Domestic Market: Utility-Scale Energy Storage Continues to Grow, Price Competition Expected to Ease
Rapid Growth in Demand for Large-Scale Energy Storage Installations
Market Size: Estimated that in 2024, newly installed large-scale energy storage capacity in China will reach 38.6 GW / 93.6 GWh, marking strong growth. According to data from the National Energy Administration, the country is expected to add 42.4 GW / 101.1 GWh of new-type energy storage in 2024, representing a year-on-year increase of 87% and 108% in power and energy capacity, respectively — a clear sign of rapid expansion.
Large-scale lithium ion battery energy storage (“grid-side storage”) and commercial & industrial (C&I) lifepo4 battery storage dominate China’s energy storage installations. Based on EESA’s estimates, 7.5 GWh of new C&I storage will be added in 2024. Assuming a 2-hour system duration, this translates to 3.8 GW of installed power. Subtracting this from the total, we estimate that newly installed large-scale energy storage in 2024 will reach 38.6 GW / 93.6 GWh, reflecting year-on-year growth of 85.2% / 107.1%, with an average duration of 2.4 hours.
Looking ahead, we project that in 2025, newly installed large-scale storage will reach 45.4 GW / 117.9 GWh, though the growth rate is expected to slow. The underlying driver of 215kwh 372kwh solar lifepo4 lithium battery large-scale storage demand is the need for greater grid flexibility in response to growing renewable energy capacity. Therefore, we forecast the domestic large-scale energy storage market by evaluating new centralized renewable energy installations and corresponding storage configuration ratios (measured by power capacity).
Storage Configuration Ratio:
In 2024, the storage configuration ratio for centralized onshore wind and solar projects in China is estimated at about 16.5%. Policy Document No. 136 promotes full marketization of new energy electricity and removes mandatory storage requirements, causing industry concerns about its impact on large-scale storage deployment. However, local policies are shifting from mandatory to market-driven storage adoption, so many new renewable projects will still include storage. With a June 1, 2025 deadline distinguishing old and new projects, a surge in solar and storage installations is expected before then. Consequently, the storage-to-renewable ratio is projected to gradually increase to 18.0% in 2025.
Storage Duration:
With new energy prices entering the market, the spot electricity price for solar generation during peak hours may significantly decline, increasing the demand for peak shaving from project owners. This would drive demand for energy-oriented storage. Thus, we assume the average storage duration will increase to 2.6 hours.
We expect new onshore wind capacity in China to reach 90 GW and AC-side PV additions to reach 270 GW in 2025 (with 60% from centralized projects).
Assuming an 18% storage configuration ratio and 2.6-hour duration, we project that in 2025, China will add approximately 45.4 GW / 117.9 GWh of new 100kw 200kw 372kwh lithium battery large-scale energy storage capacity — representing a year-on-year growth of 17.5% and 26.0%, respectively.
Driving factors: my country’s large-scale energy storage is expected to gradually transition from being driven by “forced allocation” policies to being driven by market factors. In terms of installed capacity, domestic large-scale energy storage power stations can be divided into two categories: “new energy storage” and “independent energy storage”. The basis for the division of the two is the grid-connected entity. The former relies on the existence of new energy stations, while the latter is independently connected to the grid.
In the early stage, domestic new energy storage and independent energy storage were mainly driven by the “forced allocation” policy. With the withdrawal of the forced allocation policy, large-scale energy storage in the future will need to gradually be driven by market factors.
Renewable Energy Paired Storage:
This refers to storage systems built alongside centralized wind and solar plants. Since 2021, China has mandated storage configurations (typically 10–25% of power capacity) for projects exceeding guaranteed grid-connection capacity. The aim was to have renewable producers share grid-balancing responsibility.
However, these projects often face low utilization and limited revenue, making them more of a cost burden. In February 2025, Document No. 136 ended the requirement to pair storage with new energy projects as a condition for approval or grid access, signaling a shift away from mandatory pairing.
Standalone Storage:
Standalone storage refers to energy storage projects operating independently of renewable plants and participating directly in the electricity market. Following policy changes in late 2021, such projects became major players in China’s storage sector.
By mid-2024, standalone storage made up 66% of new installations and 52% of total capacity. With multiple revenue sources—such as arbitrage, ancillary services, and capacity leasing—alongside high utilization rates, standalone storage is central to the market-driven growth of the sector.
At present, the main revenue source for domestic standalone storage is capacity leasing to meet the paired storage ratio requirements for new wind and solar projects. This implies that in the short term, standalone storage still relies significantly on paired storage policies and needs to explore more diversified market-based revenue models.
Overseas Market: Booming Utility-Scale Storage Demand with a More Favorable Competitive Landscape
Demand Side: High-Value and Emerging Markets Blooming Across the Board
Global Energy Storage Outlook:
Global lithium ion battery energy storage demand is growing rapidly, led by utility-scale projects. In 2023, new global installations hit 45.6 GW (+124% YoY), with China (22.6 GW), Europe (11.5 GW), and the U.S. (7.4 GW) as the top markets.
Installations are projected to reach 81.1 GW in 2024 and 106.3 GW in 2025, with utility-scale storage contributing the most—62.6 GW and 83.2 GW, respectively.
Overseas Opportunities:
Key overseas markets include high-value regions like the U.S. and Europe and fast-growing markets in the Middle East and India. The U.S. and Europe offer strong returns but have high entry barriers; domestic firms can compete with cost advantages. U.S. tariffs may raise costs but grid demand remains solid. In Europe, storage growth is driven by negative pricing, energy transition, and subsidies.
Emerging markets see strong top-down support for large-scale solar+storage projects. Domestic companies benefit from competitive pricing and delivery capacity, making overseas expansion highly promising.
U.S. & Europe LSES Markets:
The U.S. energy storage market is mature, with strong return mechanisms encouraging deployment. Commercial lithium lifepo4 battery large-scale energy storage （LSES） projects generate revenue via peak-valley arbitrage, capacity markets, and ancillary services. Returns vary by state, but key markets like California (CAISO) and Texas (ERCOT) show solid profitability. Lazard estimates that a 100MW/400MWh project in California can achieve up to 29% IRR with IRA tax incentives. Despite tariff-driven cost increases, strong grid support demand ensures continued growth.
In Europe, LSES deployment is expanding due to market-based returns and supportive policies. The U.K. and Italy lead the market. The U.K. offers diverse revenue channels through its energy, capacity, and ancillary markets. Italy launched the MACSE mechanism in 2023, offering 12 to 14 year inflation-linked contracts via competitive bidding to reduce investment risks and boost LSES buildout.
Rapid Growth Expected in Utility-Scale Storage Demand in Emerging Middle East Markets
Saudi Arabia and the UAE lead solar-plus-storage development in the Middle East. Driven by strong solar resources, rising power demand, and ambitious energy transition plans (e.g., Saudi Vision 2030, UAE Energy Strategy 2050), the region shows significant growth potential.
China’s inverter exports to Saudi Arabia and the UAE reached RMB 1.77B (+147%) and RMB 1.36B (+107%) in 2024, reflecting surging demand. Saudi Arabia plans to tender 20 GW of renewables annually, targeting 100–130 GW by 2030, and has announced 24 GWh of BESS tenders for 2024–2025. Grid limitations drive high storage ratios, offering major opportunities for 50kw 232kwh industrial and commercial large-scale storage.
India’s Storage Mandate Unlocks New Growth Potential
India is introducing mandatory energy storage for new solar and wind projects, starting with a 10%/2-hour requirement. The policy is expected to scale with falling battery costs.
By end-2024, India had 4.86 GW of storage (mainly pumped hydro). With a 2030 goal of 500 GW non-fossil capacity, the government projects at least 14 GW/28 GWh of energy storage will be needed, creating strong demand for utility-scale systems.
Market Outlook: Global utility-scale energy storage additions are expected to reach 62.6 GW in 2024 and 83.2 GW in 2025, representing year-on-year growth of 94% and 33%, respectively.
China: In 2024, China’s utility-scale storage additions are estimated at 38.6 GW / 93.6 GWh, with an average duration of 2.4 hours. Based on a projected 18% storage-to-renewables ratio and 2.6-hour duration, 2025 additions are expected to reach 45.4 GW / 117.9 GWh, up 17.5% / 26.0% YoY.
United States: According to the EIA, 10.4 GW of new utility-scale storage will be installed in 2024. We forecast 13.5 GW in 2025, implying 30% growth, factoring in strong grid demand, large project pipelines, and potential cost pressures from tariffs.
Europe: According to EASE, utility-scale storage additions will grow from 4.8 GW in 2024 to 8.8 GW in 2025.
Australia: Estimated additions are 2.0 GW in 2024 and 2.8 GW in 2025. Sunwiz expects over 4 GWh of 48v 51.2v 15kwh household lithium ion batteries solar enery storage new installations in 2024, more than double YoY. We assume 2-hour average duration.
Other Markets (e.g., Japan, MENA, Africa, Southeast Asia, LATAM):
Expected to contribute 6.7 GW in 2024 and 12.8 GW in 2025, accounting for 15% and 20% of global additions. The Middle East, in particular, is emerging as a key growth driver under solar-plus-storage parity.
