What are the trends worth paying attention to in the huge wind energy storage track in 2025?
Against the backdrop of accelerating energy transition in various countries, energy storage plays an important strategic role, and its importance and necessity are beyond doubt. Since 2022, China has become the world's largest energy storage market. Currently, the demand for industrial and commercial storage and large-scale storage in China is accelerating, with a steadily increasing proportion.
So, what is the development prospect of the energy storage industry in 2024? Next, this article will discuss the development prospects of the energy storage industry in 2024 from two aspects: the policy orientation of energy storage technology and the development trend of the energy storage market.
1. Policy orientation of energy storage technology
According to the "14th Five Year Plan for the Development and Implementation of New Energy Storage" (hereinafter referred to as the "Plan"), by 2025, new energy storage will enter the stage of large-scale development from the initial stage of commercialization and have the conditions for large-scale commercial application; By 2030, new energy storage will be fully market-oriented,
With the overall goal determined, the "Plan" has made the following requirements for the basic principles of energy storage industry development: 1. Overall planning, tailored to local conditions; 2. Innovation leads, demonstration takes the lead; 3. Market driven and orderly development; 4. Based on safety and standardized management.
In ancient times, there was a doctrine that wealth should be stored among the people, and if the people are rich, the country will be rich. The above four basic principles are "storing energy for the people", provided that the stability, safety, technological concentration, and commercialization of this energy are guaranteed. New energy does not need to be centrally mined, stored, refined, processed, or sold, nor does it pose significant safety hazards to fossil fuels. Therefore, as long as the two problems of technological concentration and commercialization can be solved, new energy storage is the energy reserve of the society. Small households and large industrial and commercial sectors can participate in the country's electricity circulation, achieving energy level storage for the people.
By 2025, the true 'hidden energy for the people' has just begun, and before that, it is only being technically prepared. According to the requirements of the "Plan", by 2025, "the performance of electrochemical energy storage technology will be further improved, and the system cost will be reduced by more than 30%; new energy storage technologies relying on conventional power sources such as steam extraction and energy storage for thermal and nuclear power units, as well as hundred megawatt level compressed air energy storage technology, will be applied in engineering; mechanical energy storage technologies such as megawatt level flywheel energy storage will gradually mature; breakthroughs will be made in long-term energy storage technologies such as hydrogen energy storage and thermal (cold) energy storage
The above technical directions are the research and development guidelines for the current energy storage industry. In 2024, there are the most opportunities to continue to focus on these research and development directions and explore commercial models. The "Plan" also includes specific plans for energy storage technology and supporting directions. It is recommended to read the entire text thoroughly, and this article will not elaborate further.
By 2030, it will be the beginning of a comprehensive upgrade of the power system. According to the requirements of the "Plan", "the market mechanism, business model, and standard system will be mature and sound, and deeply integrated with all aspects of the power system to basically meet the needs of building a new type of power system." That is to say, starting from 2030, China will accelerate the pace of replacing traditional power generation technologies. At that time, a fully market-oriented energy storage industry will undertake the task of national and even other countries and regions' power grid transformation, which will be an unprecedented huge market.
The author believes that the current policy direction can be summarized as follows: from now until 2025, breakthroughs should be made in key energy storage technologies, accumulation should be done well, and from 2025 to 2030, based on mature technologies, business models and market environments should continue to be optimized. After 2030, mature technologies and markets should be used to upgrade the green power of the national power grid.
From this, it can be seen that the energy storage industry is far from reaching its true market peak in 2024. The current main goal is still to break through and accumulate technology, and only after 2025 will it usher in a peak of market-oriented development.
2. Development Trends of Energy Storage Market in 2024
The energy storage track is gradually showing a distinct development trend, and it is expected to present at least four major trends by 2024, leading the global energy industry towards a new chapter.
1. The construction of the domestic spot market is accelerating, promoting the profitability of domestic energy storage manufacturers and improving the economic viability of energy storage projects.
In the golden autumn of September 2023, the National Development and Reform Commission and the National Energy Administration jointly released a historic document - the trading rules for China's ***** electricity spot market. The introduction of this rule marks a solid step forward in the reform of China's electricity market. The document clearly states that it is necessary to guide the participation of new energy in the electricity market in a steady and orderly manner, and to this end, it is necessary to design a market mechanism that adapts to the characteristics of new energy. This mechanism needs to be coordinated with supportive policies for new energy to ensure policy continuity and stability. In addition, new business entities such as distributed generation, load aggregators, energy storage, and virtual power plants are also encouraged to participate in electricity trading, injecting more vitality into the market.
Subsequently, in October 2023, the National Development and Reform Commission and the Energy Administration issued another notice on further accelerating the construction of the electricity spot market. This notice puts forward comprehensive requirements and guidance for the construction of the electricity spot market. Overall, since September 2023, there have been frequent policies regarding the electricity spot market in China, demonstrating the government's determination and efforts to promote market development. It is expected that by 2024, most provinces and regions in China will launch long-term settlement trial operations, and those provinces and regions with faster progress may even directly enter formal operation.
It is worth mentioning that Shandong and Guangdong are at the forefront of exploration in this area, leading the direction of independent energy storage participating in both spot electricity and ancillary service markets. With the accumulation and promotion of experience in these regions, it is expected that by 2024, the policy foundation for profitable domestic energy storage projects will become more complete. This not only means an improvement in the economic viability of energy storage projects, but also signifies a further enhancement of the maturity and competitiveness of China's electricity market. Driven by both policies and the market, the construction of the domestic electricity spot market is entering a fast lane, opening up vast space for the development of the energy storage industry.
2. Cost advantage has become the ticket to competition, highlighting the advantages of the entire industry chain capability. The ability to independently research and manufacture a higher proportion of equipment is a key factor for manufacturers to make profits at the current price level.
In recent years, with the continuous expansion of domestic and overseas energy storage markets, the sales and shipments of energy storage enterprises have shown a rapid growth trend. However, domestic energy storage manufacturers generally have weak profitability, and increasing revenue without increasing profits has become a dilemma faced by many enterprises. In terms of global energy storage system shipments, the advantages of leading companies have not yet been demonstrated, with CR3 only accounting for 30%. Leading companies mainly rely on integration, price advantages, and brand effects to increase their global market share, while other companies sell more domestically and face difficulties in increasing market share.
2. Cost advantage has become the ticket to competition, highlighting the advantages of the entire industry chain capability. The ability to independently research and manufacture a higher proportion of equipment is a key factor for manufacturers to make profits at the current price level.
In recent years, with the continuous expansion of domestic and overseas energy storage markets, the sales and shipments of energy storage enterprises have shown a rapid growth trend. However, domestic energy storage manufacturers generally have weak profitability, and increasing revenue without increasing profits has become a dilemma faced by many enterprises. In terms of global energy storage system shipments, the advantages of leading companies have not yet been demonstrated, with CR3 only accounting for 30%. Leading companies mainly rely on integration, price advantages, and brand effects to increase their global market share, while other companies sell more domestically and face difficulties in increasing market share.
The high proportion of self-developed and self-made equipment is a key factor for manufacturers to make profits at the current price level. Only by achieving full stack self-developed, from battery cells to PCS to system integration, proficiently mastering electrochemical technology, power electronics technology, and digital capabilities, can we effectively reduce costs and improve product competitiveness. The scale effect of the battery cell process has a significant impact on the compression of direct material and non-material costs. Enterprises with high battery cell production capacity and the ability to produce their own DC side systems have significantly higher gross profit margins than single system integration enterprises that purchase all externally.
Currently, most integrators can provide energy storage power station operation and maintenance software with supporting hardware, whose main function is to identify and monitor the status of the power station. The differences are reflected in the level of refinement of monitoring, such as performance evaluation of individual cell states and early identification of thermal runaway characteristics. The next stage of competition may be reflected in the automatic execution of revenue maximizing operational control strategies through the prediction of electricity prices. At that time, the differences in products among different vendors may become more apparent, and full stack capabilities can also achieve full production chain control, thereby improving product reliability. Therefore, for energy storage enterprises, in order to stand out in the fierce market competition, they must continuously improve their technological level and innovation capabilities.
3. Serious product homogenization, accelerated iteration, and technological innovation are key factors. In the future, companies that truly possess core competitive advantages will laugh until the end
Nowadays, customers are not only concerned about the cost of energy storage systems, but also increasingly focus on the overall performance of the system and the operational efficiency of the project. The safety and reliability of the system must also withstand the inspection of the power grid
Sun Wei mentioned that low-priced catfish have frequently appeared this year, and companies deeply involved in price wars find it difficult to devote energy to technological innovation, resulting in a quagmire of low prices and low-end products and losing market value.
However, it is widely believed in the industry that a watershed in low-priced competition is about to emerge, and the market will accelerate its elimination. Most companies will be dragged down by price wars, leaving behind a group of companies that truly possess core competitive advantages in the market. 4. Overseas energy storage has high profitability and huge potential in overseas markets. Domestic energy storage companies will continue to expand overseas on a large scale.
Overseas energy storage projects have rich market-oriented profit models, such as electricity trading, frequency regulation, backup, etc., which bring greater price differences and excess returns in special environments to the projects, thus constituting a good source of economic benefits. In contrast, domestic energy storage projects are still in the process of improving their mechanisms for participating in spot trading and ancillary services, with a significant amount of revenue coming from less market-oriented forms such as capacity leasing. Therefore, the arbitrage price difference overseas is significantly higher than that domestically.
The overseas energy storage market has shown strong development momentum and enormous potential due to its high degree of electricity marketization. Due to issues and risks in the supply chain, environment, and market, the overseas energy storage market is highly dependent on external markets, including upstream raw materials and positive energy
Negative electrode materials, downstream components, and even the battery itself. In order to address these challenges and seize development opportunities, domestic energy storage companies are accelerating their localization layout in overseas markets.
Many leading energy storage battery companies in China have also realized the importance of going global and are accelerating the process of globalization. From simply increasing their export scale to building large-scale factories overseas, they are "rolling" high-end production capacity to the world. Faced with the differences in investment environment, talent resources, cultural differences, construction period and sales network, industrial chain support, and carbon emissions in the overseas energy storage market, domestic energy storage companies need to be more cautious in responding to market changes and customer demands to achieve sustainable development.
