Ma Jinpeng of New Energy An: A Portrait of the Leading Brand in Domestic Industrial and Commercial Energy Storage Solutions by 2025
Recently, I attended the seventh Energy Storage Carnival and the 2024 Global Shipment Ranking Conference for Chinese Energy Storage Enterprises, hosted by the Energy Storage Leaders Alliance in Wuhan. The event was well-attended by battery manufacturers, system integrators, investors, and asset operators. After reviewing the published statistics, I was filled with mixed emotions. During the evening banquet, a leader from a newly listed energy storage company spoke about the intense competition within the industry, becoming visibly emotional. Nevertheless, this company achieved commendable financial results in 2024, while many in the audience were CEOs facing deficits, stirring conflicting feelings within me.
The development of new energy storage in China has indeed progressed in just two years, mirroring the decade-long growth trajectory of solar and wind energy. It seems that this sector has not fully experienced the transitional phases from policy-driven growth to market channel establishment. While the growth of solar and wind energy was akin to feeling one’s way across a river, energy storage development appears to be shaped by those who have already crossed, perhaps lacking patience or being influenced by distorted market behaviors driven by supply and demand.
From discussions at the conference and exchanges with industry peers, I distilled five key insights:
- First, the annual shipment rankings of domestic industrial and commercial energy storage from 2022 to 2024 have seen significant fluctuations, indicating that the industry landscape has yet to solidify.
- Second, with the introduction of the 472Ah square cell announced by peers at the event, the market has seen a variety of specifications for battery cells, including 2XX, 3XX, 4XX, 5XX, and 6XX, all meeting delivery conditions, making it even more complex than solar panel specifications.
- Third, a company unveiled a 125kW/261kWh energy storage cabinet with a conventional sales price nearing 0.5 yuan per watt-hour; however, the profitability of system integrators remains poor, with very few companies turning a profit. During the forum that afternoon, I emphasized, “The continuous profitability of system integrators is the foundation for the sustainable development of the industry and the assurance for the sustainable operations of energy storage investors and asset operators.” The energy and power industry’s evolution undeniably aims at reducing unit energy costs or energy consumption in an orderly and continuous manner. Yet, it seems that while speakers on stage discuss value, those in the audience are competing for orders at near BOM costs, a lamentable situation.
- Fourth, a division of labor among investors, asset operators, and system integrators is beginning to emerge. Professional asset operators, like Xingji Yuneng and Huagong Energy, are moving from a rough market development to a more refined competitive landscape. They are earning substantial revenue by fully exploiting load characteristics, demand management, sales integration, and demand-side response. I view this as a positive trend for the industry.
- Fifth, virtual power plants (VPPs) should represent the ultimate form of industrial and commercial energy storage. Comprehensive energy management on the distribution side is the ultimate positioning for investors and asset operators, suggesting that companies should not establish independent departments.
It has been over a year since I last wrote about “The Domestic Industrial and Commercial Energy Storage Solutions…” During this time, the development of China’s industrial and commercial energy storage has experienced significant ups and downs. Various aspects such as development cycles, costs, profit-sharing ratios, delivery periods, financing costs, and contract terms are all in a state of flux. However, as a sector that has achieved both technical and economic feasibility, it still demonstrates a trend of sustainable development.
In 2024, I traveled 150 times, most often meeting with investors, developers, and operators. These interactions have deepened my understanding of the industry, leading me to reflect on the future of energy storage solutions and the characteristics of the leading brand in 2025.
Before we look ahead to 2025, let’s review some challenges observed in 2024:
- Firstly, there is a concerning trend of heavy investment but light operations. Early investors relied too heavily on the single revenue source of peak-to-valley price differences, with policy changes leading to operational data not meeting expectations. This has highlighted the inability to achieve conservative revenue growth through refined operations. In the same region, projects commissioned two years apart can see profit-sharing ratios as high as 9:1, and currently, the sharing of price differences has even reached a 5:5 split, causing some owners to default and demand renegotiations. This is particularly challenging for high static investments made two years ago.
- Secondly, the reliability of technical indicators has been called into question. Issues regarding charging and discharging efficiency, capacity retention rates, equipment uptime, fault recovery times, and system adaptability to scenarios have raised doubts, leading to some integrators exiting the field. How can we sustain EMC operations for 15 years under these conditions?
- As we enter 2025, various energy and power policies are being rolled out at both national and local levels. Whether through distributed photovoltaic management regulations or document No. 136, the commitment to accelerating the construction of a new power system and promoting the sustainable, high-quality development of new energy is evident. According to the International Energy Agency’s definition of low-carbon transformation in power systems, China has entered the third phase of a six-phase process. This phase is characterized by increasing difficulty in balancing supply and demand for electricity and requires systematic enhancements to the flexibility of the power system. Existing facilities and improved operational methods are insufficient to meet these flexibility demands, necessitating investments in new flexibility solutions.
- The past reliance of grid-side energy storage revenue on the capacity leasing of new energy is merely a transitional phenomenon in the development of new energy storage, lacking long-term sustainability and posing questions regarding its business logic. Document No. 136 will effectively guide energy storage from a cost-based positioning to one based on value assets. The accelerated process of establishing a power spot market and the potential expansion of price differences (current spot prices in regions like Inner Mongolia, Shanxi, and Guangdong range from 0 to 1.5 yuan, while Gansu is at 0.04-0.65 yuan, and Zhejiang is at 0.20-0.80 yuan) will significantly enhance the trading attributes of energy storage, facilitating better integration of new energy and improving the penetration of new energy into the grid, a development with profound implications.
Looking toward 2025 and the coming years, what steps should domestic industrial and commercial energy storage product and solution providers take? It is certainly not about continually driving prices down. In the long run, price competition offers no benefits to investors, operators, or solution providers. So, what strategies should we pursue to become the leading brand in the coming years? Here are some thoughts for consideration:
To conclude, the value proposition of a leading brand must always align with the financial models of investors and asset operators. Providing the lowest possible cost per kilowatt-hour solution is crucial, focusing on how to effectively safeguard better financial metrics for investors, including overall return on investment, static payback periods, and cumulative net cash flow over the entire lifecycle. Supporting these key financial indicators involves numerous aspects from project development to recovery, including static investments, operational and maintenance costs, capacity assessments, revenue guarantees, financing viability, State of Health (SOH) maintenance, charging and discharging efficiency, Depth of Discharge (DoD), fault rates, recovery times, insurance measures, algorithm strategies, and operational friendliness (EMS). These can be broadly categorized into eight key value points, which represent the foundation of a leading solution brand’s value. I will elaborate on these points further:
- First, optimizing the reasonable static investment of projects based on financial models: The current market supply chain information has become remarkably clear, making it easy to ascertain equipment BOM prices. In some respects, the competition lies in the bargaining power of the supply chain. However, choosing different components and battery cells affects prices, lifespans, and performance drastically. The selection of battery cells reflects investors’ endurance and value propositions. From discussions with many investors, once project return rates meet expectations, it’s not just about reducing equipment costs to improve returns further. Equipment manufacturers need to make a profit too. To secure orders, some may compromise on configuration and quality, leading to higher probabilities of operational issues, which can result in revenue losses that cannot cover the costs of those issues. Therefore, a speculative mindset should be avoided. Currently, there is no absolute safe solution for storage systems; rather, we are incrementally enhancing safety strategies. Safety requires investment, and it is reasonable for investors to seek better returns. Industrial and commercial energy storage is fundamentally a financial asset, yet balance must be maintained between static investment management and refined operational management without falling into a speculative mindset.
- Secondly, building a closed-loop and assured system operation and maintenance management capability: Operation and maintenance (O&M) must be prioritized, as it is akin to the maintenance of communication devices. Preventive maintenance and corrective repairs are equally important. Equipment failure often starts with a small part, which can affect other components, leading to larger issues. This is a domino effect within the system. Preventive maintenance can mitigate or avoid minor damages, eliminating small hazards before they escalate into severe faults. A well-planned maintenance approach can significantly reduce costs, as planned work is three to four times more efficient than unplanned work. In energy storage systems, preventive maintenance allows for the preparation of maintenance strategies, tools, and spare parts in advance, enabling efficient repairs. In contrast, reactive repairs during unexpected downtime can take significantly longer and incur higher costs. It is essential not to assume that warranty-covered repairs are sufficient; cloud platform monitoring and regular on-site maintenance are both critical. Investors should focus on the operational management processes, tools, personnel configurations, and management levels of product and solution providers.
- Thirdly, establishing an adaptable capacity assessment capability: Capacity assessment is crucial for investors’ returns. With the diversification of revenue from industrial and commercial energy storage, capacity assessments should incorporate more than just 15-minute load data. It should also consider the coordination of primary energy sources (distributed solar, decentralized wind), load management, and secondary energy sources (new energy storage). The credibility of the capacity assessment methods and tools used will also be a necessary capability for solution providers to develop.
- Fourth, enhancing the financing capability of investors’ projects: Currently, private investors primarily rely on financing leasing companies for project financing, which incurs annual rates between 6-7.5%. Overall, financing costs are perceived as high, making non-recourse project financing difficult. Leading product and solution providers can leverage their advantages and sound financial health to proactively collaborate with industry financing institutions to offer investors more accessible and cost-effective financing solutions.
- Fifth, refining project operation capabilities: Whether as a singular financial asset, a key scheduling element within energy parks, or a core asset of a virtual power plant, refined operations have become increasingly important for revenue preservation and growth. More optimal combinations of diversified revenues supported by algorithms are vital for operations.
- Sixth, ensuring the core technical indicators of the energy storage system: Key performance indicators, such as capacity retention (SOH), charging and discharging efficiency, and DoD, remain essential. Current battery manufacturers often guarantee lifespan metrics under standard conditions, but actual operational data shows that systems typically degrade after around 5500 cycles, representing an 8-year lifespan. Investors’ financial models must account for battery replacement costs, which can be significant.
- Seventh, constructing insurance coverage for energy storage systems: As policies evolve, governments are beginning to address the insurance products that will accompany healthy industry development. The introduction of various insurance measures will play a crucial role in mitigating risks associated with energy storage operations.
- Lastly, establishing a robust recycling and residual value management capability: Comprehensive lifecycle solutions should encompass both the sustainability of the product and the ability to implement effective recycling mechanisms.
As we discuss capability building, it is also important to anticipate new market trends for 2025. Firstly, existing distributed solar photovoltaic stations will require energy storage solutions. New policies regarding distributed solar management will lead to a shift in self-consumption requirements for commercial solar setups, creating additional demand for energy storage. Secondly, industrial and commercial energy storage is expected to see rapid growth in markets abroad, particularly in regions with mature and clear economic models. Thirdly, larger-scale energy storage projects will become the norm, with integrated container solutions being the preferred choice for medium-to-high voltage connections.
The changes in energy storage shipment rankings from 2022 to 2024 have been substantial, indicating that the industry structure is still evolving. This is a competition of comprehensive capabilities and value combinations. The ultimate winners have yet to emerge in the rankings. As Warren Buffett famously stated, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you will do things differently.” With increased industry self-discipline and a greater respect for safety, we can guide technology towards lower costs per kilowatt-hour and promote sustained and healthier industry growth.
As I write these words, the sunlight is gradually breaking through the clouds, shining brightly on the solar panels on the roof. I conclude this report with a poetic line: “Shouldering heavy responsibilities, we march forward; our efforts will not be in vain.” My team and I will uphold these principles as we push for industry development, and you can look forward to our upcoming solution release.
