Industrial and Commercial Energy Storage Reaches a Significant Turning Point!

On March 13, 2025, the Sichuan Provincial Development and Reform Commission announced a new policy concerning the pricing mechanism for new energy storage systems. This policy outlines that user-side energy storage projects launched by the end of 2026 will have their new capacity demand charges managed on a provincial level for two years, effectively creating new opportunities for industrial and commercial energy storage.

Capacity demand charges refer to fixed fees that users pay based on their transformer capacity or maximum demand, which can account for 15% to 30% of electricity costs for commercial users. One of the longstanding challenges in the industrial and commercial energy storage investment sector has been the insufficient transformer capacity, which has hindered project implementation. Additionally, the cost structure for user-side storage has been heavily burdened by demand charges resulting from equipment capacity increases.

The new regulation from Sichuan explicitly states that for user-side energy storage projects operational by December 31, 2026, the additional demand charges incurred in the two years following their launch will be managed on a provincial level. This makes Sichuan the first province to clearly stipulate a reduction in capacity demand charges for user-side energy storage, with an unprecedented two-year exemption. Consequently, businesses will not need to pay extra for increased storage capacity during this period, effectively granting them a two-year “electricity fee holiday.” For instance, a 1MW/2MWh user-side energy storage station could save approximately 600,000 to 1,000,000 yuan due to the exemption from demand charges, reducing the overall project cost by at least 20%.

The specific rules of the new regulation include:

• Capacity Charge: Determined by the additional capacity of dedicated transformers for the energy storage equipment.
• Demand Charge: Based on the maximum demand during the month of charging; if data is unavailable, the average of adjacent times will be used.
• Charging Side: Independent storage charging is treated as a power user participating in market transactions, exempt from transmission and distribution charges, thus further lowering purchasing costs.
• Discharging Side: Before the market operation, discharge prices will be based on coal power contract prices, interlinked with time-of-use electricity prices, significantly increasing revenues during peak periods.

Sichuan’s policy is not an isolated innovation. In 2024, the province released a notice to promote the healthy development of new energy storage, streamlining the grid connection process for storage projects. Additionally, in early 2025, the city of Zigong implemented a policy exempting operational capacity charges for commercial centralized charging facilities until the end of 2030, successfully facilitating the establishment of various demonstration projects by companies, including China Petroleum’s Zigong sales branch.

This innovative pricing mechanism provides comprehensive support for energy storage projects from construction to grid connection and revenue generation. Importantly, the new regulation emphasizes “user-side energy storage,” targeting high-energy consumption scenarios such as data centers and industrial parks. As Sichuan is a major clean energy province, with over 80% of its electricity generated from hydropower, it has long faced seasonal conflicts between surplus water during wet seasons and electricity shortages during dry seasons.

With the rapid advancement of collaborative projects between Sichuan and Chongqing and the surge in new energy installations, the pressure on the grid to manage peak loads has increased significantly. The introduction of this regulation is not merely a standalone move but is designed to work in synergy with the province’s energy structure and existing policies.

The essence of the Sichuan regulation is to reconstruct the economic model of industrial and commercial energy storage through a dual-driven approach of reducing initial investments and expanding revenue channels. If this policy proves effective in Sichuan, it could not only expedite the implementation of local energy storage projects but also inspire similar initiatives in other provinces, offering a “Sichuan solution” to the nationwide challenge of scaling industrial and commercial energy storage.

However, it is noteworthy that the regulation currently only specifies a two-year exemption period. There is no clarity on how demand charges will be allocated after this period. Industry experts warn that if users have to bear these costs after two years, it could lead to a “policy cliff effect.” In response, officials from the Sichuan Development and Reform Commission mentioned that they plan to explore a “dynamic adjustment and market-based allocation” mechanism to potentially incorporate part of the costs into transmission and distribution charges or green electricity premiums to ensure a smooth policy transition.

Multiple Provinces Adjust Time-of-Use Electricity Pricing

According to incomplete statistics from the CESA Energy Storage Application Branch’s industry database, in 2024, the national user-side energy storage capacity grew by 2.67GW/6.35GWh, with a capacity market share of 5.79%, primarily concentrated in Jiangsu, Zhejiang, and Guangdong. The East China region alone accounted for 1.45GW/3.47GWh of the new capacity, exceeding half of the national total.

Time-of-use electricity pricing is a key factor determining revenue for user-side energy storage stations. In 2024, provinces such as Zhejiang, Anhui, Hubei, Jiangsu, Henan, Gansu, Heilongjiang, Shandong, and Yunnan adjusted their time-of-use electricity pricing policies, with an average peak-valley price difference exceeding 0.7 yuan/kWh in over 40% of the provinces. Currently, 28 provinces across the country enable two charging and two discharging cycles.

Many regions have introduced low-cost midday or deep valley time slots, establishing seasonal pricing where peak and valley rates are more pronounced in winter and summer compared to spring and autumn. Compared to 2023, while the overall peak-valley price difference has slightly decreased in 2024, the rapid decline in energy storage system costs has improved overall returns for industrial and commercial energy storage.

For example, the peak-valley price difference in the Guangdong Pearl River Delta region remains the highest in the country (1.2843 yuan/kWh as of March 2025), with a time-of-use pricing scheme that features dual peak periods (10 AM – 12 PM and 2 PM – 7 PM), supporting the “valley charging – peak discharging – flat charging – peak discharging” strategy. In a two charging and two discharging mode, the internal rate of return (IRR) for a 1MWh project can reach 15%, with a static payback period of about 5.4 years.

Zhejiang previously saw a narrowing of price differences due to the cancellation of peak pricing but has managed to maintain profitability by optimizing charging and discharging strategies, such as utilizing low-priced midday solar energy for charging. In Shanghai, the combination of high load density and electricity pricing mechanisms has made it a hotspot for energy storage investments. Meanwhile, provinces in the southwest and central regions, such as Guizhou and Hunan, are experiencing increased demand for industrial electricity and are benefiting from supportive policies, with peak-valley price differences exceeding 1 yuan/kWh, thus attracting energy storage project developments.

As the demand for supply stability drives energy storage needs in places like Hainan, and in Tibet, where energy storage is used to mitigate solar energy wastage, the primary source of returns from price difference arbitrage is not as critical.

Data Center Energy Storage Set to Explode

Since 2024, the rapid development of artificial intelligence has exceeded most expectations, leading to a significant increase in demand for computing power and data center projects across various industries, including autonomous driving, smart manufacturing, healthcare, finance, and energy. The China Academy of Information and Communications Technology predicts that by 2030, electricity consumption in data centers will exceed 700 billion, 400 billion, and 300 billion kilowatt-hours across different scenarios. The share of data centers in total electricity consumption is expected to grow from 1.6% in 2023 to approximately 5% by 2030.

On February 10, 2025, the Ministry of Industry and Information Technology and seven other departments issued the “Action Plan for the High-Quality Development of the New Energy Storage Manufacturing Industry,” emphasizing the expansion of user-side energy storage applications in critical sectors such as data centers, smart computing centers, communication stations, industrial parks, commercial enterprises, and highway service areas, which have high requirements for power reliability and quality.

Driven by the demand for AI computing power, a growing number of energy storage orders and bidding projects for data centers are emerging. According to incomplete statistics from the CESA Energy Storage Application Branch’s industry database, since 2024, over 1.8 GWh of energy storage projects linked to data centers have updated their status, including registrations, grid connections, bids, and awarded contracts, with a total investment exceeding 7 billion yuan (some projects include investments in data centers and solar energy).

In April 2024, Cloud Storage New Energy Technology Co., Ltd. won a bid for a green energy supply demonstration project for the “National Integrated Computing Network” and Linhe Data Center Cluster, involving a procurement of 64.8 MW/259.2 MWh of lithium iron phosphate battery systems for 180 million yuan, translating to a unit price of 0.695 yuan/Wh. This project supports the collaborative technology research and application demonstration of computing and electricity at the Linhe Data Center Cluster in Inner Mongolia.

In December 2024, China Railway 14th Bureau Group Co., Ltd. and Liuzhou Electric Power Survey and Design Co., Ltd. jointly won a bid for the EPC contract of the 400 MW/800 MWh independent energy storage power station in Laibin City, Guangxi, with a total amount reaching 3.63686 billion yuan. In February 2025, Yongtai Energy successfully delivered the “Digital Xichong: Urban Super Brain” energy storage project, marking the establishment of the first data center energy storage project in the area, ensuring stable operations for the Super Brain AI.

The “Digital Xichong: Urban Super Brain” project, supported by iFlytek, aims to create a smart city governance hub in Xichong County, Nanchong City, Sichuan Province, recognized as a provincial-level center for digital transformation. Yongtai Energy customized a storage solution for this project, with a capacity of 200 kW/430 kWh, equipped with two Smart 215 L intelligent liquid-cooled storage systems. The Smart 215 is a classic product from Yongtai Energy, featuring an all-in-one design that integrates lithium batteries, BMS, PCS, and EMS modules, providing multiple functionalities including peak shaving, grid frequency modulation, power expansion, and backup power.

In February 2025, Keda Guoxin Energy Technology Co., Ltd. was pre-awarded the China Telecom (Anhui) Smart Computing Center Energy Storage Project (Phase One), with a construction scale of 25 MW/200 MWh and a revenue-sharing partnership lasting 10 years, with a budget of approximately 373.99 million yuan. These projects signify the evolution of energy storage from a “backup power source” to a core component of computing infrastructure.

In the coming years, collaborative development of “wind-solar bases + data centers + energy storage” in the western regions and “data centers + source-grid-load-storage” models in the eastern regions are expected to emerge, making data center energy storage the next explosive growth point.

International Developments in Energy Storage

In overseas markets, investor responses have been more direct. The UPS industry is experiencing a 17% annual compound growth rate, with market size expected to reach 87 billion dollars by 2027. Analysts at Goldman Sachs have referred to data center energy storage as “oilfield equipment for the digital age.” Currently, the development of data center energy storage in the United States is leading globally, with Tesla’s Megapack battery storage system implemented in several major data centers, including those of Google, Amazon, and Microsoft, all of which have committed to 100% renewable energy and are exploring smart coupling between data centers and storage systems to enhance energy utilization.

The Trump administration recently announced partnerships with SoftBank, OpenAI, and Oracle to develop a 100 billion dollar AI data center, with plans to expand investment to at least 500 billion dollars. A portion of this project is expected to be powered by solar and storage systems developed by SB Energy (a subsidiary of SoftBank). According to estimates from the International Energy Agency, electricity consumption in U.S. data centers reached about 200 billion kilowatt-hours in 2022, accounting for approximately 4.5% of total U.S. electricity consumption, projected to increase to 260 billion kilowatt-hours by 2026, representing about 6% of total consumption, with an annual growth rate of 6.8% from 2023 to 2026.

The Electric Power Research Institute indicates that with major tech companies investing in expanding computing centers, by the end of 2030, electricity consumption in U.S. data centers could double, accounting for 9% of total generation. Clean energy sources such as solar, wind, and nuclear are considered primary means to alleviate AI energy demands.

By 2025, overseas industrial and commercial energy storage is expected to grow by over 100%. In contrast to domestic industrial and commercial energy storage, which mainly relies on time-of-use pricing for peak-valley arbitrage, overseas applications in microgrids, solar storage, and industrial and commercial energy storage scenarios are more diverse and complex, presenting numerous opportunities for Chinese energy storage companies to expand internationally.

In 2024, a large number of commercial energy storage companies, including BYD, Sungrow Power Supply, Singularity Energy, Jingkong Energy, Daqin Energy, and Telongmei Storage, accelerated their international expansion, with some companies reporting that overseas revenue now accounts for over 50% of their total income. Many companies anticipate that overseas industrial and commercial energy storage will experience growth exceeding 100% by 2025, with Europe and North America as key target markets.

Unlike the past focus on household storage, in 2024, large-scale storage projects in Europe surpassed household energy storage for the first time, becoming the main driver of market growth. According to the EU’s “Fit for 55” and “RepowerEU” plans, the target is to achieve over 40% renewable energy generation by 2030, further increasing to 45%.

Amid energy shortages caused by geopolitical tensions and extreme weather, electricity prices in Europe have soared, severely impacting the manufacturing sector. As energy costs for European manufacturers rise sharply, profit margins have contracted significantly. Data shows that in 2024, the cost of industrial electricity in Germany increased by 42% year-on-year, placing unprecedented cost pressures on energy-intensive industries. The demand for large-scale industrial and commercial energy storage, which can better accommodate renewable energy integration, reduce energy costs, and enhance operational resilience, has become increasingly urgent in the context of Europe’s energy transition.

According to incomplete statistics from the CESA Energy Storage Application Branch’s industry database, the installed capacity of industrial and commercial storage in Germany increased by 19.3% year-on-year in 2024, reaching 240 MWh, with a market share of 4.21%. While the scale remains small, improvements in economic efficiency and regulatory conditions are expected to significantly boost industrial and commercial storage installations in the coming years. Additionally, the EU has introduced “Energy Storage Recommendations” aimed at promoting the deployment of energy storage technologies to support renewable energy integration and grid flexibility, providing a comprehensive regulatory framework to enhance the stability of renewable energy supply and reduce curtailment, thereby creating a favorable environment for the development of industrial and commercial energy storage systems.

European governments are also implementing various incentive policies, such as tax reductions and subsidies, to promote the development and application of storage technologies. Overall, the European market is shifting from a household-dominated focus to large-scale industrial and commercial development, driven by policy direction, price volatility, and technological advancements. BloombergNEF predicts that by 2030, the cumulative capacity of industrial and commercial energy storage projects in Europe will increase from 0.7 GW in 2020 to 8.8 GW.

Companies that can provide customized solutions for multiple application scenarios will have a competitive advantage in the market.

CIES 2025 Energy Storage Conference Introduction

The CIES 2025 Energy Storage Conference is jointly hosted by the Energy Storage Application Branch of the China Chemical and Physical Power Industry Association, China Energy Storage Network, and Digital Energy Storage Network, with academic support from the expert committee of the Energy Storage Application Branch. The conference will feature:

• Opening ceremony and invited expert reports
• Integration of intelligent distribution networks and new energy storage innovations
• New power systems and grid dispatch
• Collaborative development of new energy storage and large energy bases
• International energy storage and power auxiliary services
• Spot trading and capacity markets
• Industrial green microgrids
• National energy storage standard promotion
• Intelligent new energy storage system integration solutions
• Energy storage safety and certification
• Capital and investment in new energy storage
• Flow batteries, compressed air storage, and long-duration energy storage technologies
• Hybrid energy storage
• Global opportunities and challenges in new energy storage supply chains
• Intelligent industrial and commercial energy storage solutions and case studies
• Virtual power plants and vehicle-grid interaction
• Grid-connected energy storage systems and project construction
• ESG for energy storage batteries
• New product launches

During the conference, several research reports will be released, including the “2025 White Paper on the Development of China’s New Energy Storage Industry,” “2025 White Paper on the Development of Industrial Green Microgrids,” “2025 Tender and Pricing Analysis Report for China’s New Energy Storage Projects,” and “2025 Analysis Report on Typical Applications and Development Trends of New Energy Storage.” It is expected that over 60,000 guests from government agencies, research institutions, grid companies, power generation groups, EPC contractors, system integrators, energy storage equipment manufacturers, energy service providers, project developers, investment institutions, and international buyers will attend and participate in the exhibition.

Since its inception in 2011, the China International Energy Storage Conference (CIES) has remained committed to high-end, quality, and international characteristics, facilitating over 500 billion yuan in domestic and international supply chain and channel collaborations, assisting local governments in attracting investment projects exceeding 100 billion yuan, and promoting various capital cooperation reaching 300 billion yuan. This year’s exhibition will feature “4+1+1” exhibition areas, including displays of energy storage system integration, power generation groups, electrical equipment, temperature control devices, control systems, energy storage batteries, testing and certification, fire safety, and more.

The exhibition will focus on cutting-edge technologies and practices in the energy storage sector, actively build communication channels between government and enterprises, explore new paths for high-quality development in the energy storage industry, promote the deep integration of high-end innovation elements such as specialized technologies, capital, and services, showcase new products, technologies, equipment, and services from both domestic and international sources, help exhibitors expand brand influence and recognition, actively develop domestic and international market channels, enhance the competitiveness and market share of self-controlled products, and contribute “energy storage wisdom” and “energy storage solutions” to the construction of a green, efficient, flexible, intelligent, and sustainable modern energy system.

We welcome you to participate in the 2025 15th China International Energy Storage Conference and Exhibition.