Over the past year, the solar industry has faced intense competition, with prices close to cost. The surge in energy storage, attracting even non-solar companies, is not surprising. As a result, the energy storage market quickly shifted from a “blue ocean” to a “red ocean.” Many energy storage product sellers report selling at cost, with no room for further price cuts. Prices for conventional storage systems have dropped from 2 RMB/Wh at the end of 2022 to 0.8 RMB/Wh. Within six months, bidding prices fell by a third, with severe product homogenization and price wars.
For solar companies, this fierce competition still presents growth opportunities, with customer bases aligning. Having competed in the solar panel market for years, entering a similarly capital-intensive industry like energy storage is seen as a repeat of the same story.
From “Useless” to “Valuable”
Solar companies ignited the energy storage boom. Since 2020, provinces have required large solar plants to include energy storage in a ratio ranging from 20:1 to 5:1. That year, the 33 GW of new centralized solar installations led to 7 GW in energy storage. This change surprised solar plant builders, who previously profited by selling electricity to the grid. With subsidies declining, they now needed to invest significantly in energy storage.
The response was to find the cheapest energy storage systems worldwide. Although storage manufacturers saw increased sales, their status in the value chain remained low. By 2023, energy storage shifted from being sidelined to highly sought after due to market-driven pricing and time-of-use electricity policies.
Power is now categorized as “good” or “bad,” with solar power during midday considered “bad” due to lower prices. The value of a solar plant is now dynamic, dependent on when energy is sold. Energy storage allows storing excess midday energy to sell when prices are higher, adding flexibility and profitability.
Advances in storage technology have also improved cost-effectiveness. Lithium battery prices have dropped to 0.4 RMB/Wh, with systems lasting over a decade. The cost of “solar + storage” is about 0.3 RMB/kWh, compared to 0.3-0.7 RMB/kWh for coal, making solar more competitive in grid auctions.
The Shift to “Energy Storage for All”
Following the “solar for all” trend, where rooftops were covered with solar panels, there is now a trend toward “energy storage for all.” Both distributed solar and small energy storage installations promise passive income if built successfully. With distributed solar yields declining, investors and developers have turned to small-scale energy storage.
Solar companies welcome this trend as it aligns with their existing customer base. However, leading storage companies like CATL and EVE Energy have not focused on this market, citing its fragmented nature and the complexity of deploying small storage units. Safety concerns and site-specific requirements further complicate the deployment.
Energy storage products are relatively simple to produce. Solar companies can buy battery cells, integrate them into cabinets, and sell them through their established networks. This has led solar companies to dominate the new storage market, as battery cell manufacturers prioritize serving EVs, large storage plants, and overseas markets.
Solar and Storage Integration
In the long term, solar companies’ ambitions are growing. They aim for “solar-storage integration,” a concept discussed for years but now becoming practical. Trina Solar and JinkoSolar have started producing energy storage cells, with plans for 12 GWh and 25 GWh, respectively, enough for self-sufficiency.
This mirrors their approach of reducing costs through vertical integration. For example, JinkoSolar’s 56 GW full-industry chain base in Shanxi exceeds the capacity of many specialized companies. Solar companies believe they can outperform storage companies in production and management.
The consensus in the storage industry is that current mainstream technology—lithium iron phosphate + graphite—is nearing its peak. Within three years, the industry is expected to reach a technological plateau. Despite just starting, the storage market has already seen intense competition, with industry insiders expecting even fiercer battles ahead, both domestically and internationally.
