In 2025, China's energy storage industry fell into a peculiar situation of "ice and fire": on one hand, the prices of energy storage systems dropped below the cost line, and the industry's gross profit margin declined to 8%; on the other hand, there was a shortage of battery cells, with delivery cycles extending from 30 days to 75 days, forcing 38.7% of small and medium-sized enterprises to reduce production due to the shortage of battery cells.

"Every day we are urged for battery cells, and customers even come directly to the factory gate to push us, but our own supply of battery cells is intermittent." Manager Li, head of an energy storage integrator in Changzhou, Jiangsu, expresses his frustration, which is a true reflection of the current structural imbalance in the energy storage industry.

When the "New Policy No. 136" cancels the mandatory energy storage in February 2025, ending an eight-year policy-driven model, the energy storage industry will have to shift from "barbaric growth" to "value cultivation."

The price of lithium battery energy storage systems has plummeted by nearly 80% in the past three years, with the market average price of some storage systems falling below the cost price, leading the entire industry to face widespread losses.

This low-price competition has fallen into a vicious cycle. According to data from the China Chemical and Physical Power Sources Industry Association, the average winning bid price for lithium battery energy storage systems from January to June 2025 is 0.4848 yuan/Wh, a year-on-year decrease of 29.94%.

The annual report of Penghui Energy for 2024 shows that although the company's revenue reached 7.96 billion yuan, an increase of 14.83% year-on-year, the net profit attributable to shareholders of the listed company was -250 million yuan, a year-on-year decrease of 685.72%.

In stark contrast to the overcapacity, the supply of battery cells is becoming increasingly tight. In the third quarter of 2025, the average delivery cycle for energy storage battery cells has extended from 30 days in the same period last year to 75 days.

"Right now we are using cash flow to exchange for time," said Manager Li. The company he works for has 3GWh of orders backlog. If all are delivered, the expected revenue could reach 1.2 billion yuan, but due to a shortage of battery cells causing production delays, the company has to bear tens of thousands of yuan in penalties every day.

In February 2025, the National Development and Reform Commission and the Energy Administration issued the "Document No. 136," which clearly states that the configuration of energy storage shall not be a prerequisite for the approval, grid connection, and online access of new energy projects. This marks the official end of the "mandatory energy storage" policy first proposed in Qinghai in 2017.

The expert member of the Energy Storage Application Branch of the China Chemical and Physical Power Industry Association, Chu Pan, stated: "The cancellation of mandatory energy storage does not mean that energy storage is not valued, but rather aims to alleviate the burden on the slightly weakened new energy power generation in recent years, allowing it to embark on a faster and better development path."

Following closely, the "Document No. 394" released in April requires the basic realization of full coverage of the electricity spot market by the end of 2025, and the comprehensive implementation of continuous settlement operations.

The electricity spot market adopts a 15-minute rolling clearing model. Data from the Zhejiang pilot project shows that during peak hours for photovoltaic power generation, the electricity price dropped to a minimum of -0.18 yuan/kWh, while the highest price during the evening peak reached 1.45 yuan/kWh, with daily price fluctuations generally exceeding 1.5 yuan/kWh.

This system design upgrades energy storage from a traditional "peak shaving and valley filling" tool to a "dynamic balancer" of the power system, raising the requirements for its response speed and prediction accuracy to the minute level.

Against the backdrop of the comprehensive market entry of new energy and the AI-enabled industrial transformation, artificial intelligence is deeply integrating with energy storage systems, reshaping core aspects such as battery management, energy scheduling, and electricity trading.

Yuanjing Energy has released the world's first intelligent body energy storage EN 8 Pro, based on AI large models, promoting autonomous and efficient interaction between energy storage and the electricity market, as well as the power system.

Ningde Times has launched a smart energy storage management platform - "Tianheng·Zhichu", which integrates innovations such as "big data platform + AI large model and advanced mechanism algorithm fusion + AI assistant tools" to build a complete set of standardized capabilities for energy storage power stations, including intelligent early warning and operational analysis.

The "2025 Energy Storage Industry Research White Paper" data shows that smart BMS (Battery Management Systems) are becoming widespread, with AI algorithms achieving battery health prediction accuracy exceeding 95%, extending lifespan by 10%—15%. Virtual power plants aggregate distributed energy storage resources through AI algorithms to participate in electricity spot market trading, with pilot projects in Europe and the United States increasing revenue by 20%.

To reduce costs, the trend towards larger energy storage cells and systems is becoming increasingly evident.

Ruipu Lanjun has released a new generation of high-capacity energy storage cells with a peak capacity of 392Ah, an energy efficiency of 95%, and an energy density of 415Wh/L.

Yuanjing Power released a 530Ah energy storage cell, which will achieve mass production and delivery within the year; Haichen Energy Storage released a 587Ah energy storage battery, with a volume energy density increase of 6.5% compared to the 314Ah battery.

The increase in battery cell capacity drives a rapid enhancement in system capacity. Nandu Power released the Center L Ultra 6.25MWh AC/DC integrated liquid cooling energy storage system, suitable for energy storage scenarios of 2 to 8 hours; EVE Energy released a 6.9MWh energy storage system, supporting standardized configurations for hundred-megawatt-hour power station projects.

Xu Dongyang, the head of the Product Development Department of the Comprehensive Energy Division at CRRC Zhuzhou Institute, believes that: "The increase in size of the battery cells and systems not only reduces initial investment costs but also significantly decreases the footprint and subsequent operation and maintenance expenses by enhancing integration and energy density, achieving structural optimization of the entire lifecycle cost."

As the proportion of new energy installations continues to increase, long-duration energy storage technology has become key to addressing the intermittency and volatility of energy.

In 2025, the bidding results of two major long-term energy storage projects in Europe—the UK and Italy—have attracted industry attention. The Italian transmission system operator Terna announced the results of its first energy storage auction, with a capacity of 10GWh. All winning projects are lithium-ion batteries, with operating times of 2, 4, 6, and 8 hours, respectively.

Similarly, the UK's energy regulator Ofgem has advanced 77 LDES projects (28.7GW) to the next phase in its new long-duration energy storage capacity price floor scheme, of which approximately 70% of the capacity is lithium-ion batteries (excluding pumped storage).

Starting from August 1, 2025, China's first mandatory national standard "Safety Requirements for Lithium Storage Batteries and Battery Packs for Energy Storage Systems" will be implemented, setting a survival red line for the industry.

More than 20 leading companies, including CATL, have successfully passed this mandatory standard.

Liu Yanlong, the former secretary-general of the China Chemical and Physical Power Sources Industry Association, pointed out: "The safety of energy storage batteries is related to the sustainable development of the industry, and the safety of its products involves the manufacturing at the front end, the management system at the back end, and system integration, requiring a complete testing and evaluation standard system."

The energy storage industry is shifting from simple equipment sales to diversified value creation.

Inner Mongolia Autonomous Region has explored and constructed a multi-dimensional revenue model of "discharge compensation + spot price difference." For the discharge amount of independent new-type energy storage power stations included in the regional plan to the public grid, compensation will be implemented according to the principle of a fixed amount for one year and a fixed amount for ten years, with the compensation standard for the year 2025 set at 0.35 yuan/kilowatt-hour.

The actual operating data for the first eight months of this year shows that: the total charging electricity used for new energy storage in Inner Mongolia reached 2.71 billion kilowatt-hours, an increase of 422% year-on-year; the total discharging electricity used reached 2.36 billion kilowatt-hours, an increase of 439% year-on-year.

The Ordos Wan success 200,000 kW / 800,000 kWh energy storage power station will be officially put into operation in June 2025, with a total investment of 75,656,000 yuan. The project leader Li Chao expects to achieve a profit of 29 million yuan for the entire year of 2025.

In the face of fierce competition in the domestic market, Chinese companies are accelerating their overseas expansion, seeking new growth opportunities in the international market.

According to statistics from the China Energy Storage Industry Technology Alliance (CNESA), in 2024, the total value of overseas orders signed by Chinese energy storage companies exceeded 150GWh, covering major global markets including the Americas, Europe, Australia, and the Middle East. In the first half of 2025, the scale of overseas orders reached 163GWh, a year-on-year increase of 246%, covering more than 50 countries and regions worldwide.

In Spain, Naturgy has begun the construction of its first battery storage projects, which will be configured in a hybrid manner with the company's Tabernas I and II solar parks, as well as the Piletas I wind farm and the El Escobar solar power station.

These four projects are the first phase of a larger plan, which aims to build ten battery storage sites by 2026, with a total capacity of 160MW/342MWh and an investment of over 80 million euros.

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