Mixed Blessings in the Energy Storage Industry: Who Will Prevail Next Spring?
System Shipment Rankings, CSR Spring Mountain
On March 13th, CNESA released the 2023 energy storage system integrators shipment volume list, and experts believe it is worth noting several points from their recent years' data analysis.
Firstly, the competition for the top two spots, CSR ZELRI surpassing HaiBoSiChuang to claim the first place, essentially reflects the competitive dynamics between state-owned enterprises and private enterprises.
In the first year, they ranked in the top two, and in the second year, they took the top spot. CSR ZELRI, fully owned by China's CSR, surpasses most private enterprises by a significant margin in terms of technological prowess, talent, channels, and projects. The "minor shock" they bring might become a common occurrence.
In 2022, CSR secured a 4 billion yuan order and won over 20 energy storage system integration/EPC project orders, making it the second-largest domestic shipper and the fastest-growing company. In 2023, CSR successively secured major framework procurement orders for energy storage systems from China National Nuclear Corporation, State Power Investment Corporation, China General Nuclear Power Corporation, China Energy Construction Group, and China Huaneng Group, with new signed orders breaking 6 billion yuan for the year.
As for HaiBoSiChuang, formerly the top player in the "Tsinghua System" energy storage sector, holding the title of "domestic energy storage system top shipper" for three consecutive years, with a solid background and prominent reputation, their successful listing seems just a step away.
In June 2023, HaiBoSiChuang submitted its IPO prospectus to the Shanghai Stock Exchange's Science and Technology Innovation Board, aiming to go public for two main reasons: to broaden new financing channels and to urgently expand production capacity. This seems to be a common constraint faced by private enterprises. By the end of 2022, HaiBoSiChuang had a production capacity of 2.63GWh, while CSR, its competitor, had already reached 3GWh.
Without matching production capacity, it implies that the market will be dominated by competitors' products. The market provided an answer in 2023.
In addition to production capacity issues, HaiBoSiChuang also faces a halving of capital, heavy reliance on major customers, highly single main business and products, as well as all major components such as batteries, structural parts, PCS, and electrical components being outsourced. With the increasing load rates year by year, HaiBoSiChuang may not have made much profit.
However, it is also necessary to be alert that although state-owned enterprises have advantages in talent, resource integration, and reporting, their disadvantages are also quite obvious: cautious thinking, slow decision-making, lack of competitive pressure, and insufficient innovation, which are crucial factors to be broken through.
Emerging Enterprises, Rising Stars
The rankings welcomed two "newcomers": wind power giant Goldwind Science & Technology (Goldwind Zero Carbon) and Zhiguang Electric Power (Zhiguang Energy Storage), which has been deeply engaged in the power industry for over 20 years.
Goldwind Science & Technology, Sparkling All the Way
As the domestic wind power market leader for 12 consecutive years and the global wind power market leader in 2022, Goldwind Science & Technology, the giant of wind power converters, has been involved in energy storage since 2019, under the name Goldwind Zero Carbon since then. In 2023, its wholly-owned subsidiary, Changzhou Goldwind Energy Storage, was established, responsible for the 5GWh factory in Changzhou. In October of the same year, its 2GWh energy storage factory in Funing commenced construction.
Goldwind Science & Technology's transition from wind power to energy storage is not abrupt, and there are traces to follow. Starting with the construction of the first energy storage system in 2012, it has delivered over 3GWh accumulatively, with over 100 projects nationwide. Goldwind, which proposes the concept of "three-electric services," positions its development goals in digital energy technology. It indicates that energy storage will rely more on the "cloud," bringing customers more security, efficiency, and returns.
Zhiguang Electric Power, in Hot Pursuit
Established in 1999 and listed in 2007, Zhiguang Electric Power has been focusing on energy technology for over 20 years, with profound accumulations, especially in power electronics.
Zhiguang's high-voltage series-connected energy storage technology has special advantages in large-scale energy storage, ensuring safety, efficiency, and economy. Its customers include State Grid Corporation of China, Southern Power Grid, China Huaneng Group, State Power Investment Corporation, China Huadian Corporation, China Energy Engineering Group, Guangdong Energy Investment Group, and Guangdong Galaxy Semiconductor, among others.
In the survival of the fittest in the energy storage market, without sufficiently high-quality products and adequate capacity, companies will soon be eliminated in the fierce competition. Starting from 2023, Zhiguang Electric Power began to invest heavily in expanding production capacity, preliminarily planning for a total capacity of 12GWh. Projects commenced successively in January, June, and September 2023.
With 20 years of experience in high-voltage frequency conversion and SVG products, Zhiguang Electric Power is among the best in terms of product types and technological R&D reserves among its peers.
Combining its existing advantages rather than blindly changing technology tracks, Zhiguang Electric Power can maintain stable growth and achieve leaps forward, which is one of the reasons.
On March 15th, Zhiguang Electric Power announced the introduction of strategic investors to its subsidiary, increasing its capital to 618 million yuan. State-owned capital played a leading role among the investors, with Southern Power Grid, Guangdong Development Bank, and CITIC making increased investments.
"Volume" Comes First, with Mixed Blessings
The word "volume" dominated 2023, accompanied by a constant stream of voices about overcapacity. On the one hand, there is rapid expansion of capacity; on the other hand, there is a serious underutilization of capacity. According to industry insiders, the utilization rate of the battery industry's production capacity is basically below 40%.
To ensure business operation, price reduction has become the most direct and effective sales method. Companies are willing to lower prices or even incur losses to seize the market, in order to avoid production line shutdowns, ensure utilization rates, and continue to recover funds to maintain operations, thereby attracting investment to stay in the game.
However, surprisingly, although everyone knows that there will be a large number of companies closing down in the elimination round, the pessimistic mood has not slowed down the development of the industry. According to SNE Research data, global energy storage battery shipments reached 185GWh in 2023, a year-on-year increase of 53%, with China accounting for 84GWh, a year-on-year increase of 47%.
Beneath the surface of sadness lies the industry's overall transition from quantity to quality. Intense competition has prompted companies to increase R&D investment; to ensure profit growth, the development of overseas markets plays a crucial role; batteries have progressed from 280Ah to 314Ah or even higher capacities, liquid cooling has become standard, and 5MWh energy storage cabinet products have been successively launched, and so on.
Applying the viewpoint of BYD's Wang Chuanfu, excellent capacity never becomes obsolete. Experts in the energy storage sector also believe that companies that strive to bring about change, new ideas, and new changes to the industry will endure, while those that fish in troubled waters and make quick money will only perish in the wilderness.