A reform in China’s electricity market is enhancing the economics of energy storage as global demand increases, leading to significant growth for Chinese energy storage manufacturers. Estimates suggest that shipments of lithium-ion battery cells for energy storage from Chinese companies will rise by 75% this year. They have exported over $65 billion worth of batteries for storage and electric vehicles, reinforcing their global market dominance in this crucial sector that supports renewable energy and data centres.
The rise in sales is fueled by domestic data centres and renewable energy needs, as well as by recent Chinese reforms and subsidies that are increasing overall demand for energy storage. International demand is also growing in line with the expansion of data centres, the need to modernize Europe’s aging grid, and China’s increasing renewable energy projects in the Middle East. Analysts, such as Cosimo Ries from Trivium China, note that leading energy storage manufacturers are working extra hours to meet high demand, marking this surge as a major development in China’s energy sector.
UBS recently projected a 25% increase in the expected global battery-energy storage installations by 2026. The International Energy Agency forecasts a 16% rise in global investment in battery storage to $66 billion this year, with a significant portion likely to be captured by Chinese companies. While Tesla leads in energy storage systems, China is the primary producer of the essential battery cells within them. The top six global battery cell suppliers are all Chinese, demonstrating their overwhelming market presence.
Notably, EVE Energy’s energy storage sales increased by 35.51% in the first three quarters of the year, and REPT BATTERO achieved record battery shipments in the third quarter. While storage revenue has historically made up a smaller portion of major manufacturers’ profits compared to electric vehicle batteries, this ratio is starting to change. Analysts point out that combining solar energy with storage has become essential in meeting the robust power needs of U. S. AI data centres, particularly as traditional power sources struggle to expand in the coming years.
Nevertheless, Chinese manufacturers are facing potential challenges due to U. S. restrictions on tax credits for projects involving “foreign entities of concern,” including China. In the current year, China’s battery exports, including those for energy storage and electric vehicles, reached $66.761 billion, making batteries the leading export in clean technology for China since 2022. The following year is expected to see further growth in global energy storage shipments.
China already boasts the largest battery energy storage fleet globally, holding about 40% of the total market. This expansion has been partly driven by government mandates requiring storage integration with wind and solar projects. Recent reforms have also made energy storage operations more profitable, allowing for better management of energy supply by charging during low-price periods and discharging during high-price periods. As a result, energy storage plants operated longer in the third quarter, indicating a positive trend for the sector. Moreover, a new government initiative aims to nearly double battery storage capacity by 2027, alongside new provincial subsidies to support this growth.
With information from Reuters
