For Trina Energy Storage, a newcomer in the battery cell industry, it faces the pressure of overcapacity of energy storage battery cells, falling prices, and accelerated reshuffle. Although the development of energy storage business has not been as expected for eight years, Trina Solar Co., Ltd. (hereinafter referred to as "Trina Solar", 688599.SH) is still unwilling to give up and has once again increased its investment in energy storage. Since the beginning of this year, Trina Solar's holding subsidiary Jiangsu Trina Energy Storage Co., Ltd. (hereinafter referred to as "Trina Energy Storage") has made frequent moves, successively releasing new battery cabins, industrial and commercial energy storage integrated cabinets, and 500Ah+ large-capacity battery cell products, and has also established three global engineering and technology centers in the field of energy storage at home and abroad. Trina Solar is a leading company in the photovoltaic manufacturing industry and ranked third in the photovoltaic module sales list in 2023. Trina Energy Storage is a small player in the energy storage industry and is not on the top ten of the relevant sales list. Trina Solar's photovoltaic module shipments reached the world's first place in 2014. In 2015, it established an energy storage subsidiary and set a goal of entering the top five in the energy storage industry. However, Trina Energy Storage has not been able to achieve this goal. In 2020 and 2021, it even lost more than 10 million yuan for two consecutive years, and only turned a profit in 2022. The main reason why Trina Energy Storage's development has not been as expected is the lack of core competitiveness. Trina did not have battery cells before, and had no leading advantage in the manufacturing of energy storage products. The energy storage market will enter a period of explosive growth in 2023, and Trina Energy Storage's self-developed battery cell products will begin small-batch verification and pre-sale stages; in 2024, Trina's self-developed energy storage battery cell products will be mass-produced and launched on the market, and will begin to be tested by the market. The cost of battery cells accounts for about half of the cost of the entire energy storage system. If a company has leading battery cell products, the cost and quality of the energy storage system will have a greater chance of leading its peers. Trina's self-developed battery cells are based on this logic. The technology of energy storage batteries and power batteries is essentially the same, and the knowledge and know-how in manufacturing are also similar. CATL, which leads in power batteries, easily became the sales champion of energy storage batteries. But for Trina Solar, photovoltaic manufacturing and energy storage manufacturing are not interlinked. Even if it has its own battery cell products, Trina's energy storage system currently has no obvious advantages in terms of cost and technology. The advantage of Trina Energy Storage lies in the complementary photovoltaic business and energy storage, and it is the first photovoltaic enterprise to deploy energy storage. The development of the photovoltaic industry is inseparable from energy storage, and the integration of photovoltaic storage is a development trend. According to Qichacha data, more than 40% of energy storage companies cover both energy storage and photovoltaics. The vast majority of photovoltaic companies do energy storage by assembling parts, that is, making energy storage system integrated products, and Trina was the same before. Trina, which has its own battery cells, hopes to usher in the rapid development of its energy storage business in 2024. The relevant person in charge of Trina Solar's investor relations department told Caijing that the company's cumulative shipments of energy storage products will be about 5GWh by the end of 2023, and it is expected that the shipments of energy storage products in 2024 will be above 5GWh, surpassing the total shipments of previous years.   Adding more energy storage The current mainstream battery capacity in the energy storage battery field is 200Ah+, and 500Ah+ large-capacity batteries are high-end products that have just been launched. According to InfoLink, the penetration rate of 300Ah+ products in the global large storage market will be 22% in the first quarter of 2024, and the penetration rate will be close to 50% in the fourth quarter of 2024. During the SNEC, Trina also released two new products: AI bionic liquid-cooled industrial and commercial energy storage cabinet Potentia Blue Ocean 2, and a new generation of flexible liquid-cooled battery cabin Elementa King Kong 2. At the same time, Trina Energy Storage Global Engineering Technology Center was unveiled in the United States, Europe and China, aiming to solve technical problems at a faster speed and optimize customer experience. The basis for Trina Energy Storage to frequently release new products is a new round of investment led by Trina Solar. In 2023, Trina Solar, mainly through its investment company and Trina Xingyuan controlled by Gao Jifan, joined other investors to increase investment in Trina Energy Storage twice, with a total additional investment of 1.6 billion yuan. With the new investment in place, Trina Energy Storage will start to launch a number of new products in the second half of 2023. In the more than eight years before 2023, Trina Energy Storage did not develop smoothly and was just a nobody in the energy storage industry. However, Gao Jifan, chairman of Trina Solar, has always been optimistic about the prospects of the electrochemical energy storage industry. Photovoltaic power generation is highly volatile and it is difficult to provide stable output for the power system. Therefore, energy storage is a necessity for its development. Trina Solar was the first to deploy energy storage among the leading photovoltaic companies. In 2015, Gao Jifan founded Trina Energy Storage. After a series of equity operations, during the period when Trina Solar delisted from the US stock market and returned to the A-share market, Trina Solar acquired 81% of the equity of Heli Investment, which held Trina Energy Storage, and signed a "Performance Commitment Compensation Agreement" with Trina Xingyuan and Gao Jifan to bet on the performance of Trina Energy Storage from 2018 to 2022. In the following four years, Trina Energy Storage's performance never met the bet requirements, so Gao Jifan paid compensation to Trina Solar every year. Before the two rounds of financing in 2023, in February 2022, Trina Energy Storage completed its Series A financing, and Changzhou Local Investment Fund and other investors became shareholders. After Trina Energy Storage's latest round of financing in December 2023, Trina Solar's shareholding ratio in Trina Energy Storage was 55.28%. The financial data disclosed in the announcement at that time showed that Trina Energy Storage's net profit attributable to the parent company in the first three quarters of 2023 was -110 million yuan. The relevant person in charge of Trina Solar's investor relations department told Caijing that the company's development idea is the integration of photovoltaic storage and dual-wheel drive, which is engraved in Trina's genes. The comprehensive competitiveness and leading enterprise status accumulated by Trina Solar in the photovoltaic track for 27 years are the basis for the rapid development of Trina Solar's energy storage business. Trina Solar's 2023 annual report shows that the proportion of photovoltaic storage collaborative customers is as high as more than 65%. In 2023, Trina Solar's operating income will be 113.4 billion yuan; among which, the operating income of energy storage business is about 2.4 billion yuan. By the end of 2023, Trina Solar's energy storage battery, DC battery compartment and AC/DC product portfolio production capacity will be 12GWh. How competitive are self-developed battery cells? Battery cells are the parts with the highest cost share (about 50%) of energy storage systems, and are also the core factor that determines the quality and safety of energy storage systems. The most critical part of Trina Solar's energy storage business this time is to launch self-developed energy storage cells. Trina Energy Storage has established an independent battery cell R&D team since 2019, and the team currently has nearly 600 people. In 2022, Trina Energy Storage established the strategic positioning of "Trina Core" and completed the sample development of energy storage cells such as 150Ah and 280Ah. In 2023, iteratively developed two battery cell products, 306Ah and 314Ah, and began small-scale verification and pre-sale. In 2024, Trina's self-developed battery cell products will be mass-produced and launched. According to the information provided by Trina Solar to Caijing, in the first half of 2024, 100% of Trina's energy storage system shipments will use self-developed cells. In the second half of 2024, it is not ruled out that customers have the need for specified cells in special projects, and a certain proportion of outsourcing will be adopted. The proportion of Trina's self-developed cells entering the energy storage system products throughout the year is expected to be around 90%. While Trina developed its own cells in 2019, Trina established a joint venture with the cell manufacturer Penghui Energy. In April 2019, Trina Energy Storage and Penghui Energy established a joint venture - Jiangsu Tianhui, with Trina holding 49% and Penghui holding 51%. At that time, Jiangsu Tianhui planned a 10GWh lithium iron phosphate cell production capacity and a 10GWh energy storage module production line. Penghui Energy currently ranks around 10th in the energy storage battery sales ranking. Trina Energy Storage has purchased hundreds of millions of yuan worth of cell products from Jiangsu Tianhui. According to the announcement released by Penghui Energy, in 2022, Trina Solar purchased 150Ah/280Ah/300Ah lithium battery cells from Jiangsu Tianhui, with a contract value of approximately 600 million to 900 million yuan. According to the announcement released by Trina Solar, in 2023, because the types of battery products produced by Jiangsu Tianhui could not match the company's needs, it did not continue to purchase products from Jiangsu Tianhui. In 2024, Trina Solar plans to purchase 37 million yuan of products from Jiangsu Tianhui. A relevant person in charge of Trina Solar told Caijing that Trina's energy storage cells are completely independently developed and have nothing to do with the joint venture Jiangsu Tianhui. Trina Solar has also applied for a registered trademark for its own cells-"Trina Core". According to Qichacha, the application for the registered trademark of "Trina Core" was submitted on March 4, 2024 and is currently in the stage of rejection pending review. Lawyer Sun Yun, senior partner of Shanghai Landi Law Firm, told Caijing that the trademark application for the three words "Tianhexin" was rejected, most likely because of the lack of distinctiveness. In layman's terms, the combination of these three words has no obvious recognition compared to the products or services of other companies. After owning its own battery cell products, the biggest challenge for Trina Energy Storage is whether its battery cell products have strong market competitiveness. The manufacturing properties of energy storage batteries and power batteries are similar, and their quality and cost are extremely dependent on scale and management level. There is currently a big gap between Trina's battery cells and traditional battery giants in terms of production capacity, yield and cost. According to SNE Research statistics, global energy storage battery shipments in 2023 will be 185GWh, a year-on-year increase of 53%. CATL has a global energy storage battery shipment market share of 40%, ranking first in the world for three consecutive years. CATL is far ahead of second- and third-tier manufacturers in terms of raw material costs and yields. Trina has not released specific data on its battery cell production line. The relevant person in charge of Trina Solar's investor relations department told Caijing that the yield and cost of the company's battery cell products are comparable to those of the industry's leading battery cell manufacturers, and it has now caught up and is cost-competitive. Although Trina has not disclosed the cost of its battery cell products, the market price of its energy storage products has begun to decline. A market insider of Trina Solar's distributed photovoltaics told Caijing that after having its own battery cells, the company's energy storage product prices have been lowered. For customers, there is both quality assurance and affordable prices, and it is expected that the sales volume of energy storage products will increase this year. For Trina Energy Storage, a new battery cell player, the current overcapacity of energy storage batteries, price cuts, and accelerated reshuffles bring greater pressure. According to statistics from the Zhongguancun Energy Storage Industry Technology Alliance CNESA, as of the end of December 2023, the production capacity of energy storage batteries has reached 488GWh, a year-on-year increase of 201%. The total production capacity of planned, under construction and put into operation energy storage batteries has reached 1172.5GWh. According to statistics from Gaogong Industry Research Institute (GGII), the overall capacity utilization rate of energy storage batteries has dropped from 87% in 2022 to less than 50% in the first half of this year, and the capacity utilization rate of household storage batteries is less than 30%. InfoLink Consulting predicts that the shipment growth rate of energy storage batteries will be 35% in 2024, reaching 266GWh. Based on the above data, the overcapacity of energy storage batteries is intensifying. At the same time, the price drop continues. According to CNESA data, the average price of energy storage cells in 2023 will drop from 0.9 yuan to 1.0 yuan/Wh at the beginning of the year to 0.4 yuan to 0.5 yuan/Wh at the end of the year; the average price of energy storage systems will drop to about 0.8 yuan/Wh, a decrease of 40%. In 2024, the market price of energy storage cells is still falling. Recently, the system quotation of a large energy storage project bidding company in Ulanqab was 0.4699 yuan/Wh-0.625 yuan/Wh. A person from an energy storage investment institution told Caixin that in the previous period when battery cells were in short supply, self-operated battery cells were a very advantageous thing. But now battery cells are in excess and the price has fallen below the cost price. If self-operated battery cells are not competitive in the market, it is better to buy battery cells for better cost performance. The current concentration of the energy storage battery market is increasing. The combined market share of the top five leading companies such as CATL, BYD, and EVE Energy has exceeded 75%. Moreover, many leading energy storage battery companies such as CATL are no longer satisfied with being just battery suppliers, but have extended the industrial chain downward and started to be energy storage system integrators. For the cross-border energy storage craze of photovoltaic companies, industry insiders have begun to be wary of risks. Zhu Gongshan, chairman of the photovoltaic leading company GCL Group, said publicly on October 31, 2023 that the energy storage industry should learn from the experience and lessons of the photovoltaic industry to avoid blind expansion and disorderly competition. It is recommended that each company find its own position. The energy storage industry is about to be reshuffled, and only professionals can survive.