Rising Demand for Energy Storage Batteries Sparks Production Expansion Among Major Companies

Energy Storage Battery Demand Forecast is looking promising, prompting major companies to ramp up production.
According to Zhitong Finance, on December 12, during the 2022 Gaogong Energy Storage Annual Conference, Zhang Xiaofei, Chairman of Gaogong Energy Storage, reported that global energy storage battery shipments for 2022 were approximately 125 GWh, reflecting a significant increase of over 160% from the previous year’s 48 GWh. It is anticipated that by 2025, global shipments will surpass 390 GWh. Yu Guo, Executive President of BYD’s Energy Storage Sales Center, stated, “This year marks the true beginning of the market-oriented development of the domestic electrochemical energy storage industry.” Looking ahead over the next three to five years, the industry is expected to maintain an average annual compound growth rate of over 50%.
Energy storage batteries typically refer to batteries used for solar and wind power generation, as well as for storing renewable energy. The share of new storage technologies is continuously increasing, with electrochemical storage accounting for 11.8% in 2021. Currently, the main technology in the energy storage industry is lithium iron phosphate (LFP) batteries, which represent the most mature technology route. In 2021, the cumulative installed capacity of global electrochemical energy storage accounted for 95.7% of the new energy storage cumulative installed capacity, with lithium batteries, sodium-sulfur batteries, lead-acid batteries, and flow batteries making up 90.9%, 2%, 2.2%, and 0.6%, respectively.
Energy storage batteries have numerous applications, including power generation measurement, grid-side, transmission and distribution side, and user-side applications. Additionally, they are used in distributed photovoltaic storage and virtual power plants. The market structure indicates that electricity storage remains the largest downstream sector, with household and portable storage showing strong performance. In the first half of this year, lithium battery shipments for energy storage totaled 44.5 GWh, with the three major downstream shipments at 30 GWh, 6 GWh, and 2.5 GWh, respectively.
However, the energy storage industry faces challenges in commercialization, as companies are under considerable pressure due to rising raw material costs. In particular, lithium carbonate constitutes a significant portion of the costs for upstream materials. In April of this year, the price of domestic battery-grade lithium carbonate was 374,400 CNY/ton, which surged to nearly 200,000 CNY/ton by November, reaching 565,700 CNY/ton, with expectations of exceeding 600,000 CNY in the future. This increase in battery prices is mainly driven by the significant rise in lithium carbonate prices, leading to a 27% increase in the price of lithium iron phosphate batteries compared to last year.
On October 10, during the 2022 annual procurement framework for energy storage batteries by the State Power Investment Corporation, the second bidding phase involved a capacity of 500 MWh to 1 GWh. Guoxuan High-Tech secured 60% of the bid, amounting to approximately 800 million CNY, with a bid price of around 1.33 CNY/Wh. Lin Yang Yiwei won 40% of the bid, totaling about 500 million CNY, with a bid price of approximately 1.25 CNY/Wh. In comparison to last year’s energy storage battery bidding market, recent battery price increases have more than doubled.
This recent price increase in energy storage lithium batteries may alleviate cost concerns for battery companies and encourage their production expansion. Currently, leading companies such as CATL, Yiwei Lithium Energy, and Xinhua are actively expanding their energy storage projects. For instance, on November 17, CATL established a new subsidiary for energy storage development with a registered capital of 120 million CNY. Before this, CATL announced an exclusive supply agreement with Primergy Solar LLC for the Gemini Solar + Storage project, located near Las Vegas, with a total investment of 1.2 billion USD. On November 18, the joint venture project between Yiwei Lithium Energy and Lin Yang Energy for a dedicated 10 GWh energy storage lithium iron phosphate battery production facility began operations. Since 2021, Yiwei Lithium Energy has invested over 66.5 billion CNY in energy storage projects, while Xinhua announced a 21.3 billion CNY investment in Yiwu to establish a 50 GWh capacity project.
Based on incomplete statistics, more than 26 expansion projects related to energy storage and power battery manufacturing have been initiated this year, with a total investment exceeding 290 billion CNY. Additionally, there have been over 120 investment and financing events in the energy storage battery and materials sector, with the scale nearing 100 billion CNY.
As major companies intensify their investments, over 20 listed companies are engaging in cross-industry investments, including firms that were previously distant from the energy storage sector. GGII points out that as production capacities are released, the comprehensive cost-performance advantages of energy storage battery products from first- and second-tier brands will become more pronounced, maintaining a relatively tight market throughout 2023. Western Securities predicts that long-duration energy storage will be a significant trend in the future, with relevant technological routes expected to benefit.
Recommended energy storage battery companies include CATL, Yiwei Lithium Energy, Penghui Energy, and Dofnano. Relevant concept stocks include:

• CATL (300750.SZ): Holds the largest market share globally and actively explores energy storage business models in various regions.
• Sungrow Power (300274.SZ): One of the earliest companies engaged in inverter product R&D and manufacturing in China, maintaining a leading position; with over 30% global market share in 2021.
• Yiwei Lithium Energy (300014.SZ): Recently launched the LF560K energy storage battery, employing advanced CTT technology to reduce costs significantly.
• Penghui Energy (300438.SZ): Focused on expanding energy storage capabilities, ranking third in domestic lithium battery shipments.
• Pi Energy Technology (688063.SH): A global leader in household energy storage, maintaining a second-place market share for two consecutive years.
• Xinhua (300207.SZ): Achieved revenue of 179 million CNY from energy storage batteries in the first half of this year, a year-on-year increase of 70.39%.

This information is provided for informational and investor education purposes and does not constitute a recommendation for any specific stocks or investment strategies.