With the booming of energy storage, how good is its quality?
Since September 2025, there has been a tight supply of large-capacity cells, the core components of energy storage systems. Some energy storage cell manufacturers said that the primary concern of energy storage system integrators is no longer the price but the delivery cycle.
The phenomenon of "hard to find a single cell" has become common in the industry. The production lines of leading cell manufacturers have been operating at full capacity, and the capacity utilization rate of second-tier manufacturers has generally exceeded 80% since the second quarter of 2025. Some orders have even been scheduled for delivery in 2026.
The cell production lines are working overtime to keep up with the rapid growth momentum of the global energy storage market.
According to statistics from InfoLink, a new energy industry information agency, the global energy storage cell shipments reached 240.2 GWh in the first half of 2025, a year-on-year increase of 106.1%. According to data from the Zhongguancun Energy Storage Industry Technology Alliance (CNESA), in the first half of 2025, the newly installed capacity of new energy storage in China reached 23.03 GW/56.12 GWh (power/energy). Both indicators increased by more than 68% year-on-year. The cumulative installed power and energy have respectively exceeded 100 GW and 240 GWh.
The data confirms the high prosperity of the energy storage market, but the price trend has not kept pace. Even though "it is hard to find a single cell", the price of energy storage systems has not risen significantly, and the new winning bid prices have hit new lows, seemingly going against market laws. The market's concern is whether such a high growth rate can be sustained after this round of energy storage "rush installation wave" driven mainly by policy changes?
01 Synchronous Expansion of the Global Energy Storage Market
In the past four years, the global energy storage market has gone through an industrial cycle from sporadic layout and policy pilot projects to commercial implementation and large-scale expansion.
The global energy storage cell shipments have increased from less than 50 GWh in the whole year of 2021 to more than 240 GWh in the first half of this year. InfoLink expects the annual shipments to reach 460 GWh, with an annualized growth rate of more than 70%. In the Chinese market, which accounts for 90% of the global demand side, the cumulative installed power of new energy storage has increased from single digits in 2021 to over 100 GW, and the installed energy has increased from 12 GWh to 240 GWh.
Judging from the data alone, the energy storage market in the first half of 2025 still maintained a relatively high growth rate in recent years. However, the perceived growth in the market was more significant. There are mainly two reasons for the difference between the data and the perception:
First, the growth exceeded expectations.
At the beginning of 2025, under the combined effects of the high base of the previous year, policy uncertainties in major global markets, and risks of trade frictions, the market generally expected the growth rate of the energy storage market to slow down.
However, the actual situation is that the support policies in the three major regions of China, the United States, and Europe have stimulated the potential demand. In China, the cancellation of the mandatory energy storage allocation policy for new energy projects led to a rush installation wave. In the United States, the "Big and Beautiful Act" extended the tax credits for energy storage projects until 2033, and the gradually narrowing subsidy and tariff time windows also added fuel to the fire. The European Union further improved its incentive policies in aspects such as long-term energy storage and capacity tariffs, promoting energy storage projects to develop towards larger electricity volumes and longer durations.
The pessimistic expectations at the beginning of the year were not realized, which magnified the subjective perception of market participants regarding the industry's popularity.
Second, the growth regions are more diverse.
According to data from GGII, from January to August 2025, Chinese energy storage enterprises obtained more than 250 new orders in the overseas market, with a total scale of 188 GWh, a year-on-year increase of 183%. Among them, the Middle East market led with 38.75 GWh of orders, followed by Australia (37.88 GWh), Europe (32.49 GWh), India (11.25 GWh), and Chile (10.8 GWh). Before 2024, the overseas orders of Chinese energy storage enterprises almost only came from the United States and Europe.
The emerging markets have become the core growth engine of demand, which is another important reason for the booming energy storage market in 2025. Especially customers in the Middle East and Australia, with large single-project scales, high technical levels, and short delivery cycles, have created a large number of high-quality new demands.
02 Why Do Prices Remain Stable and Decline Despite the Shortage of Cells?
The rapidly growing energy storage market has led to a shortage of energy storage cells, the core components.
Since the second quarter of 2025, the capacity utilization rate of the energy storage battery production lines of major Chinese battery manufacturers has reached over 80%. The energy storage production lines of some leading enterprises are operating at full capacity with full sales, resulting in a situation of "orders waiting for capacity". The energy storage production line of CATL has been scheduled until the first quarter of 2026, and Hichen Energy Storage will be operating at full capacity in 2025. Staff from multiple battery enterprises said that when downstream energy storage system integrators purchase cells now, their first concern is not the price but the delivery cycle.
In fact, the tight supply situation of cells has not led to price increases. Instead, prices continued to decline until August 2025. Take the 25 GWh energy storage system centralized procurement project of China Energy Engineering Group as an example. The winning bid price of the 4-hour energy storage system was reported at a new industry low of 0.37 yuan/Wh, a decrease of more than 42% compared to the end of 2023. Prices in the overseas market are also falling. The unit price per KWh of the 2-hour energy storage system exported from China to the European and American markets has decreased by 10 US dollars in the past year, and the cell price has dropped from 51 US dollars/KWh to 46 US dollars/KWh.
After September 2025, some cell manufacturers began to demand price increases from small and medium-sized customers under the trend of tight supply, but the prices for large customers remained stable. On one hand, "it is hard to find a single cell", and on the other hand, it is difficult for prices to rise. There are mainly three reasons for this contradictory phenomenon:
First, the decline in system costs brought about by technological iteration has offset some of the pressure for cell price increases. The most important development trend in energy storage technology in recent years is the continuous increase in cell capacity. The mainstream products in the market have switched from 280 Ah to 314 Ah. In 2025, the new products launched by major manufacturers at industry exhibitions have generally increased to 500 Ah - 700 Ah, and the capacity of some cells has exceeded 1000 Ah. The single cell capacity of BYD's newly released "Haohan" energy storage system is as high as 2710 Ah.
Large-capacity cells can reduce the number of cells in an energy storage system, simplify the complexity of the battery management system (BMS), and thereby reduce the integration manufacturing cost, installation cost, and floor area of the energy storage system. Therefore, even if the unit price of large cells purchased by system integrators increases to some extent, the total system cost is controlled through integration optimization, keeping the final delivery price stable.
Second, the market growth is concentrated on large customers with strong bargaining power, and large projects are still a "buyer's market". Currently, the growth of the global energy storage market mainly comes from large-scale projects such as independent energy storage power stations, new energy energy storage allocation, and data center energy storage allocation. The purchasers of these projects are usually large power companies, energy developers, and technology giants, with large single-purchase scales. These large customers have strong bargaining power. To obtain orders and establish long-term cooperation, cell and system manufacturers are willing to make concessions in their quotations, thereby suppressing the overall price increase.
Third, the production capacity of small-capacity cells has not been cleared, and the total battery market still has an oversupply. Although large cells are the mainstream in large-scale energy storage projects, small-capacity cells of 280 Ah and below still have application scenarios in household energy storage, industrial and commercial energy storage, off-grid projects, and some emerging markets sensitive to costs (such as Africa, Brazil, and India). This provides market space for second and third-tier battery enterprises producing small cells, and their production capacity will not be cleared in the short term. Therefore, from the perspective of the total battery market, the shortage of large cells coexists with the surplus of small cells, and the industry as a whole still has an oversupply, which is the fundamental reason for suppressing price increases.
It is worth noting that in this round of the energy storage market boom, Chinese enterprises are undoubtedly the biggest promoters and beneficiaries. The market share of Chinese manufacturers, which were already in a dominant position, has further expanded. However, this has also led to the competition in the global energy storage market gradually evolving into an "internal battle" among Chinese enterprises.
Looking back at the global energy storage battery shipment list in 2023, there were still two South Korean enterprises among the top ten, namely Samsung SDI and LG Energy Solution. By 2024, only Samsung SDI remained. As of the first half of 2025, all the top ten were Chinese companies, with a total market share of up to 91.2%.
In this situation, Chinese enterprises generally adopt aggressive price competition strategies to compete for market share. When the main competitors are all experienced in price wars, it is almost impossible to raise product prices.
03 How Long Can the High Growth Rate Last?
The current popularity of the energy storage industry is not caused by a single factor. The key lies in clarifying the impacts and sustainability of different growth drivers in the short, medium, and long terms.
The short-term driving force mainly comes from the concentrated release of policy node effects - the combination of policy changes, tariff and subsidy adjustments, and incremental stimulus measures has promoted the "rush installation wave" in the Chinese and American markets. The forces supporting longer-term growth come from industrial policies, innovative market mechanisms, expansion of application scenarios, and accelerated technological iteration.
Policy factors play a dual role - providing long-term stable expectations and giving rise to short-term "rush installations".
The industrial policies that build long-term certainty form the cornerstone of the development of the energy storage industry. Developing energy storage projects has been elevated to a strategic level by major global economies to ensure energy security, promote energy transformation, and stabilize power grid operation.
In April 2024, the National Energy Administration of China issued the "Notice on Promoting the Grid Connection and Dispatching of New Energy Storage". In September 2025, the National Development and Reform Commission and the National Energy Administration jointly issued the "Action Plan for the Large-Scale Construction of New Energy Storage (2025 - 2027)". These two policy documents cleared obstacles for the development of new energy storage in aspects such as expanding application scenarios, improving utilization levels, leading innovation and integration, and perfecting market mechanisms. The goal is to add 100 million kilowatts (100 GW) of new energy storage installed capacity nationwide within three years from 2025 to 2027, and the cumulative installed capacity nationwide will reach 180 million kilowatts (180 GW).
The "Big and Beautiful Act" passed by the United States in July 2025 significantly reduced or even cancelled subsidies for new energy vehicles, wind energy, photovoltaics, and other new energy sources. However, it retained the investment tax credits (ITC) for independent energy storage projects until 2033. The clear policy cycle and considerable subsidy intensity provide long-term investment certainty for market participants and encourage capital to enter.
The European Union's "REPowerEU" energy plan regards new energy storage as the core technology to get rid of fossil fuel dependence and ensure energy independence. The European Commission has created a favorable macro environment for the development of energy storage by simplifying the licensing and approval processes for energy storage projects and promoting member states to introduce supporting incentive measures.
Second, there are short-term urgent policies that have given rise to the "rush installation wave".
In early 2025, the National Development and Reform Commission of China issued the "Notice on Deepening the Marketization Reform of New Energy On-Grid Electricity Prices" (Document No. 136), which cancelled the previous mandatory energy storage allocation requirements for new energy power generation projects. For existing projects, most provinces used May 31, 2025, as the cut-off date for grid connection. Projects connected to the grid before May 31 would implement the current subsidy policy, while those connected after June 1 would implement the new policy. To lock in the relatively certain project revenues under the old policy, a large number of project developers chose to accelerate the project progress. Finally, in May 2025, the newly installed power of new energy storage in China was 10.25 GW, and the installed energy was 26.03 GWh, both setting historical records. The newly installed power in May alone accounted for 44.51% of the total in the first half of 2025, and the installed energy accounted for 46.38%.
The situation in the US market is more complex. The deadlines of multiple key policies coincided in 2025, including the expected increase in tariffs on imported energy storage equipment, the "safe harbor" period for the foreign entity (FEOC) restriction clauses for components from specific countries, and the time requirements for the start of construction in the tax credit policy. These factors prompted developers to speed up the progress and advance the energy storage projects originally planned to start in the next few quarters to start within 2025.
In terms of market driving forces, new energy storage is undergoing a fundamental transformation from relying on direct subsidies to obtaining market-based returns based on its intrinsic value. Among them, the capacity tariff mechanism is a key catalyst.
The traditional power market is mainly priced based on the amount of electricity generated (KWh), while the capacity market is priced based on the ability to ensure the reliable supply of the power system (available capacity, KW). As the penetration rate of intermittent renewable energy sources such as wind and solar power in the power grid increases, the power grid's demand for auxiliary services such as frequency stability and voltage support is growing.
With its ability to respond quickly and adjust flexibly, the energy storage system has become an ideal resource for providing these auxiliary services. The capacity pricing mechanism quantifies the "reliability" value of energy storage through long-term contracts and commercializes it, providing stable and predictable cash flows for projects. This reduces the investment risk of projects and improves their financing viability. It not only reduces the difficulty of financing but also encourages the investment and development of longer-duration (such as 4 hours and above) energy storage projects, forming a positive interaction between market demand and technological development.
The impact of technological progress on the energy storage market is concentrated in two aspects: one is to reduce the cost per kilowatt-hour; the other is to expand application scenarios.
The technological iteration and large-scale production of key components such as batteries, energy management systems (EMS), and power conversion systems (PCS) have continuously driven down the cost per kilowatt-hour of energy storage systems, improving the project's economic viability and also becoming an important foundation for supporting long-term energy storage systems. As the cost decreases, the mainstream energy storage duration of energy storage projects in China, Europe, and the United States has now been extended from 2 hours to 4 hours, and the demand for some projects