In 2023, the global economy weakened, and inflation saw a decline, impacting the willingness of key contributing countries to undertake major installations. Concurrently, the production capacities of raw materials crucial for solar and energy storage, such as polysilicon and lithium carbonate, have surged, resulting in an oversupply and subsequent ongoing reduction in final product prices.
Nevertheless, the burgeoning energy storage industry has brought to light the economic viability of energy storage systems. As the sector advances, there are increasingly more locations and scenarios showcasing robust demand for Energy Storage Systems (ESS). Consequently, it is anticipated that the demand for ESS will continue to rise.
The demand and supply for lithium carbonate are balancing out, leading to a continuous decline in its price.
The dynamics of lithium carbonate supply and demand are poised to shift from a tight balance to a more relaxed state, with a projected price decline exceeding 80% this year. According to Baiinfo, if the scheduled new production capacities for lithium carbonate materialize on time, global production capacity could reach 1,092,000 tons by the end of 2023 and escalate to 1,642,000 tons by 2025.
On the demand side, with a deceleration in the growth rate of electric vehicle (EV) sales, anticipated lithium carbonate demand from 2023 to 2025 is projected at 531,700, 652,000, and 757,000 tons, respectively. Additionally, factoring in current installations, the demand for lithium carbonate in the energy storage sector is expected to reach 90,900, 148,200, and 230,300 tons from 2023 to 2025.
Moreover, the global demand for lithium carbonate in consumption and other typical industries is estimated to be 973,000, 1,179,000, and 1,388,000 tons in 2023, 2024, and 2025, respectively. This indicates that the production capacity of lithium carbonate continues to exceed its demand. In 2023, as the growth rate of EV sales slowed, the price of lithium carbonate plummeted from its peak of 560,000 yuan per ton to a low point in 2023 of 99,000 yuan per ton, representing a decline of over 80%.
Potential Installation Bottleneck:
The Challenge of High-Power IGBT Modules
While the percentage of domestically produced low-power discrete components has seen a significant increase, the supply and demand for high-power IGBT modules remain constrained. Thanks to the rapid growth of the domestic electric vehicle and solar energy storage industries, the localization of IGBT production has accelerated notably. According to statistics from YOLE, China's IGBT localization rate is projected to rise from 12.3% in 2017 to 32.9% in 2023. Many inverter companies have incorporated domestically produced low-power IGBT discrete components into their photovoltaic and energy storage inverter products. However, progress in increasing the domestic production rate of high-power IGBT modules for centralized PV inverters and high-power energy storage PCS remains sluggish. The industry continues to be dominated by overseas enterprises such as Infineon and Fuji in this regard.
Customer demand for IGBTs still lags behind the capacity expansion rate of overseas enterprises, maintaining a tight balance between supply and demand. Consequently, there persists a bottleneck in the installation of high-power energy storage plants. The current localization rate of IGBT modules remains relatively low, keeping PCS capacity tightly balanced. Efforts to alleviate this bottleneck have yet to fully materialize.
Market Space:
With the rapid expansion of new energy installations, the evolution of power trading models, cost reductions in raw materials, and influential top-level policy initiatives, the global new energy storage market is experiencing dynamic growth.
Looking ahead to 2024, TrendForce anticipates that global new energy storage installed capacity will reach 71GW/167GWh, marking a substantial year-on-year increase of 36% and 43%, maintaining a commendable growth trajectory. However, compared to the remarkable growth rates of 115% and 133% in 2023, the growth pace in 2024 has noticeably decelerated. On a continental scale, Asia and Europe continue to exhibit robust growth trends, while the Americas experience a more tempered increase, and the Middle East and Africa showcase the most impressive growth performance. Breaking down market segments, the market share of key players like China, the United States, and Europe remains unchanged, contributing significantly to overall increment, while the United Kingdom and South Africa exhibit remarkable growth rates.
Projections for Global Installations of Energy Storage in 2024
As the primary incremental markets globally, China, the United States, and Europe are projected to account for 84% of the total new installations in 2024, sustaining their leadership in driving demand growth for the global energy storage market. Analyzing market share, the Asia-Pacific and Europe show consistent and steady growth in installed demand, whereas the Americas experience a decline. Meanwhile, the Middle East and Africa emerge as strong growth performers, driven by their low base and the imminent grid connections of their winning projects.
Asia:
Currently, key players in Asia have set explicit installed capacity targets and rolled out a series of top-tier policies to intensify efforts in boosting this capacity. Moreover, the challenge of wind and solar consumption is a shared concern across many nations, underscoring the anticipation of a continued high growth rate in overall demand for energy storage installations by 2024. TrendForce predicts that by 2024, new energy storage installations in Asia will hit 34.3 GW/78.2GWh, reflecting a substantial year-on-year growth rate of 40% and 47%. Notably, China remains at the forefront of global demand for energy storage.
Europe:
At the forefront of global energy transformation planning, Europe is gearing up for significant changes. TrendForce anticipates that the new installed capacity of energy storage in Europe will hit 16.8 GW/30.5 GWh in 2024, showing a robust year-on-year growth of 38% and 53%, sustaining an impressive growth rate. Presently, mainstream European countries find their subsidized energy storage policies mostly grappling with budget exhaustion or facing subsidy retreat. The slowdown in household storage growth is causing a shift, with a decrease in the proportion of countries dominated by household energy storage. Conversely, the United Kingdom is experiencing a notable increase in the proportion of installed capacity dominated by large-sized energy storage. The surging demand for large-sized energy storage is propelled by government tenders and market-based projects, maintaining strong growth momentum. Notably, Germany, Britain, and Italy stand out as the three countries with dominant installed demand in Europe.
Americas:
Most subsidized energy storage policies in the Americas rely heavily on tax credits and additional feed-in tariff incentives. The urgency for developing energy storage in North America, along with the economics of energy storage projects, surpasses that of Latin America. Latin America faces constraints such as limited available land and the absence of a regulatory system, making it a longer journey to reach the period of installed demand for energy storage volume. Projections indicate that by 2024, the new installed capacity for energy storage in the Americas will hit 15.6GW/48.9GWh, marking a year-on-year growth of 27% and 30%, though the growth rate has notably slowed. Notably, the United States continues to dominate the demand for energy storage in the Americas.
Emerging Markets:
In the Middle East and Africa market, South Africa and Israel, as two major incremental markets, have well-defined energy storage installed capacity plans and specific subsidy policies. With robust demand in these two countries, the Middle East and Africa's energy storage market are poised for substantial growth. Anticipated figures suggest that the new installed capacity of energy storage in the region will reach 3.8GW/9.6GWh in 2024, showing a year-on-year growth of 36% and 62%. Presently, market demand in the Middle East and Africa primarily stems from government bidding projects. Additionally, the substantial growth in photovoltaic (PV) installed capacity underscores consumption issues. With favorable policies and a thriving bidding market, it is anticipated that distributed PV and large-sized energy storage demand will experience a breakout, leading to robust growth.
