Xiao Zhang was originally full of enthusiasm and planned to show his strength at this year's SNEC (International Solar Photovoltaic and Smart Energy Conference and Exhibition), hoping to tap more customers of photovoltaic companies and promote his small energy storage products. However, he can't help but worry about whether this year's sales performance can be as he hoped, after all, the fierce competition in the market has made him feel unprecedented pressure.
I remember that at the beginning of last year, the liquid-cooled energy storage system in his hand still occupied a place in the market at a high price of 340,000 yuan, but in just one year, the price fell sharply like a roller coaster, and it had fallen to 150,000 yuan at the end of last year. In order to complete the sales performance set by the company in such a severe market environment, he had to redouble his efforts and reserve at least five times the number of customers to ensure the completion of the task.
However, the moment he stepped into the pavilion, he was stunned by what he saw. As far as the eye can see, the exhibition with the theme of photovoltaic has now become the world of energy storage. The sales team of almost every PV company is enthusiastically selling energy storage products to customers, as if the PV business has taken a back seat. This change is particularly obvious at SNEC, according to rough statistics, there are more than 100 energy storage products on display, including more than 30 new product releases.
Due to safety concerns, heavier energy storage products are arranged to be displayed on the first floor, while the exhibition halls of large companies are located on the second floor. This layout creates an interesting scenario: when PV companies release energy storage products, they can only perform a "non-physical performance" and demonstrate the features and benefits of the product through PPT. Despite this, energy storage products still play an important role in the press conference and attract the attention of many customers.
JinkoSolar, a leader in the photovoltaic industry, officially launched small-scale energy storage products last year. Qian Jing, vice president of the company, admitted in an interview that although photovoltaic is JinkoSolar's main business, energy storage will become its second growth curve. She said that with the growing global demand for renewable energy and energy storage technology, JinkoSolar will seize this opportunity and actively deploy the energy storage market.
Sun Wei, president of Trina Energy Storage, expressed his confidence in the energy storage market more directly. He said that Gao Jifan, chairman of the company, emphasized that Trina Energy Storage must become a leader in the industry, and set a goal of sales revenue of more than 100 billion yuan in the next 5~8 years. He firmly believes that with the continuous maturity of energy storage technology and the continuous expansion of the market, Trina Energy Storage will usher in a broader development prospect.
However, not all PV companies are directly involved in the energy storage business. As one of the leading photovoltaic companies, LONGi Green Energy has chosen the strategy of cooperating with energy storage companies. Zhong Baoshen, chairman of the company, said that this is based on in-depth analysis and judgment of market trends. He believes that although the energy storage market has huge potential, it is not easy to gain absolute competitiveness in it. Therefore, LONGi Green Energy chooses to work together with other professional energy storage companies to jointly develop the market.
Over the past year, the PV industry has experienced unprecedented competitive pressures. Due to overcapacity and weak market demand, the selling price of photovoltaic products has approached the cost price. However, it is in this context that the energy storage industry has ushered in explosive growth. In particular, the market for small-scale energy storage products, which was almost unpopular before, has now become a hot spot for many companies to chase.
In addition to PV companies, some non-PV companies have also seen the huge potential of the energy storage market and have poured into it. As leaders in the inverter industry, Huawei and Sungrow also officially joined the competition in the energy storage market at this year's SNEC. Zongshen Power, as an enterprise that originally focused on engine business, also invested in the construction of an energy storage plant at the end of 2022. Their salespeople say that as long as there is enough financial support, any business can get a piece of the market.
However, as more and more companies pour into the energy storage market, the price war is becoming more intense. According to a number of energy storage product salespeople, the current energy storage products on the market are close to cost price sales, and the space for further price reduction is very limited. Taking the regular price as an example, the price per watt-hour is only 0.8 yuan now, compared to 2 yuan/wh at the end of last year. This price competition has put pressure on many businesses, but it has also brought more dynamism and innovation to the industry as a whole.
Zhu Gongshan, chairman of GCL Group, said at the SNEC energy storage exhibition at the end of last year: "In half a year, the bidding price of energy storage has dropped by one-third, the homogenization of products is serious, and the price war has intensified. But even then, it's an opportunity. He believes that although the energy storage market is highly competitive, it is still a huge opportunity for photovoltaic companies. After all, PV and energy storage have a high degree of overlap in terms of customer groups and technologies, and the demand for energy storage will continue to grow as renewable energy continues to grow. Therefore, photovoltaic companies are fully capable of replicating their successful experience in the photovoltaic field to the energy storage field to achieve rapid growth in performance.
In this energy storage market full of opportunities and challenges, photovoltaic companies are constantly exploring and innovating to find their own development path. Although the competition is becoming increasingly fierce, it is this competition that drives the continuous progress and development of the entire industry. And we are also looking forward to seeing more outstanding photovoltaic companies shine more brightly in the energy storage market.
01
From "chicken ribs" to "fragrant dumplings"
The energy storage industry has ushered in a historic turning point, and the driving force behind it is the photovoltaic company.
Since 2020, various provinces have introduced policies requiring large-scale photovoltaic power plants to be equipped with a certain proportion of energy storage power stations. With the implementation of the policy, the installed capacity ratio of photovoltaic and energy storage has gradually stabilized at about 5:1. Driven by this policy, the new installed capacity of centralized photovoltaic power stations was about 33GW that year, which indirectly boosted the energy storage power station business of up to 7GW, while the new installed capacity of global energy storage power stations was less than 1GW.
This change caught PV plant builders off guard. In the past, they only needed to sell electricity to the national grid to make a profit, but with the adjustment of the state's subsidy policy, the profit model of photovoltaic power plants has become much worse than before. Nowadays, they also need to invest a lot of money in the early stage to build energy storage power stations, which undoubtedly increases the pressure on their operations.
Faced with this dilemma, PV plant builders are looking for the cheapest energy storage systems in the world. They believe that the utilization rate of energy storage power stations is not high, and they only need to meet certain specifications. According to industry expert Sun Wei, even in 2022, the utilization rate of energy storage power stations supporting centralized power stations is only about 10%, and a large amount of investment has become a "heavy burden" for owners.
However, in private exchanges, managers of a number of energy storage companies expressed their frustration to the virtual unit of Energy Pioneer Watch. When purchasing energy storage systems, many developers do not pursue product quality and performance, but only require low prices that can meet the requirements of grid connection. This makes the position of energy storage manufacturers in the overall industry chain not high, and although there is an increase in shipments, the profit margins are limited.
However, in 2023, energy storage power stations have ushered in an unprecedented turnaround. With the gradual opening of the electricity market and the implementation of the time-of-use electricity price policy, electricity has been endowed with more value attributes. At noon, photovoltaic panels generate a large amount of electricity, and the electricity price is relatively low, and this electricity is called "low-cost electricity"; In the evening, electricity prices are relatively high due to less daylight. This change makes the profitability of PV plants no longer depend solely on the absolute value of the amount of electricity generated, but into a dynamic pricing process.
In this context, the value of energy storage power stations is highlighted. They can store electricity when electricity prices are low and sell it to the grid when electricity prices are peaking, enabling peak-to-valley arbitrage. At the same time, if the grid does not collect electricity, the energy storage power station can also find customers to sell electricity on its own. In addition, with the continuous advancement of energy storage technology, its cost performance has also been significantly improved. According to data from a number of brokerages, the price of energy storage lithium battery cells has dropped to 0.4 yuan/wh, and a set of energy storage systems can continue to operate for more than 10 years. This reduces the LCOE of "photovoltaic + energy storage" to about 0.3 yuan, which is similar to or even lower than the cost of coal power.
In addition to peak-to-valley arbitrage, energy storage power stations also have a variety of profit models, including capacity leasing, grid ancillary fees, and capacity compensation. The emergence of these profit models has brought more possibilities for the operation of energy storage power stations. According to industry conventional standards, a large-scale energy storage power station with a capacity of 100,200MWh can earn about 20 million yuan a year, and the payback period is between 67 years.
However, the investment threshold for large-scale energy storage power stations is high, and it needs to cross multiple barriers such as land, fire protection, and power grids, and the investment amount often exceeds 100 million yuan. Therefore, small-scale energy storage power stations that are more flexible and easy to implement have quickly become hot spots in the industry. Hu Wenzhao, project director of China Construction Investment Leasing Co., Ltd., shared the "revenue map" of a small energy storage power station. In areas with better conditions, such as Jiangsu and Zhejiang, small energy storage power stations can pay for themselves within 5 years; In Guangdong and Hainan, it takes 5~6 years; In Hunan, it is 6~6.5 years; Henan, Hubei, Anhui, Chongqing and other places are 6.5~7 years; In other regions, the payback period is mostly more than 8 years. Despite this, small-scale energy storage power stations in these areas still have investment value and development potential.
Taking Zhejiang, the most advantageous province, as an example, investing in a small energy storage power station with a capacity of 1MW/2.2MWh has extremely high profit potential. Under the peak-to-valley arbitrage model, the power station can earn about 1,700 yuan per arbitrage; In the case of good operation, the annual income can reach about 1.1 million yuan. The construction cost of the power station is only about 2 million yuan. Such a return on investment undoubtedly makes small energy storage power stations a "sweet spot" in the market.
To sum up, the energy storage industry is undergoing a transformation process from "chicken ribs" to "fragrant and sweet". With the gradual opening up of the electricity market and the advancement of energy storage technology, this change will become even more significant. In the future, energy storage power stations will play a more important role in the energy field and make greater contributions to the optimization and sustainable development of the energy structure.
02
The era of national energy storage: the deep integration of photovoltaic and energy storage
Once upon a time, the boom of the photovoltaic industry swept the country, and the roofs of towns and villages were covered with photovoltaic panels, forming a thriving distributed photovoltaic market, which is on an equal footing with traditional centralized power stations. However, now this craze is gradually shifting to the field of energy storage, heralding the arrival of the era of "energy storage for all". The logic of the two coincides, once the construction is successful, the follow-up is a steady stream of income.
As the yield of distributed PV gradually decreases, financial institutions, dealers and developers have turned their attention to the emerging market of small energy storage power stations. This is an exciting opportunity for PV companies, which are their direct and indirect customers. As Trina Solar's sales staff said, they used to sell both photovoltaic panels and photovoltaic accessories such as brackets and cleaning robots, but now they have just added a new product line - energy storage systems.
Despite the surge in business volume, leading energy storage companies, including CATL and EVE, have not set foot in this market segment. The reason for this is that the market is fragmented, with small energy storage projects generally having a smaller capacity, while large energy storage projects often start at 100 megawatt hours. For leading companies, the shipments of the small energy storage market are difficult to match their huge production capacity. In addition, the deployment of small energy storage cabinets is more complex, involving safety risks and technical guidance, which requires energy storage companies to have a strong service network.
However, the technical threshold of energy storage products is relatively low, and the performance is far less than that of vehicle power batteries. PV companies only need to purchase battery cells, carry out simple assembly, and achieve large-scale shipments through a mature distributed photovoltaic sales and service network. This trend has made the small-scale energy storage market a new battlefield for PV companies.
Although this state of cooperation seems to be a bit "awkward", photovoltaic companies use the products of energy storage companies to seize the energy storage market, but the two sides still choose to cooperate. This is because both sides urgently need new growth points to meet their respective development needs. Since last year, photovoltaic companies have begun to increase investment in energy storage business and "transform" dealers to adapt to market changes.
Taking Dongguan Xiaodong New Energy Co., Ltd. as an example, as a senior agent of JinkoSolar, the two sides signed a cooperation agreement on energy storage products with a scale of 100 megawatt hours this year in July last year. This decision is based on JinkoSolar's superior technology, manufacturing, delivery and service capabilities in photovoltaic products. Li Pengfei, general manager of Xiaodong New Energy, said that JinkoSolar's reputation in the photovoltaic field has won them the trust of customers and provided strong support for them to enter the energy storage market.
In addition to PV companies, non-PV companies such as Huawei have also joined the energy storage feast. With its leading position in the inverter business and a large customer base, Huawei also has the strength to enter the energy storage market. They will divide provincial agents according to different business modules to form a professional team of energy storage agents. After receiving sales leads, these agents will report to Huawei, and Huawei will allocate resources according to customer needs. This model ensures that customers can get professional services and high-quality products.
Although PV companies dominate the energy storage market, they have not relaxed their control over product quality. In order to ensure the safety and stability of small energy storage power stations, photovoltaic companies will re-test the purchased battery cells and select high-quality products for shipment. This strict control of quality not only improves customer satisfaction and trust, but also establishes a good brand image for photovoltaic companies in the energy storage market.
Huawei's energy storage partners said that Huawei's battery cell suppliers are mainly CATL, BYD and EVE. This is because only the products of these three companies can meet Huawei's rigorous testing standards. This also reflects that the energy storage market is gradually maturing and becoming professional.
Looking to the future, with the gradual opening of the power market and the advancement of energy storage technology, energy storage power stations will play a more important role in the energy field. The in-depth cooperation between photovoltaic companies and energy storage companies will also bring a broader market space and more lucrative profit returns to both parties.
03
Photovoltaic and storage integration: the ultimate integration of photovoltaic and energy storage?
From short-sighted games to long-term strategic planning, the cooperation and competition between the two major industries of photovoltaic and energy storage are showing a magnificent picture. This seemingly subtle "competition and cooperation" relationship is quietly brewing new changes under the wave of photovoltaic and storage integration.
For a long time, the photovoltaic industry and the energy storage industry have been fighting their own battles, but they have the same goal - to achieve clean and efficient use of energy. However, as technology advances and the market evolves, PV companies are starting to show greater "ambitions", and they are no longer satisfied with just providing photovoltaic panels, but want to incorporate energy storage systems into their business as well.
The concept of "integration of photovoltaic and storage" is not groundless, but based on a deep insight and forward-looking layout of the future energy market. PV giants such as Trina Solar and JinkoSolar have already put into production energy storage battery cells, and their plans go far beyond self-sufficiency to take a place in the energy storage market. This integrated strategy not only helps to reduce costs and improve efficiency, but also enhances the overall competitiveness of enterprises.
The self-confidence of PV companies is not unfounded. With their manufacturing capabilities, production management experience, and deep understanding of the end market, they believe that they are fully capable of occupying a place in the energy storage market. They firmly believe that with the continuous progress of technology and the increasing maturity of the market, the energy storage industry will usher in greater room for development.
However, the energy storage industry is not all smooth roads. At present, the mainstream technology path - lithium iron phosphate + graphite is close to the ceiling, and the technical bottleneck is gradually emerging. But it also provides an opportunity for PV companies to leverage their technological advantages to drive innovation and development in energy storage technology.
On the road of photovoltaic and storage integration, photovoltaic companies are not satisfied with the competition for the small-scale energy storage market, but set their sights on a broader large-scale energy storage market. JinkoSolar's case of supplying 84MW of ground-mounted power plant energy storage systems to Australian companies is a strong example of their entry into the large-scale energy storage market. Although PV companies still lack experience in large-scale energy storage projects, they believe that they can quickly make up for their shortcomings in the next few years with their strong R&D capabilities and market insight.
In the face of the strong attack of photovoltaic companies, energy storage cell companies did not sit still. They have released new small-scale energy storage products to strengthen their market competitiveness. At the same time, they are also actively exploring the photovoltaic panel business to achieve reverse integration with photovoltaic companies. This kind of cross-border competition not only intensifies the degree of competition in the market, but also promotes the development and innovation of the entire industry.
In this "hand-to-hand battle" of photovoltaic and storage integration, the "competition and cooperation" relationship between photovoltaic companies and energy storage cell companies is becoming more and more complex. They are both rivals and partners, seeking cooperation in competition and achieving a win-win situation in cooperation. This relationship may seem delicate, but it is full of possibilities.
Looking back on the development of the photovoltaic industry, it is not difficult to find that price wars, technological innovation, and market integration are the themes that run throughout. In the context of the new era of photovoltaic and storage integration, these themes will continue to interpret new stories. In the next few years, the integrated photovoltaic and storage market will be more involved, but it will also be more dynamic and opportunities. For the photovoltaic industry and the energy storage industry, this is both a challenge and an opportunity. Only by continuous innovation and continuous progress can we be invincible in the fierce market competition.
Source: Internet
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