the road to global expansion.

First, different countries have different customs, laws, and more importantly, inconsistent grid standards and large differences in end-consumer habits. Energy storage companies need to provide personalized, customized, and localized products to successfully establish a foothold and achieve long-term success overseas.

Second, establishing stable overseas distribution partnerships, building user profiles, coordinating communication, and deeply binding overseas channels are also essential tasks.

Third, energy storage going global requires a series of certifications, including the North American UL certification system and the European CE certification system, each with different focuses, requiring careful consideration.

In summary, renewable energy has brought huge challenges to the global traditional power grid, and energy storage has become the best solution and is recognized as one of the most promising "hot spots," with huge development potential both domestically and internationally.

Therefore, there is great potential for energy storage to expand globally.

(Source: 36Kr)