The solar industry has officially entered the N-type TOPCon era, but it now faces a significant supply glut. Recently, bargain hunting has emerged in the solar sector, signaling the start of a major consolidation wave.
Battery giant CATL is drawing attention. Initially, CATL aimed to acquire Runergy, ranked third in solar cell production from 2020 to 2022. However, in a surprise move, Tongwei, ranked fifth in 2023 for solar cells and modules, outpaced CATL with a bid of less than CNY5 billion. Reports now suggest CATL is in talks with Das Solar, ranked ninth, though neither side has confirmed this.
Industry insiders liken CATL to a crocodile lying in wait, poised for a "double acquisition." The company is also eyeing a top-five solar firm for potential investment. Armed with deep pockets, CATL's aggressive mergers and acquisitions strategy is seen as a key variable that could reshape the market.
CATL's cross-sector acquisitions are a bet on the soaring potential of the solar-storage market. Despite the end of China's solar subsidies, the government now mandates that 10% of solar systems must include energy storage to boost efficiency and stabilize the grid.
The energy storage needs of independent power grids, 5G base stations, and battery-swapping stations are all part of CATL's strategic focus, with the Chinese market being its top priority.
When pressed on its plans for the solar industry and capacity goals, CATL's spokesperson had little to reveal, saying only that no further information was available.
Analysts note that CATL, as the world's leading lithium battery maker, primarily supplies batteries for electric vehicles (EVs) and energy storage systems. While the booming electrification trend opens doors across various markets, CATL's 30% global market share is seen as having peaked, leaving the company vulnerable to geopolitical risk. In contrast, the energy storage sector, driven by renewable energy growth and grid balancing, is expanding faster than the EV market.
As China's new energy vehicle sector rapidly scales up, the recycling of lithium batteries will become increasingly critical by the first quarter of 2024. CATL's moves align with the full lifecycle management of lithium batteries.
When EV batteries drop to 70–80% of their capacity, they enter the retirement phase and can be repurposed. These batteries are particularly valuable for energy storage, a sector with significant growth potential. They can also be used in smaller applications like two- or three-wheel vehicles and household appliances.
For batteries that can no longer be reused, CATL has developed a high-efficiency recycling process, recovering 99.6% of nickel, cobalt, and manganese, and 91% of lithium. This reduces the need for new metal mining, strengthening China's lithium battery and renewable sectors while mitigating risks from geopolitical supply chain disruptions. At the same time, it ensures that waste is handled in an environmentally responsible way.
Chinese media report that CATL has ramped up activity in the solar sector, forming a string of subsidiaries under its Contemporary Green Energy unit in the second quarter of 2024. Mid-year, Contemporary Green Energy fully acquired two subsidiaries from Longi Solar—Liyang Leye and Bozhou Xijia New Energy. Earlier, CATL's 1,100 MW third-phase national solar base and Contemporary Green Energy's 250 MW solar project were connected to the grid.
Das Solar, with an annual capacity of 30,000 MW in solar cells and modules, boasts a strong TOPCon production line. Its largest client, China Three Gorges, contributed 30% of its revenue in 2023. Other major clients include PowerChina, Dakang Group, and China Energy Engineering, with the top five clients accounting for 60% of its revenue.
State-owned giants like China Resources, State Power Investment Corporation, China National Nuclear Corporation, and China General Nuclear Power are also major players in the sector. If CATL completes its acquisition, it would deepen its integration with China's power grid network, further entrenching its position in the country's renewable energy landscape.
