Under the Great Reshuffle, How is Sungrow Exploring Optimal Solutions for Commercial and Industrial Energy Storage Development?
After ranking first in the Chinese energy storage system integration market for eight consecutive years, Sungrow is now aiming to replicate its large-scale energy storage advantages in the commercial and industrial sector. In 2023, following years of fluctuations, commercial energy storage showed signs of explosive growth, with domestic shipments exceeding 3GWh, marking it as the inaugural year for commercial energy storage. Concurrently, at the end of 2023 and the beginning of 2024, Sungrow’s commercial energy storage advertisements appeared on high-speed trains in Shanghai and Guangzhou, targeting core customer groups in key commercial regions like the Yangtze River Delta and the Guangdong-Hong Kong-Macao Greater Bay Area.
Over the past year, Sungrow has achieved remarkable results in commercial energy storage. According to statistics from GaoGong Industry Research, in 2024, Sungrow’s commercial energy storage shipments topped the rankings for the first time. However, this remains an area without a clear leader, as there are hundreds of companies engaged in commercial energy storage, resulting in a highly fragmented and competitive market. The gap between the first and tenth ranked companies is not substantial. Amid rampant price wars and a nationwide crackdown on fire safety compliance, the fast-growing commercial energy storage sector has suddenly plunged into a state of deep reshuffle.
As 2025 begins, with the introduction of new regulations under Document 136, the development logic for energy storage, including commercial and industrial applications, will be reshaped. On one hand, electricity reforms are continuously advancing; on the other, technologies like AI are making significant breakthroughs. These changes are profoundly impacting the development path of the energy storage industry.
In a recent discussion on April 11, hosted by Dr. Kou Nannan from Bloomberg New Energy Finance, Dr. Cao Wei, General Manager of Sungrow’s Commercial Energy Storage Product Line; Dr. Song Jing, a researcher at the WRI Beijing Sustainable Transformation Center; and Dr. Zhou Wenwen, General Manager of Sungrow Huicai, explored the theme of “Deepening Scenarios x Intelligent Empowerment — Better Solutions for Commercial Energy Storage Development.”
The Era of Scenario Dominance
Unlike large-scale storage, commercial energy storage operates in a distinctly different market. The customer base is large and diverse, with applications ranging from the picturesque Jiangnan water towns to the Gobi oil fields, and from bustling urban centers to rural areas. Theoretically, all electricity-consuming enterprises have the potential to connect with energy storage solutions.
Based on application scenarios, over 90% of new installations from January to September 2024 were direct energy storage applications for commercial users. New application scenarios accounted for about 5%, while the solar storage charging scenario had the lowest share at approximately 2%. The boundaries of commercial energy storage applications are dynamically expanding with the reduction in cost per kWh and the reshaping of the electricity market. As the cost of distributed solar energy decreases, participating in market transactions can enhance the overall operational efficiency of systems, leading to better investment returns.
Dr. Cao Wei expressed that energy storage is transitioning from being “policy-driven” to “value-driven,” with scenario innovation being key to breaking through challenges. All customer value must be realized within scenarios, which are inherently complex. For instance, commercial buildings, due to their high occupancy levels, have stringent safety requirements for energy storage systems. Charging stations require energy storage systems to balance grid loads, ensuring they can meet the high demand for electric vehicle charging during peak times. Data centers have high stability requirements for power; any sudden disruptions can result in data loss or equipment damage. In industrial microgrids, energy storage systems must effectively manage the generation capacity of distributed power sources, provide emergency power, and deliver ancillary services such as peak shaving and frequency regulation.
Focusing on customer value and addressing scenario demands, Sungrow is combining different scenario-based product solutions in its product lineup. In March of this year, Sungrow launched the 255CS series, which incorporates both “AC coupling” and “DC coupling” modes for solar storage integration. This supports direct connections to existing solar inverters for already installed scenarios and pairs with Sungrow’s hybrid solar inverters for new installations.
China’s commercial power consumption is significant, with high electricity prices and considerable fluctuations. The electricity consumption of the secondary and tertiary industries has continued to rise over the past five years. With the implementation of carbon peak plans in industrial sectors and key industries at home, there is an urgent need for energy-saving and green energy transformations to mitigate the impact of foreign carbon border adjustment mechanisms on domestic high-energy-consuming industries. In response, Sungrow has developed products tailored for large industrial scenarios. The 420kW/835kWh commercial energy storage product is designed to offer “multiple discharges, stable supply, and simplified maintenance,” assisting high-energy-consuming enterprises in reducing costs, increasing efficiency, and achieving low-carbon transitions.
The Future of Commercial Energy Storage
The landscape of commercial energy storage is deepening, and a single product cannot dominate the market. There is a growing consensus within the industry on the need for customized solutions tailored to different scenarios. As of now, Sungrow, with its 28 years of deep experience in power electronics, has developed a “product matrix” for commercial energy storage. The offerings range from 100KWh, 125kW/257kWh, and 420kW/835kWh to 5MWh series products, covering voltage levels from 400V to 10/20KV and 35KV, fully meeting commercial energy storage needs.
The Role of AI in Commercial Energy Storage
After nearly two years of rapid development, commercial energy storage system solutions are shifting from simple hardware technology integration towards a focus on refined and intelligent operations, emphasizing software algorithms and subsequent operations. The future of AI is intertwined with renewable energy and energy storage, and the next step for energy storage lies in AI. Commercial energy storage must learn to think critically and utilize big data and AI algorithms to enhance the intelligence of energy storage systems. This is one of Sungrow’s core advantages.
To date, Sungrow leads the world in cumulative energy storage installations, which, based on extensive data and engineering practice, lays a solid foundation for future AI algorithm training. Sungrow believes that AI technology will reshape the energy storage industry value chain across three dimensions: precision in energy management, real-time decision-making in scheduling, and optimization of electricity trading strategies, creating a trillion-level market growth space.
For example, in a GWh-level energy storage station containing millions of battery cells, as time progresses, the status of these cells may vary. Managing and providing early warnings for these cells accurately is challenging using traditional methods. “Sungrow integrates data from multiple components of the energy storage system, utilizing AI-driven big data calculations to manage vast numbers of battery cells precisely, providing early thermal runaway warnings with over 99% accuracy, allowing thousands of battery cells to operate as one,” Dr. Cao stated.
AI is also increasingly being applied in network construction. Sungrow leverages its globally leading simulation modeling capabilities with a fully digital simulation experimental platform to simulate the operational status of network-type systems under various application scenarios during steady-state and transient processes. AI-powered network construction algorithms can tailor solutions to specific grid conditions, ensuring reliable grid construction for GWh-level stations.
In 2024, Sungrow will be the first in the industry to propose the concept of industrial and commercial energy network construction. In complex commercial and industrial energy network scenarios, energy storage can better adapt to the grid and improve it to some extent. Sungrow’s commercial energy storage products also inherit innovative technologies from the large-scale storage field, such as AC storage, battery life pre-diagnosis, and DC arc detection. Notably, the combination of user-side energy storage with the factory’s electricity environment is equipped with network construction and black start capabilities, capable of improving voltage frequency and harmonics issues.
Sungrow believes that the dispatch model for commercial energy storage is undergoing a profound transformation, evolving from “one-way control to two-way interaction” and “following the grid to supporting the grid.” The ability to actively construct networks will become the “market entry certificate” and “premium moat” for commercial energy storage, shifting the industry from price competition to value competition.
The essence of energy storage is trading, and the nature of electricity trading is to “capture certain gains amidst uncertainties.” With the increasing complexity of the electricity market, some believe AI will transition from being an “optional tool” to a “survival necessity.” It is anticipated that within the next three years, companies lacking AI trading capabilities will be pushed out of the mainstream market. In the electricity spot market, fluctuations in renewable energy output and sudden load changes require millisecond-level responses, while manual strategy adjustments may take minutes. Grid dispatch must handle real-time processing of thousands of variables, including meteorological data, electricity prices, load, and equipment status, while traditional rules cover only about 20% of scenarios.
Sungrow has developed the Power Bidder system, an auxiliary decision-making tool for electricity spot trading, which processes vast amounts of station information, utilizes various AI algorithms, and integrates intelligent scheduling decisions, achieving an annual average electricity price prediction accuracy of around 90%. AI is becoming the “smart brain” of energy storage systems, with its value evolving from an “efficiency enhancement tool” to the underlying engine for reconstructing business models.
To lead the intelligent energy storage revolution, Sungrow will implement a three-pronged strategy: vertical integration of the AI technology chain, horizontal integration of energy data ecosystems, and deep alignment with electricity market rules.
Long-Termism Through Cycles
As renewable energy generation experiences explosive growth, commercial energy storage has indeed reached a pivotal moment, but it is not a clear path; instead, it is filled with fierce competition and brutal price wars. Currently, nearly all energy storage companies are venturing into the commercial energy storage sector, with peak participation exceeding 600 companies. Coupled with a dramatic decline in lithium battery costs, price competition among integrated systems has intensified, raising the stakes for technology iteration, cost control, and business model innovation among system integrators.
The influx of competitors and the intensified competition have led some companies to secure contracts and market share through below-cost bidding, which can result in future struggles to achieve profitability or even break even. Such practices often lead to the failure to meet important operational metrics. As a “bridge” in the system integration sector, the ability to maintain profitability is essential for the sustainable and healthy development of the industry and ensures the ongoing viability of energy storage investors and asset operators.
Industry insiders have outlined the BOM costs of commercial energy storage. The integrated cost of a 125kW/261kWh energy storage cabinet is estimated to be between 0.51 and 0.53 RMB per watt-hour, including taxes. As a leading enterprise, Sungrow has proactively called for a focus not on price competition but on technological innovation and service quality. Dr. Cao emphasized that commercial energy storage is essentially a financial asset for customers, with a project lifecycle extending beyond just a couple of years, often lasting over a decade. Many low-priced winning bids may struggle to ensure safe and stable operations for such extended periods. The value of commercial energy storage is created during its operational phase, including more efficient returns and lower operating costs.
Currently, commercial energy storage investment return models are primarily based on peak and valley price differentials, while virtual power plants (VPP) represent the ultimate form of commercial energy storage. “Peak-valley arbitrage only captures superficial gains; ultimately, commercial energy storage needs to evolve into virtual power plants that aggregate participants for electricity trading, achieving balance in electricity load while addressing user-side green energy needs,” Dr. Cao noted.
Recently, two government ministries jointly announced that by 2030, the national virtual power plant adjustment capacity will reach 50 million kW. They outlined a clear roadmap for the development of virtual power plants, addressing operational mechanisms, market participation, safety management, and technological innovation.
The introduction of this significant policy marks a transition for virtual power plants from trial phases to large-scale, market-oriented development, providing clarity on the direction for all industry players. The transition from simple peak-valley arbitrage to complex virtual power plants signifies an elevation in the competition within commercial energy storage, marking a crucial step towards a healthy and mature industry. Only those committed to long-termism in technology, products, and market strategies will successfully navigate challenges and embrace an unprecedentedly bright future.
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