Swift Current Energy, a Boston-headquartered developer, owner and operator of utility-scale clean energy assets, has contracted with First Solar for 500 MW of its Series 7 thin-film modules.
This order will see modules delivered between 2027 and 2028. The company previously placed orders for 3.3 GW of First Solar modules last year.
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A rendering of Six Flags’ new project
Six Flags Magic Mountain, in partnership with Solar Optimum and DSD Renewables (DSD), is breaking ground on a 12.37 MW solar carport and energy storage system.
Six Flags says the Magic Mountain project is the largest single-site commercial renewable energy project in California and largest solar project allocated toward a for-profit organization in the United States.
Key components of the solar installation include a 637,000 square foot solar carport built over the main guest parking lot and team member parking lot, along with 30 electric vehicle charging spaces in the guest parking lot.
“Solar canopies have always been an excellent use of otherwise underutilized space, and this site, with its wide open parking lots, provides the perfect canvas to build on,” says Danielle Fidel, senior director, developer network, at DSD.
The installation will also include a battery storage system producing approximately 2 MW of power with up to 8 MWh of capacity that can be deployed daily.
The Magic Mountain project is the third solar installation for Six Flags. Properties in northern California at Six Flags Discovery Kingdom and New Jersey at Six Flags Great Adventure have also developed on-site solar capabilities, with over 30 MW of fully operational solar power systems installed.
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Jesse Simons
EDF Renewables North America has signed an agreement with SOLARCYCLE to recycle solar panels that are damaged or broken during construction and operation from their grid-scale, distribution-scale and on-site solar projects.
“As a company, we have committed to developing the recycling capability of our clean energy assets, starting with solar,” says Edgar Puerto, associate director, strategic procurement, at EDF Renewables. “We view this as a key strategy for reducing our greenhouse gas emissions and catalyzing a new domestic supply chain for made-in-America solar products.”
SOLARCYCLE’s proprietary technology allows for the extraction of 95% of the value from recycled panels, including silver, silicon, copper, aluminum and glass: a significant increase over the industry standard, which is currently below 50%.
The recycler’s patented processes are increasingly extracting value from each panel so that, combined with reverse logistics, they can provide the lowest-cost recycling solution to EDF Renewables that maximizes environmental benefits and supply chain resilience. “As one of the largest clean energy companies in the world, we are thrilled that we were selected for this important initiative,” says Jesse Simons, chief commercial officer and co-founder of SOLARCYCLE. “We are proud to partner with EDF Renewables, who went deep with us, with multiple visits to our factory, extensive audits and a competitive RFP process.”
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RAQ appears to be planning a vertically integrated facility building battery cells, packs and whole systems. The announcement said that RAQ’s “large capacity cells enable two to three times the production output within a typical building footprint, translating to greater energy efficiency, productivity, and manufacturing agility”.
The company has, however, not revealed the type of battery technology that will be produced at the facility. Lithium-ion is the current dominant technology for both the electric vehicle (EV) and energy storage system (ESS) markets, while chemistries based on sodium, zinc and other resources are growing in popularity although from a very low base.
Construction services provider Broccolini Construction Inc created the preliminary design for the first phase of the facility, which is expected to begin construction in 2024.
RAQ says on its website that it has over 20 years of advanced energy storage technology, decades of working providing solutions to the US military, and over 60 patents and patents pending.
Banks RBC Capital Markets and Société Générale are advising on the project.
Canada is planning to bring in tax credit incentives for clean energy investment, in both downstream projects and upstream manufacturing, akin to those under the US’ Inflation Reduction Act which have seen investment in the country’s clean energy sector boom.
Energy-Storage.news has contacted RAQ for comment and will update this article when a response is received.
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Despite the numbering, the project is actually the third in Longroad’s Sun Streams complex of solar PV and batteries. The previous addition, Sun Streams 3, achieved financial close in January, with energy storage system integrator Powin signed up to provide that plant’s 215MW/860MWh BESS, which will be paired with 285MWdc of solar PV.
As reported by Energy-Storage.news at the time, as construction began on Sun Streams 3, Longroad CEO Paul Gaynor called Arizona an “important growth market”. The company claimed to have 4GW of projects in operation or development in the state, and signed a long-term power purchase agreement (PPA) with utility Arizona Public Service (APS) for Sun Streams 3.
The developer said today that APS has signed up as off-taker for Sun Streams 4 via another PPA. Sun Streams 3 will go online next year, while Sun Streams 4’s expected start of commercial operations will be in mid-2025.
Paul Gaynor said back at the start of this year that the US Inflation Reduction Act (IRA) and the incentives it brought in for clean energy development and manufacturing would open up the market to even bigger and better things.
Today, the CEO said Sun Streams 4 will be one of Longroad’s “first projects to incorporate provisions from the historic Inflation Reduction Act”.
PV modules from First Solar, BESS by Powin
Longroad acquired the Sun Streams portfolio from the development arm of US thin-film PV manufacturer First Solar in 2021. Along with Sun Streams 3 and Sun Streams 4, there is also the already-operational Sun Streams 2, which is a standalone 200MWdc solar PV plant that went online in mid-2021.
First Solar has provided the modules for the other projects and this relationship continues with Sun Streams 4, set to be equipped with the manufacturer’s Series 6 Plus modules. In fact, as reported by PV Tech in September, Longroad Energy has signed supply contracts for 8GW of modules with First Solar since 2017, extending the deal to add another 2GW last month.
Other contractors and suppliers have been retained for the full Sun Streams portfolio too.
Engineering, procurement and construction (EPC) contractor McCarthy Building Companies has been selected for the new project as well as the previous two.
Powin returns as BESS provider and integrator. As with Sun Streams 3, Powin will integrate battery cells from AESC into the plant, as well as energy storage inverters and power conversion system (PCS) equipment from SMA.
On the solar side of the installation, inverters will be provided once again by Sungrow and trackers by Nextracker. Operations and maintenance (O&M) duties will be carried out by Longroad and affiliate Longroad Energy Services, together with O&M provider NovaSource Power Services. Powin will also be involved in O&M on the battery system.
Rising Arizona
Arizona Public Service will use both the contracted solar-plus-storage systems to store solar generated during the daytime to manage peak demand.
They will also be important contributors to APS’ integration of renewable energy into its energy mix, with the utility targeting 100% carbon-free electricity by 2050 and 45% renewable energy by 2035.
“Arizona is experiencing rapid growth and development, and with the demands of our hot summer months, APS customers will continue to count on reliable power as we invest in additional energy resources,” APS VP for resource management Justin Joiner said today.
Arizona, one of the US’ desert southwest ‘hotspots’ for solar has also become one of the country’s rising markets for solar-plus-storage and standalone energy storage.
In October alone, Energy-Storage.news and PV Tech reported on projects from fellow Arizona utility Tucson Electric Power (TEP), which is building the 200MW/800MWh Roadrunner Reserve standalone BESS, the completion of an US$1.8 billion financing by BESS developer Plus Power for 2.78GWh of projects in Arizona and Texas and the launch of plans for a solar-plus-storage project by utility cooperative AEPCO which will feature “up to” 940MWh of battery storage.
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That means there’s no bias in favour of, for example, batteries, or nuclear, or green hydrogen, but as Jigar Shah points out, companies applying have to have done their homework and come with strong fundamentals in their approach to business as well as to R&D.
And as Shah says repeatedly, it is not the Department of Energy’s (DOE’s) job to pick winners in the clean energy tech race. Nor is it the Department’s job to dictate how markets should be run in the various regional transmission organisation (RTO) and independent system operator (ISO) service areas that form the US grid.
Yet with the need to balance the variable nature of solar PV and wind generation and maintain grid reliability in the face of increasingly frequent extreme weather events becoming ever more acute, the DOE recognises the value of long-duration energy storage (LDES), Jigar Shah says.
With apologies that this second part has come later than planned due to a few scheduling complications, what follows is a discussion with Jigar Shah into the finer points of commercialising LDES technologies, and how the work of the DOE and LPO fit in with those efforts.
You can read Part 1 of our interview with Jigar Shah here.
The LPO has financed a broad range of projects and technologies. Among those is the US$504 million for the Advanced Clean Energy Storage (ACES) Delta project, which was the first to get a loan guarantee since 2014 after the LPO lay dormant in the Trump years. ACES Delta will create green hydrogen using 220MW of electrolysers and put it into underground salt caverns to provide 300GWh of storage, suitable for multiple days of discharge, with the Los Angeles Department of Water and Power as an off-taker.
With reference to that project, as well as in a more broad sense, how do you see the evolution of long-duration energy storage (LDES), which has become a key area the Department of Energy, and by extension the LPO, have looked to support?
On the ACES Delta project: this was a very professional developer. They had a great project, they had a salt cavern that was already designated, they had a coal power plant that was theirs and the transmission line was already there. They had a customer in LADWP that wanted to do this project so they had a great off-take agreement. So it was an easy deal for us to approve and we were able to do the due diligence, etc.
Now, you and I can argue whether the next 12 salt caverns are going to be turned into long-duration hydrogen storage or not, but this particular one was well-structured, and was ready to be financed. So we were happy to finance it.
I think the same thing is true with long-duration energy storage. You’ve got several types of LDES. You’ve got the 10-hour storage, that’s where [a company like] Eos fits in and then you have these 100-hour sort of storage companies and then multi-day storage companies, etc.
My sense is that the level of confusion in the marketplace, around where all of these companies sit is real and so there’s some value in us helping to solve that. We published the long-duration liftoff report earlier this year. That helped people really understand why the grid needs LDES, which was valuable.
Rendering of ACES Delta in Utah, the first project to receive a Loan Programs Office loan guarantee under Jigar Shah, and the first granted since 2014. Hydrogen will be stored in salt caverns underground. Image: Advanced Clean Energy Storage I/Mitsubishi Power Americas.
I think we try as a Department of Energy to put context around long-duration energy storage.
Once we’ve published that context, then the companies have to find a way to establish their relevance, find customers who want to buy their stuff. If they need to fix market rules, the DOE is here to provide technical assistance, but we’re not supposed to put our thumb on the scale around on which way the market is set up.
‘DOE has been thinking a lot about commercialisation’
A lot of the providers of LDES would say the technologies are proven, but in terms of bridging the gap to establish a market, what are your thoughts? The DOE is supporting cost reduction efforts through the Energy Storage Grand Challenge and other initiatives, in California we see the state’s energy commission (CEC) provide funding to bridge revenue gaps for certain projects. Where and how does the DOE see a market becoming established for, let’s say 8-10-hour duration storage?
The DOE really doesn’t think that way. The goal of the DOE is to make sure that Americans have resilient and reliable electricity, so that they can actually live a modern lifestyle, and then to the extent that we want to establish an energy abundance, we want to make sure that we have all these technologies ready to go. So that different markets can pick from nuclear, hydro, geothermal, solar, wind, whatever technologies that they want to deploy at scale. It’s not our job to tell them.
But in general, in trying to achieve those goals, there are certain tools that we think are missing.
So you might say, we have two hours of battery storage available today but the market needs 10 hours of battery storage, you see that in California as well. So when basically when the market is tight, it’s generally tight for like 18 hours. It’s not tight for two hours. So when it’s tight for that long, then the question is, when do you recharge the batteries? Because you don’t recharge the batteries at a thousand dollars a megawatt-hour.
So the question becomes, when do you recharge? You charge for those four hours that it’s not tight, when market prices are stable. Sometimes that’s the middle of the day when there’s excess solar power, and sometimes that’s at night when there’s excess wind power, whatever it is.
When you look at the way that the California market performed last year, or the Texas market performed last year, there were this number of days where it would have been better to have 6 to 10 hours of battery storage. Then we’ll have to see if that number of days is worth it to the solar and wind developer, to actually add 6-8 hours of battery storage. In some markets, it is.
In Texas, you’re starting to see a lot more public announcements, saying that they’re adding 6+ hours of battery storage. In other markets, people are saying: “For two days’ worth of those issues, I’m not going to add six hours of battery storage”.
Ultimately, the challenge we have is that we have to live under the market rules as they’re designed today. Now separately, market rules can be changed. It’s very obvious that if you add long-duration energy storage to the parts of the transmission grid that have the most amounts of congestion, you would reduce that congestion and reduce electricity prices for everybody.
The problem is, once you reduce that congestion, then there’s no arbitrage. There’s no high prices to get paid for doing that. Then the only way to do that is through some socialised way. So someone says, “Hey, if we put batteries there it’ll reduce prices for everybody, but we can’t do that in a market-based way. So we have to just rate base it, for everybody. That’s what MISO does.
Long-duration energy storage can be rate based that way too. But again, it’s not DoE’s job to force that on people. [Instead], we do a report and we say, here are the benefits of doing that and then hopefully, MISO says: “That report’s really good. We should do that.” That’s sort of how we make change. So those decisions are made on those more local levels, DOE are not mandating it.
Is it also a question of the LPO supporting those technologies in terms of both innovation and scale to get to the point where they’re so affordable that it just seems to almost be the obvious option?
I don’t know that that looks that way. I do think that LPO has been thinking a lot about commercialisation and how commercialisation occurs.
In general, it doesn’t work to say, “We’re going to give you a demonstration grant, we’re gonna do this thing, and when your costs get to lithium-ion battery costs, then they’ll take off”.
Busy expo hall at this year’s RE+, where Energy-Storage.news spoke with Jigar Shah. Image: Andy Colthorpe / Solar Media
Because they’ll never get to lithium-ion battery costs. Basically, you have to scale up your technology for like, five years, before those costs come down.
The only way to solve that problem is to either find niche applications where people are willing to pay a premium, or you raise a lot of equity from the markets, and you lose money for seven years until you get your costs down right to that point.
I think that describing how commercialisation works, which is what we’re doing with DOE and LPO around nuclear and new transmission technologies, battery storage, and all these other things is something that we’re doing more of. I think we are starting to be more articulate around that, but some of it actually, is that the company has to be able to raise a lot of equity. They have to be able to win the hearts and minds of those equity check writers.
Our publisher Solar Media is hosting the 10th Solar and Storage Finance USA conference, 7-8 November 2023 at the New Yorker Hotel, New York. Topics ranging from the Inflation Reduction Act to optimising asset revenues, the financing landscape in 2023 and much more will be discussed. See the official site for more details.
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As Energy-Storage.news reported, battery storage operators in Texas voiced adamant opposition to NPRR 1186 and its requirement for energy storage resources (ESRs) to hold more capacity than required when providing ancillary services.
Power marketer (or ‘optimiser’) Gridmatic said the new amendments reduce the additional capacity required to provide ancillary services although do not get rid of the requirement altogether, as the company’s VP business development David Miller explained whilst providing the background on the changes.
Background
In December 2022, ERCOT brought in a new SOC rule for energy storage resources requiring them to be capable of satisfying all discharging ancillary service awards held on the generation side for the full duration of the award, starting at the beginning of each hour of an award. NPRR 1186 was designed to codify this new rule and address its unintended consequences.
An example in practice meant that an energy storage asset with a contract award of 10MW of ERCOT Contingency Reserve Service (ECRS), a relatively new ancillary service with a 2-hour qualification requirement, would need to hold 20MWh of SOC at the beginning of each hour it was awarded ECRS.
Miller said: “These BPM (business practice manual) updates limited the operational flexibility of storage to deliver ancillary service awards, particularly during peak demand when those resources were most needed. Batteries played an important role in helping Texas’ grid avoid major blackouts this summer but could have played an even larger one if not for the SOC rule that caused them to withhold ancillary capacity.”
ERCOT has now revised the SOC rule to require batteries to hold only one hour of SOC for discharging ancillary service awards rather than multiple hours for different ancillary services, Miller said, though added that that hasn’t satisfied all the opposition from battery operators.
“This addressed the concerns about multi-hour SOC requirements but did not address concerns from stakeholders that the SOC rule itself is discriminatory (against batteries). NPRR 1186 also did not address concerns from ERCOT that the current penalties for failing to maintain SOC are not sufficient, so additional NPRRs are expected to take up the issue of penalties and compliance.”
The rule is said to be discriminatory as no other energy asset has its fuel supplies monitored or mandated in such a real-time way, with existing penalties for failing to fulfil ancillary service awards applying to all market operators. ERCOT has defended the rules, saying they improve the awareness, accounting and monitoring of energy storage resources on the grid.
Impact of amended rule on ERCOT market going forward
The proposed 1-hour SOC rule is nonetheless an improvement on the December 2022 rule change, Miller said.
“The proposed new 1-hour SOC reserve rule will not have as adverse an impact on batteries as the original SOC rule, and will allow batteries to supply greater grid support during critical peak demand periods when they are most needed. On the heels of a summer of record peak demand in Texas, ERCOT will need to do everything it can to better utilise its nationally leading battery market.”
However, it will still impact the ability of batteries to provide ancillary services in ERCOT, the other main ones being Reg-Up and Reg-Down, Responsive Reserve Service (RRS or spinning reserve), which Miller explained in a separate interview with Energy-Storage.news in June (Premium access).
That is particularly true for those batteries with a discharge duration of under two hours, so one likely impact of the new codified rule is more 2-hour (or more) duration batteries in the market. Most battery storage projects currently being built in the state are have a 2-hour duration.
ERCOT market continues to boom
As Energy-Storage.news has written extensively, the ERCOT, Texas battery storage market is the most active in the US along with California, currently the largest by deployments but one which could be overtaken by ERCOT next year.
Large-scale project news from the state in October alone included TotalEnergies turning on a co-located 255MWh BESS, Spearmint Energy securing tax equity for a 300MWh project, developer Solvent Energy talking to banks to sell part of a 2.5GW portfolio and Plus Power completing a US$1.8 billion financing round of which half was for projects in ERCOT.
Gridmatic recently launched a US$50 million fund for its tolling businss model (Premium access) where it pays battery storage owners a fixed fee to take on responsibility (and all upside) for playing the asset into markets.
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The offtaker is Mozambique’s main utility Electricidade de Moçambique (EDM) through a 25-year power purchase agreement (PPA) while Source Energia, another developer and IPP, also worked on the project with Globeleq.
The power plant has been described as a ‘US$36 million project’. World Bank and donor country-funded finance institution Private Infrastructure Development Group (PIDG) provided US$19 million in debt funding while UK development finance institution British International Investment provided a US$1 million grant.
Financial close was completed in December 2021, reported by Energy-Storage.news at the time. The energy storage system was provided by E22, part of the Spanish group Gransolar, while another Spanish company TSK provided engineering, procurement and construction (EPC) services.
The project is part of Mozambique’s plan to deploy 200MW of renewable energy over a five-year period, and is the third large-scale solar plant in Mozambique.
Filipe Nyusi, president of Mozambique said at an inauguration ceremony: “The Cuamba solar and storage plant will provide greater energy security and stability in this region of Mozambique and marks a turning point for the Cuamba district. Globeleq, Source Energia and EDM have all invested in this project – a public-private partnership that demonstrates the confidence of international investors in Mozambique.”
Mike Scholey, Globeleq’s CEO remarked: “We are extremely excited to now have Cuamba Solar officially delivering clean power to the Mozambican grid via EDM and supporting both the local economy and the Government’s efforts to build more renewable power. We continue to build our business in Mozambique through this project, our purchase of the Mocuba solar PV plant and our Temane gas-to-power project, currently in construction.”
Though the project is the first large-scale solar-plus-storage project in Mozambique, a larger, 300MW project recently secured a land agreement for a 950 hectare area a few months after its developer Ncondezi Energy launched a feasibility study into it.
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A few days ago, Energy-Storage.news reported that Trina Storage, energy storage division of solar module super league (SMSL) member Trina Solar, had debuted its Elementa 2 battery energy storage system (BESS) at the show. Based on a larger format lithium iron phosphate (LFP) cell than its predecessor, Elementa 2 packs up to 4MWh storage capacity into each 20ft container.
Sungrow PowerTitan to power battery ‘Hives’
Clean Energy Transfer Fund (CETF), an Australian investor into clean energy technologies and projects, selected solar PV inverter and energy storage brand Sungrow to supply liquid cooled BESS solutions to a connected ‘virtual power plant’ network.
Hive Battery Developments, as the vehicle supported by CETF is called, is seeking to deploy clusters of BESS resources at strategic locations.
Earlier this year, as it picked out Sungrow’s PowerTitan BESS container to power the so-called ‘Hives’, CETF’s first project was set to be a network of 10 separately sited systems, each of about 5MW, adding up to 49.9MW output to 200MWh of capacity in New South Wales (NSW).
Then, at last week’s show, Sungrow and Hive Battery Developments signed a strategic cooperation agreement. A total 3GWh of Sungrow PowerTitan systems will be provided for the CETF-backed networks of BESS assets, over the next three years.
One reason Sungrow stood out, according to CETF, is that the company has a team that models and offers support for the grid connection process, adhering to Australia’s strict Generator Performance Standards (GPS).
CETF will play the systems into opportunities for frequency control ancillary services (FCAS) and wholesale arbitrage in the National Electricity Market (NEM), which has recently been found to be among the world’s most volatile electricity markets in analysis by Rystad Energy. Sungrow said it also signed a 250MW to 300MWh BESS supply deal with automotive company Penske, and 1,100MW of deals with equipment distributors during the show.
Headquartered in Hubei, China, Sungrow’s energy storage presence has grown over the last eight years or so it has been active in the space, and in addition to being ranked among the leading PV inverter companies for several years, is now considered a top contender among BESS system integrators too by the likes of research firms Wood Mackenzie and S&P.
5MWh container race
In addition, Sungrow was showcasing its latest PowerTitan 2.0 BESS, which houses 2.5MW power conversion system (PCS) and up to 5MWh capacity within a 20ft container, based on a new larger format 314Ah lithium battery cell.
Also bringing a 5MWh, 20ft containerised BESS product using 314Ah cells, was battery manufacturer Hithium. The company first brought the product, called ESS 2.0, to the international market at this year’s RE+ in the US.
The Chinese manufacturer focuses on producing batteries for the energy storage market, where many of its counterparts cater for electric vehicles (EVs), and is ramping up from the 70GWh of annual production capacity it expects to reach by the end of this year, to 135GWh by 2025. Like Trina Storage, Hithium supplies its own-made LFP cells to its BESS solutions.
Australian manufacturer EVO Power to use Ingeteam inverters
Also at the show, Australian BESS manufacturer EVO Power signed a deal to use Ingeteam’s liquid cooled bi-directional energy storage inverters in its products.
Headquartered in All-Energy Australia’s home state of Victoria, EVO Power targets the larger, megawatt-scale end of the commercial and industrial (C&I) market, although it also has a DC-coupled battery solution for utility-scale projects.
A few weeks ago, the completion of what was claimed to be the first project in Australia to feature a DC-coupled solar-plus-storage system was announced, using EVO Power’s CONNECT series utility-scale product, alongside bi-facial PV modules and an SMA central inverter. Located in South Australia, the project, for developer Flow Power, has a 5.8MW solar PV array and 6.7MWh BESS.
EVO Power’s strategic partnership with Ingeteam was sealed with the signing of a Memorandum of Understanding (MoU) that took place at All-Energy Australia, the company announced this morning.
Ingeteam’s Ingecon Sun Storage 3Power bi-directional inverters will be used in EVO Power’s medium voltage modular BESS range utility-scale applications, called AMP.
AMP is claimed to be a low Capex, high efficiency solution, designed to be plug & play, with up to two PCS units per skid, using digital signal processing technology that offers efficient inverter control. It includes medium-voltage transformer and auxiliary power supply, available from 2MW to 5MW.
In what is fast-becoming industry standard for BESS, AMP uses LPF cells, and EVO Power said it can perform multiple modes of operation, suiting it for applications from power smoothing and time shifting of energy to grid support and ancillary services like frequency regulation, black start and providing synthetic inertia.
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Fluence is a pure-play BESS solution provider controlled by utility AES and technology firm Siemens, while Sungrow is primarily an inverter manufacturer. Huawei is a technology firm, while BYD and Tesla entered the BESS market from their position as leading EV manufacturers.
The top five system integrators differs slightly to that put out by S&P Global recently as it only considers 2022 deployments, while S&P’s top five of, in order, Sungrow, Fluence, Tesla, Wärtsilä and Hyperstrong was based on cumulative installations to-date as of July 2023. Wärtsilä is a power solutions firm, which, it emerged today, may divest its energy storage business, while Hyperstrong is a China-based system integrator.
The US market meanwhile was more concentrated than the global one last year, with Tesla (25%), Fluence (22%) and Sungrow (13%) making up the top three holding a collective 60% market share, and the top five holding 81%.
An increasingly competitive market
Wood Mackenzie’s note corroborates S&P’s observation that Chinese companies are gaining market share in the global BESS space, which Wood Mackenzie called “increasingly competitive”.
This competition is particularly pronounced in China, Kevin Shang, senior research analyst at Wood Mackenzie said, where the market has effectively commoditised.
“China’s integrator market is becoming increasingly competitive, squeezed heavily by both upstream and downstream supply chain participants. Possessing manufacturing capacity on key components, like cell, PCS, BMS and EMS, tends to be a necessity rather than a plus as bid requirements for energy storage projects become more detailed and stringent,” Shang explained.
“The price war among system integrators has started in China. We’ve observed an increasing number of players willing to sacrifice profits in exchange for market share, dragging down the profitability of the whole industry. However, we forecast that aggressive bid strategies with little margin will not be sustained. Intensifying market competition will make it difficult for companies with low profitability and no clear competitiveness to survive over the coming years.”
S&P attributed strong growth in the Chinese domestic energy storage market to companies based there gaining a foothold in the global market. In comments provided to Energy-Storage.news after we covered their rankings release, S&P Global Commodity Insights’ senior analyst Anqi Shi suggested this could impact the global storage industry.
“The oversupply and fiercely competitive market that we foresee is actually a global issue,” said Shi. “Annual energy storage installations in China grew by 400% in 2022, and will more than double again in 2023 to reach 18 GW. This is supporting the growth of many local system integrators.”
“In fact, we found eight Chinese system integrators each with total pipelines (installed plus contracted) of over 1GWh. Many of these system integrators are using this as a platform to expand internationally, heating up competition in the market.”
“In addition, throughout 2023 we have seen aggressive energy storage system manufacturing capacity announcements, partly to a bid to localise production and also to drive scale. As a result, system manufacturing capacity will far outstrip demand in the coming years.”
Energy-Storage.news has been told anecdotally that BESS price drops in 2023, confirmed by Clean Energy Associates (CEA) in a recent report, can be attributed to oversupply from China-based providers.
CEA said in its report, covered by us yesterday, that the incentives under Inflation Reduction Act will make US-made BESS, within specific parameters, cost-competitive with those from China.
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