The Tangled Web Of Battery Energy Storage Systems
Lux Research has released a visual presentation of the key partnerships of the seven leading stationary storage battery suppliers.
As we can see, most of the leaders have established a few strategic agreements with system integrators and also sometimes with power electronics and software providers.
Having partners not only secures volume sales, but also translates to access into new markets.
Lux Research rated the cell suppliers, noting that LG Chem (Strong Positive), Samsung SDI (Positive) and Panasonic (Positive) are on track to succeed through partnerships.
Four other companies got “Wait and See” status in the ESS market.
“The above graphic shows some of the key partnerships of seven leading stationary storage battery suppliers, but do note this is not an exhaustive list. Relative line thickness indicates the strength of a partnership – the thicker the line, the closer the relationship. These line thicknesses were developed using the total amount of capacity deployed as tracked in the Lux Research Grid Storage Tracker (client registration required), as well as publicly available partnership information. Below, we look at seven of the leading battery providers, providing an overview of key strategies and our “Lux Take” on the strength of each network.
NGK Insulators – Wait and See:
- No significant, long-term relationships with any system integrator; tend to work on one-off large projects with a variety of entities including Mitsubishi Electric and Siemens
- Deployed multiple projects with S&C Electric, but not at the scale of NGK’s other more sizable projects
- Developers of molten salt battery chemistries don’t have as much to gain working with partners, mainly because the chemistry is more niche, with fewer developers compared to Li-ion
Kokam – Wait and See:
- Supplies batteries to Sunverge, also an investor
- Has worked extensively on projects for KEPCO, a Korean utility, although KEPCO is also supplied by other Korean giants Samsung SDI and LG Chem
- Sunverge is becoming an increasingly valuable partner for Kokam, as they are expanding in size and revenue, enabling Kokam to enter markets outside of Korea and increase general revenue streams
Panasonic – Positive:
- Signed an agreement with Tesla in 2014 to construct the Gigafactory; success depends on whether Tesla can reach its EV production target in 2020 (client registration required)
- Lead supplier for Advanced Microgrid Solutions through Tesla
- Panasonic’s partnership with Tesla is mutually beneficial due to their size and increasing scale – Tesla will also aggressively pursue other sectors besides electric vehicle (EV) production, leaving room for growth and expansion in other sectors
LG Chem – Strong Positive:
- Has the strongest system integrator partnership with AES Energy Storage (client registration required), thanks to their 2015 supply agreement, which could result in as many as 1 GWh in sales or more
- Will supply batteries for Nidec in a large contract between Nidec and German Utility STEAG signed in 2015
- Strong presence in the U.S. and Germany, has potential to enter the Korean market through KEPCO; working with one of the largest system integrators around, and smaller but notable partners; its wide range of connections opens up possible revenue streams, technology advancement and expansion
BYD – Wait and See:
- Key partnership with ABB, its primary power electronics provider, announced in 2014
- Also works with RES Americas, but overall, no key partners, as the company prefers to work more internally
- Despite not having long-term partners, they are still doing well, as they also specialize in areas besides energy storage, and are large enough to successfully pursue it
Toshiba – Wait and See:
- Formed TMEIC in a joint venture with GE and Mitsubishi in 2003 to develop power electronics among other industrial systems
- TMEIC is Toshiba’s primary power electronics provider; Parker Hannifin is also a partner.
- Develops LTO anodes, which is expensive and only economical for frequency regulation applications, limiting the upside of potential partnerships
Samsung SDI – Positive:
- In a supply agreement with Green Charge Networks, a leader in the commercial and industrial space
- Younicos is its exclusive system integrator in Germany, Austria, and Switzerland; deployed a few projects in the U.S., but not to the scale of Green Charge Networks
- Has large – but also smaller – partners who have the potential to become larger; connections with a variety of partners will allow expansion into other markets, different sectors, and revenue streams, similarly to LG Chem
The market for stationary energy storage is still small, though it is showing impressive potential – since 2011, Li-ion systems have grown at a compound annual growth rate (CAGR) of over 50%. Partnerships can provide better pathways to market for battery companies in the fledgling stationary space, eliminating the investment required to develop software and power electronics, while also avoiding the complexities of understanding project permitting and construction. However, it is important to note there is not only one pathway to success, and a weak partnership network doesn’t mean a company will fail. As the stationary market matures, companies which are vertically integrated will be able to offer the most competitive pricing and capture the greatest market share. Clients should view partnerships as an important short-term strategy entering the market, gaining market share, and refining technology, but understand this model will likely lose out to vertically integrated companies over time.”