09 July 2023 |

A banner week for BESS


Serendipity, not variety, is the spice of life (in my opinion, at least). 

Around the time I hit send our deep dive / primer on grid-connected energy storage in the U.S. on Thursday, Hithium, a major Chinese lithium-ion energy storage system manufacturer, announced a $620M Series C to expand its manufacturing capacity. Further, a newer British company, Field Energy, reared its head with £100m of new funding this week as well. 

This makes my job for today easy. 

We spent Thursday discussing the growth of utility-scale battery energy storage systems (‘BESS’) in the U.S. Now, we can discuss BESS’s prospects overseas.

BESS ramps internationally

There are some key similarities across the markets we’re discussing here. China is a major hotspot for renewable energy deployment. As is the U.K., especially for wind (both onshore and offshore). In and of itself, deeper renewable energy penetration is a solid signal that a market that will benefit BESS. Power sectors like France’s, which gets 70% of its power generation from ‘almost-always-on’ nuclear, need it less. 

As far as the companies are concerned, their stories are relatively straightforward. They’re in growth mode in countries where renewables are growing. China, where Hithium is headquartered, is deploying more energy across all resources – from coal to offshore wind to new nuclear – than any other country. Considering how much renewable energy China is deploying, BESS is becoming a more critical component of deployment to balance energy.

The Chinese energy storage market at present is similar to the U.S. in that pumped hydro is the #1 energy storage asset installed today in terms of GWs of capacity. But, again, comparable to our discussion of the U.S., that’s set to change in the next couple of years. China could have up to 50 GW of battery energy storage capacity installed by 2025, putting it well in front of the U.S. 

Hithium makes lithium-ion energy storage systems for various utility-scale applications. It’s worth disambiguating that storage can be paired with many different types of projects and in a variety of settings. It can be paired directly with solar. It can be paired with wind. It can be stand-alone (connected to the grid rather than any specific asset).

Global energy storage pairing statistics via Rho Motion (data as of the end of year in 2022)

Hithium sells systems across all these application types, as well as into more niche applications, like a 78 MW solar agrivoltaic plant in Mongolia. It’s also worth noting that Hithium makes lithium-iron-phosphate battery cells as well, which, unlike many other lithium-ion batteries, omit cobalt, a problematic metal to procure for various reasons. It supplied LFP cells for one of China’s largest standalone BESS facilities, a 200MW/400MWh system in Ningxia, China.

With their Series C raise finalized, Hithium now aims to expand its manufacturing capacity from 70 GWh by the end of 2023 to 135 GWh by 2025. For a comparative reference point, Tesla’s MegaPack factory – one of North America’s largest utility-scale battery factories – aims to churn out 40 GWh annually. And while there’s plenty of Chinese market to sell into, Hithium also has a presence in Fremont, California, and Munich, Germany, both of which are markets ripe for more BESS growth. 

One final note on Hithium that’s also worth mentioning is that the company wasn’t founded until 2019, which speaks to how titanic the explosion of interest in BESS for grid and power sector applications has been over the past ~5 years.

Meanwhile, in the U.K. market, Field Energy aims to tap tailwinds based on the fact that the U.K. is the world’s sixth-largest wind power producer. Plus, the U.K. is much less far along in terms of deploying BESS systems than the U.S. and China; it only has about ~2 GW of capacity installed.

While it’s a leader in wind energy deployment, the U.K. lags other companies in BESS deployment (offshore wind farm in the U.K. pictured via Shutterstock)

Field first raised £30M in equity financing plus £47M in debt (an asset-backed debt facility) to start building its manufacturing plant around this time last year. Now it’s added an additional £100M to its coffers to accelerate its manufacturing buildout. This is more private equity than venture funding: the entirety of the round was supplied by  DIF Capital Partners, an infrastructure investment firm. 

This will help Field develop projects in the U.K., though the capital infusion from DIF Capital Partners will also support their entry into other European markets

The net-net

The most considerable constraint for these companies won’t be short-term demand. The question is can they do the work, i.e., scaling their manufacturing capacity (and whether they can keep costs down). Raising the funds to commercialize and scale manufacturing capacity isn’t easy. But building factories and making big batteries consistently is even more challenging. 

Further, another question to end with is whether these companies decide to adapt when the market inevitably features a variety of chemistries for battery energy storage systems. As we discussed Thursday, in five years, electrochemical energy storage on the grid should be a more diverse field than the lithium-ion domination we see today. 

What market share lithium-ion retains over time will be consequential for companies like Hithium and Field Energy. Retooling major manufacturing facilities for new battery chemistries isn’t something you can do overnight.