In the past few years, driven by the rapid development of the "new three", the energy storage industry has seen explosive growth and has become one of the star industries that has attracted the attention of the capital market. However, in the rapid development of the supply side of the market, the "involution" pressure brought about by insufficient demand has also made many small and medium-sized enterprises complain.

Recently, the Ministry of Industry and Information Technology and other eight departments issued the "Action Plan for the High-quality Development of New Energy Storage Manufacturing Industry" (hereinafter referred to as the "Plan"), which clearly proposes to strengthen the monitoring and early warning of lithium battery production capacity and prevent blind investment and disorderly development risks. The "China Times" reporter noted that in November 2024, the Ministry of Industry and Information Technology announced the draft of the "Plan", which mentioned that it would guide various regions to lay out new energy storage manufacturing projects in a scientific and orderly manner, and rely on research institutions to carry out industry operation monitoring and early warning to prevent low-level duplicate construction. Three months later, when the "plan" landed, it not only continued this expression, but also emphasized the need to monitor and warn the production capacity of the lithium battery industry in the article of "scientific planning of industrial layout".

Lin Boqiang, dean of the China Energy Policy Research Institute of Xiamen University, pointed out in an interview with the China Times that from a more macro perspective, "involution" is actually a cyclical problem. Commodities themselves are cyclical, such as coal, oil, etc., when the price is high, we desperately invest in increasing supply, do not grasp the demand, supply is greater than demand after the price falls, the market slowly digests the production capacity, and then increases the input again after the capacity is consumed, which is a cycle that repeats. Therefore, for the photovoltaic and energy storage industries, although the short-term "involution" is inevitable, the long-term outlook is still optimistic.

Emphasis on "anti-involution".

In October last year, the photovoltaic industry association held a symposium on preventing vicious competition in the industry, which attracted widespread attention from the society. It didn't take long for the wind of "anti-involution" to blow to the energy storage industry.

In early November 2024, Zeng Yuqun, chairman of CATL, said in a speech at the 2024 World Energy Storage Conference that the "low price" achieved by low quality and reduced allocation is not economically economical, let alone sustainable. As a highly technology-intensive industry, the energy storage industry can only embark on the road of benign development by focusing on value competition and creating high-value products.

At the end of December, the Zhongguancun Energy Storage Industry Technology Alliance (CNESA) organized a closed-door seminar, and nearly 30 leading enterprises in the industry participated in the discussion of measures to prevent involution competition in the industry, including the industry self-discipline convention on anti-involution competition and anti-below-cost price competition, as well as measures to prevent winning bids below cost.

Behind this, there is a continuous decline in prices. From January to October 2024, Chinese companies will produce more than 200GWh of energy storage lithium batteries in the global market, and the annual output is expected to exceed 300GWh. This figure was 48 GWh in 2021, 130GWh in 2022 and 206GWh in 2023. Behind the market of superficial cooking oil, affected by supply and demand, price wars are also constantly staged. According to the CNESA database, the price of the 2-hour energy storage system has dropped to 0.628 yuan/Wh, which is almost halved compared with the previous year, and even lower than 0.4 yuan/Wh has appeared.

It is also for this reason that the "plan" has added the content of monitoring and early warning of the production capacity of the lithium battery industry. In terms of quality, the draft of the "Plan" announced in November last year has proposed to strengthen the standardized management of the lithium battery industry, implement the main responsibility for product quality of new energy storage enterprises, improve the quality management system, and strengthen the quality supervision of new energy storage products. Strengthen the prevention and punishment of patent infringement, market monopoly and other violations of laws and regulations, resolve the phenomenon of "involution" in the industry, and maintain a healthy and fair market environment. In the "Plan", this part of the expression has not changed, only the name of the item has been changed from "optimizing the market environment" to "standardizing the industry order".

From a policy perspective, preventing "involutional" vicious competition has become the focus of several high-level meetings last year. The Politburo meeting in the middle of the year proposed to strengthen industry self-discipline and prevent "involution" vicious competition. The Central Economic Work Conference at the end of the year also proposed that it is necessary to comprehensively rectify the "involution" competition and standardize the behavior of local governments and enterprises.

Layout of new technologies

After the release of the plan, although the three major A-share indexes collectively opened low on February 18, lithium batteries, energy storage, and photovoltaic sectors led the rise in early trading. Haitai Xinneng and Ainengju rose up to 7%, and finally closed with an increase of nearly 5% and 3% respectively. The battery also became one of the top ten sectors of the main capital inflow of the market on the day. Among them, companies in the sodium battery industry chain performed better on the stock market on February 18. Peneng Technology(688063. SH) rose by more than 12% and finally closed with a 7.26% gain. Transart Technology (002866. SZ) rose by about 6% on February 18 and on the 19th.

The reporter noted that in addition to paying attention to market supply and demand, the "plan" also put forward requirements for the innovation of new energy storage technology. Compared with the draft for comments, in the field of promoting engineering and application technology research, the plan has added supercapacitors and lead-carbon batteries in addition to sodium batteries and flow batteries. In view of the various technologies, in the lithium battery technology, the key layout of the product has added a high-consistency battery system; In the technology of sodium battery, the specific direction of the research of anode materials has been expressed, which is high-performance hard carbon, sieved carbon and other anode materials; In supercapacitor technology, high-performance separators have been added to support innovation.

Lin Boqiang told this reporter that although lithium batteries are now in a state of surplus, they are still in short supply in the long run, so the research and development of other types of batteries must keep up. At present, lithium batteries are still the most commonly used energy storage batteries on the market, and it is not known whether these new energy storage batteries under development can eventually be more efficient and low than lithium batteries, or it depends on future technological progress, but even if they are ultimately not as good as lithium batteries, but due to the very large amount required for future social and technological development, the raw materials of lithium batteries may not be enough, so every route must be tried. In the end, who can become the mainstream product mainly depends on the efficiency and performance of the battery.

According to the analysis of the open source securities research report, the "Plan" recommends the development of multiple types of energy storage needs and corresponding products for different scenarios, focusing on new technologies. In the context of the increase in the proportion of domestic new energy power generation, the reform of electricity price policy and the cancellation of mandatory distribution and storage, the policy is expected to guide the medium and long-term driving factors of domestic energy storage installation, and the energy storage industry is expected to enter a new stage of development.