The energy storage system market is on the brink of a significant reshuffle. Leading battery manufacturers like CATL and BYD are rapidly penetrating into the downstream system integration sector.
In addition to battery manufacturing, more energy storage battery manufacturers are venturing into system integration, including Ruipu Lanjun and Chuneng New Energy.
Energy storage system integration is not merely about assembling components; it requires optimizing the compatibility of various components to ensure efficient collaboration among critical parts like batteries, BMS (Battery Management System), EMS (Energy Management System), and PCS (Power Conversion System).
Looking ahead, energy storage systems will evolve towards deep integration with intelligence and digitalization, adaptability to multiple scenarios, ecological collaboration, and a shift from “passive protection” to “active defense.”
As a result, energy storage companies must accelerate their transition from traditional single-price competitive models to providing comprehensive solutions for customers, thereby enhancing their core competitiveness and expanding market boundaries.
In the vast Gobi Desert of Haixi Prefecture, Qinghai, a shared energy storage station powered by Sunpower showcases rows of deep blue solar photovoltaic panels shimmering in the sunlight. Nearby, a series of container-like lithium battery storage devices are silently harnessing enormous amounts of electrical energy. As a GWh-level facility, this power station must coordinate millions of batteries to work in unison, which relies heavily on efficient system-level technical support.
The energy storage system (ESS) serves as a core link in the energy storage supply chain, connecting equipment providers with system owners. Data shows that in 2024, the energy storage system segment will undergo a rapid reconstruction, with leading battery companies like CATL and BYD leveraging their core technologies and supply chain advantages to accelerate their entry into the downstream system integration market.
Industry experts point out that the primary reason battery manufacturers are involved in energy storage system integration is to meet the market’s diverse demands for energy storage equipment and services. Currently, the energy storage system integration market is approaching a critical reshuffle, and seizing opportunities during this phase is crucial for gaining a competitive edge in future development.
According to system connection positions, energy storage system integrators can be categorized into AC-side and DC-side integrators. Data indicates that in 2024, the top five global AC-side energy storage system integrators will be Tesla, Sunpower, CRRC Zhuzhou Institute, Fluence, and Haibo Technology. In the DC-side rankings, CATL and BYD continue to hold the first and second positions, followed by Jingkong Energy, Haichen Energy, and Yuanxin Energy.
Notably, CATL, BYD, and Haichen Energy are all battery manufacturers. Beyond these three companies, an increasing number of battery manufacturers are no longer satisfied with merely producing batteries; they are now entering the system integration arena. In November 2024, Ruipu Lanjun signed an agreement with JUNGWOO Group to supply energy storage system products with a capacity of no less than 5 GWh and energy storage battery products of 2 GWh. Following this, in January this year, the Jiangsu Lanjun New Energy storage system integration project officially commenced in Huai’an City.
Similarly, Chuneng New Energy signed a supply agreement for a 1.5 GWh power storage system with Bison Energy, while Guoxuan High-Tech partnered with Jinjing New Energy to jointly conduct research on new technologies and business models for battery energy storage systems (BESS). XINWANDA has applied for a patent for a system and control method for energy storage that can improve discharge duration under expanded power discharge scenarios.
As noted by Liu Yong, Secretary-General of the Energy Storage Application Branch of the China Chemical and Physical Power Industry Association, “The core reason for battery manufacturers’ involvement in energy storage system integration is to meet the market’s diverse demands for energy storage equipment and services.” He emphasized that the barriers to entry in the energy storage bidding market are continually rising, and owners are increasingly valuing the comprehensive R&D capabilities of companies, expecting them to provide a “one-stop” solution covering battery manufacturing, system integration, and intelligent operation and maintenance throughout the lifecycle of energy storage stations. This shift is prompting battery manufacturers to intensify their focus on the system integration aspect and build competitive advantages through innovations in intelligence and digitalization.
Looking to the future, Liu Yong predicts that energy storage system shipments will continue to grow at a rate of 25% year-over-year, with anticipated shipments surpassing 300 GWh in 2025. It is evident that battery manufacturers’ involvement in system integration will become the norm, intensifying competition in this area.
Contrary to the notion that energy storage system supply is akin to the past “computer assembly” due to low entry barriers, a lack of core technology, and severe homogenization, energy storage system supply is, in reality, a high-tech demanding system-level engineering task. It requires close monitoring of energy density, battery lifespan, and charge-discharge capabilities, as well as efficient communication transmission and data computation from information collection to control system processing. Moreover, it necessitates unified interfaces and protocol compatibility among subsystems to achieve precise coordination and ensure the overall performance stability of the system, supporting efficient grid dispatch.
“Energy storage systems are not just batteries; energy storage isn’t simply a ‘large power bank,'” explained Cai Zhuang, General Manager of the Energy Storage Division’s Product Center at Sunpower. He pointed out that the core technologies of energy storage encompass not only electrochemical management but also power electronics and grid support technologies. Sunpower refers to the deep integration of these technologies as “Three Power Integration.”
“The complexity of energy storage systems lies in their ability to identify, analyze, and proactively resolve various issues. This includes precise management of millions of batteries and the interconnection of multiple isolated technical modules into a comprehensive solution with safety, economic viability, and active grid support capabilities.” Cai Zhuang likened it to a new energy vehicle, where performance is influenced by not only the battery but also the electric control, electric drive, and intelligent driving systems. The value of the new energy vehicle lies in the overall performance of the vehicle system, and the same applies to energy storage systems.
Energy storage systems mainly consist of battery packs, BMS, EMS, PCS, and other electrical devices. The BMS is responsible for monitoring, evaluating, protecting, and balancing the batteries, while the EMS handles data collection, network monitoring, and energy dispatch. The PCS connects the battery system to the grid, enabling the conversion between direct current and alternating current.
In simpler terms, energy storage system integration is akin to building with blocks, but it is not just about stacking them randomly. Each block must be optimized to maximize its function. System integration can enhance the compatibility of various components, ensuring efficient collaboration among critical parts like batteries, BMS, EMS, and PCS, thereby improving the overall system’s performance and reliability. Additionally, system integration must offer customized solutions based on different application scenarios, such as grid frequency regulation, peak-shaving, and accommodating renewable energy, to maximize the economic value of the energy storage system. Finally, safety and lifespan management are also integral to system integration, employing advanced control strategies and intelligent management to extend system lifespan and reduce operational costs.
As the energy storage system integration market enters a critical reshuffle, industry insiders believe that leading battery manufacturers are leveraging their core technologies and supply chain advantages to build full-chain competitiveness through vertical integration. Current data shows that CATL and BYD have established a comprehensive layout covering upstream lithium resource development, midstream battery manufacturing, and downstream system integration.
According to InfoLink Consulting, based on existing project reserves, significant breakthroughs are expected from both companies in the AC-side sector by 2025. “Batteries are the core components of energy storage systems, and battery manufacturers possess deeper technical expertise in areas such as BMS,” Liu Yong pointed out. Furthermore, battery manufacturers have clear advantages in channel resources, cost control, and technological iteration capabilities, but they need to strengthen collaborations with other supply chain segments like PCS.
Some experts argue that unlike other fields, energy storage manufacturers lacking rich practical experience will find it challenging to produce high-performance, highly reliable, and cost-effective products in a short time. Currently, problems like overcharging and over-discharging in existing energy storage systems often stem from a lack of system-level experience that results in BMS lacking certain protective, analytical, and control capabilities. This, combined with poor system-level control strategies, can lead to reduced battery and component lifespan and frequent failures.
Cai Zhuang emphasized that for energy storage systems, electrochemistry (batteries) is the foundation, power electronics is the bridge, and grid applications are the decisive point. “The application of energy storage systems on the AC side is incredibly complex, requiring strong capabilities for frequency regulation, reactive power compensation, power quality management, peak shaving and valley filling, demand management, microgrid capabilities, and GW-level black start capability. All these require robust AC-side performance, especially in response to unexpected grid conditions, necessitating quick and precise coordination between the AC and DC sides. The strong dispatching capability of entire stations is still based on the system capabilities from ‘Three Power Integration,’ which is a strength of Sunpower,” he said.
In Liu Yong’s view, the energy storage system integration market is about to enter a “great reshuffle.” Whether newcomers in the battery industry or traditional system integrators, some companies are facing instability due to technical challenges, financial pressures, and narrow sales channels, leading to survival pressures. Meanwhile, leading companies will continue to strengthen their positions. “Seizing opportunities during this period to occupy a leading position in the industry is crucial for gaining an advantage in future development,” Liu Yong noted.
Regarding the future direction of energy storage systems, a representative from Kehua Data stated that energy storage systems will move towards deeper integration of intelligence and digitalization, adaptability to multiple scenarios, ecological collaboration, and a transition from “passive protection” to “active defense.” “In simple terms, energy storage systems will leverage artificial intelligence and big data technologies to shift from ‘passive responses’ to ‘active decision-making,'” explained the representative. In the future, Kehua Data aims to integrate AI deeply into the entire lifecycle of energy storage through algorithm optimization, intelligent control, and scenario innovation, enhancing operational efficiency, safety, and economic viability of energy storage systems, thereby promoting the intelligent development of the industry.
Cai Zhuang believes that the future direction for energy storage systems will continue to focus on the deeper integration of power electronics, electrochemistry, and grid technology, particularly with comprehensive empowerment from digitalization and AI, adapting flexibly to grid conditions to ensure stable grid operations.
With the aid of AI technologies, the safety and operational efficiency of energy storage systems are significantly enhanced, expanding market demand and accelerating innovation in company practices. This encourages energy storage companies to shift from traditional single-price competition to providing comprehensive solutions for customers, thereby strengthening their core competitiveness and effectively broadening the development boundaries of the energy storage market, injecting new vitality and momentum into the sustainable development of the energy storage industry.
