Chinese shipments of energy storage batteries outpace growth in EV batteries - Fastmarkets

China’s lithium battery shipments totaled 786 gigawatt hours (GWh) in the first three quarters of 2024, up from 605 GWh in the same period in 2023, according to the latest data from Shenzen-based research institute GGII.

The capacity of shipped ESS batteries amounted to 216 GWh in the first three quarters of the year, up by 70% compared with the 127 GWh shipped in the same period in 2023. In comparison, shipments of power batteries for electric vehicles (EVs) totalled 533 GWh in the first nine months of 2024, up by 20% from the 445 GWh in the same period in 2023.

Battery producers in China have been expanding the capacity of ESS batteries to offset the slowing EV growth rate amid falling costs for the production of lithium batteries, sources told Fastmarkets.

“We are seeing much higher production of energy storage batteries in China this year and we expect the future growth rate in the energy storage market to remain fast paced,” a Chinese cathode producer source said.

As China pushes for more advanced new power system, ESS batteries are gaining more attention due to their shorter production time and greater practicality compared with wind, solar and hydro power, Fastmarkets understands.

At the end of 2023, China had 86 GW of ESS in place, with energy from pumped hydro power accounting for more than 59% and battery storage nearly 40%, according to data from the China Energy Storage Alliance (CNESA).

China’s major battery producers, including EVE, have seen a huge spike in terms of ESS battery deliveries this year.

EVE delivered 14.80 GWh of ESS batteries in the third quarter of 2024, up by 95% compared with the 7.58 GWh in same period last year, according to its latest quarterly report.EVE’s power battery deliveries for EVs, meanwhile, amounted to 7.20 GWh in the third quarter, up by just 1% year on year, putting its combined total lithium battery deliveries for the third quarter up 50% year on year to 22.00 GWh, compared with 11.00 GWh in the third quarter of 2023.

Over the first three quarters of 2024, the company’s battery deliveries totalled 56.44 GWh, a 55% increase year-on-year Among these, the company shipped 35.73 GWh of ESS batteries, up by nearly 110% compared with the 17.00 GWh delivered in the same period last year.

China’s largest battery producer CATL said the growth rate in its deliveries of ESS batteries was faster than EV batteries in terms of both domestic and overseas markets.

CATL has ranked first globally in terms of ESS battery deliveries since 2021, accounting for more than 40% of the global market share, its annual report said. And in 2023, CATL’s shipment of ESS batteries spiked by 46.8% to 69.00 GWh, outpacing the 32.6% growth in EV battery deliveries, which reached 321 GWh. Its overall shipment volumes reached 125 GWh in the third quarter this year, up by 15% compared with 110 GWh in the second quarter. And the ESS sector currently accounts for around 24% of CATL’s total battery capacity, according to the company’s quarterly report.

From 2018 to 2023, CATL’s revenues from ESS grew from 189 million yuan ($27 million) to nearly 60 billion yuan ($8.60 billion) and now accounts for nearly 15% of its total revenues.

In addition, CATL said its gross margin from deliveries of ESS was 23.79% in 2023 – 1.5% higher than from its EV battery shipments.

The company said it will be supplying battery cells and packs to Tesla’s “Megapack” storage plant in Shanghai, which aims to make 10,000 Megapack units per year with a combined 40 GWh of storage capacity, according to media reports.

“In addition to major regions such as China, Europe and North America, the energy storage market in emerging [markets], such as the Middle East and Africa are also quite active,” EVE chief executive Liu Jincheng said at a battery conference this year.

And based on data from SNE Research, global shipments of ESS batteries reached 185 GWh in 2023, up by 53% compared with 121 GWh in 2022.

China’s major battery producers have also been steadily increasing their overseas market share amid growing demand, partly due to intense competition within China.

EVE announced in September that it had signed an agreement to deliver 19.50 GWh of LFP lithium batteries to American Energy Storage Innovations (AESI).The agreement includes 13.39 GWh of LFP batteries American Battery Solution (ABS) in 2023, which has now been transferred to the agreement with AESI.China’s other major EV and battery producer BYD has also signed up to a number of large-scale ESS projects in countries, including Brazil and Mexico, since 2017.

BYD’s global deliveries of ESS batteries reached 28.40 GWh in 2023, ranking it second globally behind CATL, an industry analyst told Fastmarkets.

And in early October this year, Spanish independent power producer, Grenergy Renovables, announced that it had secured financing for the first phase of the world’s largest ESS project in Chile, which will be BYD’s largest-ever ESS battery contract, and will supply 1.10-3.00 GWh of storage capacity.