BNEF Summit Shanghai 2022 kicked off on November 29 and lasted till November 30, 2022. Wen Tan, CEO of Pylontech, was invited to speak at the Evolving Chinese Energy Storage Strategy session, and shared his viewpoints about industrial chain price fluctuations, new technology prospects, market layout, and other critical issues facing the energy storage industry.

The following Q&A has been lightly edited for length and clarity.

Q1: The past two years have seen dramatic fluctuations in lithium prices. How do you envision the future trend of lithium prices?

A: It is hard to accurately predict the trend of lithium prices. 2016 saw a rise in the price of lithium carbonate, which skyrocketed to about RMB 180,000/ton. Since 2021, the price of lithium carbonate has been soaring by about 10 times based on its price in 2020. No one had predicted such tremendous fluctuations in the price of lithium carbonate.

The main reason for short-term lithium price fluctuations is not cost, but the mismatch between supply and demand, specifically, insufficient supply in the upstream part. Fluctuations in the prices of Lithium, a bulk commodity, are in line with the laws of industry development, and are projected to ease in 2-3 years.

Electric vehicles and energy storage are the main drivers of global lithium demand. To accelerate advancements in zero-emission vehicles, countries have stepped up policy support and government subsidies for new energy vehicles. Meanwhile, transportation electrification has picked up speed and led to rapid expansion of lithium battery production capacity. Driven by the dual demand for energy storage and new energy vehicles, global lithium resources are under strain. Moreover, due to complex processes and long cycle for mining iron ore and lithium ore, the increase of production capacity at the upstream mining companies usually lags behind the fast growth of the downstream demand. However, the new energy and energy storage system is ultimately meant to bring sustainable energy sources to more users around the world. Therefore, there must be an upper limit to the rise in resource prices. The invisible hand will rebalance supply and demand in the medium and long term. Cost reduction and yield improvement will go hand in hand.

Q2: How do you think we should address lithium shortage?

A: Lithium shortage is a long-term issue. Development of sodium-ion batteries helps alleviate the imbalance between supply and demand of lithium resources and ensure the stability of the energy storage supply chain.

At present, Pylontech is focusing on R&D of sodium-ion batteries, and is about to launch the sodium-ion energy storage system soon. If lithium carbonate prices continue to rise in the short run, lithium prices will face dramatic fluctuations, which will put great pressure on energy storage companies like Pylontech. The development of sodium-ion batteries will, therefore, provide an effective solution to stabilizing the supply of energy storage system and easing the pressure on energy storage companies.

Q3: Can sodium-ion batteries replace lithium-ion batteries? What are the advantages of sodium-ion batteries?

A: Sodium-ion batteries are a supplement to lithium-ion batteries rather than a substitute for lithium-ion batteries. They are developed to meet the world’s energy needs and are of great significance in the long run, as energy demand will go through tremendous changes and pose higher requirements on the energy storage and new energy industries in the next decade and beyond.

At present, the rising cost of lithium-ion batteries has made the economic effectiveness of sodium-ion batteries more prominent. Though the energy density of sodium ions is limited due to its materials, sodium-ion batteries show obvious advantages in transportation safety, resource availability, cost controllability, and many other aspects. From the perspective of technology development, negative electrode, electrolyte and other tough challenges involved in manufacturing have already been resolved. From the perspective of manufacturing, the strong lithium-ion battery industry chain can support the development of the sodium-ion battery industry. Of course, the joint efforts of the upstream and downstream players are essential to the healthy and sustainable development of sodium-ion batteries raw materials and supply chain.

Q4: What is the plan of Pylontech for the mass production of sodium-ion batteries?

A: We plan to launch the GEN 1 sodium-ion energy storage system in May or June 2023. In view of the development pattern of lithium-ion batteries, it needs to adopt a sophisticated commercial model to promote the development of sodium-ion batteries. As to the market layout of sodium-ion battery and energy storage system, the initial plans are to promote its application in some markets, such as lead-acid substitution.

Q5: Would you please brief us on the overseas market layout of Pylontech? Do you have any suggestions for other energy storage companies?

A: In the process of building a sustainable future, innovative energy storage solutions have become a key part of renewable energy generation. Market demand and policy support have ushered in a period of rapid growth for the energy storage industry. A mature and efficient energy storage system will be the basis for the universal development of the new energy industry. For more than a decade, Pylontech has been devoted to energy storage, has kept increasing investment in R & D of new battery materials and technologies, and has been leveraging technological innovation to reduce cost, improve efficiency, and create values.

Driven by high electricity prices and photovoltaic penetration, the business model and business logic for the overseas home energy storage market dominated by Europe and the U.S. have gradually taken shape. Meanwhile, the Chinese market has also introduced a lot of policies in this regard. Thanks to the development of the energy storage industry and the joint efforts of energy storage companies, the Chinese and overseas energy storage markets have gradually become mature. At present, the main overseas markets of Pylontech are Europe, the U.S., Japan, and Australia.

Pylontech puts quality first and delivers premium products when expanding into the overseas markets. Our deployment in an overseas market begins with an in-depth understanding of the power specifications of that country or region, on the basis of which we actively adjust and adapt to the relevant requirements. Besides, we strive to create values for global customers and partners, and seek to grow alongside them. We believe that this can actually bring benefits to the end users.

The global energy market has not been so optimistic in 2022 but has also created a lot of opportunities for new energy companies to serve end users. As a pioneer in the home energy storage industry, Pylontech approaches business with a strong sense of responsibility and mission. We are committed to guiding the industry in taking safe delivery as the bottom line of business development, leveraging technological improvement to create more values for our customers, and winning the trust of users with authentic value creation. Hopefully, more and more energy storage companies will deliver quality products to the overseas markets and benefit more end users.