Significant Growth in China's Energy Storage Market in H1 2023

In the first half of this year, the bidding and procurement for energy storage projects continued to show a high growth trend. Data shows that from January to June, the total bidding scale in the domestic energy storage market reached over 170 GWh, a 1.5-fold increase compared to the 68+ GWh in the same period last year. This includes energy storage systems, storage cells, and EPC contracts with equipment. In terms of technology routes, lithium iron phosphate energy storage remains the most mainstream technology with the highest number and scale of constructions, accounting for over 92% of procurement demand. Notably, many central and state-owned enterprises focus their procurement projects exclusively on lithium battery energy storage systems. Additionally, hybrid storage is also prevalent, mainly represented by combinations of “lithium iron phosphate + flow/sodium battery/flywheel” technologies. In the first half of the year, central and state-owned enterprises led the bidding demand for energy storage, with CRRC Zhuzhou Institute, Xinyuan Zhichu, and Haibosi Chuang being the top three companies in terms of awarded scale. Among the over 170 GWh of energy storage procurement orders, central enterprise projects reached a total awarded capacity of 90 GWh, approximately 52% of the total; state-owned enterprises opened bids for over 40 GWh, accounting for nearly 24%. Specifically, China Energy Engineering’s energy storage bidding amounted to over 26 GWh, leading among other owners. Projects from China Power Construction, China National Nuclear Corporation, China Huadian, and China General Nuclear Power all exceeded 10 GWh in procurement scale. Among the publicly available information, the largest single project in terms of scale is the 25 GWh lithium iron phosphate battery energy storage system procurement project by China Energy Engineering, which attracted participation from 70 companies across its three bidding sections. Results showed that for the 4-hour (10 GWh), 2-hour (12 GWh), and 1-hour (3 GWh) storage systems, the average bids were 0.425 yuan/Wh, 0.465 yuan/Wh, and 0.786 yuan/Wh respectively, although the project has yet to announce the winning candidates. The second-largest scale project, which attracted the most bidding companies, was the 16 GWh energy storage system procurement by China Power Construction, involving 76 bidding companies, with 27 companies qualifying. This project required the use of lithium iron phosphate battery units with a nominal capacity of ≥280 Ah, and bid prices ranged from 0.442 yuan/Wh to 0.528 yuan/Wh, with an average bid of 0.469 yuan/Wh. Qualified suppliers included Tiancheng Tongchuang, Sungrow Power Supply, Shuangdeng Group, CRRC Zhuzhou Institute, Chuangneng New Energy, Penghui Energy, Envision Energy, Ruipu Lanjun, Trina Storage, and Ganfeng Lithium, among others. Additionally, other large-scale procurement projects were launched, such as the 12 GWh energy storage system procurement by China Nuclear Huineng, the 10.5 GWh procurement by China General Nuclear Power, and the 6 GWh procurement by Huadian Group for lithium iron phosphate energy storage systems. Notably, the largest single energy storage project (excluding bulk procurement) was the 1 GW/6 GWh power-side energy storage project in Ulanqab City, with a bid amount between 6.25 billion and 6.27 billion yuan. From the bidding results, data from various agencies shows that among lithium battery energy storage system suppliers, CRRC Zhuzhou Institute ranked first with a total awarded capacity of 5.8 GWh; Xinyuan Zhichu and Haibosi Chuang followed with 3.5 GWh and 3.3 GWh respectively. Other companies like BYD, Yisite, NARI Group, Rongheyuan Storage, Kelu Electronics, and Sungrow Power Supply had awarded capacities exceeding 1 GWh. Furthermore, it is reported that Sungrow Power Supply has increased its investment in the domestic market since last year, becoming the vendor with the highest number of awards in large-scale procurement projects this year. In terms of prices, the average bidding prices of energy storage systems in the first half of this year showed a milder decline compared to last year, with the bidding price range gradually narrowing. The average bidding price for the 2-hour energy storage system was 0.558 yuan/Wh, down 27% year-on-year; however, it is noteworthy that the average bid price stabilized in the first five months but showed an upward trend in June, possibly related to a smaller sample size and the inclusion of grid-structured energy storage projects. The average bidding price for the 4-hour energy storage system was 0.448 yuan/Wh, down 69% year-on-year. The lowest price for energy storage systems was reported by Shandong Electric Power Times in a 1 GWh direct current side energy storage system procurement project with a unit price of 0.368 yuan/Wh for lithium iron phosphate technology. The lowest bidding price for the 4-hour energy storage system was from TBEA in the fourth bidding section of a 6 GWh lithium iron phosphate electrochemical energy storage system procurement project by Xinjiang Huadian, with a bid of 0.405 yuan/Wh. Regarding energy storage cells, the average bidding price in the first half of this year was 0.289 yuan/Wh, with a price range of 0.26 yuan/Wh to 0.38 yuan/Wh. Reported projects for energy storage cell procurement mainly include China Power Construction’s 1 GWh cell procurement and Zhongchu Technology’s 6 GWh cell framework procurement. Additionally, at the beginning of June, China Electrical Equipment Group announced a cell procurement project with a scale of 7.248 GWh, including four specifications of 50 Ah, 100 Ah, 280 Ah, and 314 Ah, with the 314 Ah cell accounting for 99.34% of the total procurement volume. In the 1 GWh energy storage cell procurement project by New Wind Technology, nine companies qualified with bid prices ranging from 0.26 yuan/Wh to 0.34 yuan/Wh, with an average bid of 0.279 yuan/Wh. Penghui Energy was the first candidate with the lowest bid of 0.26 yuan/Wh. In the 1 GWh energy cell procurement project by China Power Construction, two packages of 280 Ah and 314 Ah each procured 500 MWh, with nine qualified companies including Trina Storage, Lishen (Qingdao), Ganfeng Lithium, Ruipu Lanjun, Haicheng Storage, Chuangneng New Energy, Yiwei Power, Envision Power, and Zhongchu Innovation. In Zhongchu Technology's 6 GWh cell framework procurement, the eight qualifying candidates were Yiwei Power, Ruipu Lanjun, Xinpengda Power, Zhongchu Innovation, Chuangneng New Energy, Ganfeng Lithium, Envision Power, and Desay Battery, with the bid price range from 0.27 yuan/Wh to 0.38 yuan/Wh and an average of 0.276 yuan/Wh. Notably, the recent rebound in lithium carbonate prices, coupled with the real market test of energy storage business models, encourages policies that promote technological innovation and service quality improvement to drive high-quality industry development, suggesting that various factors are promoting a restructuring of the energy storage market, and energy storage cell prices are expected to break away from the 'low-price trap' since last year, moving towards a more stable price range.