Global Energy Storage Giant to Withdraw! Overseas big reserve too "volume"

world's fourth-largest energy storage system integrator, is considering selling its energy storage business because management is pessimistic about the long-term profitability of the energy storage business. Although the profit margin of overseas large-scale energy storage has been significantly higher than that of domestic energy storage, the market competition is very fierce. As far as energy storage system integration is concerned, the profit margin of overseas large storage system integration is not high . The

world's fourth-largest energy storage system integrator is considering selling its energy storage business.

Recently, according to several foreign media reports, Wartsila Group, a Finnish power solution company, is conducting a strategic review of its energy storage and optimization business, considering options such as divestiture or sale.

This is a surprising news for many people in the industry: globally, the energy storage business is one of the rare high-growth tracks, the trillion-level market has not yet opened, and Wartsila has already occupied a considerable market share in the field of energy storage, so it should enter a "safe zone" in a sense. According to

S & P Global, as of July 2023, Wartsila's global installed energy storage projects ranked fourth in the world, only after Sunshine Power, Fluence and Tesla. Why do the

world's top energy storage giants hesitate about energy storage business?

by installed capacity, only made its first quarterly profit in the third quarter of this year.

(Note: Large-scale storage, namely large-scale energy storage, mainly refers to the energy storage system products used in the power generation side and transmission and distribution side of the power system.)

As domestic energy storage manufacturers continue to enter the overseas storage market, the competition in this market is intensifying. The above-mentioned market participants believe that manufacturers like Wartsila Group may not be an example.

"This (Wartsila's consideration of withdrawal) is the beginning of the shuffle of the overseas reserve market, and there will be more similar news in the future." The market person said.

Overseas large storage is also a "Shura field"

. For a long time, the overseas large storage market has been regarded as a better energy storage market segment. The development of this market is more mature, the competition situation is relatively gentle, and the average profit margin of manufacturers is higher than that of domestic manufacturers.

Compared with the domestic market, the overseas energy storage market has a certain threshold, requiring enterprises to be familiar with the local power market environment, master channel resources, and the number of domestic system integrators who can get large storage orders from Europe and the United States is not large.

But it is not easy to make money in the overseas reserve market.

A person close to Huawei said that due to the low profit of overseas large reserves, Huawei once did not touch the large reserves business and only did some demonstration projects. Until now, the proportion of large storage business in Huawei's energy storage business is still very low.

Another typical representative is Fluence , the second largest integrator in the world. The company was founded in 2018 by electrical giant SIEMENS and AES, but it did not make its first quarterly profit until the third quarter of this year, after which it had been in a loss state .

Sunshine Power is the representative enterprise of the domestic layout of overseas large storage business, the overseas proportion of energy storage business is more than 80%, and the product type is mainly large storage. In the first half of

this year, the gross profit margin of Sunshine Power Energy Storage System business reached 30.66%, and the revenue of this part increased by 257% year on year. This left many people with the impression that overseas large reserves have high profit margins and are easy to make money.

But in fact, the former big storage industry market participants said that in the first half of the year , the profit of Sunshine Power Energy Storage System business increased mainly because of the shortage of overseas big storage PCS (energy storage converter) and higher profits. Sunshine Power not only integrates energy storage systems, but also develops energy storage PCS, so the overall profit margin has been improved.

In other words, as far as energy storage system integration is concerned, the profit margin of overseas large storage system integration is not high .

In contrast, in 2022, when there was no shortage of large storage PCS, the gross profit rate of the energy storage system of Sunshine Power Supply was only 23.24%. Only slightly higher than gross profit margin of Haibo Sichuang (23.

Fluence is a typical representative, its battery core is purchased from Ningde Times, Vision Power and other manufacturers, PCS also relies on external procurement, only BMS (battery management system) and software OS to achieve self-research. According to

the results, as of June 30, 2023, Fluence's net profit in the first three earnings quarters was- $110 million, and its gross profit margin was only 4.2% , compared with 30

% of Sunshine Power. It is not surprising that Wartsila Group, ranked fourth in the world, is considering divestiture or sale of its energy storage business.

The above-mentioned market participants said that although Wartsila's energy storage business has barely achieved profitability, it may be a drag on the overall profitability of Wartsila Group, so they consider divestiture or even sale.

From a larger perspective, Wartsila Group's hesitation in energy storage business is actually a landmark event for foreign-funded enterprises to "shrink the front" in the global energy storage market.

Due to the early development of energy storage industry in European and American markets, foreign-funded enterprises with first-mover advantages and market channel advantages were once the absolute main force in the global energy storage market.

However, as more and more Chinese manufacturers enter overseas markets and bring fierce competition from home to abroad, their share of this market is increasing.

In 2021, according to IHS Market data, among the top eight energy storage integrators in the world, only one Chinese company, Sunshine Power, accounted for 6% of the market.

this year, With the domestic energy storage market and overseas household storage market entering the cold winter, more and more Chinese energy storage integrators who used to focus more on the domestic market or a single overseas market have turned their attention to the global market. Manufacturers represented by Jingke Energy Storage, Atlas, Kelu Electronics, Nandu Power Supply and Deye Stock have laid out overseas large storage and industrial and commercial energy storage markets.

In addition, domestic lithium battery overcapacity, more and more lithium power enterprises have begun to enter the energy storage system integration link. For example, Ningde Times signed a contract in September this year to provide containerized liquid-cooled battery systems for Kwinana Battery Phase II and Collie Battery Projects in Australia.

As mentioned above, overseas energy storage system integrators, especially European and American integrators, generally do not develop their own components, but rely on Chinese suppliers of batteries and PCS, so they are at a disadvantage in cost. By virtue of supply chain advantages and cost advantages,

Chinese manufacturers can not only digest some excess capacity, but also open up new incremental markets, and their market share and position in the global energy storage market are expected to be improved.

Of course, price is an important factor affecting business, but it is not the only factor.Long-term safety and reliability are also critical.

The above-mentioned market participants said that overseas customers of energy storage will require annual acceptance in the contract, and assess the capacity, RTE (system cycle efficiency) and the annual average online rate. Once they do not meet the requirements, the penalty cap can reach 100% of the contract amount.

Therefore, the apparent profit of overseas energy storage integration may be higher than that of domestic energy storage integration, but the contract rigidity is very strong, and the risk of delivery is relatively high. These factors will be reflected in the longer term competition.

In addition, it is worth noting that with the increase of entrants, some Chinese manufacturers have begun to compete with low-price strategies in overseas markets. This is a game of "hurting one thousand enemies and losing eight hundred".

A senior executive of an energy storage company told 36 Carbon that the overseas large storage market is different from the domestic market and generally does not disclose the bidding price of energy storage, but according to his observation, the competition in the overseas energy storage market as a whole is becoming more and more fierce.

"Just like today's wind power, the profit margins of domestic and foreign markets are almost the same, and the overseas energy storage market will be rolled in sooner or later, and now it's just a time lag." The executive said.