Adhesives firm doubles down on energy storage

German adhesive solutions giant tesa is doubling down on China's booming energy storage sector, leveraging its technical expertise and domestic investments to tap local markets that are transitioning from policy-driven growth to innovation-led competition, a senior executive said.

"The energy storage sector is a super attractive market, which is very much driven by China. There are plenty of opportunities to deal with, but as a company you have to be super fit, and you have to be technology-driven, innovation-driven," said Stephen Hauber, president and regional manager of tesa Greater China, highlighting that the company's annual research and development investment accounts for 6 percent of its global revenue.

Hauber said the company has positioned itself as one of the key players in the country's adhesive solutions market, serving industries including automotive and electronics. Now, the company sees energy storage — a sector pivotal to China's green transition — as its next frontier, on top of long-term investment commitment to conventional business sectors. Energy storage solutions include heat-activated tapes and sealing technologies critical for battery safety.

"China is now the leading market, it is super important for us, as a lot of innovations are created by our local customers," Hauber said.

Currently, China dominates the energy storage landscape.

Data from the National Energy Administration show that new types of energy storage installations in the country — aside from pumped storage hydropower — hit 73.76 million kilowatts by the end of last year.

As for the battery — a major proportion of new types of energy storage solutions — the International Energy Agency has estimated that the installed capacity of utility-scale batteries in China will reach 13.6 gigawatts by 2026, topping the world and followed by India and the United States.

The growing demand for power storage is driven by the increasing need for power system flexibility as the grid integrates larger shares of intermittent, variable new energy sources like solar and wind power.

Domestic players like CATL and BYD lead in lithium-ion battery production, but foreign firms like Tesla are also expanding rapidly to this end, with its Shanghai Megapack factory targeting around 40 gigawatt-hours annually.

Such a trend drove market demand for manufacturing battery-related products, in tesa's case, adhesive tape solutions for electric vehicle batteries, among others.

"You see, the Chinese market is rising super fast. It is something that none of the other countries can do. We are committed to developing new innovations. We have very demanding customers, and we need to fulfill their needs," Hauber said.

Talking about how to outperform its peers, Hauber said: "If you cannot differentiate yourself on price, you must have a different approach to satisfy the needs of your customers. You can only do this with innovation."

"Therefore, the only right solution is that you continuously invest in innovation. We have more than 170 technology and product development talents and reached school-enterprise cooperation with Soochow University in 2022 to jointly promote the development of advanced materials that help us compete in the market," he said.

Hauber noted that China's latest efforts to promote new quality productive forces "clearly indicate that everything revolves around innovation and sustainability." To better tap the market, he said the company has adopted a science-based approach to sustainability.

Meanwhile, Hauber said the complete removal of restrictions on foreign investment in the manufacturing sector has brought, and will bring, the company immense opportunities, such as integrating into the localized industrial chain. "We look forward to seeing more such measures implemented," he said.

"Despite the uncertainties in the international environment, China has never changed its policy of opening-up and has shown high-quality and sustainable economic vitality. This gives us the confidence that the next China is still China," Hauber said.

"We will continue to invest in China. It's not only because of the market size, but also due to the evolving demand and the highly attractive nature of the market," he said.