Energy storage orders continue to increase and cells in shortage

1. Energy storage orders continue to increase
2. Demand for energy storage surges in other countries
3. Cells are in short supply and prices are rising

As power battery companies frequently obtain energy storage orders, the energy storage industry has once again become the focus of the capital market. Since last week, CATL ranks first in top 10 energy storage battery manufacturers in China has won the largest energy storage order in the United States, and then Gotion High-tech has also signed up to purchase energy storage projects with a total volume of up to 600MWh.

In addition, listed companies such as Far East and Zhongtian Technology have all announced that they have recently received orders for energy storage. In this regard, Shao Liang, Secretary of the Board of Directors of Far East Co., Ltd., said that the company will actively expand its production capacity with the help of accumulated customers, technologies and other resources, continue to develop the global energy storage market, and focus on the energy storage market on the power generation side, the grid side, and the user side.

At the same time as the explosion of the energy storage market, the demand for batteries is increasing, but the batteries are in a state of shortage, which restricts the development of the energy storage industry to a certain extent. At present, it is difficult for battery cell manufacturers to accurately predict the actual demand of the energy storage market, and the capacity supply is more cautious. Battery cell manufacturers generally plan the capacity demand for the second year one year in advance.

Energy storage orders continue to increase

According to Gotion High-tech’s announcement, Hefei Gotion High-tech Power Energy Co., Ltd., a wholly-owned subsidiary of the company, recently received a bid-winning notice from China Power International Development Co., Ltd. Winning the bid for the second frame bidding project of energy storage equipment of Xinyuan Zhishou in 2022 – energy storage battery prefabricated cabin 2, the total project procurement is expected to be no more than 600MWh, and it is estimated that the winning bid amount is about 800 million RMB.

New energy storage orders continue to increase in volume and are expected to usher in an outbreak period. Recently, large-capacity new energy storage EPC projects have been tendered in many places, and the implementation of energy storage projects has accelerated. Since the second half of the year, energy storage projects have started intensively.

According to the data, 36 new Chinese energy storage projects in China opened bids in September, with a total capacity of 6.05GWh, a total power of 2.63GW, and an average winning bid price of 2.11RMB/Wh; During the same period, 44 new energy storage projects were tendered, with a total scale of 12.59GWh.

The “14th Five-Year Plan for New Energy Storage Development Implementation Plan” released in March this year clearly pointed out that by 2025,the new energy storage has entered the stage of large-scale development from the initial stage of commercialization, and has the conditions for large-scale commercial application.

This further stimulated the layout and accelerated implementation of energy storage projects. According to statistics, during the year, eight provinces including Guangxi, Hunan and Shandong announced 167 energy storage demonstration projects, and the disclosed energy storage scale was about 12.9GW and 20.3GWh.

Relevant technical personnel in the energy storage industry said, a number of pilot demonstration projects of different technology types and different application scenarios have been implemented, and a number of key technologies and core equipment have reached the international advanced level; A number of key technical specifications and standards have been gradually formed, and a number of market players with international competitiveness have gathered momentum.

Demand for energy storage surges in other countries

Not only the Chinese energy storage market has exploded, but the global installed capacity of energy storage has entered a rapid growth channel. The demand for energy storage equipment in other countries continues to blow out, and China is the main supplier of energy storage products in the international market. According to customs data, in the first eight months of this year, China’s total exports of lithium-ion energy storage batteries were US$29.926 billion, a year-on-year increase of 82.97%.

According to the announcement of Far East Co., Ltd., the company’s smart battery sector has won the bid / signed a contract of more than 10 million RMB for household energy storage orders exceeding 870 million RMB, and received a designated notice from European importers of home energy storage systems and other products, and it is expected to supply 15,000 to 20,000 sets in 2023.

In this regard, Shao Liang also said that continuous breakthroughs in the field of household storage continue to help improve the company’s reputation and provide convenience for occupying a larger market in the future. CATL also said when receiving a research group of 1,700 people recently that the growth of the global energy storage market has accelerated significantly since the beginning of this year, and the company’s energy storage business has also started rapidly.

“Many top battery companies, including top 50 lithium ion battery manufacturers, have a large global business volume, especially since the beginning of this year, affected by the European energy crisis, the price of fossil energy has risen sharply.” Yue Fen said that the average electricity price in the European spot market will rise from 50 euros/MWh in 2020 to 250 euros/MWh in 2022.

At present, the average electricity price in the spot market in Germany has reached as high as 431 euros/MWh, which is transmitted to end users, and the electricity price of end users continues to rise. In Yue Fen’s view, users’ demand for self-consumption of electricity by installing photovoltaics and energy storage is becoming more and more urgent, and the demand for energy storage in overseas markets has surged. In the first half of the year, nearly 80% of the energy storage battery shipments by Chinese companies were in other countries.

Cells are in short supply and prices are rising

With the outbreak of energy storage orders and the concentrated start of projects, recent news about energy storage companies suspending orders has also continued to spread. The main reason for this is that the price of batteries continues to rise, and they are in a situation where batteries are hard to find.

Under the requirement of grid connection at the end of the year, the demand for energy storage batteries has greatly increased. Since the beginning of this year, new energy vehicles have been in a period of high prosperity, and the demand for power batteries has continued to be high. This means that energy storage companies also need to compete with new energy vehicle companies for batteries.In fact, power battery companies are also actively expanding production capacity.

CATL issued an announcement at the end of September saying that with the rapid development of the global new energy industry, the market for power batteries and energy storage industries continues to grow. In order to further promote business development, meet market demand and improve production capacity layout, the company plans to invest in the construction of a Luoyang new energy battery production base project in Yibin District, Luoyang City, Henan Province, with a total investment of no more than 14 billion RMB.

In the face of the concentrated outbreak of energy storage projects around the world, the supply of energy storage batteries will still be in short supply in the short term. In this regard, at present, the shortage of high-end product production capacity may continue for a period of time, and the low-end production capacity may have batches of products entering the market in the second half of next year.

The capacity of energy storage cells ranges from 280Ah to 300Ah, 320Ah, 350Ah and the current EVE’s 560Ah. Large cell products can be applied in various scenarios, but some cell companies are also exploring the mainstream direction in the future. Although the energy storage order has ushered in an explosion, the current energy storage business model is not perfect.

“The development of China’s energy storage industry has moved from technical verification to a new stage of initial commercialization, but the large-scale application of energy storage in power systems is still in its early stages.” Yue Fen also said that in the future, to vigorously develop energy storage, it is necessary to continue to work on life and safety improvement, cost reduction, and mechanism design.

Continue to innovate in the direction of high-safety, long-life, and low-cost technologies, and at the same time create an electricity market mechanism that can reasonably assess the value of energy storage systems and divert costs, and promote the construction of a mature new energy storage business model.

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