Sinolink: Lithium carbonate prices continue to decline, with high demand for large domestic storage and strong market outlook.

Sinolink released a research report stating that as of August 30, the price of battery-grade lithium carbonate was 74,600 yuan per ton, a decrease of about 9.0% compared to the end of July. With supply exceeding demand, the price of lithium carbonate continued to run weakly from August to early September. The continuous decline in lithium carbonate prices drove down the bidding prices in energy storage systems, with high activity levels in domestic installations and bidding scales. The monthly fluctuations in utility-scale installations in the United States continued to trend upward, with projects expected to rebound after interest rate cuts. Emerging markets such as Australia and the Middle East continued to exceed expectations in terms of energy storage demand, while China and the United States maintained high growth, leading to a high level of demand for global energy storage. Key points from Sinolink are as follows: According to incomplete statistics, the scale of lithium battery energy storage projects awarded in August in China was 5.5GWh, with projects mainly focusing on group procurement, standalone/shared energy storage, and wind-solar projects. From January to August 2024, the cumulative awarded scale of lithium battery energy storage projects in China exceeded 36.8GWh, a year-on-year increase of 77.3%. The average bid price for 2-hour energy storage systems in August was 0.52 yuan/Wh, a decrease of 0.07 yuan/Wh compared to the previous month. The significant drop in average bidding prices was mainly due to the continuous decline in lithium carbonate prices, further opening up cost reduction opportunities. In terms of bidding provinces, non-group procurement projects in August mainly focused on Inner Mongolia, Ningxia, Shandong, Guangxi, and other regions. According to incomplete statistics from CESA, approximately 3.5GW/8.7GWh of new energy storage projects were put into operation in China in July, a year-on-year increase of 100%/104% and a month-on-month decrease of 33%/-23%. From January to July, the cumulative installed capacity of new energy storage projects in China was 16.4GW/40.0GWh, a year-on-year increase of 76%/100%, with approximately 15.5GW/35.6GWh being lithium battery energy storage projects, showing a year-on-year increase of 83%/100%. In August, European natural gas futures prices slightly increased, with the price of Dutch TTF natural gas futures reaching 39.82 euros per MWh as of August 31, an increase of 11.0% from the end of July. Due to increasing tensions in certain areas between Russia and Ukraine, European natural gas futures experienced a significant increase in early August, surpassing 40 euros per MWh and hitting a new high for the year. As September began and the tensions eased and temperatures gradually decreased, European natural gas futures prices started to recede, with the closing price of Dutch TTF on September 6 reaching 36.48 euros per MWh. As of September 7, the overall gas storage level in Europe was at 92.8%, a 0.6 percentage point decrease compared to the same period last year, with gas storage progress slightly lower than the same period last year. It is expected that the high volatility in European natural gas prices will continue in the future. According to the US Energy Information Administration, in July 2024, the utility-scale solar photovoltaic capacity in the United States achieved an additional installation of 0.76GW, a year-on-year decrease of 45.0% and a month-on-month decrease of 67.9%. The utility-scale energy storage achieved additional installations of 0.75GW/2.11GWh in July, with a year-on-year decrease of 49.8%/-49.8% and a month-on-month decrease of 39.7%/-49.1%. The installations of utility-scale photovoltaic and energy storage in the United States in July were below expectations, possibly due to high summer temperatures and interest rate cuts. It is expected that the situation will improve with the interest rate cuts and cooler temperatures. From January to July, the utility-scale solar photovoltaic achieved an additional installation of 12.8GW, a year-on-year increase of 73.9%, and the utility-scale energy storage achieved an additional installation of 5.0GW/13.9GWh, a year-on-year increase of 56.6%/62.2%. Looking at the planned installation scale for the rest of the year, from August to December, the utility-scale solar photovoltaic in the United States is expected to have a planned installation of 25.2GW, a year-on-year increase of 111.5%, while the utility-scale energy storage is expected to have a planned installation of 9.7GW, a year-on-year increase of 186.4%. According to ISEA, from January to August 2024, Germany's residential energy storage achieved an installation of 22.1GW/3.0GWh, a year-on-year decrease of 13%/-16%, with an additional preliminary installation of 179MW/267MWh in August, a year-on-year decrease of 48%/-48%. According to HEPI, in August, the electricity prices for residents in various European capital cities remained relatively stable, with the average residential electricity price in European capital cities at 23.0 euro cents/kWh, a month-on-month decrease of 0.06 euro cents/kWh. Among the main countries with residential energy storage installations, the residential electricity prices in the capital cities of Germany, the UK, Italy, and Spain were 39.3/34.9/32.0/20.8 euro cents/kWh in August, with month-on-month changes of 0%/1.7%/+0.4%/+5.3%. Overseas demand for large-scale energy storage remained high, with Sungrow Power Supply signing supply agreements for 1GWh in the United States and 1.7GWh in the United Kingdom in August to early September. CSI Solar Co., Ltd. signed a contract for a 200MWh energy storage project in Australia, and Tianhe Germany began construction on a 100MWh energy storage project. Progress was made on large energy storage projects in Australia, the UK, Chile, and other regions, while Portugal and Bulgaria initiated subsidy tenders for energy storage systems. Key recommendations include Sungrow Power Supply (300274.SZ), CSI Solar Co., Ltd. (688472.SH), Ningbo Deye Technology (605117.SH), Shenzhen Sinexcel Electric (300693.SZ), and Shenzhen Hopewind Electric (603063.SH). Risk warnings include unexpected rebounds in raw material prices, international trade risks, and currency exchange rate fluctuations.