In 2022, the global Battery Energy Storage Systems (BESS) integrator market has become more competitive. The top five global system integrators account for 62% of overall BESS shipments (MWh) based on the latest analysis by Wood Mackenzie.
Sungrow, the leading provider, dominates the market with 16% of global market share rankings by shipment (MWh), followed by Fluence and Tesla with 14% each, Huawei and BYD with 9% each.
According to Kevin Shang, senior research analyst at Wood Mackenzie, said: "As important laws drive the battery energy storage systems market forward, the BESS integration industry is becoming more and more competitive. Current integrators are working to gain more market share, while the rapidly expanding energy storage market has also received many new participants."
"A shared trait among top BESS integrators is their worldwide reach, which enables them to tap into an extensive customer base and find more sources of income. Furthermore, numerous BESS integrators have been working to improve their supply chain's vertical integration."
Speaking about the supply chain, Shang noted that although the worldwide battery supply improved in 2023 after facing supply shortages the previous year, the shortage of transformers has now become the main obstacle of the energy storage supply chain. The industry is facing difficulty due to a shortage of transformers and a sudden price increase. It takes at least a year to obtain transformers in all sizes which puts a burden on system integrators as transformers are essential for grid connection.
North America is dominating the way
BESS integrator market in North America is concentrated, with the top five companies controlling 81% of the market share in 2022. Tesla is in the lead with a 25% share of the market based on shipment rankings.
As the world’s most vertically integrated energy storage provider, Tesla has a significant advantage. Crucially, by combining hardware, software, and additional services, Tesla can offer continual enhancements and new features to its clients promptly.
Following Fluence (at 22%), Chinese firm Sungrow ranked third with a 13% share of the North American market in 2022. Sungrow's high position is mainly due to their affordable costs and advanced cooling technology.
"The Inflation Reduction Act (IRA) and green policies of the state will enhance growth in the storage market. We predict that competition within the US BESS integrator market will ramp up in the upcoming years. Companies must implement a strong business plan to thrive in a fiercely competitive market."
In 2022, China dominated the Asia Pacific BESS integrator market with an 86% share.
Shang noted that competition is growing and squeezing integrators, with pressure coming from upstream and downstream supply chain participants. Having manufacturing capacity for key components, such as cells, PCS, BMS, and EMS is becoming a necessity rather than an advantage as bid requirements for energy storage projects become more detailed and stringent.
Due to energy storage product homogenisation, price has become the most important distinguishing factor and the primary factor in winning bids in the area.
Shang mentioned that a price war among system integrators has started in China. We have noticed more and more businesses willing to give up making money in order to gain a bigger market share. This has decreased the overall profitability of the industry. However, we predict that companies using aggressive bidding strategies with low margins will struggle to maintain their positions in an increasingly competitive market. Over the next few years, it will be challenging for businesses with low profits and no clear competitive edges to survive.