SHENZHEN SHINE WELL POWER TECHNOLOGY CO.,LTD

The European energy storage market is mainly driven by the demand for energy self-control and cost-effectiveness. As the process of destocking approaches its end, it is expected that the market shipments will return to steady growth in 2024. Meanwhile, the US market is expected to maintain rapid growth in the long term, while emerging markets such as Australia, South Africa, and Southeast Asia may become the driving forces for future residential energy storage growth. As market competition intensifies, market share is likely to further consolidate among leading companies with brand and channel advantages. Chinese companies are making efforts to enter the overseas residential energy storage market, accelerating their expansion in the industrial chain, race tracks, and market segments. They are developing diversified models focused on "integration," "multiple race tracks," and the "entire market," which may lead to a further concentration of global market share among Chinese enterprises. Focusing on regional differentiated demands will help companies achieve breakthroughs. Demand side: Focusing on specific markets and responding to specific needs As a B2C product, residential energy storage has different demand focuses in different markets. Currently, the residential energy storage market can be divided into three categories: High-end closed markets: Represented by the United States and Japan, these markets require deep localization operations. They have high requirements for product performance and after-sales services, high entry barriers, and a certain brand premium. The main participating companies from China are BYD. High-end open markets: Represented by Western Europe, Italy, Australia, and other developed countries, these markets show a significant trend towards product homogenization. Channel saturation has been reached, and the market has entered a phase of brand elimination. However, software aspects will become the key to differentiate among brands in the future. The main participating companies from China are Huawei, Sungrow, GoodWe, and Growatt. Medium-to-low-end open markets: Represented by Eastern Europe, Africa, Southeast Asia, Latin America, and other regions, these markets emphasize cost-effectiveness and product functionality. Considering that these markets are more fragmented, with significant information gaps, companies that offer reliable product performance and excellent cost-effectiveness still have the opportunity to succeed. The main participating company from China is DYU. North American market: Emphasis on localization, price wars are meaningless. According to Energy Sage statistics, despite the significant decline in lithium carbonate prices in H1 2023, the cost of residential energy storage systems in North America did not decrease significantly. The average installation cost of residential energy storage in North America reached $1,352 per kWh, an increase of 2% compared to the previous period. Taking Tesla Powerwall 3 as an example, a 13.5 kWh system costs $7,300, and with additional costs for installation, transportation, and taxes, the total installation cost is approximately $7,600. The system cost accounts for only 50% of the total installation cost. In addition to the product itself, users are paying increasing attention to software based on intelligent charging and discharging strategies, localization teams, and after-sales services. Image: Changes in the average installation price of residential energy storage systems in the United States (USD/kWh) Using the example of BYD, which was established in 2019 and launched its home energy management system in North America in January 2022, its market share in the North American residential energy storage market increased significantly to fourth place in H1 2023, following Enphase, Tesla, and SolarEdge. The company's success is mainly attributed to: Building overseas teams with substantial assets to achieve localization of the Chinese brand. Following Tesla's channel strategy, skipping distributors and directly cooperating with installers. The company targets numerous small and medium-sized EPC (Engineering, Procurement, and Construction) companies in the United States. According to institutional statistics, the number of cooperating EPCs had exceeded 1,000 as of March 2023. By providing more incentives to installers, the company encourages them to promote the brand. Placing importance on quality commitment, with a system warranty of 12 years, exceeding the market's average of 10 years. The market share of residential energy storage brands in the United States varies, but some of the leading brands include Tesla, Enphase, SolarEdge, and BYD. These brands have established a strong presence in the residential energy storage market in the US. In South Africa, the demand for residential energy storage is driven by the country's significant power supply challenges. Eskom, the state-owned power company, has been facing difficulties in meeting electricity demand due to aging power infrastructure and financial constraints. This has led to frequent power outages, and as a result, there is a growing need for off-grid solutions and residential energy storage systems. The South African government has introduced tax incentives to encourage the installation of renewable energy systems, stimulating the rapid development of the country's renewable energy market. Similarly, Brazil is also facing challenges in its power grid infrastructure, leading to frequent large-scale power outages. This has created a strong demand for off-grid solutions and residential energy storage among residents. However, considering the local economic conditions, cost-effectiveness is an important factor for residential energy storage products in these regions. Taking DEYE as an example, the company has targeted the Asian, African, and Latin American markets and has achieved rapid growth in its inverter and residential energy storage products. DEYE initially started with injection molding and sheet metal businesses and became a core supplier to Midea, a leading home appliance manufacturer, after entering the air conditioning heat exchanger field in 2007. The company demonstrated its technological iteration and commercialization capabilities. After entering the inverter market in 2016, DEYE achieved rapid revenue expansion. The company's inverters feature low voltage, wide power range, and high reliability. By utilizing domestically produced IGBTs, self-supply of components, and achieving economies of scale, DEYE successfully reduced costs and met the demand for cost-effective solutions in emerging markets, leading to rapid revenue growth. Translation: The market share of residential energy storage brands in the United States varies, with Tesla, Enphase, SolarEdge, and BYD being some of the leading brands. In South Africa, where power supply challenges are prominent, there is a growing demand for residential energy storage solutions. The Brazilian market also faces similar challenges, with frequent power outages and a strong demand for cost-effective residential energy storage products. DEYE, for example, has achieved significant growth in the Asian, African, and Latin American markets with its inverter and residential energy storage products.

In 2023, Germany, the United Kingdom, and Italy were the top three markets for energy storage installations in Europe. According to TrendForce, the installed capacity in Germany, the UK, and Italy in 2023 was approximately 6.1/4.0/3.9 GWh, respectively. The global energy storage market remained active in the first quarter of 2024. In Europe, Germany, Italy, and Spain continued to experience high growth in the energy storage market during the first quarter, with both Germany and Italy announcing or approving projects exceeding 1 GW. TrendForce predicts that the new installations in Germany, the UK, and Italy in 2024 will be approximately 7.1/7.7/6.2 GWh, representing growth rates of 17%/92%/62%, respectively. Italy's energy storage market is expected to be further integrated with renewable energy generation facilities in 2024, driven by favorable policies. On February 27, 2024, the Italian Council of Ministers approved the "National Recovery and Resilience Plan," which includes the introduction of the "EU Industry 5.0" plan, with an investment of 6.3 billion euros in digitization and energy transition. Prior to this 6.3 billion euro allocation, Italy's National Recovery and Resilience Plan had already committed 59 billion euros between 2021 and 2026 to incentivize renewable energy. Italy's electricity consumption and renewable energy generation rank third in Europe, while electricity prices rank first. The combination of high electricity demand, high prices, and the Superbonus program introduced by the Italian government in 2020 has made Italy the second-largest market for residential energy storage installations and the third-largest market for overall energy storage in Europe.   According to ANIE data, as of June 30, 2023, Italy had a total installed energy storage capacity of 3,045 MW/4,893 MWh, with residential energy storage accounting for over 80% of the new installations. However, in Q2 2023, residential energy storage installations declined by 13% compared to the previous quarter due to the reduction in subsidies under the Superbonus program.   In December 2023, the European Union approved Italy's energy storage plan, allocating up to 17.7 billion euros to help Italy build over 9 GW/71 GWh of energy storage facilities. The plan is expected to run until the end of 2033, with the aim of constructing large-scale storage facilities in southern Italy and Sicily by 2030.   According to TrendForce, Italy's new energy storage installations in 2023 were approximately 2.4 GW/3.9 GWh, representing a year-on-year growth of 117%/90%, primarily driven by residential installations. TrendForce predicts that Italy's new energy storage installations in 2024 will reach 2.6 GW/6.2 GWh. So far, the market size of Italy's energy storage grid is relatively small, but in the coming years, it is expected to become one of the most active markets in Europe. There are also expected to be significant opportunities in the commercial and industrial capacity market.   The fluctuation of energy storage policies in Italy has affected residential energy storage demand. The high subsidies have brought market prosperity but also significant fiscal pressure. The government temporarily suspended the Superbonus subsidy program between February and April 2023 due to budgetary pressures and subsequently reduced the subsidy levels for 2024 and 2025. This has led to construction delays in thousands of projects, affecting residential energy storage demand. The Superbonus program was limitedly extended in December 2023.   The local energy storage demand environment in Italy may undergo significant changes. In 2023, residential energy storage still accounted for the largest share of new installations in Italy. However, in 2024, there is potential for significant development in large-scale and commercial/industrial energy storage. It is important to monitor policy changes and adjust business strategies accordingly to mitigate risks.   Additionally, careful market planning and sales strategies should be implemented to avoid high inventory and to ensure flexible adjustment of product and service supply based on market demand and policy trends, enabling businesses to develop steadily in the context of policy fluctuations.       Source: TrendForce Energy Storage (translated from Chinese)

Excerpted from MR. Singal: Lithium battery packs are the workhorses that power our electronics, but their creation involves a complex dance of several processes. Let's delve into the typical flow of a lithium battery pack production line:   Sorting and Grouping: Not all batteries are created equal, even within the same batch. This step involves meticulously sorting batteries based on their capacity, ensuring consistent performance across the entire pack. Automatic Welding: Once sorted, the batteries are precisely welded together using techniques like laser welding. This creates a strong and reliable connection between the batteries within the pack. Semi-finished Product Assembly: After welding, the core of the pack is complete. However, it's not ready for action yet. Additional components like bus bars (conductors), protective boards (safety features), and connectors are meticulously assembled to create a semi-finished product. Aging Test: Safety and performance are paramount. The semi-finished pack undergoes a rigorous aging process, simulating real-world use cycles. This helps identify any potential weaknesses and ensures the pack delivers optimal performance and longevity. PACK Detection: A thorough inspection follows the aging test. Specialized equipment meticulously checks the pack for any electrical or physical defects. Only packs that pass this stringent screening process move forward. PACK Packaging: Finally, the pack gets dressed for success. It's encased in sturdy and secure outer packaging, complete with necessary labeling and safety information. This ensures safe transportation and protects the pack during use.   A Look Inside the Pack: A lithium battery pack is more than just batteries grouped together. It's a complex system that includes various crucial components:   Battery Pack: The core, consists of sorted and welded batteries. Bus Bar: Conducts electricity between the batteries within the pack. Protective Board: Monitors and safeguards the pack against overcharging, over-discharging, and overheating. Outer Packaging: Provides structural integrity and protects the pack from environmental factors. Connector: Enables connection with the device using the pack.   Key Considerations for PACK Production:   Battery Consistency: For optimal performance, batteries within the pack need a high degree of consistency in terms of capacity and other parameters. Cycle Life: While single batteries may have a longer cycle life, the pack itself might have a shorter lifespan due to factors like variations in usage patterns. Operating Conditions: PACKs have specific limitations regarding charging and discharging currents, temperature ranges, and charging methods. Protection and Monitoring: Battery packs require continuous monitoring and protection for voltage, temperature, and current to ensure safe and efficient operation.   The Automation Challenge: Despite advancements, automation in PACK production faces hurdles due to inconsistencies in battery pack standards. However, the industry is actively working towards developing automated solutions to improve production efficiency and cost-effectiveness. By understanding the intricate flow of a lithium battery pack production line, we gain a deeper appreciation for the technology powering our everyday devices.

According to the Ministry of Industry and Information Technology's Electronic Information Department, China's lithium-ion battery industry continued its growth trend in the first two months of 2024. Based on information from industry standards announcements and industry association estimates, the total national production of lithium batteries exceeded 117 GWh in January and February, representing a 15% year-on-year increase. In the battery segment, the production of energy storage lithium batteries surpassed 17 GWh in the first two months. The installed capacity of power-type lithium batteries for new energy vehicles was approximately 50 GWh. The total value of lithium battery exports reached 61.94 billion yuan during January and February. In the first-tier materials segment, the production of positive electrode materials reached 277,000 tons, showing a 4.5% year-on-year increase. The production of negative electrode materials reached 230,000 tons, demonstrating a 5.6% year-on-year increase. The production of separators reached 2.45 billion square meters, maintaining the same level as the same period last year. The production of electrolytes reached 135,000 tons, indicating a 3.8% year-on-year increase. In the second-tier materials segment, the production of battery-grade lithium carbonate and lithium hydroxide reached 75,000 tons and 41,000 tons, respectively. The average prices of battery-grade lithium carbonate and lithium hydroxide (micro-powder grade) in January and February were 97,000 yuan/ton and 92,000 yuan/ton, respectively. Source: Industrial Information Bulletin, translated.