The bidding price of energy storage has hit a new low, and the average bidding price of energy storage systems in November has been close to "halved" compared with the beginning of the year.
Due to fierce market competition, some battery manufacturers are at risk of stopping production or withdrawing from the market. It is widely expected that the market will experience a round of elimination in the future, in which companies with fewer resources and higher costs may be eliminated. Despite the intensification of market competition, there are still companies that are increasing their investment in energy storage system integration business. At the same time, industry experts predict that the price of energy storage cells may drop to 0.35-0.38 yuan/Wh in 2024.
Energy storage system "kills the red eye"
The core role of the energy storage system is to eliminate the instability of renewable energy in the power system and convert it into a stable power source.
Wang Zeshen, secretary-general of the China Chemical and Physical Power Industry Association, has said that the size of China's energy storage market is expected to exceed 15GW in 2023, and this figure will reach 70GW in 2025. According to the industry, solar and wind power account for only 11% of the power system, and to meet the 2060 carbon neutrality target, the proportion of renewable energy generation needs to reach 70%.
According to incomplete statistics from the Data Link global energy storage database of the Zhongguancun Energy Storage Industry Technology Alliance (CNESA), as of the end of September 2023, the cumulative installed capacity of electric energy storage projects in operation in China was 75.2GW, a year-on-year increase of 50%. The cumulative installed capacity of new energy storage projects was 25.3GW/53.4GWh, and the power and energy scale increased by 280%/267% year-on-year.
In such an accelerated growth and promising market, since the beginning of this year, the winning price of new energy storage has fallen again and again. "It's competitive, it's everywhere, it's rolling to death, and the opportunities are everywhere. The chairman of an energy storage company described the current stage of the energy storage industry to a reporter from the Financial Associated Press.
According to CNESA data, the average bidding price of energy storage systems in November (taking 2-hour lithium iron phosphate battery energy storage systems, excluding user-side applications as an example) was 800.46 yuan/kWh, down 47% compared with the beginning of this year, the average bidding price of 4-hour energy storage systems was 736.31 yuan/kWh, a record low, and the average winning price of EPC (general contracting) was 1415.28 yuan/kWh, down 14% compared with the beginning of this year.
The bidding price shows that energy storage companies are "killing the red eye", and a new low will hit a new low in a few days. Recently, the bid for the purchase of energy storage system B package B of Gongma energy storage power station project in Hainan Prefecture, Qinghai Province was opened, and the price hit a record low, and the lowest price of the energy storage system was only 0.58 yuan/Wh. At the beginning of this month, the lowest price of the 5GWh lithium iron phosphate energy storage system bid section of China Nuclear Huineng Co., Ltd. was 0.638 yuan/Wh, which was less than one month.
"There are a lot of projects now, but if you want to get the project, you basically can't make money, there is no profit, and many companies are doing it at a loss. The above-mentioned energy storage industry people said.
The intensification of market competition or the root cause, with the sharp growth of demand, the expansion of the industrial chain has entered a state of almost fanatical competition. GGII data shows that as of August 2023, there are more than 122,000 domestic related enterprises involved in energy storage business, and at the same time, the domestic energy storage battery and system integration planning and construction capacity has exceeded 1.5TWh, with a planned investment of more than 570 billion yuan.
The battery cell is reversed to the buyer's market
It is understood that the energy storage system mainly includes battery modules, inverters, EMS, BMS and other components. Among them, energy storage batteries and energy storage inverters are the two key materials for energy storage systems, accounting for about 60% and 20% of the cost respectively.
From last year to this year, in the field of energy storage, the status of lithium battery cells can be described as "falling off the altar".
A person from an energy storage listed company told the Financial Associated Press reporter, "Last year, as an energy storage company, we wanted to grab the power battery with the car factory, because we couldn't get the battery cell, so the energy storage company was in a difficult time at that time, and we had to beg people to give us the battery cell." This year, everything has reversed, and lithium carbonate has fallen from 600,000 to more than 100,000 tons, becoming a buyer's market, so so many energy storage companies have come in at once. ”
From last year's "grabbing" of battery cells to this year's "grabbing" orders, behind the drastic reversal is structural overcapacity. According to the incomplete statistics of CNESA DataLink global energy storage database, in the first three quarters of this year (January to September), domestic mainstream lithium battery manufacturers have disclosed the production capacity planning scale of energy storage lithium batteries is close to 300GWh, and the domestic capacity utilization rate that has reached production in the second half of this year is less than 50% as a whole.
Driven by the plunge in the raw material lithium carbonate, the price of lithium battery cells has also plummeted. According to the data of Xinchun lithium battery, as of December 21, the average price of square energy storage cells (lithium iron phosphate) has fallen to 0.44 yuan/Wh, and the lowest price is 0.4 yuan/Wh, which is more than 50% lower than the price in January.
In the early stage, Chuneng New Energy shouted in August that the 280Ah energy storage lithium battery will be sold at a price of no more than 0.5 yuan/Wh (excluding tax) at the end of this year, and the price is not affected by the fluctuation of upstream lithium carbonate prices, which has also caused an uproar in the industry. Zhang Xiaofei, CEO of Gaogong Lithium Battery, previously said at the annual meeting of Gaogong that it is expected that in 2024, the price of lithium iron batteries for energy storage will drop to 0.35-0.38 yuan/Wh.
The reporter of the Financial Associated Press learned from industry insiders that in fact, the price in the market is even as low as 0.2 yuan/Wh, and the price competition is becoming more and more fierce, and the quality is uneven. For example, the anode material used by a battery cell company is 30,000 yuan/ton, but some companies use 10,000 yuan/ton of anode, which leads to the difference in product quality.
Xu Shaolong, deputy general manager of CRRC Zhuzhou Electric Locomotive Research Institute Co., Ltd., has publicly said that many peers have begun to reduce allocation when doing cost reduction, and even use some bad materials.
Energy storage will usher in a knockout round next year
Malicious competition in the industry is in dire straits. The above-mentioned energy storage industry people said that the so-called malicious competition is two parts, one is that the people who make battery cells in the industry have no bottom line in the product, and the second type is a large company with strong capital, which gives up profits for the scale in the competition, so under the squeeze at both ends, the industry is "rolling to death".
Under the fierce competition, the existing battery factories "can't hold on" and fall into the dilemma of stopping production or withdrawing from the market. Among them, Houneng Co., Ltd. decided to stop the production of lithium batteries due to its small scale of lithium battery production and outdated equipment, resulting in high production costs and not meeting market demand. In addition, Kunshan Juxin Energy Technology Co., Ltd. was listed as an executor by the People's Court of Kunshan City, Jiangsu Province due to financial problems, and eventually entered bankruptcy proceedings.
There is a great consensus in the industry that next year will be a round of elimination. The above-mentioned energy storage industry people believe that the competition has just started this year, and next year will be the most cruel year. Zhang Xiaofei previously predicted at the annual meeting of Gaogong Lithium that the price of energy storage cells will drop to 0.35-0.38 yuan/wh in 2024, and it will be almost the same as in 24 years in 25 years.
Zhang Jiajing, general manager of Yuanxin Energy Storage, told the Financial Associated Press reporter that in the future competition in the energy storage industry, there are two types of enterprises that will face greater challenges. First of all, enterprises with more upfront financing and competing for projects with high investment face the problems of high costs and accounts receivable that are difficult to convert into cash flow.
Secondly, battery cell companies in the energy storage supply chain may face major challenges, the battery cell market is fiercely competitive, and oversupply is more common. Cell production is a capital-intensive industry that requires a large amount of investment in equipment, raw materials, and technology research and development. In addition, there is a correlation between cell production line downtime and profitability, and the continuous operation of battery cell factories is a key factor in ensuring production efficiency and product quality, and cannot be produced according to project needs like integrated manufacturers. The current price situation of the battery cell market makes it difficult for new cell factories to make a profit.
On the other hand, the capital market is still increasing, and Corun recently announced that the company intends to increase the capital of its wholly-owned subsidiary Yiyang Corun New Energy Co., Ltd. by 100 million yuan in cash to meet the actual needs of project investment and strengthen the investment in the company's energy storage system integration business.
In view of the above-mentioned "involution" situation, the reporter of the Financial Associated Press learned from Pulutong that in the energy storage business, according to the difference between domestic and foreign markets, Pulutong focuses on the investment and operation of industrial and commercial energy storage power stations in China, and mainly does system integration overseas.
This article originated from the Financial Associated Press