According to the Zhitong Finance APP, GGII has released its top ten trend forecasts for China's new energy storage market in 2024. GGII believes that the global energy storage market has entered a period of rapid development and reshuffle, which will continue for the next 1-2 years. Multiple changes such as slowing growth, overcapacity, profit compression, market differentiation, technological iteration, capital cooling, and safety accidents will accelerate the differentiation of enterprises.

In 2023, "neijuan and surplus" has become a consensus in the industry. Whether it is electricity, industrial and commercial, or household energy storage, whether it is domestic or overseas markets, whether it is upstream materials and equipment or downstream components and integration. In the stage of structural and phased overcapacity, the industry is experiencing a "song of ice and fire", with many cross-border players in terms of enterprise bond prices, bond delivery times, and local services. On the one hand, there will be over 70000 newly registered companies in 2023, and on the other hand, there will be many dropouts, resulting in a contraction of enterprise profitability and facing a crisis of cash flow and layoffs.

In 2023, despite the pains, the prospects for energy storage remain promising. China, the United States, and Europe have issued statements to increase their renewable energy installation targets, and major countries and regions such as China, the United States, Europe, and India have achieved unexpected growth in photovoltaic installation. The demand for energy storage in emerging markets such as the Middle East, South America, Africa, and Southeast Asia is on the rise, and new energy storage technologies represented by lithium batteries are rapidly reducing costs, accelerating their penetration in segmented application scenarios and emerging markets.

GGII predicts the top ten trends of China's new energy storage market in 2024 through industry analysis and research, combined with macro trends and enterprise data:

Prediction 1: It is expected that by 2024, the growth rate of global pre installed capacity will reach 40%, the growth rate of energy storage system/battery shipments will be about 25%, and the global shipment of energy storage systems will exceed 160GWh

From the demand side, global pre balance sheet energy storage remains strong. In 2023, China, the United States, and Europe will continue to announce plans to increase renewable energy construction. In the future, China and the United States will remain the main markets for pre balance sheet energy storage worldwide.

The US market, due to the highly dispersed and independent regional power grids and outdated facilities, has a stronger demand for energy storage. However, due to difficulties in grid connection, labor shortages, and supply chain factors, although there are high investment subsidies, the short-term installed capacity growth rate is limited, and there are still a large number of energy storage projects waiting in line for grid connection. Driven by technological innovation and continuous cost reduction, the cost of lithium-ion energy storage per kilowatt hour in China is approaching that of pumped storage, and its application scale will continue to expand.

Affected by the dual carbon strategy and regional energy structure, the demand for off balance sheet energy storage in Southeast Asia, the Middle East, South Asia, Australia, South Africa, South America and other regions is also continuing to grow. It is expected that by 2024, the global pre installed capacity will still exceed the growth rate of shipments, and the installed capacity will exceed 130GWh. The global shipment of energy storage systems (before and after the meter) will exceed 160GWh, and the global shipment of energy storage batteries will exceed 200GWh.

Prediction 2: The global household storage market presents a structural inventory state, and regional inventory will return to normal levels in H1 2024. It is expected that global household storage lithium battery shipments will reach 25GWh in 2024

The high expectations for the household storage market in 2023 have led to a continuous backlog of inventory among channel merchants. Due to differences in global demand, installation speed, and product certification, different regions exhibit structural inventory distribution. It is expected that the industry inventory will be depleted by January 2024 at the earliest and June at the latest. During this period, the household storage and installation/shipment ratio will continue to adjust, reflecting in the supply chain. Enterprises are gradually returning to rationality, and the inventory ratio will fall back to the level of 0.6-0.8.

In 2023, the US household storage market will be affected by interest rate hikes and NEM3.0 policies, resulting in a decrease in the willingness to install household photovoltaic and energy storage capacity. The interest rate hike is expected to end in 2024, and the US market still has significant growth potential. It is expected that by 2024, the global installed capacity of household storage will be 22GWh, and the shipment of household storage lithium batteries will be 25GWh.

Prediction 3: The segmented application scenarios of industrial and commercial energy storage continue to increase, and regional market differentiation is obvious. It is expected to maintain a growth rate of over 30% in 2024

Affected by electricity pricing policies, subsidy policies, and industrial development foundations in different provinces/cities/regions, the differences in the industrial and commercial energy storage market will continue to widen. In the short term, provinces and cities such as Jiangsu, Zhejiang, and Guangdong will occupy the vast majority of market demand, and some enterprises will take the lead in forming brand awareness and channel influence in regional markets. It is expected that industrial and commercial energy storage will maintain a shipment growth rate of over 30% in 2024, and grid registration approval may become a key factor affecting market size growth.

In 2024, it is expected that policies will gradually promote existing electricity consumers to shift from purchasing electricity through agents to directly participating in market-oriented transactions. More and more industrial and commercial users will obtain profits through participating in demand side response, virtual power plants, and other activities. With the increase in the proportion of new energy, the price difference between peak and valley in most provinces will continue to widen, and the midday low valley electricity price model will be implemented in more provinces.

Driven by the expansion of (photovoltaic) storage and charging, carbon market coverage, and distributed photovoltaic storage policies, industrial and commercial energy storage in segmented scenarios is expected to be applied on a large scale. At the same time, the combination of segmented industries, segmented scenarios, and industrial and commercial energy storage will be further strengthened, and the demand for energy storage in typical application scenarios such as zero carbon parks, port shore power, photovoltaic direct and flexible storage, oil+energy storage, and microgrids will continue to expand.

Under the national strategy of "counting from the east and computing from the west" and the rapid development of AI, computing power has become the biggest driving force for the development of data centers. GGII expects that the penetration rate of lithium-ion UPS products will accelerate in the next five years.

Prediction 4: Centralized procurement and independent energy storage remain mainstream, bidding requirements become stricter, central enterprises participate more, and the concentration of the battery cell industry continues to increase

In 2024, based on safety and quality considerations, the bidding requirements for the source network side owners will continue to be improved on the existing basis, such as in the system, battery cells PCS、 Clarify product technology and brand requirements in terms of auxiliary materials and other aspects. Further clarify the requirements for battery cells, such as specifying battery cell brands and inventory not exceeding 30 days, to increase the CR10 of the large storage battery cell industry to over 90%.

In terms of allocation and storage policies, with the increasing proportion of new energy installed capacity, some provinces will put forward higher requirements for energy storage, clarify allocation and storage rewards and punishments, such as Gansu, Ningxia and other places, and network construction will become the development direction of energy storage in Northwest China.

In terms of bidding methods, the proportion of centralized procurement and independent energy storage will continue to expand.

In terms of bidding participation, some downstream owners such as China Power Investment Corporation, China Power Construction Corporation, and China Energy Engineering Corporation will gradually put their energy storage cell/integrated/PACK production lines into operation. In the future, their energy storage companies will further leverage the group's resources and industry chain synergy advantages, and participate more in project bidding as integrators. Pure integrator enterprises will face greater pressure.

Prediction 5: Domestic spot trading and ancillary service rules are becoming increasingly perfect, energy storage is opening up new business models, and economic difficulties are expected to improve

In 2023, domestic independent energy storage power stations still face difficulties in cost management and low system utilization. Capacity leasing and electricity market revenue are at a low level, and the business model is weak. It is expected that more provinces and cities will introduce policies similar to Shandong and Shanxi to encourage the conversion of energy storage to independent energy storage in 2024. Independent energy storage will enter the electricity spot market in a more flexible way such as "quantity quotation", and the business model of energy storage will be further expanded.

In the future, more provinces such as Shandong, Xinjiang, Hunan, etc. will pilot capacity compensation, capacity markets, and other forms to improve the capacity electricity pricing mechanism, as well as the types of auxiliary services. Driven by cost reduction in scale and expansion of electricity market revenue, energy storage power stations have crossed the investment profit line, with daily full load discharge times increasing by 30% to 0.75 times from 0.58 times in the first half of 2023. Some provinces, such as Shanxi, can be driven by the frequency regulation market for more than one time. Investment will shift from policy driven to market value driven, especially in the northwest, north, and provinces with scarce regulatory resources.

Prediction 6: In 2024, the overall supply of energy storage market will exceed demand, and the competition in system integration will be more fierce than in the battery cell sector. More than 50% of energy storage system enterprises will be eliminated, and CR10 will share more than 80% of the market share

According to preliminary statistics from GGII, there will be approximately 100 energy storage system enterprises (including large-scale storage systems, industrial and commercial storage systems, household storage systems, etc.) that have initially formed a scale in 2023, and there will still be enterprises entering gradually. Compared to energy storage cell manufacturers, pure system integration enterprises have lower technical barriers and mainly rely on assembly production or commissioned OEM. Their core competitiveness lies in their ability to obtain orders.

In 2024, there will continue to be overcapacity in energy storage capacity, with oversupply becoming the main trend in the market. With the entry of energy storage subsidiaries of central state-owned enterprises (power generation groups/power grid companies/local energy groups) and competition from integrated enterprises with core component supply capabilities, the market share of pure integrated enterprises will be continuously squeezed, and the risk of being eliminated will greatly increase. It is expected that more than 50% of energy storage system enterprises will be eliminated. At the same time, the market share of CR10 system enterprises continues to expand, accounting for over 80% of the market.

Prediction 7: The price of energy storage cells will remain stable at around 0.4 yuan/Wh, and the pressure to reduce costs on the AC side will shift from main materials to auxiliary materials. It is expected that the system (0.5C) price will stabilize at 0.8 yuan/Wh, but there will still be disorderly competition below the cost price

After destocking in the second half of 2023, battery manufacturers' expectations for market supply will return to rationality, from decoupling to anchoring lithium carbonate again to cope with overcapacity. It is expected that energy storage batteries will bottom out at 0.35-0.37/Wh (including tax prices for second and third tier batteries) in 2024, and then rebound to above 0.4 yuan/Wh. Compared to 2023, the price tends to be balanced throughout the year, with a fluctuation of no more than 20%.

The cost reduction of the communication side energy storage system will shift from the main materials (battery cells, PCS) to auxiliary materials (fire protection, temperature control, etc.), starting with liquid cooling and fire protection systems. Compared with the gross profit of battery cells and PCS (<5% and 20% respectively in 2023), the gross profit of liquid cooling solutions and fire protection systems is over 30%. With the entry of new auxiliary material enterprises, it is expected that there will still be 10-15% price reduction space for auxiliary material systems in 2024.

Overall, the price of the communication side energy storage system (0.5C) is consistent with the fluctuation pattern of the battery cells, with a fluctuation range of no more than 20%. However, the competition pressure in the energy storage system segment is significantly higher than that in the battery cell segment, and disorderly and malicious low price competition will still exist.

Prediction 8: New energy storage products equipped with 314Ah will be shipped in bulk in Q2 2024, with upgrades in battery cells and PCS technology. However, 280Ah and system products will still be the mainstream products for power energy storage

71173-314Ah is expected to become the next generation mainstream energy storage cell, and the 5MWh system product equipped with 314Ah will be shipped gradually in Q2 2024 after 3-6 months of certification. It has been announced that 300Ah+battery cells will be mass-produced in Q1 2024, but 280Ah and system products will still be the mainstream products for power energy storage in 2024.

High temperature cells and high-energy efficiency (96+%) cells based on system level efficiency will be released in 2024. The upgraded version of the cells can effectively reduce the power consumption of auxiliary source equipment in the system and improve overall energy efficiency. The upgrade of PCS focuses on miniaturization and integration, and the application of silicon carbide devices will further improve PCS performance. At the same time, based on cost considerations, it is imperative for PCS to integrate BMS main and control modules.

Energy storage companies that master core component technology will increase product added value through technological and product iteration to avoid falling into price competition.

Prediction 9: Sodium ion batteries and large cylinders are expected to be applied in household storage, and 2024 will be the first year of large-scale production of large cylinders

Currently, there are over 30 companies (including sodium battery companies) developing and laying out large cylindrical batteries. Except for the steel shell full pole ear large cylindrical battery, which has not yet achieved large-scale modulus production, other types of large cylindrical batteries have been mass-produced, and their terminal applications are mainly aimed at the energy storage and low battery power markets (including lithium-ion light vehicles, etc.).

Domestic lithium battery companies' large cylindrical battery products are still in the development and validation stage, and production line design and equipment procurement are also underway. Based on the equipment development cycle and production line construction cycle, it is expected that 2024 will be a period of concentrated release of domestic large cylindrical battery production capacity. Large cylindrical batteries have great development space in the fields of household storage and industrial and commercial storage, mainly due to: 1) good safety; 2) The internal layout has flexible assembly properties; 3) Low cost under standardized system.

At the same time, in 2024, sodium ion batteries will be the first to be commercially applied in household energy storage, electric two wheeled vehicles, A00 level passenger vehicles, base station energy storage and other fields. With the continuous improvement of scale and manufacturing processes, the price of sodium ion batteries will continue to steadily decline, driving their large-scale application in more fields such as industrial and commercial energy storage.

Prediction 10: In 2024, the shipment volume of all vanadium flow batteries will exceed GW for the first time, and the system price will drop to 2 yuan/Wh

Based on intrinsic safety and long-term energy storage considerations, liquid flow batteries, hydrogen energy storage, and water-based batteries are receiving increasing attention and expectations in 2023. From 2022 to 2023, the cumulative winning bid for vanadium based flow batteries exceeded 3GW. Due to limited battery capacity and electrolyte supply, delivery has been postponed. With the release of industrial chain capacity, it is expected that the shipment volume of flow batteries will exceed 1GW by 2024.

The production capacity of flow batteries (all vanadium, zinc iron, chromium iron, etc.) will be expanded to 10GW, and the electrolyte core material vanadium pentoxide will release about 40000 tons of production capacity, including about 5000 tons of vanadium extraction capacity from stone coal. The release of vanadium material production capacity further stabilizes electrolyte and system prices. It is expected that the price of vanadium pentoxide (98%, flake) will remain at 90000/ton throughout the year, and the price of all vanadium flow batteries will remain at 2-2.2 yuan/Wh.