This year has witnessed a substantial plunge in the price of energy storage systems. It has nosedived from nearly 1 yuan per watt-hour at the start of the year to under 0.5 yuan currently.
This year has witnessed a substantial plunge in the price of energy storage systems. It has nosedived from nearly 1 yuan per watt-hour at the start of the year to under 0.5 yuan currently. According to the third-quarter reports, energy storage enterprises are grappling with incessant pressure, with the majority reporting "increased revenues but no profits." The cutthroat competition has ignited a price war that has severely squeezed the industry's profit margins. Consequently, how energy storage firms can attain high-quality development has emerged as a central concern.
The crux of the internal competition among energy storage companies is that their products fail to deliver the anticipated value. Presently, the majority of energy storage stations serve as obligatory adjuncts to renewable power plants such as wind and solar installations. Both grid-side and source-side storages lack autonomy and sharing capabilities. In such a scenario, energy storage is frequently regarded as a cost burden rather than a valuable asset by wind and solar enterprises. Despite the presence of government subsidies and grid compensation for peak shaving and frequency regulation, these revenues still fall short of ensuring reasonable returns on investment in energy storage systems.
Problems in electricity market trading, leasing markets, and policy subsidies have further aggravated the internal competition among these firms. The earnings from electricity price differentials do not commensurate with construction and operational costs in market transactions, rendering it arduous to reach the break-even point. In leasing markets, companies are more inclined to construct their own facilities instead of leasing them out due to the high degree of uncertainty and the rapid depreciation in rental prices. Additionally, developers perceive current policies as tenuous and fraught with significant uncertainties regarding future asset returns.
Furthermore, battery cell costs account for 60% of the total system costs, and production demands continuity. Owing to the oversupply in recent years, numerous firms have chosen to continue production at a loss rather than suspend operations, thereby precipitating a price war among battery cells. Collectively, these elements have ensnared energy storage companies in an internal strife.
To radically transform this pricing quandary within the sector, it is essential to augment value creation via two principal avenues: transactional energy storage and network-constructing energy storage.
Regarding transactional energy storage, artificial intelligence can be harnessed to fabricate intelligent systems that optimize investment returns through market trading strategies - charging during periods of low prices and discharging when prices spike, by continuously validating strategies based on real-time data.
For network-constructing solutions, surmounting technical hurdles is crucial so that stored power can proficiently serve off-grid projects with multiple functions such as inertia support or rapid black start capabilities. If storages prove conducive to grid stability and exhibit sound integration potential into the frameworks of new power systems - their value creation will escalate considerably over time, especially with the progress of battery technology leading to a reduction in overall system costs.
It is an inescapable fact that intense competition will usher the industry through a phase of elimination. Abnormal competitive practices (such as exchanges of resources for orders) will gradually dissipate as markets mature. Only those firms endowed with core competencies and innovative capabilities will prosper in the days to come.