Spring is the best time of year, and now is precisely the moment for forward momentum. 2025 marks the concluding year of the "14th Five-Year Plan," as well as a crucial year for further deepening reform across the board. As a key engine driving China's economic growth, this year’s National Two Sessions saw lively discussions surrounding the energy sector’s dual priorities: "Two Major Initiatives" (implementing national strategic plans and bolstering security capabilities in critical areas) and "Two New Initiatives" (promoting a new round of large-scale equipment upgrades and encouraging trade-ins of old consumer goods for new ones).

 

Looking back over the past year, from ensuring stable production and supply of traditional energy sources like coal, oil, and gas, to the robust growth of new energy sectors such as wind power and photovoltaics, China's energy sector has achieved new progress and accomplishments, injecting strong momentum into the "dual efforts" and "dual innovations."

 

From the supply perspective, since 2024, China's national energy system has been guided by a new energy security strategy, steadily advancing energy reform and development while ensuring a secure and stable energy supply—crucial for supporting the economy as it rebounds and maintains positive momentum.

 

From a structural perspective, in recent years, China has vigorously promoted renewable energy substitution initiatives, accelerating the development of wind and solar power. This not only has spurred the continuous growth of related industries such as photovoltaic component manufacturing and wind turbine equipment production, attracting substantial investment, but has also effectively fostered collaborative development among diverse industries and regions.

 

Meanwhile, in 2024, the role and positioning of new energy storage technologies underwent a fundamental transformation. At the policy level, new energy storage was officially included for the first time in the Government Work Report, significantly elevating its importance and recognized value. In terms of scale, the cumulative installed capacity of new energy storage surpassed that of pumped hydro storage for the first time, making it the second-largest flexible resource in the power system—second only to thermal power—in terms of regulation capabilities. Moreover, the value of new energy storage in providing power supply and accommodating renewable energy was successfully demonstrated during centralized dispatch trials conducted across multiple provincial grids.

 

As we enter 2025, China's new energy storage industry continues to grow rapidly amid the accelerated development of a new energy system and a new power grid. According to the Government Work Report, a number of nationally recognized advanced manufacturing clusters have been cultivated, while emerging industries such as commercial aerospace, Beidou applications, and next-generation energy storage are experiencing robust growth.

 

Chen Wenkai, Vice President of the Institute for Science and Technology Strategic Consulting at the Chinese Academy of Sciences, stated that the prospects for new energy storage technologies are vast, and the continuous iteration and advancement of these technologies will effectively promote the open sharing of energy production and consumption, enable synergistic integration of diverse energy sources, and contribute more significantly to society's comprehensive green transformation and sustainable development.

 

  The rise of new energy storage is reshaping the energy landscape.   

 

According to data from the National Energy Administration, by the end of 2024, China had completed and put into operation new energy storage projects with a cumulative installed capacity of 73.76 million kilowatts / 168 million kilowatt-hours, representing a 20-fold increase compared to the end of the 13th Five-Year Plan period. If pumped-storage hydro projects are included in the statistics, the total installed energy storage capacity reaches 140 million kilowatts, reshaping the energy landscape at a compound annual growth rate of 40%.

 

        "In the past, energy storage was merely a 'supporting player' in the power system, but now, for the first time, it has stepped onto the central stage of the energy sector's green transformation—albeit on an unprecedented scale of hundreds of gigawatts," said Liu Yafang, a part-time professor at Zhejiang University. Among these advancements, the landscape of new energy-storage technologies has evolved dramatically: no longer dominated solely by lithium-ion batteries, it has diversified into a vibrant ecosystem featuring complementary innovations such as compressed-air energy storage, flow batteries, solid-state and semi-solid-state batteries, and sodium-ion storage systems.

 

"Especially the installed capacity of electrochemical energy storage has grown from less than 4 GWh in 2021 to surpass 100 GWh for the first time in 2024—a growth rate that is truly unprecedented in any sector," Chu Pan, an expert committee member from the Energy Storage Application Branch of the China Chemical and Physical Power Sources Industry Association, told a reporter from the Securities Daily. He added that this substantial expansion of storage capacity has enabled energy storage to assume an even more critical role in the emerging power system.

 

The transformation of energy storage's role stems from the dual-driven forces of policy empowerment and technological breakthroughs. Since the release of the "Guiding Opinions on Promoting the Development of Energy Storage Technology and Industry" in 2017, China has cumulatively introduced more than 2,200 specialized policies targeting energy storage. In 2024 alone, nearly 500 new policies were added, establishing a comprehensive policy framework that covers technology R&D, market mechanisms, and safety standards.

 

Additionally, with the basic completion of the nationwide unified electricity market system in 2024, energy storage has been permitted to participate as an independent entity in various electricity markets. Moreover, the policy now includes grid-side independent energy storage capacity pricing, paving the way for a critical breakthrough in energy storage business models.

 

The report from the Southern Power Grid Energy Development Research Institute shows that energy storage power stations in regions such as Guangdong and Shandong have boosted their internal rates of return to 12% by adopting integrated revenue models that combine peak-valley arbitrage, capacity leasing, and ancillary services. Meanwhile, State Grid Jiangsu Electric Power has piloted a "shared energy storage" model, aggregating distributed energy storage resources to participate in demand response initiatives, resulting in an annual revenue increase of 3 million yuan per project.

 

Economic improvements have further fueled the continued surge in installed capacity. Data from the China Association of Chemical and Physical Power Sources show that in 2024, newly added electrochemical energy storage capacity surpassed 100 gigawatt-hours for the first time, representing a 25-fold increase compared to 2021.

 

Thanks to the dual boost of policy support and market demand, in 2024, primary-market energy storage companies saw 107 investment and financing deals, with disclosed amounts reaching 17.6 billion yuan. Among these, 45 financing rounds were specifically targeted at system integration, charging/swapping services, lithium batteries, and related materials. Meanwhile, in non-lithium battery technology areas, sodium-ion batteries and solid-state batteries have also garnered significant attention.

 

The diversified breakthroughs in technological approaches have provided a solid foundation for industrial expansion. For instance, the 300 MW advanced compressed air energy storage system developed by the Institute of Engineering Thermophysics at the Chinese Academy of Sciences boasts a world-leading conversion efficiency of 72%; meanwhile, Contemporary Amperex Technology Co., Limited (CATL), also known as "Ningde Times," has unveiled its third-generation sodium-ion battery with an energy density reaching 165 Wh/kg, showcasing a 200% improvement in low-temperature performance compared to lithium-based batteries. These advancements have significantly accelerated the commercialization and large-scale deployment of energy storage technologies.

 

Recently, the Ministry of Industry and Information Technology, along with seven other departments, jointly issued and implemented the "Action Plan for High-Quality Development of the New Energy Storage Manufacturing Industry" (hereafter referred to as the "Action Plan"), aiming to build next-generation information technology and new energy as key growth engines, thereby driving the high-quality development of the new energy storage manufacturing sector. The Action Plan calls for accelerating the diversified development of core technologies for new energy storage systems, tailored to multi-timescale and multi-application scenario needs, while enhancing technological capabilities, enriching product supply chains, and expediting the adoption and promotion of innovative products and business models.

 

Regarding this, Jiang Liping, former deputy director of the State Grid Energy Research Institute, believes that the role of energy storage technology in power systems is primarily reflected in five key performance areas: flexibility, adaptability, stability, reliability, and cost-effectiveness. Industry insiders generally agree that, with the growing adoption of new models such as virtual power plants and vehicle-to-grid integration, energy storage will increasingly participate in multiple value-creation mechanisms—including real-time electricity trading and green certificate/carbon markets—truly becoming a strategic cornerstone of the energy revolution.

 

  Industry competition is fierce, yet pain points remain to be addressed.   

 

Although the new energy storage sector boasts "long-term growth potential and abundant opportunities," its development still faces numerous challenges. Wang Jianxin, Vice Chairman and Executive Secretary-General of the China Battery Industry Association, believes that the industry's disorderly expansion has led to overcapacity in low-end production, inefficient resource allocation, severe product homogenization, and persistently low profitability. Additionally, issues related to safety and the establishment of a robust standards framework remain unresolved.

 

In fact, "involution" can be said to be a true reflection of the domestic energy storage industry in 2024. Intense competition has driven prices across the entire industrial chain to steadily decline—data shows that the average winning bid price for energy storage systems in 2024 was 628.07 yuan/kWh, a 43% year-on-year drop.

 

“Those making the battery cells are under the most intense pressure—literally squeezed from all sides. Party A represents the owner, Party B is the general contractor for the project, and Party C is the system integrator. Only then does it come down to the battery cell itself. Moreover, the battery cell must also win the unanimous approval of Parties A, B, and C—a process that’s not only incredibly challenging but also fiercely competitive,” said Yi Huiqiong, Vice President of Ruipu Lanjun Energy Co., Ltd., speaking to a reporter from the Securities Daily.

 

"Almost every segment of the energy storage industry chain is facing the issue of 'involution'—intense internal competition—stemming from supply-demand imbalances. This is a structural challenge," Chu Pan noted. At its root, the imbalance lies in companies' overly optimistic expectations for the growth of the energy storage sector. Over the past four years, soaring demand for energy storage has compelled firms across the industry to ramp up production capacity, often following their competitors' moves. However, the quality of this expanded capacity varies widely—often driven by low-cost, low-quality suppliers who lack both experience and established expertise, ultimately triggering market involution."

 

Liu Wei, Secretary-General of the Zhongguancun Energy Storage Industry Technology Alliance, shared a set of data with a reporter from the Securities Daily: In 2024, China saw an impressive 89,100 newly registered energy storage-related enterprises, representing a year-on-year increase of 17.90%. Meanwhile, the number of enterprises with abnormal operational statuses surged to 16,000, marking a significant rise of 123.51% compared to the previous year.

 

“Energy storage power stations are not profitable, leading to fierce price competition during equipment procurement. As a result, equipment suppliers face extended payment cycles, and by 2024, most domestic companies in the energy storage business sector are expected to suffer losses,” Liu Wei noted. He added that while energy storage firms strive to cut supply-chain costs, reducing their own operational expenses and R&D investments has significantly weakened their innovation drive and capabilities.

 

Additionally, low utilization rates of new energy storage systems have long been a persistent pain point for the industry. According to the "2023 Annual Industry Statistics on Electrochemical Energy Storage Power Plants," commercial and industrial facilities with integrated storage systems operate at an average of 14.25 hours per day, with an average of 317 equivalent charge-discharge cycles. In contrast, renewable energy projects paired with storage systems can only run for an average of 2.18 hours daily, achieving just 104 equivalent charge-discharge cycles on average.

 

Regarding the reasons behind the unsatisfactory utilization hours of energy storage, Zhang Jinbin, Deputy Chief Engineer at the Electric Power Planning & Design Institute, believes that one key issue is the need to improve the energy storage dispatch mechanism. For instance, in scenarios where new energy sources are paired with energy storage, the current scheduling approach relies primarily on integrated grid-level coordination. This method prevents the use of the grid for charging purposes, while discharging must follow the schedule dictated by new-energy generation output. As a result, each charge-and-discharge cycle incurs efficiency losses, which in turn dampens the enthusiasm of new-energy-plus-storage project owners.

 

"Second, the pricing mechanism still needs improvement. In some regions, independent energy storage stations experience a reverse price structure for charging and discharging, leading to distorted metrics and financial losses for operators. 'If we rely solely on the existing electricity market, it will be difficult to ensure reasonable returns for new types of energy storage,' Zhang Jinbin noted. 'Therefore, we must accelerate the establishment of a capacity-based pricing mechanism specifically tailored for new energy storage solutions, while also refining the cost-recovery framework for储能设施建设. By strengthening both market and dispatch mechanisms, we can effectively manage and incentivize the next phase of new energy storage development.'"

 

Finally, the safety concerns surrounding electrochemical energy storage are also a critical hurdle that the energy storage industry must overcome for high-quality development. Lin Jiubiao, Chief Engineer of CATL’s Energy Storage Business Unit, stated that safety incidents at energy storage power stations are primarily caused by factors such as batteries and energy storage inverters. From a technical perspective, the safety issues in electrochemical energy storage are entirely manageable and controllable. Only by rejecting irrational price competition and continuously enhancing quality management can we ensure the consistent reliability of product quality.

 

  Take a multifaceted approach to drive high-quality development in the industry.   

 

Facing the current challenges in the energy storage industry—such as intense "involution"-style competition, heightened risks to safety and reliability, and low investment returns—industry experts generally agree that driving high-quality development can be achieved by leveraging policy coordination, fostering technological breakthroughs, and expanding product exports overseas. Additionally, the industry must accelerate the development of specialized energy storage segments, unlock deeper value opportunities, and align these efforts with appropriate pricing policies—collectively paving the way for comprehensive industry advancement.

 

Han Xiaoqi, Director of Safety at the Electric Power Planning & Design Institute and Deputy Secretary-General of the China New Energy Storage Industry Innovation Alliance, stated that the new energy storage industry is currently at a critical stage of growth. She emphasized that timely adjustments to the pricing mechanism—aligning it with the industry's developmental phase—are essential for boosting confidence in the sector's expansion.

 

At the beginning of this year, the nation clearly announced that new energy power generation will fully enter the market, and that requiring energy storage as a prerequisite for new renewable energy projects is strictly prohibited. The energy storage industry widely expects that this policy direction is key to achieving high-quality development of the emerging energy storage sector.

 

In the transition from policy-driven to market-oriented approaches, Han Xiaoqi believes that close attention should be paid to the issue of cost recovery for new energy storage technologies. "In recent years, the costs of new energy storage have dropped significantly; however, in both the electricity market and the ancillary services market, revenues often fall short of fully covering these expenses. Therefore, it is essential to implement tailored policies—such as adopting a 'two-part' pricing mechanism suited to local conditions—to ensure sustainable development."

 

Wang Peng, Executive Dean of the National Academy of Energy Development Strategy at North China Electric Power University, believes that industry professionals need to grasp the deeper implications, accelerate deployment, and respond proactively. "The effective implementation of local policies is crucial. In terms of operations, companies will need to embrace market-oriented maintenance and management. As new business models emerge, each enterprise must tailor its approach to exploring virtual power plants. Meanwhile, the shift from 'required to deploy' energy storage systems to 'I want to deploy' will also take shape."

 

The reporter noted that during this year's Two Sessions, National Committee of the Chinese People's Political Consultative Conference member and Chairman of CATL, Zeng Yuqun, focused on further enhancing the market-oriented application of new energy storage technologies to drive high-quality industry development. Specifically addressing concrete measures, Zeng Yuqun emphasized three key steps: First, widening the peak-to-valley price gap to create a reasonable profit margin for flexible resources like energy storage; second, expanding the range of ancillary service trading products tailored to new energy storage systems, while also promoting the allocation of ancillary service costs to electricity users, thereby ensuring energy storage costs are appropriately managed; and third, refining the capacity compensation mechanism by accelerating the issuance of standardized guidelines and implementation details for determining capacity-based electricity prices for new energy storage systems.

 

Liu Yafang stated that in the future, it is necessary to accelerate the establishment of a production relations system tailored to the unique characteristics of this new form of energy storage as a new productive force. By developing a fair and rational pricing framework, along with supportive fiscal and financial policies, we can refine the grid connection and dispatch mechanisms for energy storage, continuously optimize the electricity market, and expand the range of trading products and mechanisms through which energy storage participates in the power market. This will help unlock the diversified and maximized value of new energy storage technologies.

 

Currently, there is a growing consensus within the industry that addressing the challenges in energy storage development cannot rely solely on the power sector. Liu Yafang believes that the application of energy storage should not be limited to mere electricity storage; instead, we must vigorously promote integrated and hybrid storage solutions such as concentrating solar power, "coal-fired power + green power coupling," and grid-forming energy storage. Additionally, we should actively explore new technologies and models like virtual power plants, wind-solar-storage-hydrogen-ammonia-alcohol systems, and accelerate the realization of energy storage's multifaceted potential—unlocking greater opportunities for expanding renewable energy development and enhancing its integration and consumption.

 

Chu Pan stated that energy storage is highly intertwined with the development of new energy. As the new energy industry continues to advance and the penetration rate of green electricity further increases, local consumption of wind and solar power generation will inevitably become the preferred choice.

 

"Energy storage is still in its early stages when it comes to participating in the electricity spot market—it’s far from being fully developed. Energy storage plays a multifaceted role: not only can it help earn profits from peak-to-valley price differences by providing electricity, but it can also generate revenue through power ancillary services. Electricity is a high-quality energy source, and it would be unfair to limit energy storage solely to its 'energy' capabilities—especially for electrochemical storage systems, which should also leverage their unique ability to deliver 'power,' enabling rapid and precise adjustments in response to grid demands. Achieving this potential, however, depends critically on the ongoing development of the electricity ancillary services market," said Chu Pan.

 

Overall, energy storage can fully play the roles of a stabilizer and regulator, working in synergy with large-scale wind and solar power bases to build an off-grid, stable power supply system. This will provide green electricity for the production of "hydrogen, ammonia, and methanol," paving the way for a green petrochemical industry that no longer relies on fossil fuels—and ultimately offering new ideas and innovative approaches to national energy security.

 

Liu Wei told a reporter from the Securities Daily that in 2025, how the energy storage industry advances toward high-quality development will become a major challenge for all professionals in the sector. With its inherent strong vitality, the energy storage industry continues to grow and thrive—but it will inevitably face the test of both external challenges and market scrutiny. "We firmly believe that after weathering these trials, China's energy storage industry will not only become more resilient and dynamic, but also play a vital role in shaping the global energy landscape."

 

Source: Securities Daily