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BESS Value Chain Experiencing the ‘Bullwhip Effect’: A Growing Disconnect Between Demand and Production ESS demand has exhibited remarkable growth, but that is being magnified up the supply chain as manufacturers overreact to perceived demand. ESS battery cell production this year is around 600 GWh – almost twice that of installations – and even higher for ESS-destined CAM production, even when accounting for time lags in the supply chain. This is the ‘Bullwhip Effect’. In the case of ESS, it is amplified by long lead times becoming the new normal, especially for ex.China customers. At the same time, installers are struggling to secure equipment due to full order books at cell manufacturers, and previous policy-driven front-loaded demand has contributed to this. Cell and CAM producers say they are confident in demand being sustained, because of:
A huge order backlog and long-term sales contracts High utilisation ratio of ESS cell plants High profitability of ESS cell and integrators Further room for cost reductions by upgrading products: larger cell capacities etc. Very strong pipeline of ESS projects
However, LFP cell and cathode inventories have reached alarming highs, and the longer it goes on, the more pronounced the drawdown will be.
Source: Content & analysis provided by CRU Group (Distinguished Partner). For more information, visit crugroup.com *Showing only cells and CAM destined for BESS applications. Image adapted from Sketchplanations.
Extracted from the PDF; charts and images may read imperfectly.
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