Ma Jinpeng of Xinneng An: My Vision of the Leading Brand in Domestic Industrial and Commercial Energy Storage Solutions for 2025
On April 3, 2025, I attended the 7th Energy Storage Carnival and the annual ranking release of global shipments for Chinese energy storage companies, organized by the Energy Storage Leaders Alliance in Wuhan. The event saw attendance from battery manufacturers, system integrators, investors, and asset operators. After reviewing the released statistical data, I was filled with mixed emotions.
During the evening banquet, a leader from a newly listed energy storage company in China delivered a speech. Their remarks about industry competition brought them to tears. However, despite this company’s financial performance in 2024 being commendable, many attendees were owners of companies facing net profit deficits, which further complicated my feelings.
The development of new energy storage in China has progressed rapidly, completing in two years what photovoltaic and wind energy took a decade to achieve. It even feels like the industry has skipped experiencing the gradual transition from policy-driven growth to market maturity. If the growth of photovoltaic and wind energy was akin to crossing a river by feeling the stones, the development of energy storage seems like the rules are being set by those who have already crossed, possibly exhibiting impatience or distorted market behaviors due to supply and demand relationships.
From discussions during this conference and exchanges with industry colleagues, I distilled five key pieces of information:
- The annual shipping volume rankings for domestic industrial and commercial energy storage from 2022 to 2024 have fluctuated dramatically, indicating that the industry landscape is still forming.
- Considering the 472Ah square cell battery released by a competitor at the event, the market has already seen a variety of cell specifications (2XX, 3XX, 4XX, 5XX, 6XX) available for delivery, making it even more complex than the specifications for photovoltaic modules.
- One company introduced a storage cabinet product with a capacity of 125 kW/261 kWh, with conventional sales prices nearing 0.5 yuan per watt-hour. The current profitability of system integrators is poor, with very few companies achieving positive net profits. I urged during the forum that “sustainable profitability for system integrators is the foundation for the healthy development of the industry and a guarantee for the sustainable operations of energy storage investors and asset operators.”
- There are signs of differentiation in the roles of investors, asset operators, and system integrators. Specialized asset operators are emerging from a rough market development phase to a more refined competition. Companies like Xingji Yuneng and Huagong Energy have demonstrated how thorough exploration of load characteristics, demand management, power sales integration, and demand-side response can yield significant returns that surpass peak-valley price differences.
- The ultimate form of energy storage in industrial and commercial settings should be the virtual power plant (VPP), with overall energy management on the distribution network side being the ultimate position for investors and asset operators. Companies should not establish independent departments for this.
Over the past year since I last wrote about “my view of domestic industrial and commercial energy storage,” the development of this sector in China has been tumultuous. Development cycles, costs, profit-sharing ratios, delivery timelines, financing costs, and contract payment periods have all been competitive. Nevertheless, as a sector that has achieved a viable technological and economic closed loop, it shows a trend of sustainable development.
In 2024, I undertook 150 business trips, most of which involved discussions with investors, developers, and operators. These interactions, coupled with exchanges between investors, operators, and product and solution suppliers, have enriched my understanding of the industry. Based on my experiences, I am inspired to write a version for 2025—my vision of the leading brand in domestic industrial and commercial energy storage solutions.
Looking ahead to 2025, it is essential to reflect on some issues discovered in 2024:
- The issue of heavy investment versus light operation. Early investors overly relied on peak-valley price differences as a single revenue source. Policy changes can lead to operational data falling short of expectations, making it difficult to achieve conservative revenue growth through refined operations. The disparity in profit-sharing ratios among projects in the same region can be as high as 9:1, reducing to a 5:5 sharing of price differences, leading to defaults and demands for renegotiation of profit-sharing ratios.
- The reliability of technical indicators. Issues like charging and discharging efficiency, capacity retention, equipment uptime, fault recovery time, system adaptability to scenarios, and the sustainability of solution providers have faced scrutiny. Last year, several integrators disappeared from the industry, raising questions about what can support 15 years of EMC operations.
As we enter 2025, the national and local governments have rolled out a series of energy and power policies, signaling their commitment to accelerate the construction of a new power system and promote the sustainable and high-quality development of renewable energy. According to the International Energy Agency’s definition of the low-carbon transition of power systems, China is now in the third phase, characterized by increasing challenges in balancing power supply and demand. This necessitates systematic improvements in the flexibility of the power system, requiring investment in new flexible solutions.
In the past, grid-side energy storage revenue heavily relied on renewable energy capacity leasing, a temporary solution in the development of new energy storage that lacks long-term sustainability and coherent business logic. The implementation of document 136 will effectively guide energy storage from a cost-oriented approach to a value asset orientation. The acceleration of the electricity spot market will also expand price differentials, which will significantly enhance the absorption of renewable energy and the planning and penetration rates of the grid.
So, as we move towards 2025 and beyond, what should domestic industrial and commercial energy storage product and solution providers focus on? It should not be about continuously driving prices down. In the long run, price competition does not benefit investors, operators, or product and solution providers. We need to focus on what solutions can become the driving force for the first brand in the next few years. Here are some thoughts for consideration.
First, the value proposition of the leading brand must always return to the financial models of investors and asset operators. Providing the lowest cost per kilowatt-hour solution is essential to safeguard the financial metrics of investors, which include overall investment returns, static recovery periods, and cumulative net cash flow over the entire lifecycle. The foundational elements supporting these key financial metrics involve all aspects from project development to recovery, including static investment, operational costs, capacity evaluation, yield guarantees, financing viability, state of health (SOH) retention, charging and discharging efficiency, depth of discharge (DoD), fault rates, recovery times, insurance measures, algorithmic strategies, and operational friendliness (EMS).
Next, the construction of a closed-loop and secure system operation and maintenance (O&M) management capability is crucial. O&M is a critical aspect that must be taken seriously. Preventive maintenance and corrective repair are equally important. Equipment failure often begins with a minor issue that impacts other components, leading to more significant problems. Proper preventive maintenance can reduce or eliminate minor damages before they escalate, while planned work can be three to four times more efficient than unplanned tasks.
Investors should pay close attention to the O&M management processes, tools, personnel configurations, and management levels of product and solution providers. The service metrics of fault rates and recovery times are significant; for demand-controlled energy storage operations, even a two-day outage can negate the benefits of previous efforts in demand management.
Third, building an adaptable capacity evaluation capability is essential. Capacity evaluation is a key indicator of investor returns, encompassing more than just 15-minute load data. It must consider factors such as the integration of first and second energy sources, load management, and collaborative configuration assessments.
Fourth, enhancing the ability of product and solution providers to assist investors in project financing is vital. Currently, private investors primarily rely on leasing companies for financing, which incurs high costs. Leading brand solution providers have the opportunity to leverage their financial stability to collaborate with financing institutions, offering better financing options for investors.
Fifth, refining project operational capabilities is increasingly important as energy storage serves as a financial asset and a core component in park network-load-storage (NLS) systems or virtual power plants. The operational strategy relies on algorithms that optimize revenue from peak-valley price differences and demand-side reductions.
Sixth, establishing core technical performance indicators for energy storage systems, such as capacity retention, charging and discharging efficiency, and depth of discharge, is crucial. Investors are beginning to expect assurances regarding the gradual capacity retention of systems over a decade.
Seventh, building insurance capabilities to safeguard energy storage systems is increasingly recognized. Recent policy initiatives have emphasized the need for synchronized insurance products to support the healthy development of the energy storage industry.
Eighth, constructing recovery and residual value management capabilities for energy storage systems is essential. A comprehensive lifecycle solution must consider the sustainability of the provider, operational capabilities, and the effectiveness of recycling mechanisms.
In terms of market changes leading into 2025, there will likely be increased demand for energy storage alongside existing distributed photovoltaic stations due to new regulatory restrictions. Internationally, rapid growth in industrial and commercial energy storage is expected, particularly in mature markets such as Europe and North America, where clear economic models exist.
Overall, the competitive landscape from 2022 to 2024 has shown significant fluctuations in the domestic industrial and commercial energy storage sector, indicating that the industry landscape is still evolving. The ultimate winner in this space may not have yet emerged, but the challenge is one of comprehensive capability and value integration. As Warren Buffett wisely said, “It takes 20 years to build a reputation and five minutes to ruin it.” Thus, fostering self-discipline within the industry and focusing on the lowest cost per kilowatt-hour will support healthier, sustainable development.
As I conclude these thoughts, the sun begins to emerge from behind the clouds, shining brightly on the photovoltaic panels on the roof. Let me end this report with a poetic line: “Shoulder the great responsibility and sing boldly; achievements are not in vain, you will achieve success.” My team and I will advance the development of the industry based on these principles, and I look forward to introducing our solutions.
