Energy Storage Connector Enterprises Strive To Break Through The Cost Dilemma

As the core technology to promote the energy revolution and a technological highland that all countries must compete for in their energy transformation, energy storage connector is not only an emerging industry with high technology content and huge growth potential, but also a key support for building a clean, low-carbon, safe and efficient modern energy system and a new power system, which is related to the realization of the "dual carbon" goal as scheduled. Against this background, from last year to now, the central and local governments have intensively issued more than 300 policies related to battery storage connector, and clearly locked in the 30 GW storage connector installed capacity target by 2030.
In lithium battery energy storage systems, the battery pack cost accounts for as much as 60%, which directly determines the overall economy and competitiveness of energy storage projects. Reporters recently learned that the jump in battery raw material prices that has continued since last year has triggered a series of negative chain reactions. The energy storage industry chain is facing the dilemma of a sharp reduction in the gross profit margin of battery companies, a surge in the bid price of energy storage projects, and forced delays or even suspension of project construction. The energy storage industry, which is in the "window period" of development, is deeply affected.
How can energy storage companies solve the profit problem caused by the rise in raw material prices? How can the energy storage industry, which is in the "wind" of policies, get out of this dilemma?
The average winning bid price of the project jumped by 20%, and the upstream and downstream integrators were under heavy pressure.

The price of the energy storage industry chain is currently being transmitted along the chain of "lithium carbonate-positive electrode material-energy storage battery cell-energy storage equipment".
"Affected by factors such as the COVID-19 epidemic, the price of lithium battery materials has repeatedly set new records. The price of lithium carbonate has risen from 55,000 yuan/ton at the beginning of last year to more than 500,000 yuan/ton at present." Chen Haisheng, director of the Energy Storage Committee of the China Energy Research Society, reminded that in the current rapid development of the energy storage industry, we should be vigilant about supply chain risks and price mechanism problems.

"The pressure of rising raw material prices has already appeared in the third quarter of last year. The delivery cycle of battery cells has become longer, and companies also need to make advance payments, and prices have also risen rapidly." An energy storage integrator told reporters that the winning bid price of domestic lithium battery energy storage projects in 2021 was generally 1.4 yuan/watt-hour, but this year it has risen to 1.7 yuan/watt-hour, an increase of 20%.

"Looking through the 2021 annual reports of energy storage companies, their average gross profit margins basically do not reach 20%, which is equivalent to the price increase swallowing up the profits. In this way, companies are in a difficult situation. They either maintain their market share and give up some profits, or maintain profits and give up some market share. It is really a dilemma and difficult to move forward." Industry insiders told reporters that compared with the new energy vehicle industry, the price increase space in the energy industry is very limited. On the one hand, the upstream battery raw materials have to increase prices, and on the other hand, the downstream new energy companies have to reduce costs. Energy storage integrators are currently facing the dilemma of being squeezed from both ends.

Judging from the first quarter reports of 2022 of many listed energy storage companies disclosed recently, "increased revenue but not increased profits" has become a common phenomenon in the industry. "At present, it mainly depends on the companies themselves to digest and absorb the cost pressure brought by the increase in raw material prices, but this round of price increases is wide-ranging and large-scale, which has had a considerable impact on the healthy development of the industry." Jiang Li, deputy general manager of CATL, said in an interview with reporters recently.