The intense competition between BESS suppliers in the European market and the ever-more dense products available increases technical risk and the possibility of contractual issues further down the line, a France-based advisor said.
“In France, we’re now seeing new BESS players coming in quite aggressively, and across Europe more broadly, competition between suppliers is extremely intense,” said Damien Guy, founder and CEO of battery energy storage system (BESS) technical advisory NR Flex.
“In Europe, we place a lot of trust in the contract. But BESS assets are much harder to secure contractually than wind or solar. Many aspects specific to batteries create grey areas that make contracts difficult to apply: the variety of operating profiles, ageing mechanisms, state-of-charge management, performance monitoring, the sheer volume of data to track. That makes me think we will see contractual issues further down the line.”
We had been discussing the development of the French grid-scale market (see last week’s write-up of that part here), which naturally led on to the BESS supply landscape, which is looking to capitalise on opportunities there and in Europe more broadly.
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Tesla has so-far dominated the early stage of France’s grid-scale sector, winning several notable projects including the country’s largest online at 240MW/480MWh and a few for Harmony Energy as well.
The company’s turnkey, ‘black box’ strategy of providing everything but revealing very little worked well for the high-profile projects of the market’s early days, and it has done some very profitable projects in France, Guy added.
But new suppliers are coming in and with those new suppliers and increased competition, there are new risks.
“I often hear that these are now mature products. Suppliers have gigawatt-hours of experience, failures are far less frequent than a few years ago, everything has stabilised. Basically, that there’s no technical risk anymore. But this level of competition creates new technical risks that offset the maturity gains,” Guy said.
“There’s a race to increase energy density at cell, pack and container level, to push power density in the inverters and MV skids, to add new safety features, to develop new control strategies and to keep up with evolving grid codes. And there’s very little time to test all of this before it goes to market. New products often appear in quotations before they even exist in the factory.”
That energy density race is best exemplified by the launch this week of CATL’s 9MWh Tener+ product at All-Energy Australia. CATL is of course not a new player in the European market, and Guy was discussing the market at-large. But the announcement shows how the industry has close to doubled the potential capacity per 20-foot container in the space of just a few years.
And it’s the pace of change that causes Guy concern, as he explained: “Ageing and thermal design issues typically only show up after a few years of operation. They are extremely hard to de-risk upfront and difficult to cover clearly in a contract. So suppliers’ manufacturing processes, R&D, and product validation and testing need close scrutiny, even for the big names.”
“Independent auditing and testing is essential. There will be good players with high quality standards and reliable contracts, and others taking risks I would consider excessive.”
