In less than a week, the record for the world’s largest energy storage order has been broken twice. On July 16, Sungrow announced it had signed a 7.8 gigawatt-hour energy storage project with Saudi Arabia’s Al Gihaz, claiming it as the largest such project globally. Just two days later, on July 18, US company Intersect Power announced that, by 2030, Tesla would provide it with a 15.3 GWh battery energy storage system, setting a new world record. These massive orders signal a booming demand for large-scale energy storage overseas.
Large-scale energy storage, primarily used on the power generation and grid sides, typically has an output power greater than 250 KW. Built and operated by professional energy storage system integrators, its large scale can influence the stability and reliability of power systems. Forecasts from multiple market research institutions predict that the overseas large-scale energy storage market will experience explosive growth in 2024.
This year, the installed capacity of grid-side energy storage in the US is expected to double to 14.3 GW. In Europe, the large-scale energy storage market’s new installed capacity is expected to double to over 11 GWh. The Middle East and Australia are also seeing a surge in large projects.
Amid intense competition and ever-lowering bid prices in the domestic market, more Chinese energy storage manufacturers are accelerating their expansion into overseas markets to seize the market dividends. Many manufacturers have designated this year as prime time for going global. Some companies have gone further, setting overseas expansion as their top priority for 2024. According to media reports, CATL’s first presidential directive of the year was to mobilize for overseas expansion, personally issued by chairman Zeng Yuqun.
In June, two leading Chinese large-scale energy storage companies, Hyper Strong and Envision Energy, skipped the domestic SNEC International Photovoltaic Power Generation and Smart Energy Conference and Exhibition, opting instead to participate in Intersolar Europe in Munich, Germany. This shift reflects the increasing allocation of market budgets toward overseas markets by leading companies.
“China’s energy storage market only accounts for half of the world’s market. The other half is a vast overseas market with enormous development potential. In the highly competitive domestic market, leading companies are keen to go global and open up new markets,” said Li Yanming, deputy secretary-general of the Energy Storage Leader Alliance (EESA), to 36Kr.
Seizing opportunities in overseas markets
Reviewing this year’s global market, overseas large-scale energy storage is one of few areas experiencing rapid growth with considerable profit margins. It’s also the largest and most lucrative segment. Among the three categories—grid-side large-scale energy storage, commercial and industrial energy storage, and residential energy storage—the former holds an absolute leading position in global installed capacity and is currently the largest market segment. In the US market, for example, the installed capacity shares of large-scale, residential, and commercial energy storage are approximately 94%, 5%, and 1%, respectively.
The massive growth of overseas large-scale energy storage this year has made it the hottest segment of the market. Under this rapid growth, Tesla deployed 9.4 GWh of battery energy storage products in the second quarter of this year, achieving a quarter-on-quarter increase of 129% and a year-on-year increase of 157%, setting a record for the highest quarterly deployment.
Among Chinese players, Sungrow, which entered the market early, has enjoyed the dividends of the overseas large-scale energy storage market. Its 7.8 GWh energy storage order in Saudi Arabia is almost equivalent to the total installed capacity of the top three Chinese system integrators last year.
Another photovoltaic and energy storage company, Canadian Solar, has achieved consecutive quarterly net profit growth in the photovoltaic industry this winter thanks to its energy storage business. In its semi-annual performance forecast, the company stated that this year’s large-scale energy storage product shipments are expected to reach 6–6.5 GWh, a five-fold increase compared to 2023.
Although the profit margins of overseas large-scale energy storage are not as high as residential storage, the overall profit margin is still considerable. According to 36Kr, the prices and profitability of overseas large-scale energy storage are significantly better than domestic levels. Currently, the AC-side system prices in the US are still at RMB 1.3–1.4 (USD 0.18–0.19) per Wh, Europe and Australia at RMB 1.2 (USD 0.17) per Wh, Latin America at RMB 1.0–1.1 (USD 0.14–0.15) per Wh, and the Middle East and North Africa at RMB 0.9 (USD 0.12) per Wh, while domestic prices are only RMB 0.6–0.8 (USD 0.08–0.11) per Wh.
Take Sungrow, the world’s largest energy storage system integrator by shipment volume (according to Wood Mackenzie data), as an example. More than 90% of its energy storage business comes from overseas large-scale energy storage. Last year, its energy storage business had a gross profit margin of 37.47%. In comparison, Hyper Strong, which mainly focuses on domestic large-scale energy storage business, had a gross profit margin of 20.02% in 2023. This also reflects the significant profitability gap between domestic and overseas large-scale energy storage markets.
For Chinese energy storage manufacturers, expanding into overseas large-scale energy storage can not only rapidly drive revenue growth but also achieve higher profit margins, meeting their pursuit of both revenue and profit growth.
In Li’s view, this year’s spike in the overseas large-scale energy storage business is driven by multiple factors, including government policy support and the continuous decline in energy storage system costs with falling lithium battery prices. However, the core driving force comes from spontaneous market demand. “Developed economies overseas face issues with aging, congested, and expanding power grids, while emerging economies’ power systems are weak and need energy storage to support and expand the grid. Overall market demand is stable and continuous.”
To enter overseas markets, participating in exhibitions is usually the first step for energy storage companies. The main goal is brand exposure to cultivate basic recognition among customers, followed by further business progress. This June’s Intersolar Europe exhibition in Munich was the first stop for many Chinese energy storage companies aspiring to go global. According to the exhibition organizers, about 900 of the 3,008 exhibitors this year were from China.
Applications for next year’s exhibition started a month ago, and the number of Chinese companies registered for 2025 has doubled compared to the same period in 2024. The doubling of registration numbers also reflects the high enthusiasm of Chinese energy storage manufacturers for accelerating their overseas expansion.
Among the companies actively promoting overseas large-scale energy storage business, there are both old players with overseas business foundations like Envision Energy and Canadian Solar, and new players like Hyper Strong, which mainly focuses on the Chinese market, as well as “crossovers” like AlphaESS, extending from residential energy storage to large-scale energy storage. At a meeting in April, Hyper Strong chairman Zhang Jianhui said, “The next 10 years will be the beginning of Hyper Strong’s international development.”
New players must overcome three barriers
However, the entry threshold for the overseas large-scale energy storage market is higher than that for commercial, industrial, and residential energy storage. To tap into actual opportunities, new players must overcome three barriers.
The first barrier is time. Entering the overseas large-scale energy storage market requires national certifications, which can take six months to over a year. Companies must also develop international websites, participate in exhibitions, and enhance market recognition. Entering competitive markets like Europe and the US also necessitates demonstration projects in regions with easier business advancement, such as Southeast Asia and South America. Overseas customers prioritize the experience and track record of energy storage suppliers, as well as their brand IP, publicity, company values, and environmental, social, and governance (ESG) performance.
The second barrier tests the overall strength and financial capacity of companies. Overseas large-scale energy storage projects often involve amounts exceeding RMB 10 billion (USD 1.3 billion), with rigid contracts, high delivery risks, and stringent maintenance and warranty requirements. Suppliers may face hefty fines and compensation if the system’s operational efficiency fails to meet standards or if non-human factors affect power dispatch. Downstream customers scrutinize a company’s market value and revenue to ensure the supplier can handle potential risks and won’t go bankrupt during the project’s lifespan.
“Customers will look at a company’s market value and revenue to ensure that the supplier can handle potential risks and pay possible compensation, and that it won’t go bankrupt in 5–10 years, affecting the project’s operational status during its lifespan,” Li said.
36Kr learned that, in 2021, Sungrow’s overseas large-scale energy storage business was affected by the pandemic, resulting in considerable fines. According to chairman Cao Renxian’s explanation at the 2021 annual performance briefing, the fines and compensation related to the Vietnam and Myanmar projects led to a profit loss of approximately RMB 1 billion (USD 138.2 million) for Sungrow in 2021. Such fines and compensation amounts are unbearable for most startups in the industry.
The third barrier tests the technical strength of companies. Overseas large-scale energy storage systems are frequently utilized in demand response and power system dispatch and regulation, operating for several years. This tests the efficiency, safety, and quality of each supplier’s products, supported by their technical capabilities. 36Kr noted that many companies offering low prices overseas failed to secure large-scale energy storage orders because foreign customers are likely to prioritize overall lifecycle returns and quality assurance, concerned about the lack of subsequent guarantees for low-priced products.
According to Li’s observation, about 60% of energy storage companies in the large-scale energy storage market are making product iterations through minor modifications rather than technical advancements. In his view, there is a clear technical stratification between leading manufacturers and second- and third-tier manufacturers. The market is also increasingly concentrating orders on experienced leading companies.
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The reality is that leading players like Sungrow, BYD, and Tesla have been working in this market for over a decade, accumulating advantages in technology, brand, and project experience, making it difficult for new players to catch up and surpass in a short time. Even if all other conditions are met, time is an unavoidable cost. “Don’t just look at the high gross margins of many companies overseas—also consider how much they have lost or how many years they have laid the groundwork before,” Zhang said.
Therefore, despite the continuous growth of the overseas large-scale energy storage market, the current prosperity largely belongs to a few leading companies. New players can only start with demonstration projects in Asia, Africa, and Latin America, using sufficient long-term practice to accumulate technology and experience before having the opportunity to compete with leading players in the broader international market.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Wang Fangyu for 36Kr.