Energy storage market boomed in 2022, bringing both profits and concerns

SHANGHAI, Sep 19 (SMM) - In the first half of 2022, the domestic energy storage market boomed with a strong upward momentum. The newly installed capacity of new energy storage totalled 12.7GW in the first six months of 2022, and the shipments of energy storage lithium batteries achieved 44.5GWh. According to the Ministry of Industry and Information Technology, the domestic energy storage battery output reached 32GWh in the first half of 2022. The overall installed capacity rose 273% year-on-year, and the overall shipments in the first six months of 2022 were already close to that throughout 2021.

CATL, which is among the top enterprises in the world when it comes to energy storage battery shipments, gained 12.736 billion yuan from its energy storage business, a year-on-year increase of 171% in the first half of 2022. However, the rising prices of raw materials such as lithium carbonate had a significant negative impact on the company’s gross profits from energy storage battery. In the first half of 2022, the gross profit margin of CATL’s energy storage battery business stood at 6%, a considerable year-on-year decline compared with 36% in the first half of 2021.

Despite the boom in the energy storage market, a mature business model has not yet formed, which is also the obstacle to large-scale application of energy storage.

First of all, the revenue model and charging standard of demonstration projects in various places are not specified. For example, the changeable standards of electricity subsidies for power stations makes it difficult for investors to have a stable forecast.

Secondly, the free trade of electricity under the electricity reform has still been in trial, and peak-to-valley electricity pricing cannot be guaranteed in some areas. The internal rate of return of energy storage power stations is low, while it takes long time to receive the return on investment.

Third, the time was short for energy storage facility requisition. A considerable number of independent energy storage power stations fail to complete a cycle of charge and discharge every day, resulting in less-than-expected returns when participating in electricity market-oriented transactions.