In the early stage of the outbreak of energy storage business, especially the market potential of the huge PV side of the energy storage, whether large energy storage, or home energy storage, PV and lithium giants have entered the field.

Both the PV industry and the energy storage industry hold great potential for the foreseeable future. These two are both competitors and partners.

How do you see such competition and cooperation? This is an important topic for the strategic decision of PV and lithium enterprises, and also a key point to study the future development direction of energy storage industry.

Industry chain relationship

First of all, we need to accurately understand the industry chain relationship between lithium, PV and energy storage (here only refers to electrochemical energy storage).

Energy storage as a brand class system integration business, is an independent business, lithium companies are its important upstream suppliers, photovoltaic companies are a segment of the market - an important channel of PV side energy storage. Both have a unique advantage in getting involved in the energy storage business.

Take CATL as an example, its role as a lithium enterprise, in addition to the production of ternary lithium batteries, lithium iron phosphate batteries, sodium ion batteries, now also provide standardized battery packs or customized energy storage systems to downstream energy storage enterprises, is a product provider role, but as an energy storage enterprise to the downstream investors or developers to deliver energy storage systems, is a brand role for the end user.

Since energy storage is an independent business, it needs to have independent product power (mainly electrical system integration capability), brand, channel, financing, construction, operation and after-sales service capabilities or resources, these capabilities and resource endowments are very unique, and different from lithium and photovoltaic business.

In other words, not any lithium or photovoltaic enterprises, have the ability to directly carry out energy storage business.

Short-term cooperation is the main

Lithium enterprises are the upstream of the energy storage business, and is the core supplier of energy storage systems. Lithium enterprises hold important core resources and system integration capabilities, and have unique advantages in energy storage system delivery.

However, energy storage is only one of the downstream application scenarios of lithium enterprises, similar to another application scenario of electric vehicles. Lithium enterprises to extend downstream, need to build a very strong market capabilities, especially in the business end, the brand, channels and after-sales service requirements are high, the difficulty is similar to lithium enterprises to build cars.

For photovoltaic enterprises, especially the module and inverter enterprises for the end market, in the photovoltaic side of the energy storage, has an inherent brand and channel advantage, including large-scale energy storage and home storage. In simple terms, it belongs to the same market, horizontal grafting of related products.

From this, it can be seen that lithium enterprises hold upstream product resources, and if they intervene in energy storage, they belong to vertical extension and need to build market capability; PV enterprises hold downstream market resources, and if they intervene in energy storage, they belong to horizontal expansion and need to build product capability.

In the early stage of the budding energy storage business, whether lithium enterprises, or photovoltaic enterprises, do not yet have the core competitiveness of the complete energy storage industry chain. Lithium enterprises in the downstream brand and channel is not mature, and currently need to use external forces.

Photovoltaic enterprises are not yet familiar with lithium batteries and system integration, which is a different product and system from photovoltaic batteries, and also need to seek strategic cooperation with lithium enterprises from the perspective of supply chain stability.

As can be seen, at present, lithium and photovoltaic enterprises are in the early stage of building energy storage business competitiveness, in the PV side of the energy storage business just the right resources and advantages complement each other. The two sides are destined to cooperate more than compete in the short term, and even cooperation is the only option for both sides, and it is difficult to be effective in fighting alone.

Long-term differentiation and competition

Since the cooperation between lithium and photovoltaic enterprises, because the two sides of the energy storage business capacity and resources to build is still immature a natural result. Then, as the two sides, especially the large enterprises business scale and business capacity of the maturity, seeking the independence of industry chain resources and capabilities, and constantly expand the capacity and resources boundary, will be inevitable.

In recent years, CATL has built a large "circle of friends" in the lithium industry chain, while also seeking independent development in the energy storage business. in the first half of 2021, CATL energy storage revenue grew 727% year-on-year. It can be seen that CATL energy storage business, is never simply supply lithium batteries so simple, but for the end market to carry out the strategic positioning of the energy storage business, as a typical representative of the lithium system energy storage, and photovoltaic system energy storage is already a direct competitor.

For photovoltaic enterprises, the comprehensive strengthening of the industrial chain is the key to security, because this year the upstream silicon link to the downstream of the battery and module link brought a huge impact, so that the photovoltaic giants have made up their minds to industry chain integration operations.

Photovoltaic energy storage enterprises, especially large enterprises, gradually involved in the upstream lithium battery, to strengthen the stability of the lithium battery supply chain will be sooner or later, only the way of intervention, may be the first joint venture and then independent, may also be the first small after large.

Energy storage as a brand class system integration business, the most core competitiveness is the market resources, so with the market resources of the enterprise is more likely to win. In the PV side of the energy storage market, the PV system has an advantage over the Li-ion system.

The future industrial ecology of the energy storage industry is expected to be similar to that of the PV (module) industry. Both are branded system integration businesses, and the upstream and downstream markets of the industry chain are highly similar, firstly, the market is king with products, brands and channels as the core, and secondly, upstream integration ensures supply chain stability.

The energy storage industry is expected to be like the PV module industry, with increasing concentration, eventually forming a few comprehensive giants and market segment leaders, and only these head enterprises have the ability to integrate the industry chain, after all, lithium batteries are technology-intensive and capital-intensive.

Summary

Energy storage industry is still in the early stages of development, whether PV or lithium system, do not yet have the perfect business capabilities and industry chain resources, both in the huge PV side of the energy storage market happens to be inherently complementary, short-term cooperation than competition.

With the continuous development of the energy storage industry, the business capabilities and resources of large enterprises continue to mature, in the process of increasing the concentration of the industry will also gradually differentiate, business independence will also become stronger, and ultimately competition than cooperation.

Lithium-ion batteries (LIB) have become the main energy storage solution in modern life. Among them, lithium iron phosphate batteries perfectly replace lead-acid batteries, more is the first choice for grid-connected peaking, off-grid energy storage, photovoltaic energy storage, UPS, data centers and other industries.

Solar power system with lithium battery energy storage system is a very promising clean energy.