China steps up investment in energy storage

China is stepping up investment in energy storage to support renewable power generation, despite profitability challenges for operators.
Stockage énergie Chine défis rentabilité

Partagez:

China is experiencing an explosion in energy storage projects, aimed at easing the transition to renewable energies. A striking example is the 795 MW power plant in Shandong, featuring batteries capable of storing up to 1 million kilowatt-hours of electricity, enough to power 150,000 homes for a day. Built by Lijin County Jinhui New Energy Co, this plant illustrates the scale of Chinese investment in this sector.
This effort is supported by a governmental call for even greater investment to overcome grid bottlenecks and maximize the use of renewable energy. The rapid development of storage capacity is essential for balancing electricity supply and demand, particularly in a context where wind and solar farms sometimes produce more electricity than the grid can handle.

Challenges facing the energy storage sector

Despite massive investment, China’s energy storage sector faces major challenges. Profitability remains a key issue, as pricing mechanisms and technological improvements struggle to keep pace with growth. According to Simeng Deng, Senior Analyst at Rystad Energy, many players in this sector are still looking for ways to monetize their investments.
Last year, investment in grid-connected batteries in China rose by 364% to 75 billion yuan ($11 billion), creating the world’s largest storage fleet with 35.3 GW in March. In May, China set a new target of at least 40 GW of battery storage by the end of 2025, increasing its previous target by 33% as part of a broader plan to reduce carbon emissions.

Policies and regulations at stake

To meet these targets, local governments have required renewable energy installations to incorporate storage solutions, leading to rapid capacity growth. However, highly regulated electricity markets make it difficult to encourage the effective use of this capacity, particularly in solar and wind power installations. The China Electricity Board reports that storage in renewable facilities operated on average just 2.18 hours a day last year, compared with 14.25 hours a day for industrial and commercial facilities.
Cosimo Ries, analyst at Trivium China, points out that mandatory political mandates have often failed because they increase project costs without offering sufficient utilization of installed capacity.

Innovations and Technological Progress

China’s energy storage sector is undergoing significant technological advances. The new Shandong power plant uses both lithium-ion and vanadium redox flow batteries, a promising technology offering longer storage times and improved safety. Lower battery prices are also improving storage economics in China, with costs falling by 20% between the end of 2023 and mid-June 2024.
Differentiated prices for peak and off-peak periods, implemented in coastal provinces such as Guangdong, enable storage providers to sell stored electricity at higher prices, boosting their profitability.

Perspectives and Necessary Reforms

Despite this progress, market reforms are needed to give storage operators greater incentives to invest. Some industry players are calling for wider use of capacity payments to maintain ailing coal-fired power plants, with costs borne by customers. Storage technologies such as thermal storage, redox flow batteries and sodium-ion batteries show promising potential for longer storage times, although their initial cost remains high and their supply chains less mature.
China is also increasing its pumped storage projects, an established technology but with geographical limitations and long construction times. At the same time, it encourages demonstration projects for emerging technologies, balancing its bets on different storage solutions to ensure a successful energy transition.

Estimated at 40.9 billion dollars in 2024, the global microgrid market is expected to grow at an average annual rate of 19.28% to reach 191.01 billion dollars by 2033, driven notably by innovative energy contracts.
The U.S. energy storage market set a historic record in early 2025, surpassing 2 GW installed in the first quarter despite increasing uncertainty regarding federal fiscal policies and tax credits.
The Sino-Moroccan joint venture COBCO has begun manufacturing essential lithium-ion battery components at its Jorf Lasfar plant, targeting a final annual capacity of 70 GWh, enough to equip one million electric vehicles.
Trianel teams with BKW and Luxcara to build a 900 MW lithium-iron-phosphate storage park in Waltrop, the first phase of a complex that could reach 1.5 GW and stabilise the German grid.
Blue Whale Energy partners with UNIGRID to deploy behind-the-meter storage systems adapted to constrained commercial and industrial urban areas in Southeast Asia.
Northvolt, recently placed under judicial administration, has received an indicative offer from a foreign investor to acquire its Swedish assets, signaling a potential imminent restart of its battery production units.
The frame agreement aligns Jinko ESS’s utility-scale storage technology with Metlen’s development pipeline, unlocking more than 3GWh across Chile and Europe while reducing delivery risk for grid operators.
Buffalo-based Viridi has obtained the cETLus mark for its RPS150 system, meeting the UL 9540 standard only days after a public battery fire-containment demonstration.
Tesla is building a giant electricity storage facility in Shanghai, China, signing a $560 million contract to meet growing demands on the urban electricity grid.
Envision Energy signs a turnkey contract with Kallista Energy for a 120 MW / 240 MWh energy storage project in Saleux, Hauts-de-France, marking its entry into France’s stationary battery market.
The Dubai-based company obtains a USD72mn loan to add a 300MWh battery system to its 500MW solar plant in Kom Ombo, with commissioning expected in July 2025.
Asian developer Gurīn Energy selected Saft to supply a battery storage system exceeding 1 GWh in Fukushima, marking a new stage in Japan’s energy storage deployment.
Chinese lithium-ion battery manufacturer CBAK Energy confirmed a $11.6mn order for LFP cylindrical batteries to power the electric motorcycle fleet of a rapidly growing African group.
China’s 600MW/2400MWh project enters energisation phase following the installation of 240 battery containers, initiating initial maintenance of this ultra-high-voltage hybrid energy facility.
Wanhua Chemical has signed a strategic agreement with Serbian manufacturer ElevenEs to establish a localised supply chain for LFP battery materials, reinforcing their technical and industrial cooperation in the European market.
The partnership targets the development, construction and operation of over 500 MW of battery energy storage systems in France, with 200 MW nearing the construction phase.
Envision Energy and SUN Terra join forces to build a full energy storage value chain in Southeast Asia, India and Australia, including local manufacturing and technology licensing.
EDF Renouvelables has started building its first large-scale energy storage battery in Poland, a 50 MW project set to be operational by late 2025 in the Opole region.
Enfinity Global has sold a 49% minority stake in two energy storage projects in the US and Italy to Daiwa Energy & Infrastructure, a major player in alternative investments.
Sigenergy deployed a 20 MWh modular energy storage system on a solar power plant in Bulgaria, demonstrating a targeted industrial investment in high-efficiency storage technologies.