The solar battery market today closely resembles the early stages of the EV battery industry: it remains in a disorderly, homogenized expansion phase where loss-making operations and the survival of the fittest are common phenomena.
According to statistics, there is a massive surplus inventory of solar energy storage batteries. In 2022, the industry produced more than 20 GWh of excess energy storage batteries. By 2023, estimates placed excess production between 50 GWh and 80 GWh depending on the calculation methodology—representing a 2- to 3-fold increase year-over-year.
Consequently, the industry must now address a staggering cumulative energy storage battery inventory of 70 GWh to 100 GWh, which virtually equals the total market demand of the entire previous year. Because of this massive supply overhang, the energy storage battery market faces severe headwinds, and the industry is likely to experience an intense reshuffle in which weaker companies will be forced out of business.
Bidding prices across the energy storage sector continue to hit historic lows.
According to Jiemian Media, procurement bid results for energy storage system equipment for Xinjiang Lixin Energy Qitai County’s “125MW energy storage + 500MW (wind and solar combined)” project were recently announced, with Xujie Electric taking the contract. The equivalent unit price of the energy storage system dropped to just 0.564 yuan/Wh, setting a new record low for new energy storage systems. By comparison, at the beginning of 2023, average energy storage system unit prices hovered around 1.5 yuan/Wh—marking an almost threefold drop in under a year.
“Solar energy storage batteries are competing fiercely on price, which in turn prevents power battery prices from rising,” noted industry analyst Moko. Furthermore, excess energy storage battery inventories are likely to be redirected into low-end electric vehicles to accelerate destocking, further squeezing the automotive power battery market.
Overall, the power battery market remains in a trough characterized by sluggish production and sales volume. High inventories of new energy vehicles, coupled with cautious consumer purchasing sentiment, have dampened production enthusiasm among battery manufacturers. At current price levels, many manufacturers are unable to cover their operating costs, and market sentiment has yet to recover from the aggressive destocking phases of the past year.
While no one can predict exactly when the market will emerge from this trough, one thing is clear: as the sector slowly recovers, the market’s “invisible hand” has already set a new round of industry eliminations in motion.
