New energy retention firms set for period of high growth on surging battery use

Energy storage companies are rapidly queuing for initial public offerings, indicating a willingness to embrace the capital market at a time of explosive growth for the sector.

Experts said a well-established industry chain for lithium-ion batteries and a gradual scaling up of applications for technologies such as compressed air energy storage and flow batteries, will lead to a period of robust growth for the new energy storage industry.

On July 5, Hithium Energy Storage Technology Co Ltd said it had completed its Series C financing round, raising more than 4.5 billion yuan ($629.5 million).

Hithium, based in Xiamen, Fujian province, said the funds will primarily be used for the expansion of production capacity, equipment procurement, technology research and development, market development, and other business initiatives to speed up high-quality development.

Established in 2019, Hithium specializes in the R&D, production and sale of lithium battery core materials, lithium iron phosphate batteries and systems. The company had completed five rounds of financing prior to the Series C round, with Series B funding in October 2022 helping it raise over 2 billion yuan.

In June, energy storage company Rept Battero submitted an IPO application to the Hong Kong Stock Exchange. The same month, battery maker Shuangdeng Group also submitted its IPO application to Shenzhen Stock Exchange's ChiNext board.

The new energy storage sector has entered a phase of large-scale development, with the dominant position of lithium-ion batteries being further strengthened and the new energy storage industry continuously expanding, said Yi Yuechun, deputy head of the China Renewable Energy Engineering Institute.

New energy storage refers to ways of storing energy other than pumped-storage hydroelectricity, with electrochemical energy storage, represented by lithium-ion batteries, being the mainstay.

According to the institute, newly added operational new energy storage capacity reached about 7 gigawatts in 2022, among which lithium-ion battery projects accounted for 97 percent. By the end of last year, the sector had a cumulative installed capacity of about 13.1 gigawatts.

"The lithium-ion batteries sector has formed a relatively complete industry chain with performance continuing to improve. Compressed air energy storage and flow batteries are gradually achieving large-scale applications through pilot demonstration projects. Their industry chains are rapidly developing," Yi said, attributing it to rising market demand and supportive policies and regulations.

China has introduced favorable policies to promote the new energy storage development in the 14th Five-Year Plan (2021-25) period.

Experts said these measures have established a management system for the new energy storage industry, accelerated the establishment of pilot demonstration areas and projects, further enhanced steps to ensure safety at power stations, and continuously improved mechanisms to increase the participation of new energy storage in the electricity market.

Yi pointed out that independent energy storage and shared energy storage have attracted the attention of both local governments as well as investors.

Several provinces and municipalities, including Shaanxi, Shandong, Zhejiang and Hebei provinces, and Chengdu in Sichuan province, have announced new energy storage projects, mostly focusing on independent energy storage or centralized shared energy storage.

Independent energy storage stations generally refer to projects that directly sign agreements with power dispatching agencies. Others are usually built to equip energy generation projects.

Shared energy storage projects collect various stored power resources, including those on the grid side, power generation side, and user side via the power grid. The collected electricity is dispatched and transported through the grid to users. Previously, energy storage systems were primarily installed on the power source side.

"With the decline in cost of hydrogen production through water electrolysis, and its increasing downstream applications, the market for hydrogen production from renewable energy sources will experience better growth prospects. Hydrogen energy storage will grow to be a good choice for medium- to long-duration new energy storage," Yi said.