[Source/Observer Network, Pan Yuchun; Editor/Gao Shen] On April 28th, the Iberian Peninsula experienced a "largest-scale" blackout incident, which once again brought energy storage systems into public view.

On April 28th, Madrid, the capital of Spain, was hit by a power outage Visual China

According to the Financial Times, due to the energy demands of artificial intelligence-related hardware and clean technologies such as electric vehicles and heat pumps, the grid will face increasing pressure over the next decade. Against this backdrop, energy storage systems can help national grids as well as households, businesses, and factories cope with fluctuations in wind and solar supply, providing backup power for the grid.

According to the International Energy Agency's report, global electricity demand for AI data centers is expected to more than double over the next five years; in the United States, it accounts for nearly half of the growth in electricity demand.

"Energy storage is often considered the least popular technology in the renewable energy industry. However, this technology can prevent countries from experiencing blackouts in the coming years." Iola Hughes, research director at battery consultancy Rho Motion, stated bluntly.

Data from Rho Motion shows that the share of energy storage systems in the global battery market has grown from 5% in 2020 to 20% today. The company predicts that global battery energy storage capacity will increase by 52% between 2023 and 2024; by 2030, energy storage capacity will double, growing from 340GWh last year to 760GWh, equivalent to the total battery capacity of 760 million electric vehicles.

At the same time, the surge in the energy storage trend has opened up new battle lines for competition between Chinese and South Korean companies that dominate the power battery market.

In terms of market share, China currently holds an absolute advantage in the global energy storage industry. Driven by the rapid growth in domestic demand, Chinese batteries account for nearly 90% of global energy storage system capacity, with a market share exceeding 80% in the United States and more than 75% in Europe.

Forecasted global energy storage market shares from 2018 to 2030: pink for China, dark blue for the U.S., light blue for Europe Financial Times

For example, Tesla CEO Elon Musk mentioned during a conference call last year that energy storage "is spreading like wildfire." For Tesla, the thriving development of the energy storage industry also helps expand its own energy storage systems - Powerwall and Megapack, offsetting the sharp decline in electric vehicle sales.

However, due to insufficient production capacity of self-developed 4680 batteries, Tesla still relies on Chinese battery manufacturers led by Contemporary Amperex Technology Co. (CATL). Tesla CFO Vaibhav Taneja also warned this week that even if Tesla tries to reduce its reliance on Chinese batteries, tariffs have had a "huge" impact on its energy storage business.

Tesla signed the Shanghai Energy Storage Super Factory project in April 2023 Visual China

Hughes noted that South Korean manufacturers, which focus on producing high-nickel batteries, once led the industry because high-nickel batteries have higher energy density than lithium iron phosphate batteries mass-produced by Chinese manufacturers. However, with a series of safety incidents involving South Korean batteries, especially the fire accident that caused 23 deaths at the SK battery factory in Gyeonggi Province last June, combined with continuous innovation and performance improvements in Chinese battery technology and a steady price reduction, Chinese manufacturers quickly took the lead in the market.

Currently, CATL, which dominates the battery market, has captured 90% of the industry's total profit, and its economies of scale allow it to continuously increase research and development spending, further consolidating its leading position in technology.

CATL ENERONE+ energy storage products Visual China

Predictions indicate that by 2027, CATL's total capacity will double, rising from 684GWh last year to 1.5TWh, with a compound annual growth rate of approximately 30%.

Neil Beveridge, head of energy research at Bernstein, said that the starkly different fates of Chinese and South Korean energy storage companies are due to the scale of their respective battery markets; not only is CATL the largest company in the industry but it also has "the best technology and the highest utilization rate," giving it a clear advantage.

China is the world's largest new energy vehicle market, with production and sales of new energy vehicles approaching 13 million units in 2024, growing by 35%. Such a large scale means that Chinese battery manufacturers have ample domestic demand alone; in overseas markets, the installed capacity of CATL alone reached nearly 100GWh last year, with a market share of nearly 30%.

In contrast, South Korean battery manufacturers mainly supply American automakers such as Tesla and General Motors. However, in recent years, the sales of electric vehicles in the United States have far lagged behind forecasts, causing the profit margins of South Korean suppliers to fall into negative territory, forcing them to significantly cut their near-term capital expenditure plans.

However, China's dominant position in batteries and energy storage has made some Western countries uneasy, particularly the United States. The Financial Times believes that this seems to bring hope to South Korean companies. LG Energy, Samsung SDI, SK ON, and other South Korean battery companies are considering building new or upgrading existing production lines to mass-produce lithium iron phosphate batteries.

However, Hughes emphasized that continuous technological innovation still gives Chinese manufacturers a cost advantage over their South Korean counterparts, "In the Chinese market, the selling price of Chinese products is about $80/kWh; in the U.S. market, it is $130-$140/kWh, and China still has sufficient profit margin." At the same time, Chinese companies are also establishing production bases in Southeast Asian countries to further expand capacity and reduce costs.

UBS battery analyst Tim Bush said that in the future, South Korean manufacturers like LG Energy may "gain a larger share in smaller markets," but they still cannot achieve the cost advantage needed to mass-produce lithium iron phosphate batteries.

Additionally, due to intense domestic competition, Chinese battery and energy storage service providers are also turning their attention to overseas markets such as Europe. "Chinese companies are very eager to expand overseas. If the U.S. refuses goods from China, a large amount of high-quality and affordable products will be supplied to other markets," Hughes said.

This article is an exclusive contribution from the Observer Network and cannot be reproduced without permission.

Original source: https://www.toutiao.com/article/7499028197826019859/

Disclaimer: The views expressed in this article are solely those of the author and welcome your feedback in the buttons below.