From the mandatory distribution and storage of new energy sources to new energy storage being able to participate in electricity market transactions as independent energy storage, many provinces have adjusted policies on peak-valley time-of-use tariff and orderly electricity consumption, and the energy storage market expectations are constantly being pushed up.
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"I think with the technology iteration of and market growth, the incremental market for energy storage is still very large." Mike Lu, General Manager of TWS Anhui, shared some views on the current state of the energy storage market with BJX Energy Storage at 2023 SNEC.
1.?Energy storage industry requires long-term players and pursues optimal operating costs
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In recent two years, overseas energy storage companies have frequently signed large power trading contracts of more than 20 years, but the maximum life warranty requirement in domestic energy storage procurement or policy requirements is only 10 years.
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As a major battery manufacturing country, Chinese companies supply more than 60% of the world's battery products and have stronger technology research and development and manufacturing capabilities. As a major international energy storage supplier, we should be more confident to enter the market with long-term contracts, but many companies have fallen into the misunderstanding of cost reduction.
As more and more companies enter the energy storage market, the homogenization of energy storage products further intensifies competition. Under the market structure, the energy storage field has been clearly divided into two types of players: short-term players and long-term players. Short-term players pursue the ultimate cost performance and return on investment. Although they can quickly recover costs, there are shortcomings in the after-sales service guarantee of energy storage systems, which is not conducive to the long-term control of energy storage projects after putting into operation. Long-term players, on the other hand, take safety as the bottom line and pursue long-term returns and stable investment returns for energy storage.
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TWS pursues a long-term player track with the positioning of providing customers with customized energy storage system integration solutions, providing customers with a complete service system from front-end design and production to final after-sales, and insisting on using the best solution rather than the lowest solution in every step.
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At SNEC 2023, TWS Technology launched a 20-foot 5 MWh liquid-cooling energy storage system container, which significantly increases capacity and greatly reduces the first acquisition cost and the whole life cycle LCOE compared to the previous 20-foot product with a maximum capacity of 3.7MWh.
As Mike Lu said, cost is designed, and quality is designed as well.?The new 20-foot 5 MWh liquid-cooling energy storage system container designed for high-temperature environments and high-capacity applications, has reduced the cost by more than 10% through integrated technological innovation and reduced the project container usage of more than 10%, greatly improving economic performance. At the same time, the system realizes package-level detection and package-level fire protection, which has higher reliability, stability and safety.
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However, for energy storage system integrators, having a senior design team is only a foundation. To achieve stable supply in the market, it is also necessary to have a full range of competitiveness such as mature production capacity and supply chain innovation and integration.
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2.?Testing ability will become a rigid demand
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"In the recent period, energy storage capacity is relatively scarce."
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When energy storage industry is development rapidly, the number of energy storage integrators has skyrocketed, and capacity manufacturing projects are also blooming everywhere. On the one hand, improving the manufacturing scale and market supply capacity is one of the important ways to reduce cost. On the other hand, the market demand is strong, and the product supply capacity has also become one of the market competitiveness of enterprises.
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On February 14, 2023, the ESS CTP PACK production line developed by TWS Anhui was officially mass-produced. The capacity of single production line reaches 4 GWh of energy storage battery packs per year, and the unit equipment can achieve high-precision welding of 52 cells, and can gradually realize the flexible production of various types and sizes of PACK products.
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Up to now, TWS Anhui owns 1 fully automated flexible production line for square aluminum shell lithium battery modules, 1 fully automated flexible production line for residential ESS battery PACK, 3 semi-automated flexible production lines for CTP PACK and 1 highly flexible pilot line, which can meet the mainstream battery cell group processing, with an annual production capacity of 10 GWh in 2023.
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Mike Lu further explained, to do the integration of container energy storage system, not only the manufacturing site and production capacity are required, but also the investment of fixed assets such as test equipment and corresponding test environment needed. The testing ability is becoming an important part for energy storage system suppliers.
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Like photovoltaic and wind power, most domestic energy storage projects have strict timelines requirements for grid connection, and failure to connect to the grid on time may directly affect project revenue. Especially for overseas markets, parts replacement and maintenance are more time-consuming, so testing before shipment means that many subsequent repair costs can be eliminated after the project has been delivered. Many customers are looking for companies with mature energy storage system integration and testing capabilities. Mike Lu said. TWS Anhui has 14 channels of module charge and discharge test equipment and 18 channels of battery pack charge and discharge test equipment, which can realize rapid testing. Mature container system integrated production and testing capabilities have laid a solid foundation for its long-term sustainable operation.
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With an independent energy storage equipment, R&D team, and a stable and complete supply chain system, TWS Anhui has won the trust of many well-known companies by quickly responding to the market's demand for product updates and iterations. Up to now, TWS Anhui has reached close cooperation with many leading enterprises in the industry such as wind turbines, photovoltaics, inverters, and State Grid subsidiaries, and many new customers in the prototype stage.
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3.?Energy storage market: Coming Red Ocean or Blue Ocean
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Many provinces and cities in China have successively issued energy storage subsidy policies, and the regulations for energy storage to participate in the power transaction market are gradually improving. Especially the competition around carbon emissions in countries around the world also brings new business opportunities to energy storage.
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The EU Carbon border adjustment mechanism comes into force and build new international competitive rules as a starting point. The Carbon tariffs are also forcing to promote the demand for domestic industrial and commercial energy storage market, Mike Lu said.
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China is a big manufacturing and exporting country. In the field of electric power, we provide the main raw materials and equipment for the photovoltaic energy storage industry for the world. The first batch of carbon tariff policies covered five major industries: steel, aluminum, cement, fertilizer, electricity and hydrogen, and domestic enterprises had to start exploring carbon footprint verification to smoothly export. Renewable energy is the best choice to reduce carbon emissions, and under the regulation of domestic power rationing and capacity limiting, energy storage is an important part of helping factories achieve zero-carbon production. For this reason, 2023 is generally referred to as the "first year of industrial and commercial energy storage" in China.
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However, in Mike Lu's view, the current energy storage industry is far from a red ocean market. The energy storage market will continue to grow rapidly in the short term, but with product upgrades and standard iterations, energy storage will present different market forms at different stages, and blue oceans and red oceans should alternate. He believes that with the introduction of new standards or the emergence of new technologies, the tightening of industry requirements will temporarily put the energy storage market in the blue ocean, and once the standards are implemented and new technologies are gradually popularized, the energy storage market will become a red ocean, until a new round of policy standards and technologies appear again, and the market will alternately change back to the blue ocean. It's a process of escalating competition.
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To meet the new challenges, TWS Technology is fully prepared. In addition to capacity planning, TWS held an overseas market promotion seminar for the energy storage business in April this year, and will establish overseas sales teams in North America, Europe, Korea and Japan to jointly seize the opportunities in overseas ESS markets. Now the Korea market has received some orders, and delivery is expected in June or July. TWS delivered 2 GWh in 2022 and is steadily increasing its delivery target for 2023.
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In addition, according to TWS's energy storage product roadmap, the company will release aan overseas version of the platform product for the large-scale and C&I energy storage market this year. In the next step, TWS will also deepen the integration of energy storage systems, expand the upstream and downstream industry chain, and is expected to release its own BMS and EMS products in 2024, striving to achieve leapfrog sales growth in 2025.
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A batch of new energy storage forces in China are rising. Enterprises with both a sense of responsibility and creativity can move more steadily to the international stage under the wave!?
