The Hot New Energy Storage Market: Market Hype and Turning Points Coexist

In early March, new energy storage was listed as one of the “six emerging pillar industries,” and “developing new energy storage” was also successively written into the 2026 Government Work Report and the “Fifteenth Five-Year Plan” outline. On March 31, the 14th Energy Storage International Exhibition (ESIE2026) opened in Beijing’s Shunyi District. This grand event brought together about 800 companies across the industry chain; leading players such as Sungrow Power Supply (300274.SZ) and CATL (300750.SZ/03750.HK) all attended. Six themed exhibition halls and a 160,000-square-meter exhibition area were packed with people, and new products were launched in dense succession.

At the opening ceremony, the Zhongguancun Energy Storage Industry Technology Alliance released a white paper, predicting that by 2030 the cumulative installed capacity of China’s new energy storage would reach at least 371.2 gigawatts (GW), more than 1.5 times higher than the end of the “14th Five-Year Plan.” This prediction further added fuel to the industry’s enthusiasm for development.

But amid the noise, concerns are evident. “More requests for quotes, fewer actual deals.” “In a day of hosting customers, more than half are competing peers.” On April 2, the second day after the exhibition officially opened, several salespeople from energy storage manufacturers complained to a reporter from First Financial. This is a concrete snapshot of the energy storage industry’s current “involution” predicament.

However, multiple industry participants interviewed judged that as China’s domestic electricity market construction becomes increasingly完善, the national “anti-involution” strong regulatory policies take effect, and on top of that the industry focuses on product value across the full lifecycle and actively expands overseas high-net-worth markets, the energy storage industry is entering a critical turning point for order to be reshaped. It is expected that the industry’s profitability environment will improve significantly in the second half of the year.

Earnings under pressure, “copycats” appear in high-end tracks

“I stood there all day yesterday. A lot of business cards were handed out, and they didn’t skimp on the bottled water—my throat got completely worn out, but there weren’t many real deals.” On April 2, a salesperson from a second-tier energy storage company told a reporter from First Financial that although this year’s exhibition is booming, to him it feels more like “fake heat,” with hot quote requests but few actual deals. Many competing peers even came to “probe” the company’s technology, pricing, and customer information.

Behind this phenomenon is that China’s domestic energy storage market is trapped in low-price “involution.” During the two sessions of the National People’s Congress this year, NPC deputy and Chairman of Tianneng Holding Group Zhang Tianren had pointed out that irrational price competition in China’s electrochemical energy storage industry has intensified. Over the past three years, key equipment in energy storage systems has seen price cuts of about 80%. In some tenders, bid prices have long been below the industry’s average production cost. Some companies, leveraging advantages from industrial chain monopoly, bid with prices lower than cost, disrupting market order and creating a vicious cycle of “low-price dumping—profit decline—quality shrinkage.” It has even evolved into systemic risk. To grab market share, some companies compromise in areas such as cell quality control, system integration, and safety redundancy, planting major safety hazards for end-use applications.

Under the industry-wide dilemma of “growing revenues but not profits,” cost transmission pressure caused by lithium price increases further exacerbates profitability challenges across the industrial chain.

In mid-2025, battery-grade lithium carbonate prices bottomed out at about 60,000 yuan/ton, and then started a strong rebound, climbing to 130,000 yuan/ton by the end of 2025. Since the beginning of this year, battery-grade lithium carbonate has been fluctuating around 150,000 yuan/ton. By the end of March, it had already crossed the 170,000 yuan/ton threshold, up more than 160% from the 2025 low. Rising raw material prices, combined with the gradual cancellation of export tax rebates, has sharply increased the costs of the energy storage industrial chain.

Feng Di, Senior Manager of Strategic Expansion at Xiamen Xinneng An Technology Co., Ltd., told First Financial and other media that in China, energy storage cell prices have risen from 0.3 yuan/Wh last year to 0.4 yuan/Wh, driving工商储 system prices from 0.6 yuan/Wh to 0.7 yuan/Wh.

When lithium prices rise, the investment in the entire energy storage project is directly pushed higher, leading to strong customer hesitation. Some projects are forced to delay commissioning due to imbalances between costs and returns. During a phone call with investors on March 31, Sungrow responded to the impact of lithium carbonate price increases on demand, saying, “Higher raw material prices have caused some projects to be in a waiting-and-seeing stage. Those demands should still exist, but they will be deferred.”

A reporter from First Financial noted that the atmosphere of involution in the industry has spread from conventional energy storage to the grid-forming energy storage track, which is seen as having “high barriers and high premiums.”

Miao Nanlin, general manager for the energy storage industry at Nanjing Nari Relays & Protection Electric Co., Ltd., said in an interview with First Financial and other media that many companies claim “grid-forming” branding, but in reality they lack core application capabilities such as off-grid operation and short-circuit testing. Amid the voices of “real grid-forming must defeat fake grid-forming,” the “copycats” are actually making more noise. The uneven product quality leads owners to have heavy concerns in actual applications. Domestic grid companies’ adoption of grid-forming technologies is still in the pilot stage.

Miao Nanlin emphasized that from the perspective of owners and professional standards, truly grid-forming technology must have off-grid operation capability, pass off-grid short-circuit experiments, and the equipment’s output waveform must closely match that of synchronous machines. Currently, many manufacturers have not even completed basic short-circuit experiment testing.

Policy sets the tone, market reconstruction, and a return to long-term value

The disorderly phenomena of “energy storage involution” have drawn high attention from regulators, and policy packages have been rolling out intensively.

On March 25, the State Administration for Market Regulation issued a notice, clarifying that it will comprehensively apply anti-unfair-competition measures to focus on curbing “involution-style” competition in key sectors such as photovoltaics and lithium batteries. It requires precise investigation and handling of behaviors that disrupt market order, such as forced or de facto forced sales at prices below cost, and simultaneously advances efforts to prevent large enterprises from withholding payments, strengthen protection of trade secrets, and push industry associations to formulate competition rules.

On March 31, on the day of the energy storage exhibition summit, Wu Guogang, a second-level inspector from the Department of Electronic Information under the Ministry of Industry and Information Technology, also proposed four major measures regarding key focus areas for the follow-up work on new energy storage. Specifically, they include: organizing and drafting the “Fifteenth Five-Year Plan” for new battery development, strengthening support for original and leading technological innovation; strengthening precise regulation of industrial operation, dynamically tracking indicators such as capacity, output, and prices to curb low-level redundant construction; improving the standards system, strengthening the implementation of mandatory national standards, and formulating key standards such as safety, performance classification, and classified rapid testing; and improving long-term industry self-discipline mechanisms, focusing on building a market ecosystem that is high-quality and fair-priced, orderly and equitable, and breaking through homogenized and involutionary competition.

At the same time, the gradual improvement of domestic electricity market mechanisms also provides key support for the energy storage industry to crack its profitability impasse and build a foundation for returns.

On January 30, the National Development and Reform Commission and the National Energy Administration issued the “Notice on Improving the Capacity Pricing Mechanism on the Generation Side.” For the first time at the level of national institutions, it clarified the capacity value of new energy storage. For grid-side independent new energy storage power stations that provide services for safe operation of the power system and do not participate in shared capacity allocation, localities may provide capacity pricing. The capacity pricing level is based on local coal-fired power capacity pricing standards, converted into a certain proportion according to peak capacity, and determined by considering factors such as the progress of electricity market construction and demand from the power system.

“By explicitly clarifying and effectively filling the revenue shortfall of grid-side independent storage that relies solely on peak-valley arbitrage, it significantly improves project economics.” Feng Di told First Financial that previously, relying on spot market arbitrage, the return on independent storage projects was only around 5%. Now, with capacity pricing revenue added, the possibility of achieving an 8% return rate for projects is significantly higher.

For the domestic industrial and commercial energy storage market, Feng Di expects that as diversified revenue scenarios such as virtual power plants and electricity ancillary services are gradually rolled out, the industry’s profitability environment will improve significantly in the second half of this year. He pointed out that the past single arbitrage model relying on peak-valley price spreads is no longer sustainable. The market now features multiple participants, including professional energy storage operators, virtual power plant operators, and electricity sales companies, all exploring new profit models. Among them, the transformation demand for already operational existing power stations is even more urgent.

The new trend is a shift in the energy storage industry from “scale expansion” to “deep value cultivation.” The core of product competition is upgrading from “single-point price wars” to “full-lifecycle value comparison.”

Zhang Pengbo, Chief Brand Officer of Pylon Technology (688063.SH), called on the industry to treat energy storage as a long-term asset investment and operation, discard short-term profit-seeking thinking, and focus on cell quality, system efficiency, and post-project operation and maintenance capabilities. He believes that competition in the industry continues to intensify, but the entry barriers are also rising in parallel. Competition dimensions have become more diverse: whether a company’s production scale, operating conditions, and whether its products can quickly adapt to clients’ upgraded needs are all core elements of competitiveness.

（Source: First Financial）