Energy Storage Systems
The Chinese battery industry, which had been focused on attacking the European electric vehicle battery market led by Korea, is extending its reach to the energy storage system (ESS) market. They are partnering with their country’s strong solar power value chain to challenge the European household solar power and ESS market. The competition over the European market between Chinese companies, which have been restrained from entering the U.S. market by the Inflation Prevention Act (IRA), and their Korean counterparts, is expected to intensify.
According to industry sources on June 27, the demand for household solar power in Europe has surged following the outbreak of the Russo-Ukrainian war. This is due to the increased burden of heating and electricity costs resulting from the rise in natural gas prices. Also, the demand for air conditioning has increased due to global warming. According to the World Meteorological Organization (WMO), the increase in temperature in Europe is 2.3℃ compared to the 1800s, which is double the global average of 1.2℃.
In this context, household solar power and ESS have attracted much attention. It's an attempt to cover their power and thermal energy for heating independently. According to SolarPower Europe statistics, the battery installation capacity for European households, which was 3 GWh in 2020, recorded 9 GWh last year. Germany, Italy, Austria, the U.K., and Switzerland account for 88% of the share. The trends of these five nations usually spread to neighboring countries.
The first to respond were Chinese battery companies. They appear to be more focused on Europe, as the U.S. has strengthened regulations on electric vehicles, batteries, and Chinese solar panels through the IRA. This intent of China was clearly seen at Europe’s largest energy exhibition, “The Smarter E Europe,” held in Messe, Munich, Germany from June 14 to 16.
Over 120 Chinese companies participated in the ESS specialized exhibition “EES Europe” and the solar exhibition “Intersolar.” Chinese battery companies, such as CATL and BYD, which have been making inroads into The Smarter E Europe in recent years, all made appearances. CATL even announced that it had signed contracts for more than 40 GWh during the exhibition.
Competing Korean companies include only LG Energy Solution and Samsung SDI. Hanwha Q CELLS, among solar companies, set up a large exhibition hall to make its presence known, but the number of participating companies was overwhelmingly in China’s favor. Korean companies are planning to compete in quality against China's price and volume offensive.
LG Energy Solution and Samsung SDI attracted local buyers at The Smarter E Europe by unveiling new household ESS products. LG Energy Solution first unveiled its new home ESS brand enblock equipped with a lithium iron phosphate (LFP) battery and also showcased related products. They even played an enblock advertisement on the central billboard at the exhibition. Samsung SDI also debuted the Samsung Battery Box (SBB), which contains cells and modules used in ESS in a box shape.
An industry insider predicted, “Various companies in appliances and communications will continue to participate in the household solar power and ESS market,” and added, “In response to China's domestic-focused alliance, Korean companies will seek cooperation with European companies and engage in a share competition.”