Soochow released a Research Report stating that the Global reserves have a strong certainty of outbreak, the USA maintains high growth, and Europe and Emerging Markets are reaching peak interconnection and will continue until 2026.
According to the Zhito Finance APP, Soochow has released a Research Report stating that the certainty of the global large storage explosion is strong, the USA maintains high growth, and Europe and Emerging Markets are at peak grid connections lasting until 2026. Distributed emerging markets are expected to continue high growth, traditional markets have completed destocking, and interest rate cuts drive new growth. In Europe and the USA, destocking in Europe is expected in 2024, with household storage installations decreasing by 31% to 8.3 GWh. Recent increases in natural gas prices and gradual implementation of interest rate cuts will drive a 20% growth in installations in the USA and Europe in 2025, reaching 10 GWh and 2 GWh respectively.
Bullish 1) Overseas large storage: Sungrow Power Supply (300274.SZ), Contemporary Amperex Technology (300750.SZ), Canadian Solar (688472.SH), Eve Energy Co.,Ltd. (300014.SZ), Sineng Electric (300827.SZ), BYD (002594.SZ), and pay attention to Kehua Data Co.,Ltd. (002335.SZ); 2) Overseas household storage/industrial and commercial storage: Deyea (605117.SH), Ginlong Technologies (300763.SZ), Airo Energy (688717.SH), Shenzhen Sinexcel Electric (300693.SZ), Jiangsu Goodwe Power Supply Technology Co.,Ltd. (688390.SH), Hema Technology (688032.SH), Pylon Technologies (688063.SH), Shenzhen Kstar Science & Technology (002518.SZ), and Yuneng Technology (688348.SH). 3) Domestic storage: Shenzhen Hopewind Electric (603063.SH), Southern Power Grid Technology (688248.SH), among others.
The main viewpoints of soochow securities are as follows:
The certainty of the global large storage explosion is strong, the USA maintains high growth, and Europe and Emerging Markets are at peak grid connections lasting until 2026.
The institution expects a 56% growth in global large storage installations to 194 GWh in 2025. In the USA, installation will accelerate in 2024, reaching 35 GWh, a 105% year-on-year growth. In 2025, the rush to install before tariffs has already started, anticipating a 45% increase to 51 GWh.
Europe: The United Kingdom, Italy, and Germany lead the growth, with installations in 2025 revised up to 18 GWh, showing an over 120% year-on-year increase.
Emerging Markets: Large projects are landing in batches, with expected installed capacity growth of 221% to 34 GWh by 2025. In the Middle East, 50-60 GWh of project tenders are expected to be finalized in H1 2025, with anticipated installed capacity growth of four times to 20 GWh. In Chile, ongoing projects are 8 GWh, supporting a doubling of installed capacity to 4 GWh by 2025. In Australia, the expected ongoing project scale is 11 GWh, with an anticipated growth of two times to 3.5 GWh by 2025.
Domestic: New installed capacity is expected to exceed 70 GWh in 2024, nearly a 65% year-on-year increase. Although domestic photovoltaic growth will slow in 2025, the contribution of energy storage to power station profitability will improve, and the ratio and duration of energy storage are expected to continue increasing, likely maintaining a growth rate of 30%.
The distributed emerging market is expected to continue high growth, while the traditional market completes inventory reduction, and interest rate cuts drive new growth.
The bank believes that the core driving force of distributed energy storage is the parity of light storage, lack of electricity or rising electricity prices, and policy catalysis. (1) Household storage: Installed capacity is expected to reach over 20 GWh in 2025, with a year-on-year growth of over 25%.
Among them, Europe and the USA: In 2024, Europe will reduce inventory, and household storage installation will decline by 31% to 8.3 GWh. Recently, the rise in natural gas prices and gradual interest rate cuts will drive installed capacity growth in Europe and the USA by 20% in 2025, reaching 10 GWh and 2 GWh respectively.
Emerging Markets: Electricity prices in Pakistan have slightly decreased, but the profitability remains around 30%, and demand can be sustained at a high level. The post-war reconstruction in Ukraine has relatively rigid demand, which is expected to see high growth. Due to tight electricity supply in Nigeria and the Egyptian government's push for energy transition, Africa may become the next emerging market. In Southeast Asia, weak electricity grids and rising prices have already shown high growth in light storage demand.
(2) Industrial and commercial storage: Installed capacity is expected to reach 14 GWh in 2025, with a year-on-year growth of 48%. Overseas, particularly in Europe and Southeast Asia, the economics of industrial and commercial storage are significant, leading to an acceleration in installation rates; domestic project registrations have exceeded 36 GWh, gradually materializing with Electricity Reform.
Industry Chain: (1) The profitability elasticity of energy storage systems is large in Europe and the USA, while competition is fierce in domestic markets and the Middle East. Trends such as system integration, large Cells + large modules, and network-type design are clear, with leading companies possessing technological and product advantages. In terms of prices, the market is severely differentiated, with energy storage system prices in Europe, the USA, and Australia maintaining over $0.20/wh, and profitability reaching over 0.30 yuan/wh. Tesla leads the market share in the USA, while Sungrow Power Supply ranks first in Europe; however, competition is intense in the Asia, Africa, and Latin America markets, with various parties vying for position. The prices of newly signed Orders are generally between 0.6-0.9 yuan/wh, with profitability expectations around 0.1 yuan/wh, indicating relatively intense competition and an uncertain market landscape.
(2) The landscape at the Cell end is solid, with Contemporary Amperex Technology leading by a large margin. The second tier is accelerating, with some players expanding into systems. It is expected that in 2024, global shipments of energy storage Batteries will reach 330 GWh, a year-on-year increase of 57%, and will grow by 51% to 500 GWh in 2025. Contemporary Amperex Technology holds about 33% of the global market share, with approximately 60% of its share coming from overseas. The shipments from the second tier, such as Eve Energy Co.,Ltd., are also significantly increasing, and the CR3 concentration continues to rise; at the same time, Contemporary Amperex Technology and BYD are integrating their extensions into systems, accelerating the expansion into overseas emerging markets.
(3) The concentration of PCS large storage is high, with domestic companies beginning to go overseas, while household storage channels are king. Sungrow Power Supply leads in product performance and overseas channel advantages. The large storage systems are expected to reach 40-50 GWh in 2025, with a year-on-year increase of over 80%. Global large storage market share is expected to rise to 35%. Sineng Electric, Kehua Data Co.,Ltd., and other independent PCS manufacturers are emerging and are forming bonds with Battery companies or overseas integrators, resulting in a significant increase in overseas shipments. The concentration of household storage PCS is low, with Deye firmly grasping the emerging market, leading to a noticeable increase in market share, with future market excavation being a core competitive point.
Risk warning: Intensifying competition, unexpected changes in policy, insufficient installation of renewable Energy, insufficient supply of raw materials, and others.
