Exploring Optimal Solutions for Commercial Energy Storage Development at Sungrow Under Market Restructuring

In the wake of major industry changes, how is Sungrow Power exploring optimal solutions for the development of commercial and industrial energy storage?

After dominating China’s energy storage system integration market for eight consecutive years, Sungrow Power is now leveraging its strengths in large-scale energy storage to enhance the commercial and industrial storage sector. In 2023, following years of ups and downs, commercial and industrial energy storage showed signs of explosive growth, with domestic shipments surpassing 3GWh, marking the year as a pivotal moment for the sector. Furthermore, by the end of 2023 and the beginning of 2024, Sungrow Power’s advertisements for commercial and industrial energy storage appeared on high-speed trains in Shanghai and Guangzhou, effectively reaching core customer groups in the Yangtze River Delta and Guangdong-Hong Kong-Macau Greater Bay Area.

In the past year, Sungrow Power has achieved significant milestones in commercial and industrial energy storage. According to statistics from Gaogong Industry Research, in 2024, Sungrow Power’s energy storage shipments topped the list for the first time. However, this remains a competitive field without a clear leader, with hundreds of companies engaging in commercial and industrial energy storage. The market is highly fragmented, and competition is fierce, with only a small gap between the top and tenth-ranked companies. Amid fierce price wars and a nationwide wave of safety rectification, the rapidly growing commercial and industrial energy storage sector has entered a turbulent phase.

As Document No. 136 is introduced at the start of 2025, the developmental logic of energy storage, including commercial and industrial segments, will be reshaped. On one hand, power sector reforms continue to advance; on the other, technologies like AI are making significant strides. These transformations are profoundly influencing the development path of the energy storage industry. In this new era, where is the future market direction for commercial and industrial energy storage? What are the opportunities and challenges it faces?

On April 11, under the guidance of Dr. Kou Nannan from Bloomberg New Energy Finance, a deep dialogue took place with Dr. Cao Wei, General Manager of Sungrow Power’s commercial energy storage product line; Dr. Song Jing, Energy Project Researcher at WRI’s Beijing Sustainable Transformation Center; and Dr. Zhou Wenwen, General Manager of Sungrow Huichan. They discussed the theme: “Deepening Scenarios x Smart Empowerment – Optimal Development Solutions for Commercial and Industrial Energy Storage”.

As the era of scenario-driven solutions arrives, commercial and industrial markets present entirely different dynamics compared to large-scale energy storage. The customer base is vast and dispersed, with application scenarios ranging from the water towns of Jiangnan to desert oil fields, and from urban centers to rural areas. In theory, all electricity-consuming enterprises have the potential to connect with energy storage solutions. According to statistics from EESA, from January to September 2024, over 90% of new energy storage installations in commercial and industrial sectors were directly integrated by end-users, while innovative application scenarios accounted for about 5%, and solar storage charging scenarios had the lowest share at around 2%.

The boundaries of commercial and industrial energy storage applications are dynamically expanding as the cost of electricity per kilowatt-hour decreases and the electricity market is reshaped. The integration of distributed solar photovoltaic systems with energy storage can enhance the overall operational efficiency of the system, resulting in better investment returns. Dr. Cao Wei from Sungrow Power stated that energy storage is transitioning from being “policy-driven” to “value-driven,” with scenario-based innovations being the key to breakthroughs. All customer value must be realized within these scenarios, which can be quite complex.

For instance, commercial buildings, due to their high occupancy density, require comprehensive safety standards for energy storage systems. Charging stations need energy storage systems to balance grid loads, ensuring they can meet high demand during peak charging periods and improve charging efficiency. Data centers have extremely high stability requirements for electricity; any unexpected events could lead to data loss or equipment damage. Energy storage systems in industrial microgrids must effectively manage the generation from distributed power sources, provide emergency power, and offer ancillary services like peak shaving and frequency regulation.

Focusing on customer value and returning to scenario demands, Sungrow Power is combining different scenario-based product solutions within its product lines. In March of this year, it launched the 255CS series product solutions, which support both “AC coupling” and “DC coupling” modes, catering to existing solar installations while integrating seamlessly with Sungrow’s hybrid solar inverters in new installations.

China’s commercial and industrial energy consumption is high, with electricity prices fluctuating significantly. The energy consumption of the secondary and tertiary industries has continued to rise over the past five years. With the nationwide implementation of carbon peak plans in industrial sectors and key industries, and to mitigate the impacts of carbon border adjustment mechanisms in Europe and the US on domestic high-energy-consuming industries, the second and third industries in China are being compelled to pursue energy conservation and green energy transformations. In response, Sungrow Power has developed products targeting large industrial scenarios. Their 420kW/835kWh commercial energy storage solution emphasizes “multi-discharge, stable supply, and simplified operations,” aiding high-energy-consuming enterprises in reducing costs and enhancing efficiency while transitioning to low-carbon operations.

In this new era, commercial and industrial energy storage is becoming increasingly specialized. One product cannot meet all needs, and the industry has gradually reached a consensus on this. Customizing solutions for different scenarios has become an essential challenge for enterprises. To date, Sungrow Power has leveraged its 28 years of expertise in power electronics to develop a comprehensive “product matrix” for commercial and industrial energy storage. Their range includes 100KWh, 125kW/257kWh, 420kW/835kWh, and 5MWh series products, covering voltage levels of 400V, 10/20KV, and 35KV to fully satisfy commercial and industrial energy storage needs.

After nearly two years of rapid development, commercial and industrial energy storage system solutions are evolving from simple hardware integration towards refined and intelligent software algorithms and operational methodologies. The future of AI lies in the integration of renewable energy and energy storage, with energy storage’s next step being AI implementation. Commercial and industrial energy storage must learn to think intelligently, leveraging big data and AI algorithms to enhance system intelligence. This is one of the core advantages of Sungrow Power.

To date, Sungrow Power ranks first globally in cumulative energy storage installations. The extensive data accumulation and engineering practice have laid a solid foundation for future AI algorithm training. Sungrow Power believes that AI technology will reshape the energy storage industry value chain across three dimensions: precise energy management, real-time scheduling decisions, and optimized electricity trading strategies, potentially generating trillion-level market increments.

For example, in a GWh-level energy storage station, there are millions of battery cells. Over time, the status of these cells can vary significantly. Precise management and early warning systems are difficult to achieve with traditional techniques. “Sungrow Power integrates data from multiple components of the energy storage system, leveraging big data for AI calculations to manage a vast number of battery cells accurately, with over 99% accuracy in early warning for thermal runaway,” Dr. Cao Wei stated.

AI applications are also becoming increasingly prevalent in grid construction. Sungrow Power utilizes its leading global simulation modeling capabilities, including a fully digital simulation platform for both single machines and system-level experiments, to simulate the operational status of grid systems under various application scenarios during steady-state and transient processes. AI-enhanced networking algorithms can tailor solutions to specific grid needs, ensuring reliable network construction for GWh-level stations.

In 2024, Sungrow Power will be the first in the industry to propose the concept of commercial and industrial energy storage grid construction. In complex commercial and industrial grid scenarios, energy storage can better adapt to and improve grid performance. Their energy storage products also inherit unique technologies from the large-scale energy storage domain, such as AC storage, battery life pre-diagnosis, and DC arc detection. Notably, they feature stem cell grid technology, allowing user-side storage to integrate with the electricity environment of factories, offering grid construction and black start capabilities. This not only improves voltage frequency but also addresses harmonic issues.

Sungrow Power believes that the electricity dispatch model for commercial and industrial energy storage is undergoing significant transformation, shifting “from unidirectional control to bidirectional interaction, from following the grid to supporting the grid.” The proactive grid construction capability will become both the “market entry certificate” and “premium moat” for commercial and industrial energy storage, propelling the industry from price competition to value competition. The essence of energy storage is trading, and the essence of power trading is “capturing certain returns in uncertainty.” Some believe that as the complexity of the electricity market increases exponentially, AI will transition from being an “option” to a “survival necessity,” suggesting that companies lacking AI trading capabilities may be pushed out of the mainstream market within the next three years.

In the electricity spot market, the fluctuations of renewable energy output and sudden load changes demand millisecond-level responses, while manual strategy adjustments can take minutes. Grid dispatch requires real-time processing of thousands of variables, including weather, electricity prices, loads, and equipment status, while traditional rules may only cover 20% of scenarios. Sungrow Power has developed the Power Bidder decision support system for electricity spot trading, which processes vast amounts of plant information, employs various AI algorithms, and facilitates intelligent scheduling decisions, achieving an average annual electricity price prediction accuracy of around 90%.

AI is becoming the “intelligent brain” of energy storage systems, with its value evolving from an “efficiency enhancement tool” to a foundational engine for reconstructing business models. Sungrow Power aims to lead the smart energy storage revolution through a three-pronged strategy of “vertically integrating AI technology chains, horizontally connecting energy data ecosystems, and deeply binding electricity market rules.”

With the explosive growth of renewable energy generation, the commercial and industrial energy storage sector is positioned at the forefront. However, this burgeoning market is not without its challenges, marked by fierce competition and brutal price wars. Currently, nearly all energy storage companies are establishing their presence in commercial and industrial energy storage, with participation peaking at over 600 companies. Coupled with the sharp decline in lithium battery costs, competition for integrated system pricing has intensified, demanding higher technical iteration capabilities, cost control abilities, and innovations in business models from system integrators.

In the midst of this influx of competitors and intensifying competition, some companies have resorted to bidding below cost to secure contracts and market share. However, to achieve even marginal profitability, they often resort to covert methods to reduce costs, resulting in several key performance indicators falling short of standards. As a system integrator, Sungrow Power’s sustainable profitability is foundational for the healthy and sustainable development of the industry, ensuring the ongoing viability of energy storage investors and asset operators.

Industry insiders have provided a set of BOM costs for commercial and industrial energy storage: the integrated cost of a 125 kW/261 kWh energy storage cabinet is between 0.51-0.53 yuan. As a leading enterprise, Sungrow Power is advocating for a shift away from price competition, urging a focus on technological innovation and service quality. Dr. Cao Wei emphasized that for clients, commercial energy storage is essentially a financial asset, with the lifespan of a power station extending beyond a year or two, often lasting over a decade. Many low-priced winning products struggle to guarantee safe and stable operations over such prolonged periods; the value of commercial energy storage stations is created throughout their usage, including higher returns and lower operational costs.

Currently, commercial and industrial energy storage primarily relies on peak and valley price differences to establish investment return models, while virtual power plants (VPPs) represent the ultimate form of commercial energy storage. “Peak-valley arbitrage is merely superficial profit; commercial energy storage must ultimately evolve into virtual power plants, aggregating participants for electricity trading to balance power loads. This can also address users’ needs for green electricity,” Dr. Cao Wei believes.

Recently, two government ministries jointly issued a notice stating that by 2030, the national virtual power plant regulation capacity will reach 50 million kilowatts. They outlined a clear roadmap for the development of virtual power plants, addressing operational mechanisms, market participation, safety management, technological innovation, and more. This significant policy announcement marks the transition of virtual power plants from pilot exploration to a new phase of large-scale and market-oriented development, clarifying the direction for all industry stakeholders.

The competition in commercial and industrial energy storage is evolving from simple peak-valley arbitrage to the more complex realm of virtual power plants, representing a critical shift for the industry from a nascent stage to a healthy and mature phase. Only those committed to long-term technological, product, and market strategies can navigate through challenges and embrace a bright, unprecedented future.

We invite you to share your thoughts and insights in the comments. For contact, please add WeChat: 13911315123. Please specify your identity when adding.

This content is simultaneously published on various platforms including Toutiao, Xueqiu, NetEase, and Sohu. Unauthorized reproduction is prohibited, and violators will be pursued.