Energy Storage Sector In Focus In China As Margins Shrink
China’s energy storage exports in the form of BESS systems, which have catalysed a fresh burst of interest and installations in both solar and EVs in recent months, have been in focus at the annual policy setting sessions of the ruling Communist Party.
Zhang Tianren, Chairman of battery maker Tianneng Holding Group made the case for more ‘controlled competition’ at the Two Sessions. Zhang, who is also a deputy to the National People’s Congress claimed that irrational competition in energy storage has wiped out margins, creating the kind of conditions that are referred to as ‘involution’, or intense internal competition that is detrimental to margins for all players. “Prices of key equipment have plunged around 80 percent over the past three years, with some prices persistently remaining below the industry’s average production cost”, claimed Zhang.
Interestingly, Zhang’s comments come at a time when industry leader CATL has come out with outstanding results for 2025 last week. CATL’s turnover grew by 17% YoY to RMB423.702 billion, while its net profit surged by 42.3% YoY to RMB72.201 billion. The firm,. along with BYD remains among the leading Chinese players globally in the storage market, with others also making deep inroads.
A similar plaint of involution in the wind energy sector and solar manufacturing saw talk of measures including capacity regulation, standards-setting, and quality supervision to address too much competition. Those measures have not really been pushed hard, leading to limited to no impact on the sectors so far. With so much riding on low energy storage costs in India and elsewhere, governments, and developers would be watching developments very carefully.
For Energy storage, Zhang suggested that China’s energy regulator and other government departments revise tendering and bidding rules for storage projects so that evaluations include key metrics such as levelized cost of energy, battery lifecycle and degradation rate, and safety redundancy configuration levels.
China’s installed capacity of new-type energy storage reached 136 gigawatts by 2025 end, up 84 percent from a year earlier and accounting for over 40 percent of the global total, with lithium-ion battery storage contributing about 96 percent. The global lead has been built on better access to critical materials, high focus on innovation, and status as the OEM of choice for other global EV majors from Tesla to VW and more.
The country aims to raise the capacity figure to 180 GW by the end of next year, according to an action plan issued last August by the National Development and Reform Commission and other government departments. Like wind and solar, such a high capacity number will make capacity additions in other countries almost redundant without protection from Chinese imports. One of the key points the US is using to clamp down on Chinese imnports is in fact this issue of ‘deliberate’ overcapacity in China.
As wind and solar power continue to gain share at the expense of thermal and gas as electricity sources, the case for energy storage is expected to become stronger over the next few years.