Key Points
- The energy storage industry is experiencing a severe battery cell shortage, leading companies to pay significant deposits (e.g., ¥80 million RMB) months in advance to secure supply.
- Energy storage battery growth is significantly outpacing power battery growth, with an 87.7% year-on-year increase compared to 34.9% for power batteries from January to May 2026 in China.
- Key raw material, Lithium iron phosphate (Lin Suan Tie Li 磷酸铁锂), experienced a 150% price increase in one year, yet demand continues to surge, indicating genuine structural demand.
- Government policies (like China’s “15th Five-Year Plan” targeting 300 million kW installed new energy storage by 2030), new scenarios like AI Data Centers (AIDC) requiring over 99.99% power reliability, and accelerating overseas demand are driving the boom.
- While growth rates will moderate from explosive (93% in 2025) to steady-state (25-30% in subsequent years), the industry is projected to reach 4TWh total market scale by 2030, indicating a multi-year infrastructure buildout.
The energy storage industry is experiencing something wild right now.
Companies are literally competing to throw money at suppliers—we’re talking ¥80 million RMB ($11.2 million USD) deposits just to secure battery cells months in advance.
This isn’t normal market behavior.
It signals something bigger: a fundamental shift in how global energy infrastructure is being built, and China’s battery manufacturers are sitting at the center of a massive supply crunch.
Let’s break down what’s happening and why it matters.
The Cell Shortage That Nobody Saw Coming
Walk into any major energy storage factory in China right now, and you’ll see the same thing: production lines running at absolute maximum capacity.
The demand is so intense that downstream customers are offering premium deposits just to get guaranteed delivery slots.
Dai Ying, Senior Vice President of CALB (Zhongchuang Xinhang 中创新航), was blunt about it: “The company doesn’t have that much capacity to deliver in the short term. The leadership wants to push back new projects for the time being.”
REPT BATTERO (Ruipu Lanjun 瑞浦兰钧) representatives heard directly from customers: “We can add more money; we’ll pay the ¥80 million RMB ($11.2 million USD) deposit first—just save the goods for us!”
This isn’t an exaggeration—this is what’s actually happening in deal rooms across the industry.
Production Is Maxed Out
The scale of this is worth understanding:
- Energy storage production lines are operating at full capacity with maximum shift rates
- Companies are working continuous overtime to meet delivery orders
- Customer order backlogs are already scheduled into 2027
- The supply-demand gap for overseas orders is especially pronounced
Tian Qingjun, Senior Vice President of Envision Group (Yuanjing Keji Jituan 远景科技集团), confirmed: “Our bases are operating at high loads, and we are continuously shipping to major markets like Europe, North America, and Australia.”
A spokesperson from Hithium (Haichen Chuneng 海辰储能) added critical context: “Orders have grown explosively since 2026, and customer orders are already scheduled out to 2027, representing a significant supply-demand gap.”
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The Numbers Tell the Story: Energy Storage Is Exploding
The growth rates aren’t subtle.
From January to May 2026, cumulative sales of power and energy storage batteries in China reached 783.4 GWh, representing a year-on-year increase of 48.5%.
But here’s what’s truly wild: energy storage battery growth outpaced power battery growth significantly.
- Energy storage batteries: 87.7% year-on-year growth
- Power batteries: 34.9% year-on-year growth
This means energy storage is growing more than 2.5x faster than traditional EV battery demand.
Raw Material Prices Have Gone Through the Roof
Lithium iron phosphate (Lin Suan Tie Li 磷酸铁锂)—the key raw material for storage batteries—tells a price story all its own.
Current pricing: over ¥25,000 RMB ($3,500 USD) per standard package (400 kg/bag)
Price one year ago: approximately ¥10,000 RMB ($1,400 USD) per standard package
That’s a 150% price increase, yet demand continues to surge.
When prices more than double and customers still can’t get enough supply, you know you’re looking at genuine structural demand—not a temporary bubble.
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Who’s Making Money? The Companies Winning the Energy Storage Race
The energy storage boom is translating directly into profits for the major players.
REPT BATTERO (Ruipu Lanjun 瑞浦兰钧)
This company is a perfect case study in pivoting toward energy storage:
- 2025 Revenue: ¥24.334 billion RMB ($3.41 billion USD)—up 36.7% year-over-year
- 2025 Profit: ¥681 million RMB ($95.3 million USD)—their first annual profit since founding
- Energy storage revenue share: increased from 40.8% to 55.7%
- Milestone: Storage revenue exceeded power battery revenue for the first time
The company deliberately shifted production capacity toward household storage after the market explosion in 2025.
EVE Energy (Yiwei Lineng 亿纬锂能)
- Energy storage revenue share: rose to 39.76% in 2025
- The company is aggressively pivoting its product mix toward storage solutions
CALB (Zhongchuang Xinhang 中创新航)
- Energy storage revenue share: increased from 29.6% to 31.8%
- Trending toward higher energy storage concentration
CATL (Ningde Shidai 宁德时代) — The Global Leader
CATL is the clear market leader and their numbers validate the entire energy storage thesis:
- Ranked first in global storage battery shipments for five consecutive years
- 2025 Energy storage battery systems revenue: ¥62.440 billion RMB ($8.74 billion USD)—up 8.99% year-over-year
- Energy storage gross margin: 26.71%—higher than power battery margins (23.84%)
- This margin difference is strategically important: storage is more profitable than powering EVs
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Why This Is Happening: Three Major Structural Changes
The energy storage boom isn’t random.
It’s the result of converging policy, technology, and market trends that are fundamentally reshaping the energy landscape.
1. Government Policy Is Actively Driving Expansion
The Chinese government released the “15th Five-Year Plan for the Construction of a New Energy System” with an explicit target:
By 2030, installed capacity of new energy storage will reach 300 million kilowatts.
This is a government mandate with regulatory muscle behind it.
The policy framework is shifting from “mandatory storage pairing” (forcing companies to install storage with renewables) to a more sophisticated approach focused on diverse income sources, predictable cash flow, and market-based mechanisms.
Feng Siyao, Deputy Secretary-General of the Energy Storage Application Branch of the China Industrial Association of Power Sources (Zhongguo Huaxue yu Wuli Dianyuan Hangye Xiehui 中国化学与物理电源行业协会), explained the shift: “In the past, we relied on administrative quotas to ‘install energy storage,’ but now we must rely on mechanism design to ‘utilize it and make it valuable.'”
Translation: Energy storage is moving from forced infrastructure to economically viable business.
2. New Scenarios Are Creating Mandatory Energy Storage
Here’s where things get interesting.
The emergence of AI Data Centers (AIDC) is turning energy storage from optional to essential.
AI data centers have extraordinary power demands:
- They require power reliability exceeding 99.99%
- They experience frequent and intense load fluctuations
- They demand consistent, predictable power under green-power connection models
Under these conditions, energy storage is no longer optional—it’s mandatory infrastructure.
Tian Qingjun made this explicit: “Under a direct green power connection model, energy storage is no longer a ‘cherry on top’ but a must-have.”
Recently, Tencent (Tengxun 腾讯) and Envision Group (Yuanjing Keji Jituan 远景科技集团) launched the world’s first 100% green-power-supplied data center in Chifeng, Inner Mongolia.
This is proof of concept that massive-scale AI infrastructure requires energy storage as foundational infrastructure.
According to Li Yisha, Senior Energy Storage Analyst at SMM: “It is expected that the AIDC sector will bring about 4GWh of domestic installed capacity for energy storage in 2026. Over the next five years, this emerging scenario may continue to contribute significant growth.”
3. Overseas Markets Are Accelerating Demand
Energy storage demand isn’t limited to China.
There’s a significant structural change happening with geographic demand:
- Envision Group (Yuanjing Keji Jituan 远景科技集团) currently splits its market equally between domestic and international
- The company expects overseas to reach two-thirds of total revenue in the future
- Supply-demand gaps for overseas orders are especially pronounced
- Europe, North America, and Australia represent key growth markets
This geographic diversification means the energy storage boom isn’t dependent on China’s domestic market alone.
The Product Mix Shift: Large-Capacity Cells Are King
Not all battery cells are created equal in this market.
There’s a notable shift toward high-capacity cell products.
Hithium (Haichen Chuneng 海辰储能) highlighted this in their order patterns: “New orders are primarily centered around 1175Ah kilo-ampere-hour level products and 587Ah large-capacity cells.”
Larger-capacity cells are in short supply relative to smaller cells.
This creates an additional bottleneck: manufacturers can’t just ramp up any production—they need high-end capacity for premium products.
How Long Will This Boom Last?
The critical question: Is this a temporary surge or a sustained multi-year cycle?
The Optimistic Case: Solid Growth Until 2030
Li Yisha believes the underlying drivers support continued industry prosperity:
- Market mechanism transformation is structural, not cyclical
- New scenarios like AIDC will continue generating demand
- Global consensus on energy security and low-carbon transition is locked in
- These drivers should support growth at least through 2030
However, the growth rate will decelerate as the market matures.
Expected trajectory:
- CAGR 2024-2030: approximately 36%
- CAGR 2026-2030: approximately 22%
- This indicates transition from explosive growth to steady-state range
What About Short-Term Growth Rates?
The year-over-year shipment growth numbers show the expected deceleration:
- 2025: approximately 93% year-over-year growth
- 2026 (projected): approximately 54% year-over-year growth
Li Yisha provided crucial perspective: “This downward shift indicates the industry is naturally entering a phase of digestion and optimization after high-speed expansion, rather than a reversal of prosperity.”
Translation: Growth is slowing from unsustainable to sustainable, not collapsing.
Corporate Guidance Points to Long-Term Expansion
A CATL (Ningde Shidai 宁德时代) representative provided specific market forecasting:
- Demand for power and energy storage batteries remains positive with rising production
- By 2030, total market scale for power and energy storage expected to exceed 4TWh
- Compound industry growth rate over next few years: 25% to 30%
Tian Qingjun stated directly: “The supply-demand gap for overseas orders is clear, and supply is expected to remain tight throughout 2026.”
The Bottom Line
The energy storage market is experiencing genuine structural demand, not speculative hype.
When companies are paying ¥80 million RMB ($11.2 million USD) in advance deposits for guaranteed delivery, when prices double and demand still accelerates, and when new use cases like AI data centers are creating mandatory infrastructure requirements—that signals a real shift in how energy systems are being built.
The growth rates will moderate from the current 87-93% explosiveness to more sustainable 25-30% levels, but that’s normal market maturation.
The energy storage industry isn’t facing a supply shortage that’s temporary.
It’s facing the early stages of a multi-year infrastructure buildout.
And Chinese battery manufacturers are positioned to capitalize on the entire supply chain.
