Skip to main content

Opportunities and challenges for the booming battery energy storage market in China

Industrial Automation

May 2023

Shirly Zhu

Shirly Zhu

Principal Analyst

Shirly has worked across multiple industry sectors in her 10+ year career, conducting projects requiring primary and secondary research, as well as quantitative and qualitative analysis. She’s primarily focused on Industrial Automation topics including motion and industrial controls.

China’s energy storage market started to take off in 2022. According to data from CNESA (China Energy Storage Alliance), total energy storage installation (excluding pumped storage hydropower – PSH) reached 13.1GW/27.1GWh in 2022, more than doubling from 2021.

With the market booming, ESIE 2023 – The 11th Energy Storage International Conference and Expo – set new records for the show for both attendance and the size of its exhibition area. We spent two days at the event, discussing market and technological trends with exhibitors, and engaging in discussions with attendees about component manufacturing and system integration. We have summarized some key observations from the trade show below.

Booming demand for battery energy storage systems (BESS)

Behind the scenes of the current market expansion, government policies play a crucial role in driving the growth of BESS in China. This means that establishing a sustainable business model for the future remains a big challenge raised by many industry vendors at ESIE 2023.

With safety regarded as of the utmost importance for BESS, buzzwords at the exhibition included intelligence, product modularity, high level of system integration, and liquid cooling, with key concerns largely driven by safety and cost reduction. In addition, the price fluctuation of raw materials (lithium carbonate) for lithium-ion batteries was a hot topic, and it is widely expected that the price of lithium carbonate will drop further, to around 200,000 yuan/ton during 2023, driving down costs for BESS.

It’s worth mentioning that, in addition to the robust demand seen in the domestic market, many BESS vendors are accelerating market development in overseas markets. Unlike the China market, which is dominated by large-scale front-of-the-meter project installation, Chinese vendors are primarily targeting residential behind-the-meter applications in overseas markets.

Diversification of battery energy storage systems (BESS)

Lithium-ion batteries (led by LFP – lithium ferro-phosphate) currently occupy the dominant position in China’s BESS market and the industry data show lithium-ion BESS accounted for 94% of the total energy storage market (excluding PSH) in 2022. Despite this, other battery technologies, including flow batteries and sodium-ion batteries, are also used in energy storage projects and came under the spotlight at the exhibition.

All-vanadium redox flow BESS – the leading type of flow battery system in China – has gained market attention in the past two years for its high-level safety features, long lifecycle and recyclable electrolyte. This makes it ideal for long-term and large-scale energy storage projects.

All-vanadium redox flow battery energy storage system from Rongke Power

In addition, as the price of lithium-ion batteries skyrocketed last year, sodium-ion batteries have gained market attention for the abundance of the raw materials used to manufacture them and relatively low price as a result. Despite low energy density, sodium-ion batteries also have key advantages of high safety and long lifecycle.

Sodium-ion energy storage battery from HiNa Battery

PCS trending modularity and specialization

Aligned with the core requirements of BESS to reduce costs and improve safety, modular PCS (power conversion systems) are expected to become a mainstream product moving forward. PCS in modularity can manage energy storage batteries by battery rack, and delivers flexibility, stability and adaptability.

200KW modular PCS from Kehua

storage batteries by battery rack, and delivers flexibility, stability and adaptability.
Moreover, specialized PCS for flow battery systems were also on display at the exhibition. This type of PCS requires start-up at zero volts and has relatively low voltage range. According to industry vendors, the price of specialized PCS for flow battery systems is higher than that of general-purpose PCS.

As the BESS market leaps ahead, an increasing number of major component vendors (including batteries and PCS) are making substantial efforts to transition their business from component sales to full system integration. This is having the result of diversifying the supply landscape for battery energy storage systems.

For more information on the energy storage market in China, download the tradeshow report here!

Leave a Reply