Awakening New Value in Energy Storage: Over 30,000 Companies Have Fallen, Income Gap Exceeds 50%
As of now, more than 30,000 companies in the energy storage industry have gone under, and it is projected that over 60,000 energy storage companies may not survive in the next three years. The new survival rule in the energy storage sector is shifting from price competition to value creation.
The current energy storage industry, much like the photovoltaic sector, is not only grappling with a price war but is also on the brink of a “death race.” This situation has intensified following the full market release of new energy policies in February, which has forced hundreds of thousands of small and medium-sized energy storage companies to confront the challenge of survival.
A common saying in the market highlights the fierce competition: “No matter how low your price is, there will always be someone who can offer a lower one.” For instance, in January 2024, the average bid price for a 2-hour large storage system was 0.93 RMB/Wh; by the end of 2024, it plummeted to around 0.445 RMB/Wh, effectively halving within a year, with prices continuing to trend downward at the start of 2025.
The reshuffling of players in the energy storage arena is intensifying. According to reports by Battery China CBEA, the number of companies in the energy storage supply chain has reached an astonishing 290,000. The more sobering statistic is that over 30,000 companies in the energy storage sector have collapsed (in states of cancellation, revocation, liquidation, or suspension). Other media predict that if the closure rate follows the trend of photovoltaic companies over the past two years, more than 60,000 energy storage companies could go out of business in the next three years. Clearly, relying solely on price competition has no future. The new survival rule for the energy storage industry must transition from price wars to value creation.
In the context of a market-driven new energy pricing system, the cost per kilowatt-hour over the lifecycle of energy storage systems and their profitability have become core metrics for assessing competitive strength. Leading companies like CATL and Envision Energy have initiated a drive towards technological breakthroughs, AI empowerment, and intelligent trading strategies. By actively participating in the electricity market, they can significantly enhance returns for owners, thereby constructing a new type of energy storage ecosystem based on “value co-creation.”
1. Stopping Mandatory Energy Storage Requirements Opens Up Greater Market Opportunities
The original intent behind requiring wind and solar projects to incorporate a certain proportion of energy storage facilities was to smooth out the fluctuations of renewable energy and enhance grid stability. However, in practice, it evolved into an “equipment competition,” with counterproductive effects. The mandatory energy storage requirements, characterized by administrative orders, have led to clear repercussions.
Firstly, the efficiency of energy storage utilization has been low. Renewable energy companies have passively complied with these storage requirements to obtain project approvals, resulting in a significant number of energy storage facilities being built but not utilized, with utilization rates as low as 17%. A survey in a western province indicated that energy storage was only called upon once every five days on average, leading to substantial resource waste.
Secondly, this has trapped companies in a cost-shifting dilemma. The mandatory energy storage significantly raises the construction costs of renewable energy projects. For example, in a typical 100 MW wind-solar project, if energy storage is configured at a 10% ratio (i.e., 10 MW/20 MWh), the estimated cost of the storage system could reach between 20 to 30 million RMB, costs that often cannot be compensated through direct power generation revenues.
Thirdly, it has resulted in reverse selection in bidding processes. Companies view the storage requirement as a means to secure renewable energy project approvals but do not hold much hope for its actual regulatory effect, leading to a bidding process favoring the lowest price. This inefficient use not only wastes resources but also fosters a market phenomenon of “bad money driving out good,” where low-quality, low-cost energy storage equipment frequently wins bids while high-performance products are pushed out of the market. This “storage for storage’s sake” model causes nearly 10 billion RMB in ineffective investments annually and severely hinders technological progress in energy storage.
The notice released on February 9, titled “Notice on Deepening the Market Reform of New Energy Grid Pricing to Promote High-Quality Development of New Energy,” has completely changed this situation. The notice explicitly states, “No unreasonable cost-sharing shall be imposed on renewable energy, and energy storage configuration shall not be a prerequisite for the approval, grid connection, or power generation of new renewable energy projects.” This policy relaxation indicates that energy storage configuration will shift from administrative mandates to market-driven choices, allowing renewable energy owners to decide on energy storage based on actual needs and economic benefits.
This change may seem to diminish the “mandatory status” of energy storage; however, it actually opens up greater development space and intensifies industry differentiation. The mandatory energy storage requirement previously accounted for nearly half of the energy storage market. Stopping this requirement will likely reduce demand by at least 50-60%, which will have a significant impact. Companies that previously captured market share through low-quality, low-cost products and fail to adapt to the transformation will be eliminated.
On the other hand, the new policy allows energy storage to no longer be a prerequisite for project approvals, enabling renewable power plants to flexibly choose energy storage solutions based on their own needs. This market-driven demand will propel energy storage from “passive configuration” to “active selection,” shifting its core value from mere hardware costs to comprehensive revenue capabilities. In the future, energy storage stations will participate in diverse market transactions such as electricity spot markets and ancillary services, expanding revenue channels from a single “capacity compensation” to over ten scenarios, including “peak-valley arbitrage” and “black start services.” The new policy allows energy storage to return to its essence as a “problem-solving tool,” rather than being an accessory to the power source or grid.
2. Awakening New Value in Energy Storage
In the past, competition within the energy storage industry primarily revolved around pricing. Manufacturers attempted to capture market share by lowering equipment costs and sacrificing performance, leading to an influx of low-quality products in the industry. However, with the implementation of new policies and the deepening of market reforms, the competitive logic of the energy storage industry is undergoing a fundamental transformation—from price wars to value creation.
Since the new policy clearly states that “energy storage configuration shall not be a prerequisite for approvals,” significant changes are emerging in the market. Firstly, the rise of user-side energy storage is evident: the cessation of mandatory energy storage for renewable energy projects and profound adjustments on the power source side are set to open up new opportunities for user-side energy storage. By 2024, the filing volume of user-side energy storage in Jiangsu has increased by 300% year-on-year. A certain industrial park has achieved “self-consumption during peak hours, charging during low hours, and selling electricity at high prices” through “storage + photovoltaics,” shortening the investment return period to 4.2 years, a 60% improvement over the mandatory storage model. User-side energy storage, primarily driven by market forces, has become a promising sub-sector.
Secondly, technology thresholds are rising: in 2024, 90% of domestic energy storage tenders explicitly required a battery cycle life of ≥1500 cycles. Leading companies like CATL, Envision Energy, and BYD are prioritized by owners due to their advantages in lifecycle costs (LCOS). Envision’s EnOS platform integrates weather, power, and market data, achieving integrated scheduling of energy storage stations “source-network-load-storage.” In Jiangsu’s spot market, its bidding accuracy reaches 92%, far exceeding the industry average of 75%.
Thirdly, technological innovations are yielding premium returns: take Envision’s Shiyang 250MW/500MWh energy storage station as an example, which is the largest energy storage station in Jiangsu province. Since its grid connection on July 12, it has demonstrated excellent annual performance, setting multiple records for operating energy storage stations in Jiangsu. In terms of income, its annual revenue per MWh has exceeded the average by approximately 11.7%. During peak summer periods, the Shiyang station set a provincial revenue record, earning 40 million RMB in 40 days, averaging over 1 million RMB per day, with monthly revenues exceeding the average by 30%, and 15% higher than the second place. Its total revenue and revenue per MWh rank first in the province.
By the end of 2024, the Shiyang station also participated in the sixth trial run of Jiangsu’s spot market. In spot market scenarios, differences in trading capabilities will result in larger income disparities. The Shiyang station participated in electricity spot trading based on its integrated management platform EnOS, achieving AI-driven automatic trading, adapting to local spot trading rules in Jiangsu, and employing a higher calling price strategy, resulting in 11.54 million RMB income over a 14-day settlement period, 54.2% higher than the average level.
Following policy relaxation, the market has begun to “vote” with real money. On one hand, high-performance energy storage devices exhibit significant advantages in charge-discharge efficiency, cycle life, and safety. On the other hand, intelligent trading systems have become a crucial variable in energy storage value creation. In the spot market, electricity prices fluctuate frequently and are complex, making it challenging for manual operations to accurately grasp the best trading opportunities. AI-driven intelligent trading systems can automatically optimize bidding strategies through real-time analysis of price trends, grid demand, and energy storage status. For example, Envision’s Shiyang station’s EnOS platform can dynamically adjust charge-discharge plans based on weather data, historical power data, and real-time market signals, ensuring discharge at high prices and storage at low prices to maximize returns. This “hardware + software” comprehensive solution is emerging as a new benchmark in the energy storage industry.
3. Creating a Value-Coexisting Energy Storage Ecosystem
Transitioning from “bad money driving out good” to bad money exiting the market is a natural process of market upgrade and innovation, where inefficient capacity and ineffective installations are eliminated. From this perspective, the new policy that halts inefficient mandatory energy storage requirements forces innovation in energy storage technology and upgrades installation efficiency and economics, thus opening a pathway for high-quality development of energy storage in the future.
Looking ahead to the future landscape of energy storage, its greater value should shift from standalone storage to integrated “storage +” solutions, constructing a new energy storage ecosystem based on “value co-creation.” For instance, integrated projects like “photovoltaics (wind power) + energy storage + hydrogen production” are creating new models with significantly improved economic benefits. However, the successful implementation of these new policies also requires coordinated efforts from supporting policies. Establishing a comprehensive energy storage revenue settlement mechanism, clarifying auxiliary service market rules, and promoting the nationwide adoption of electricity spot markets are all pressing issues that need to be resolved in the future.
Simultaneously, the energy storage industry needs to collaborate with renewable energy generation companies, grid companies, and other stakeholders to build a healthy development ecosystem. Only through the joint drivers of policy, market, and technology can energy storage truly achieve a leap from “insufficient revenues” to “revenue redistribution.”
