Cost of lithium iron phosphate battery for energy storage

The rapid decline in the cost of Lithium Iron Phosphate Battery on the energy storage side is due, on the one hand, to the iteration and upgrading of lithium power batteries in the new energy automobile industry, which has driven down the price of a series of materials supporting the battery system, such as lithium iron phosphate, electrolyte, diaphragm, negative electrode, etc.; on the other hand, it is also related to factors such as the increasing demand for Lithium Batteries in energy storage projects and changes in project bidding mechanisms.

Clarifying the concept

Before the discussion, it is necessary to clarify two concepts: the cost of storage containers and the cost of Storage Battery packs.

In general, the energy storage industry usually talks about the cost of the former. Depending on the configuration of the energy storage project, the energy storage container products include boxes, energy storage battery packs, converters, isolation transformers, etc. As the name suggests, the cost of energy storage containers refers to the total cost of the container composed of all the above products, and the cost of energy storage battery packs are two concepts.

About BYD 0.86 yuan / wh offer, once triggered a buzz in the industry, a large part of the reason is that the concept of the two blurred. At present, the average cost of domestic energy storage containers is about 2 yuan /Wh, and some companies say that their cost control can be 1.5-1.6 yuan /Wh. From the following Henan Power Grid 100MWh battery energy storage tender project (required to purchase Lithium Iron Phosphate Batteries), Changsha 60MW/120MWh battery energy storage station, each Lithium Battery quotation can be seen.

This time, the cost of BYD's bid is the cost of energy storage battery packs, not the cost of containers.

The first batch of information released from Pinggao Group's 352MWh energy storage project shows that the contents of the bid included 5 battery clusters (consisting of a battery cluster management device and a battery pack of a certain capacity) with capacities of 101.2MWh, 92.4MWh, 61.6MWh, 48.4MWh and 48.4MWh respectively. Byd won the two largest packages with the highest capacity at 0.86 yuan/Wh, making it the biggest winner. According to industry sources, the actual capacity of the single set of power distribution of the bidding project reached 2.65MWh, an increase of 0.45MWh compared to the bidding. According to BYD's bid, the unit cost of lithium batteries is as low as 0.715 yuan /Wh.

So 0.86 yuan /Wh, 0.715 yuan /Wh in the end in the battery energy storage application market what level?

Some people in the industry believe that under the existing lithium iron phosphate material, negative electrode and other supporting material system, the cost is about 0.6 yuan /Wh, and BYD's total offer of 0.8 yuan /Wh is difficult to do. Some people even jokingly, BYD is bidding times wrong price.

The consensus of many lithium battery companies is that at present, including CATL, Guoxuan High-tech, AVIC Lithium, Lishen and other mainstream automotive Lithium Iron Phosphate Battery companies cut into the background of the energy storage market to win the project, the price advantage will be a big factor. And 0.8-0.9 yuan /Wh is more competitive. After all, there are not many lithium battery companies in China that can do less than 1 yuan /Wh.

At the same time, Gaogong lithium battery sorted out the three hundred megawatt power storage projects under Pinggao Group in 2018, and found that the highest price was Kelu Electronics, which was 1.35 yuan /Wh, which was 57% higher than the lowest price of BYD. It can be seen that the difference between the cost control level of lithium iron phosphate battery companies is large.

The decline in cost of lithium iron phosphate batteries has directly promoted its application in the energy storage market, and a number of energy storage tender projects in the second half of 2018, including Henan Power Grid and Changsha's two hundred trillion level projects, have publicly stipulated that only lithium iron phosphate batteries will be purchased.

Of course, the cost reduction will inevitably affect the gross profit of lithium battery companies. At present, due to the different levels of cost control, the gross profit is also very different, and the normal gross profit is maintained at 10%-15%.

"In the past, the gross profit of lithium batteries in power storage projects is really considerable, after all, when the total package was before, we will leave some profit." However, with the power grid group's separate tender for the supporting batteries in the Energy Storage System in 2018, the price war between lithium battery companies began. An insider from a domestic mainstream energy storage battery company said.

Even senior executives of lithium battery companies revealed to Gaogong lithium battery that in 2016-2017, the gross profit of lithium battery companies with good cost control can reach 30%, and the net profit is 10%. However, in 2018, with the increase of 10MWh and even 100MWh level power storage projects, the introduction of lithium batteries in the energy storage end is also accelerating, and after the market size is increased, the future cost of lithium batteries will be an inevitable trend.