Energy Giant Wins Major Storage Contracts

As discussions about competition and overcapacity in the energy storage industry continue to rage, Envision Energy has projected a pivotal moment in profitability by the year 2025. The company's Senior Vice President and head of Envision Storage, Tian Qingjun, highlights a significant turning point, driven by declining storage prices and lower costs of electricity generation, intertwined with the trajectory of renewable energy and national electricity policies.

Envision's 250MW/500MWh storage facility in Sheyang, Jiangsu province, was awarded the High-Tech Gold Ball Award as a "Benchmark Project of 2024," recognizing it as the largest independent energy storage site in JiangsuDuring peak summer demand, this facility generated an impressive revenue of 40 million yuan in just 40 days, topping the earnings chart across the province.

What started as a wind turbine business has evolved into a diverse portfolio encompassing Envision Energy, Envision Power, and Envision Intelligent Systems

The founder of the company, Zhang Lei, likens Envision to an orchestra, harmoniously integrating wind energy, solar energy, energy storage, innovative power systems, green hydrogen, and electric vehicles, all requiring intelligent orchestration and management.

To realize this vision, energy storage is essentialTian, who spent 16 years at Huawei and has over two decades of experience in green energy and digitization, emphasizes that "energy storage embodies the values and mission of Envision." At a recent energy storage expo in Shanghai, he elaborated, stating that the essence of energy storage lies in its transactional nature"Overcapacity in energy storage becomes a sunk cost," he said.

The challenges faced in the energy storage sector are profound, marked by declining prices and fierce competitionIn the last two years, the average price of energy storage cells has plummeted, with third-party data indicating a reduction to 0.3 yuan/Wh in the first half of 2023, down over 40% from the beginning of the year

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As a consequence, many companies, suffering from overcapacity, have been forced into a race to the bottom, engaging in aggressive low-bid bidding wars.

This bears witness to a significant issue within the energy storage industry: the strong reliance on policy-driven incentives has led to a saturated market, with too many subpar products flooding the landscapeConsequently, energy storage has yet to truly create value and thus finds few willing to absorb its costs.

The energy storage marketplace is navigating through cycles, with several expected changes on the horizonFirst, a continued decline in costs, driven by fierce price competition, will likely propel ongoing product innovation and iterationSecond, a process of natural selection will see many companies exit the market due to diminished cash flow and profitability.

Envision, with its substantial technological edge and international market presence, anticipates leveraging its technological prowess for profit

Orders placed abroad typically require two to three years for fulfillment—notably longer than the three to five months typical in China—yet this delay results in the opportunity to capitalize on decreasing costs, enhancing margins at delivery compared to contract signing.

The firm has frequently advocated for the phasing out of stringent quota policiesAlthough local governments still impose these mandates, they are increasingly focusing on how to facilitate improved participation of energy storage plants in electricity marketsIn an era defined by artificial intelligence, the vision extends to achieving complete integration of energy storage with electricity markets, enabling seamless interaction across grid operations, power generation, user sides, and load management.

Envision’s team has developed the "Envision 1.0 Electric Market Trading Strategy Software," driven by a combination of AI and big data, which streamlines operations, trading, and maintenance through an intelligent IoT operating system

Future iterations of the software are poised to incorporate even more advanced artificial intelligence technologies.

The financial dynamics of energy storage are set to become increasingly evident, particularly as it begins participating in the electricity spot market, enhancing its commercial value through improved price arbitrageFleet responsiveness, transactional capacity, and systematic capability will be pivotal in cultivating profitability in this space.

During this summer’s peak demand period, the economic impact of the Sheyang energy storage plant became unmistakably clear, showcasing Jiangsu’s approach to bolstering supply during electricity surgesThe province has embraced the construction of new energy storage facilities to fill potential supply gaps, underpinned by a functional market trading system.

Jiangsu has implemented policies to support energy storage, providing free charging during peak times and incentivizing discharges based on local coal-fired power prices, alongside offering a subsidy for every kilowatt-hour discharged until it gradually phases out

With such measures in place, numerous energy storage companies have actively participated in these market transactions.

Since integrating fully into the grid in July, the Sheyang facility has consistently met grid demands with a conversion efficiency of 90%, generating revenue of 40 million yuan within just 40 daysWhen normalized, the lifetime revenue from this plant exceeds that of other facilities by approximately 17 million yuan per hundred megawatt-hoursThis serves as a model for addressing the core issue of lacking transactions and revenues in the national energy storage landscape.

While the quick successes seen in Jiangsu province highlight the responsiveness of policy frameworks, they do not fully signify the maturation of energy storage applicationsThe pressing question remains: when will energy storage attain independent commercial viability, capable of generating profits autonomously? Analysts have concluded that the year 2025 may act as a critical turning point.

With an eye on participatory trends in the spot market, Envision is also fortifying its risk management practices

A dedicated project team is probing into electricity markets in the UK and the US, with aspirations to translate insights gained in these advanced markets back to China.

At its inception, Envision concentrated on wind energy, but this focus has broadened to encapsulate key sectors including energy storage, hydrogen energy, power batteries, and intelligent IoTCharacterized as a green technology giant, the company’s international footprint remains expansive.

When comparing the energy yield densities, wind power stands as approximately 500 times more efficient than solar energyIt takes roughly half to one acre to install a 10MW-grade wind turbine, while an equivalent solar installation often requires around 200 acresThis reality underscores the broader potential for growth within the energy storage landscape.

The foundational strategy of Envision includes a rapid integration of operational resources across wind farming, battery storage, and intelligent IoT technologies

By the first half of 2024, Envision has solidified its position among the top five globally in the energy storage system shipments.

From the very beginning, Envision has prioritized comprehensive self-research efforts across major components like battery cells, BMS, PCS, and EMS, which allows it to maintain quality assurance while striving for cost reductionThis sets the company apart distinctly from its competitors.

In established overseas markets, customers demonstrate a preference for engaging with Envision’s complete solution sets, amplifying the advantages of their self-research capabilitiesUnlike China, energy storage growth in countries like Australia, the UK, and the USA has been intrinsically linked to market participation from its inception, stimulating the development of the renewable energy sector.

The company’s globalization strategy encompasses not just energy storage but also power batteries, wind turbines, and hydrogen energy industries, with a robust setup of over 20 R&D and operations centers and 50 manufacturing bases worldwide.

Historically, Envision's shipments have surpassed those of international counterparts, yet the speed of growth in overseas energy storage operations has been more pronounced

Since 2023, Envision has successfully secured large contracts in regions such as the UK and Singapore.

Having replicated successful practices from the wind energy sector, Envision is diligently expanding its footprint in Europe, Southeast Asia, and Africa, actively engaging in over 200 global projects, with an expected two-thirds or more of additional growth to derive from international ventures.

In summation, the issue of overcapacity can be viewed as a temporary and localized challengeImportantly, the value proposition of China’s energy storage market is poised to transition towards a model driven by market dynamics and transactional valuePresently, it largely relies on government subsidies or short-term policy support to unlock value within stable price trading markets, but the future lies in participation in spot electricity markets, enhancing the capacity to optimize pricing differentials, thereby realizing the maximal intrinsic value of energy storage.