CATL, BYD, Gotion to gain as fossil-fuel prices drive demand for battery energy storage
China’s makers of energy storage systems, including Contemporary Amperex Technology (CATL) and Gotion High-Tech, stand to benefit as conflict in the Middle East keeps fossil fuel prices elevated, raising demand for their products in green energy projects, according to analysts. The tailwinds are expected to outweigh a slowdown in the local market, where weaker-than-expected demand has dragged…
China's leading energy storage system manufacturers, Contemporary Amperex Technology (CATL) and Gotion High-Tech, are poised to profit from the surge in fossil fuel prices due to the ongoing conflict in the Middle East. These elevated prices are expected to drive demand for battery energy storage system (BESS) products in green energy projects, according to analysts.
Despite a decline in local market demand, the outlook for BESS products is optimistic, particularly in the Middle East and Southeast Asia, said Lucas Zhang Liutong, director of Hong Kong-based consultancy WaterRock Energy Economics. Chinese companies hold a dominant position in the market, with BYD leading the pack in terms of shipments, according to InfoLink, a consulting firm.
Chinese BESS integrators made up nine of the world's top 10 providers by shipments in the first half of the year, with CATL leading in terms of volume, as per data from SNE Research. Chinese companies can capitalize on their superior product quality and rapid delivery times to capture new overseas demand, said Yale Zhang, managing director of Shanghai-based consulting firm Automotive Foresight.
Gotion and BYD have reduced delivery timelines for some overseas projects to three months, compared to earlier five to seven months, for instance, Gotion delivered the first batch of BESS products for Africa's largest standalone project within three months of signing the contract. BYD is also advancing in the international market, having recently broken ground on Poland’s largest battery storage manufacturing facility, with a planned capacity of 2.4 gigawatt hours, slated for commercial operation by the end of 2027.
While there are concerns about potential overcapacity and high competition in overseas markets, CATL maintains confidence in sustained BESS demand in international markets for 2023, as reported in the company's earnings call. Despite overall global battery demand being less pessimistic than anticipated, executives from leading battery producers expressed optimism about the sector's growth potential.
Written by urgent.news from SCMP Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
