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China Fund News reporter Feng Yao

With a market value of over 140 billion yuan, Sungrow Power Supply has single-handedly ignited the photovoltaic energy storage sector.

At noon on July 16, Sungrow announced on its official Weibo that the company had signed a contract with Saudi Arabia's ALGIHAZ for the world's largest energy storage project with a capacity of 7.8GWH. The project will begin delivery in 2024 and be connected to the grid at full capacity in 2025.

In the afternoon, Sungrow's share price rose instantly, up more than 9% at press time. At the same time, the share prices of many listed companies in the photovoltaic and energy storage sectors of the A-share market rose one after another, with Maxsun Technology and Arlo Energy rising by more than 5%, and GoodWe and Tongwei Technology also rising by more than 3%.

Delivered in the current year and connected to the grid the following year

Sungrow Power Supply revealed on its official Weibo account at noon that the company has signed a contract with Saudi Arabia's ALGIHAZ for the world's largest energy storage project with a capacity of 7.8GWH.

It is understood that the three sites of the project are located in Najran, Madaya and Khamis Mushait regions of Saudi Arabia. Delivery will begin in 2024 and full capacity grid connection will be achieved in 2025.

Sungrow said that it will effectively improve the stability and reliability of Saudi Arabia's power grid. A person close to Sungrow told reporters that "the project may be an independent energy storage project and is expected to be used for dispatching the entire Saudi power grid."

According to Sungrow, "the project is large in scale, with tight delivery deadlines, complex dispatching and management, and high requirements for grid support and operation and maintenance." Sungrow will deploy more than 1,500 Power Titan2.0 liquid-cooled energy storage systems, which adopt an integrated AC storage design with high energy density.

This project is equipped with nearly 7.8 million battery cells. Sungrow uses intelligent EMS and BMS systems to ensure efficient and safe operation from battery cells to PACK to system and then to energy storage power station. Sungrow expects that after the project is connected to the grid, it can achieve a long life cycle of more than 15 years and ensure stable and efficient profits for the power station.

It is reported that Saudi Arabia's "Vision 2030" was proposed by Crown Prince Mohammed bin Salman in 2016. According to the plan, by 2030, Saudi Arabia's renewable energy will account for 50% of its energy structure, and the installed capacity will reach 58.7GW, including new energy forms such as solar energy and wind energy.

The world's largest energy storage project is the Atacama Oasis project in Chile, which is planned to install 4.1GWH of energy storage batteries with a total investment of US$1.4 billion. The project will be built in two phases, scheduled to be put into use in 2024 and 2025 respectively.

Bringing the photovoltaic energy storage sector to the forefront

For Sungrow, the project is huge, even close to its total energy storage system shipments last year.

As the world's leading inverter manufacturer, Sungrow's energy storage business has grown rapidly in recent years. According to annual report data, Sungrow's global shipments of photovoltaic inverters will reach 130GW in 2023, while its global shipments of energy storage systems will be 10.5GWH.

In 2023, Sungrow's energy storage business revenue reached 17.802 billion yuan, a year-on-year increase of 78%. Its energy storage business revenue accounted for 24.64% last year, and in 2021, this proportion was 13%.

Moreover, in 2023, the gross profit margin of Sungrow's energy storage business reached 37.47%, higher than the gross profit margin of the inverter business of 28.18% in the same period.

Therefore, the signing of the world's largest energy storage project brought immediate effect to Sungrow's stock price.

In the afternoon of July 16, Sungrow's share price immediately rose, up more than 9% at press time. Moreover, the rise in Sungrow's share price has driven the overall rise of the photovoltaic and energy storage sectors. Ancai Hi-Tech and Maxsun Technology once rose by more than 5%, and companies such as GoodWe, Jinlong Technology, and Tongwei also followed suit.

In fact, Sungrow has recently won two energy storage projects in the Saudi Red Sea project.

In mid-May this year, Sungrow reached a cooperation with EPC engineering giant Larsen & Toubro (L&T) to provide 160MW/760MWH battery energy storage system (BESS) and 165MW photovoltaic inverter for Saudi Arabia's luxury tourism project AMAALA.

In addition to winning project orders in the Middle East, some domestic photovoltaic manufacturers have recently chosen to invest and build production capacity locally.

For example, Junda shares announced on June 13 that it had signed an "Investment Intention Agreement" with the Oman Investment Authority, intending to invest in the construction of an annual production capacity of 10GW of Topcon photovoltaic cells in Oman. The project investment amount is about US$700 million and will be implemented in two phases, 5GW each. Through this overseas investment layout in Oman, the company is expected to further strengthen its overseas market supply capacity for photovoltaic cells.

Editor: Captain

Review: Chen Mo

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