Exclusive from Xinliu: The Haichen commercial energy storage team has been streamlined, with priority levels lowered, as the company focuses on performance boosts for its large-scale storage operations ahead of an IPO.
According to sources, Haichen Energy Storage has recently reassigned some personnel from its commercial energy storage team to the large-scale storage department, indicating a decrease in the strategic priority of commercial storage within the company. This decision reflects not just an internal strategic shift but also highlights a pivotal change in the energy storage industry, transitioning from rapid growth to deeper differentiation.
Amid challenges such as insufficient economic viability in niche markets, a need for focused resource allocation ahead of its IPO, and an accelerating differentiation in the competitive landscape, Haichen Energy Storage, which once surged to the top tier of the industry as a “dark horse,” now faces multiple pressures as it shifts its focus to large-scale storage to drive performance.
The company had previously positioned its commercial energy storage business as a key growth driver. In December 2023, it launched the “Haina Baichuan” commercial energy storage service plan, offering a model with “full insurance coverage and low-threshold electricity leasing,” and introduced the Andustries digital platform to support its business backend and penetrate the commercial energy storage market.
However, with the decline in the priority of commercial energy storage, Haichen is now concentrating on enhancing its large-scale storage capabilities. This shift can be attributed to the company’s struggles with low-profit margins. According to its prospectus, Haichen’s revenue for the years 2022 to 2024 is projected to be RMB 36.15 billion, RMB 102.02 billion, and RMB 129.17 billion, with corresponding net profits of RMB -17.77 billion, RMB -19.75 billion, and RMB 2.88 billion, indicating ongoing profitability challenges.
The core logic behind commercial energy storage revolves around arbitrage based on peak and off-peak electricity prices. However, uncertainties related to policy changes in time-of-use pricing and fluctuations in user demand have made it difficult for commercial energy storage companies to achieve stable earnings. In 2023, the Jiangsu provincial energy storage industry association highlighted structural challenges like “non-technical cost inflation and weak profit models” facing the sector.
Moreover, commercial scenarios demand higher levels of modularity and intelligence, while Haichen’s technology framework is more aligned with centralized large-scale storage. This has resulted in gaps in key metrics like virtual power plant integration and flexible dispatch when compared to leading manufacturers. Additionally, the fragmented nature of commercial energy storage shipments limits its ability to contribute significantly to performance in the short term, presenting an unfavorable investment return ratio for Haichen.
It is noteworthy that Haichen had planned an IPO for the A-share market in 2023. However, with the shift to the Hong Kong market, the company must confront profitability pressures in its IPO process. On the production capacity front, Haichen had aimed to achieve an annual production capacity of over 100 GWh by 2024 and reach a total capacity of 135 GWh by 2025. As 2024 has passed, it remains uncertain whether these targets will be met, and the major concern lies in the substantial capacity digestion problem that follows such a rapid expansion.
Overall, Haichen’s strategic contraction is not an isolated event but a reaction to multiple crises, reflecting a broader shift within the energy storage industry. On one hand, companies like CATL and BYD leverage their advantages in power battery technology and supply chains to establish an oligopoly in the domestic energy storage market. Meanwhile, second-tier companies are caught in price wars. According to statistics from Gaogong Industry Research, the prices of commercial energy storage systems are expected to drop to RMB 1.2 to 1.6 per watt-hour in the second half of 2024, with manufacturers experiencing razor-thin profit margins.
In this context, competition in the commercial energy storage sector has intensified. New Energy An, based in Xiamen like Haichen, recruited industry star manager Ma Jinpeng at the end of last year, aiming to leverage its advantages in energy storage cells to enter the commercial energy storage arena. With support from ATL and CATL, as well as strong performances in other lithium battery applications like drones, power tools, and home storage, New Energy An is poised to become a formidable competitor in the future commercial energy storage market.
On the other hand, the commercial energy storage route has initiated a technological competition, with long-duration storage becoming a new battleground. In 2023, Haichen launched a kilowatt-hour level MIC battery, attempting to innovate its way out of homogenous competition. However, this technology remains in the validation stage and has yet to yield effective mass production results, with significant R&D investments further burdening the company’s finances. Consequently, large-scale storage, which can produce at scale and reduce product costs, is increasingly appealing to Haichen.
By concentrating resources to produce large-scale storage products in production bases in Chongqing and Heze, Haichen can effectively enhance capacity utilization and further reduce marginal costs, thereby improving profit margins. Additionally, large-scale storage projects offer more stable cash flow and longer order cycles, which can help optimize the company’s financial structure. While competition in large-scale storage projects remains fierce, securing long-term revenue through large-scale orders can alleviate the pressure on profitability ahead of the IPO.
Haichen Energy Storage’s strategic shift points in two directions: scaling up in the large-scale storage market and establishing competitive barriers through long-duration storage technology. However, with many players in the field, both paths appear challenging. As the industry transitions from policy-driven growth to market competition, a company’s survival increasingly depends on its capabilities in technological iteration, cost control, and ecosystem integration. For Haichen, the shift from commercial to large-scale storage may be just the first domino in a complex series; how it builds a real competitive moat in the energy storage sector will be crucial to its ability to navigate through cycles.
