1. Top energy storage firms strengthen

According to the development characteristics of the energy storage industry, a development pattern has been formed, with lithium iron phosphate batteries as the main route, sodium-ion batteries rapidly optimizing as a partial substitute, and various battery routes supplementing each other. With the increasing demand for residential and large-scale storage, the maturity of energy storage battery technology will be further improved, and battery costs are expected to decrease. The overall energy storage battery industry is highly concentrated, with leading enterprises occupying a large market share.

2. Energy storage inverters growing fast

At present, the shipment volume of inverters continues to grow rapidly, with micro-inverters accounting for a larger proportion. The inverter midstream mainly provides energy storage inverters adapted to various application scenarios, but there is no absolute market leader. With the release of large-scale energy storage in China and the opening of the overseas large-scale storage market, the energy storage inverter business is expected to enter an accelerated period.

3. Energy storage cooling grows steadily

With the continuous development of the electrochemical energy storage market, the temperature control market has also experienced high growth. In the future, with the increasing number of high-capacity and high-rate energy storage applications, the advantages of liquid cooling systems with high heat dissipation efficiency and fast speed will become more prominent, accelerating penetration. Compared to air-cooling systems, liquid cooling systems offer more sustainable battery life, higher efficiency, and more precise temperature control. It is predicted that by 2025, the penetration rate of liquid cooling systems will reach 45%.

4. Link between foreign home storage, domestic large-scale storage.

Energy storage systems are divided into front-of-the-meter and behind-the-meter applications. Front-of-the-meter applications are more widespread, with China, the United States, and Europe mainly focusing on front-of-the-meter businesses. In China, front-of-the-meter applications accounted for 76% of the domestic energy storage installation ratio in 2021. Behind-the-meter businesses vary in focus among countries, with a penetration rate of 10% for large-scale storage in China and 5% for residential storage. Overseas markets are mainly focused on residential storage. In 2021, the installed capacity of residential energy storage in the United States increased by 67%, while commercial and industrial energy storage decreased by 24%.

5. Market Analysis Of Energy Storage

In recent years, substantial breakthroughs have been made in new energy storage technologies such as lithium-ion batteries, flow batteries, sodium-ion batteries, compressed air energy storage, and gravity energy storage. The domestic energy storage industry in China has entered a diversified development stage and is expected to take a leading position globally in the future.

5.1 Energy storage batteries

In terms of energy storage batteries, the global energy storage battery installation capacity and growth rate have been increasing year by year, with a large demand in the global energy storage battery market. China’s energy storage lithium battery output has been continuously increasing, and the cost of lithium iron phosphate batteries per kilowatt-hour is expected to decrease. Driven by policy guidance and industry technology iteration, the downstream market for energy storage batteries has great development potential and broad demand, driving the continuous expansion of energy storage battery demand.

5.2 Power Conversion Systems

In terms of PCS (Power Conversion Systems), the global trend is towards the integration of photovoltaic and energy storage inverters, which highly overlap with residential grid-tied inverters. Energy storage inverters have a significant premium, and the penetration rate of microinverters in the distributed market is expected to continue to improve. In the future, as the proportion of energy storage configurations increases, the PCS industry will enter a rapid expansion stage.

5.3 Energy storage temperature control

In terms of energy storage temperature control, the high growth of electrochemical energy storage systems is driving the rapid development of energy storage temperature control. By 2025, the scale of China’s electrochemical energy storage temperature control market is expected to reach 2.28-4.08 billion yuan, with a corresponding average annual compound growth rate of 77% and 91% from 2022 to 2025. In the future, as high-capacity and high-rate energy storage applications increase, higher requirements will be placed on temperature control. Liquid cooling, as a medium-to-long-term technical solution, is expected to gradually increase its market penetration rate, with a predicted 45% market share by 2025.

5.4 Fire protection and energy storage

In terms of fire protection and energy storage, China’s leading energy storage enterprises in the field of fire protection systems have a significant room for market share improvement. Currently, fire protection accounts for about 3% of the energy storage system cost. With the high proportion of wind and solar power connected to the grid, the utilization rate of energy storage will rapidly increase, leading to a more vigorous demand for fire protection and a corresponding increase in the proportion of fire protection costs.

China mainly focuses on large-scale energy storage, while overseas markets focus on residential energy storage. In 2021, the proportion of user-side energy storage in China’s new energy storage reached 24%, highlighting its importance. In terms of specific application scenarios, the domestic commercial and industrial sectors and industrial parks account for an absolute majority, with a combined share of over 80%, making them the mainstream applications for user-side energy storage.