Will AC blocks become the standard product offering for energy storage systems?

Could the supply of AC-blocks become a key new trend for the energy storage industry in 2024? While most cell manufacturers are stepping down the supply chain by offering DC blocks, some system integrators have released "AC blocks" — a container with both battery and power conversion system (PCS) integrated inside. This could change industry dynamics, but it's still unclear whether they will be popular with customers.

• AC blocks will come at a cost premium in the short term, but the increased standardization and easier installation should enable overall system cost declines if the technology gains a larger market share.
• Suppliers of AC blocks are currently very limited — This product type was pioneered by Tesla Inc, in the company's 2022 Megapack redesign. More recently, Sungrow Power Supply Co. Ltd. And Rimac Energy (a subsidiary of Rimac Technology LLC) have followed this lead, releasing AC block products.
• This product type gives developers increased choice and further squeezes the established integrators as most will be unable to offer a comparable product without in-house PCS manufacturing.

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This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.