Energy storage: China’s battery power sets stage for global leadership

On a sunny morning in late May, a massive laboratory designed to create extreme conditions – from melting heat to bone-cracking cold, howling sandstorms, corrosive ocean spray and even fire – officially opened in the coastal city of Xiamen, in eastern China’s Fujian province. Equivalent in size to 14 football pitches, the 3 billion yuan (US$444 million) facility will throw everything it has at battery-based energy-storage systems built by Chinese manufacturers, testing the equipment’s mettle before installation into the country’s electrical grid, where it will play a crucial role. “Amid a profound transition into greener energy, energy storage is set to become the balancer and stabiliser upon which the new power system relies,” said Lu Jiazheng, director of the disaster prevention and reduction centre at a subsidiary of state-owned utility State Grid, at the inauguration ceremony for the Xiamen Energy Storage Validation Research Institute, known as the ESVL. “China’s experience will ultimately provide the world with a model that serves as a valuable benchmark.” Lu’s comments reflect Beijing’s ambition to accelerate commercialisation of battery-based grid-storage technology, known in the industry as battery energy-storage systems (BESS). Although built and operated by global electric vehicle (EV) battery leader Contemporary Amperex Technology Ltd (CATL), the ESVL will test equipment from all comers. Its opening is thus seen as a milestone in line with China’s vow – in its five-year strategic plan for 2026–2030 – to improve energy security. The plan lists “new energy storage” as a key pillar of the goal; a grid increasingly reliant on intermittent energy sources such as solar and wind farms must be able to cache massive amounts of electricity and smoothly feed it back into the distribution system on demand. The ESVL was designed to help energy-storage developers shorten grid-connection cycles and fine-tune their technologies to ward off risks to grid stability, according to CATL officials. The company, which commands nearly 40 per cent of the EV battery market, said the facility was the world’s largest and most comprehensive one-stop testing and validation platform for energy-storage systems. According to Seoul-based SNE Research, CATL also accounted for 30 per cent of the global market for energy-storage batteries in 2025. The ESVL’s establishment came amid an irreversible increase in the use of renewable energy worldwide, said CATL’s founder and chairman, Robin Zeng Yuqun, at a forum a day ahead of the opening. And the facility would help China’s BESS supply-chain vendors expand overseas, said ESVL head Chen Xiaobo. Sizing up the storage opportunity China already boasts global dominance in the sector. In 2025, its cumulative installed capacity totalled 144.7 gigawatts (GW) – equal to nearly 52 per cent of the global market – according to a report by the China Energy Storage Alliance, a figure that placed it in the world’s top spot for a fourth consecutive year. In comparison, the US had over 50GW of total capacity. The cumulative installed capacity of energy-storage systems in China was expected to jump 156 per cent to 370GW by 2030, according to the industry consortium. CATL, Eve Energy, Hithium, BYD and CALB, all Chinese firms, were the world’s top five makers of energy-storage batteries in the first quarter of 2026, SNE data showed. Anticipating market growth at home and abroad, China’s battery producers had unveiled plans to add more than 600 gigawatt-hours (GWh) of new production capacity this year, according to the GGII Energy Storage Research Institute, a Shenzhen-based consultancy, in a report in April. Lithium-ion battery costs have fallen about 90 per cent since 2010 as Chinese manufacturers like CATL upgraded technologies and increased production volume to cater to demand from carmakers amid rising EV popularity. Thanks to that trend, last year the cost of producing power using a facility that combines solar panels with energy storage reached parity with thermal power plants, generally considered the cheapest form of power according to an April report from UBS. Low prices and abundance also made battery-based energy-storage systems more attractive than competing systems, such as those using hot water or compressed air, as the battery equipment can be installed almost anywhere while providing fast response times and high energy output. “With potential utilisation improvements and better grid dispatch for stand-alone BESS, we think the cycle life could further improve, and levelised cost of storage could further decline,” UBS said. “Lower costs would make BESS projects more economically viable, especially given rising demand from artificial intelligence data centres for direct green-energy connections and off-grid solutions.” Along with the AI buildout, the global energy shock this year has ushered in surging demand for energy storage, which could be a windfall for battery makers and material suppliers. In late March, China’s Ganfeng Lithium – the world’s largest producer of lithium, a crucial raw material in battery production – said it was envisioning “explosive growth” in the global BESS market in 2026, spurred by higher prices for the metal and buoyant demand for renewable energy infrastructure. The statement came after Ganfeng posted a net profit of 1.61 billion yuan for 2025, swinging from a net loss of 2.1 billion yuan a year earlier. With the conflict in the Middle East propping up oil prices, global energy-storage shipments in the first quarter surged more than 78 per cent from a year earlier to 126.4GWh, following 75.5 per cent growth in 2025, data from Taipei-based InfoLink Consulting showed. China accounted for seven of the top 10 BESS suppliers in the January-to-March quarter, with BYD topping the leaderboard for the first time and pushing US giant Tesla to fourth, according to a ranking by InfoLink. CATL joined the list in eighth place as it chased BESS as a new growth engine. In April, the company announced its plan to create a 30 billion yuan unit to manage and expand mining assets, as the global energy crisis presented a high-growth opportunity. Global new BESS installations are expected to record compound annual growth of 29 per cent from 2024 to 2030, while China may log 30 per cent annual growth over the same period, analysts at BofA Securities said in a note in April. US consulting firm McKinsey & Company projected the global BESS market would reach US$150 billion by 2030. Funding the BESS buildout The rapid growth in demand has also raised the need for financing. China would need at least 7 trillion yuan to finance new energy-storage projects through 2060, including up to 200 billion yuan per year for construction between 2026 and 2028, according to a report by the Beijing-based Institute of Finance and Sustainability. To support the industry, China is exploring the securitisation of energy-storage businesses. In December, the National Development and Reform Commission – the country’s top economic planner – added grid-storage facilities for the first time to a list of infrastructure assets that are allowed to underpin exchange-traded real estate investment trusts (Reits). Reits allow asset owners to raise cash from valuable but illiquid assets without losing control of them. They also give investors the opportunity to collect regular dividends with income generated by the underlying properties. On June 9, a Reit based on energy-storage stations in Gansu province was listed on the Shanghai Stock Exchange. Policy support would continue to play an important role in scaling the industry, said Matty Zhao, co-head of China equity at BofA Global Research. “The potential inclusion of ESS assets into infrastructure Reits could broaden financing channels and lower funding costs, providing a further boost to deployment,” Zhao said. In addition, the Reit mechanism could work as a “quality filter” to alleviate a bottleneck that came about after Beijing scrapped a mandatory allocation rule in early 2025, said Dermot McGrath, founder of ZenGen Labs, a Shanghai-based consultancy. Under the old rule, developers rushed to build energy-storage stations, but only 32 per cent of such projects were in use in 2024, leaving most capital frozen in idle assets, according to a report by government-backed consortium China Electricity Council. “Reits will reward the well-run, contracted projects and skip the weak ones,” McGrath said. “Either way it’s healthier than the old build-it-and-leave-it mandate era.” After fast growth in volume, China’s energy-storage sector now needs to prove its trustworthiness, the Shanghai-based consultant added. CATL hoped users would benefit from its new ESVL, as the testing data it produced would enhance the reliability and adoption efficiency of energy-storage systems, according to Chen, the lab’s head. Meanwhile, Gotion High-Tech, the world’s 10th-largest supplier of energy-storage cells in the first quarter, is also trying to allay concerns about investment returns and product lifespan. The firm, based in central China’s Anhui province, launched the second generation of its Gotion Grid Q system in mid-May, claiming it would reduce construction costs by 30 per cent and cut overall initial investment by more than 6 per cent. China’s export outlook remained robust despite evolving policy dynamics, according to BofA’s Zhao. A reduction in export tax rebates for battery products – to 6 per cent in April from 9 per cent, and ultimately to zero by 2027 – was expected to drive near-term shipment acceleration, as buyers would front-load shipments, she said. Abdulla Humaid al-Jarwan, chairman of the Abu Dhabi department of energy, told the SCMP during a visit to China last week that his department was in talks with 22 Chinese firms, including CATL, about partnerships on infrastructure development in the capital of the United Arab Emirates. “We believe that global challenges require global solutions, and that effective partnerships remain the fastest route to developing more advanced technologies capable of serving communities and economies,” he said. “Through our cooperation with partners in China, we are seeking to develop solutions that begin in Abu Dhabi and can contribute to supporting cities and markets around the world.”

Energy storage: China’s battery power sets stage for global leadership

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Battery-based grid storage is set for 150 per cent growth in China, as Beijing prioritises energy security and firms eye global markets

Battery-based grid storage is set for 150 per cent growth in China, as Beijing prioritises energy security and firms eye global markets