We hear from industry sources about the reasons for, and implications of, the increasing convergence to the 20-foot, 5MWh+ container as the dominant grid-scale BESS product today.
The last 12-18 months have seen the emergence of more China-based battery energy storage system (BESS) manufacturers and system integrators on the global stage, all selling 20-foot, 5MWh container products (or higher, like CATL’s ‘zero-degradation’ Tener).
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Concurrent with that, Western integrators like Powin, Fluence and Wärtsilä have launched their own products of that form factor, a departure from their previous proprietary modular approach. Several BESS developers and operators Energy-Storage.news has spoken to recently said the 20-foot 5MWh form factor was the only viable product for their projects.
Mass production of 20-foot BESS containers has ‘killed’ modular model
Alejandro Schnakofsky, CTO of system integrator Prevalon (until recently the BESS arm of Mitsubishi Power Americas, said that the cost reductions have made any other form factor virtually untenable.
“What happened was you had specialised metal fabricators in China that started replicating the high-volume production of regular shipping containers, but for BESS applications. That drove that cost down and frankly killed the third-generation, modular BESS equipment approach from the Western integrators,” Schnakofsky claimed.
“Two or three years ago, there was a lot of marketing around the intrinsic safety benefits of smaller enclosures with smaller capacity. But now, those simply cannot compete. Everyone is buying modules at the same price point so if your cost basis to enclose those is 3x your competitors, you’re dead. That’s why a lot of Western integrators have shifted strategy recently.”
Schnakofsky says the first generation of BESS was about simply about getting batteries into a box and ‘making it work’, while the second was the shift from walk-in enclosures towards ones filled with batteries where you opened panels from the outside.
Speaking to Energy-Storage.news at ees Europe/Intersolar last month, Andy Tang, VP energy storage & optimisation for Wärtsilä, gave a similar overview of the generational development of BESS and agreed that the 20-foot form factor is now the standard.
“We had all gone down this path to building custom enclosures of, say, 350kWh per enclosure to around 2MWh. Then about a year ago, we all moved to announcing something in the 20-foot container footprint. That is the next stop for the industry,” he said.
Micheal Lippert, France-headquartered system integrator Saft’s director for innovation and solutions, said: “We’ve been doing 20-foot containers for 12 years so we’re happy to see the industry has followed.”
Two other factors have led to the standardisation of form factors in BESS, Schnakofsky said. One is that the whole of the Chinese domestic energy storage market moved to it two years ago following a single specification approved by the government, driving its volume production up to highly cost-competitive levels. The other is an improvement in system controls that has allowed inverter capacity to be distributed less evenly amongst energy storage capacity, which helps support the deployment of larger building blocks for BESS projects (but this was in response to the proliferation of 20-foot high energy density products, not vice versa).
Is this commoditisation?
“It looks a little bit like commoditisation, but I’m not sure it is,” Lippert continued, also speaking in-person with us whilst at ees Europe.
“There are reasons to believe that is now the standard building block for the market, but this is a picture that has emerged in the last six months, and you have to ask what is the reality behind all these 5MWh announcements,” he said, adding that not all will be ready with their announced products.
“I don’t want to bet on whether it will commoditise or if in 6-12 months it could change again. One year, if you’d asked me I would have said the standard was modular, now it seems everyone is having 5MWh systems. What we do see is increasing differentiation at the cell level.”
Schnakofsky also didn’t go as far as saying the market had commoditised but said that there was now less differentiation than in the third-generation BESS era: “Not everyone is buying exactly the same 20-foot container BESS. I think a lot of the componentry, maybe 80%, is standardised and I suppose commoditised.”
Role of system integrators
The next obvious question is what the role of Western integrators like Prevalon will be as custom, modular enclosures become a thing of the past, but Schnakofsky is bullish on this.
“What the system integrators can do is add value on the layout of the system, the design for thermal management, etc. There is still some level of differentiation from product to product, but it’s not as intrinsic as it used to be during generation three when you had different-sized boxes and could really build a story around that,” he said.
“Buyers of BESS are paying for availability and performance guarantees and those don’t come out of the box. System design, constructability of your solution, how you support your customer and EPC to ensure projects are deployed on time, how you configure and control your system; that is the new frontier for system integrators, that is at the forefront now of how successful or unsuccessful companies will be.”
He points out that if the market had commoditised, developers would just be buying BESS containers directly, whereas in reality, only a handful of the largest IPPs have the capability to do this and integrate projects themselves.
“But I imagine a lot of the recent supply deals between integrators and cell manufacturers represent procurement at the DC block level,” Schnakofsky claimed.
What are the other implications?
One implication of this may be a supply chain more dominated by China, where the 20-foot containers are being built and where the 20-foot 5MWh-plus products are increasingly coming from.
“We choose to contract manufacture in China but we could do it in the US, Mexico, Eastern Europe,” Tang said.
The other is clearly the falling cost of BESS, with the mass production of the units in China lowering prices across the market. But, Wärtsilä’s Tang and Saft’s Lippert cautioned against the assumption that the driving down of costs is a straightforward one.
Wärtsilä’s latest product has 4MWh per 20-foot container, while Saft’s has 3.3MWh, with Saft planning a 5MWh system from 2026.
“The challenge on these products is whether you’ve really reduced the cost of ownership. It might reduce your capex but increase the weight to make shipping harder,” Tang said.
“My opinion is that we do not understand the total cost of ownership of these 20-foot containers. Logistics and thermal performance are important, and the jury is still out on whether bigger is better.”
“We’re approaching a natural limit on weight. We believe a 6-7MWh 20-foot product is 50 tons, and not all ports and roads can handle that.”
Lippert similarly questioned the non-stop drive to higher energy densities and the long-term performance guarantees of newer products in the market.
“The raft of 5MWh announcements is attracting a lot of attention. But it’s curious as in many projects, the footprint is not the first criteria for the developer. Cost is important, but the more important one is can you deliver on your promises over 10-15 years? High energy density is no good if it triggers additional maintenance costs or if the systems aren’t reliable in operation,” he said.
