Ten Predictions for New Energy Storage
As the global energy transition accelerates, particularly since China first proposed the construction of a new power system in 2021, the importance of new energy storage has become increasingly evident. It plays a critical role in the renewable energy and power system supply chain, with rapid growth in installed capacity attracting significant investments and companies. This shift has transformed the energy storage market from a vast ocean of opportunities into a highly competitive environment. On one hand, new energy storage faces an expanding market size, diverse application scenarios, and promising development prospects. On the other hand, it also contends with intensifying competition, increasing overcapacity, and serious industry “involution”, presenting a scenario that is “half sea water, half fire.” The year 2025 marks the conclusion of the “14th Five-Year Plan” and the beginning of the “15th Five-Year Plan.” How to effectively plan the future development strategies, growth paths, and industry directions of new energy storage has become a significant issue. In light of this, I propose ten predictions for the future development of new energy storage, hoping to inspire discussion and exploration among interested parties.
1. Will Large-Capacity Long-Duration Lithium Batteries Reach a Turning Point?
The lithium battery market is currently experiencing an unprecedented expansion, with many manufacturers, especially leading companies, launching large-capacity cells and long-duration storage batteries (continuously discharging for four hours or more at rated power) to gain an advantage in the increasingly saturated market. In cell manufacturing, products featuring capacities of 500Ah or even 1000Ah are being introduced; in system integration, products with capacities of 5MW or even over 8MWh are entering a competitive frenzy; and in single storage, the focus is on achieving gigawatt-scale integration.
Typically, it is thought that larger capacity and longer discharge times are better for lithium batteries, as greater capacity allows for more charge-discharge cycles and longer durations. However, this is not always true, as lithium battery capacity is influenced by the chemical properties of the materials used, the quality and ratio of active materials in the electrodes, and the internal structure. Moreover, external factors such as temperature play a crucial role; prolonged exposure to low temperatures can decrease material activity and, consequently, battery capacity.
While the trend towards larger and longer-lasting batteries is clear, large-capacity cells and long-duration storage systems present a double-edged sword. They can reduce unit costs and meet user demands, but they also introduce safety risks and technical challenges. Long-term deep charge-discharge cycles can significantly impact the internal structure of the battery, leading to issues such as excessive electrolyte evaporation and changes to the separator membrane, which can result in permanent capacity loss. Overall, electrochemical storage should not blindly pursue larger capacities and longer durations; sufficient technological groundwork and comprehensive safety verification are essential. Considerations must include material selection, manufacturing processes, standards, safety management, and overall costs to find the optimal solution for developing large-capacity, long-duration lithium batteries.
2. Will Solid-State Batteries Spark a New Battery Revolution?
Solid-state batteries, with energy densities and cycle counts several times higher than traditional liquid lithium batteries, offer advantages such as high energy density, enhanced safety, long lifespan, and a wide operating temperature range. They are expected to fundamentally address the concerns of rapid discharge at low temperatures and thermal runaway, heralded as the “crown” of next-generation electrochemical batteries and viewed as a groundbreaking innovation in power batteries and electric vehicles. This could lead to significant improvements in battery range (over 1000 kilometers per charge) and drastically reduced charging times (around 15 minutes), while also fundamentally resolving safety issues.
Currently, China is at the forefront of solid-state battery research, focusing on sulfide, oxide, and composite electrolytes, with manufacturing processes including both traditional wet and new dry methods. Leading companies like CATL, BYD, and others are investing heavily in research and development to advance solid-state battery technology and commercial applications. Some manufacturers have begun pilot production, but true industrialization remains a challenge, particularly in key materials development, innovative manufacturing processes, and lifecycle cost reduction to ensure market competitiveness.
Given their significant advantages in performance and safety, solid-state batteries are poised to become a key upgrade direction for next-generation lithium batteries, with increasing production applications in smartphones, portable computers, electric vehicles, and sectors like low-altitude economics and robotics. They are likely to revolutionize everyday life and work habits. Notably, all-solid-state batteries are among the preferred solutions for the next generation of batteries, marking a critical competitive edge in the future of battery technology.
3. Will Sodium-Ion Batteries Rise to Prominence?
One of the greatest concerns for electric vehicle owners is the risk of battery fires. Sodium-ion batteries, using sodium ions as their positive material, are chemically more stable than lithium ions, requiring higher temperatures to reach thermal runaway, making them less likely to ignite. Additionally, sodium-ion batteries are cost-effective due to the abundant availability of sodium resources compared to the more scarce lithium, resulting in production costs approximately two-thirds that of lithium-ion batteries without facing supply chain bottlenecks.
Research on sodium-ion batteries has progressed alongside that of lithium-ion batteries, but due to lower energy densities, sodium-ion batteries have lagged behind for over thirty years. A surge in development occurred a few years ago with rising lithium prices, but the subsequent price drop for lithium has led to a sluggish development phase. The main issue hindering sodium-ion battery development is its lower technological maturity compared to lithium iron phosphate batteries, requiring improvements in charging speed, energy density, durability, and safety. The industry remains in the early stages of commercialization, with cumulative cost advantages yet to be effectively realized. To achieve true industrialization, numerous technological challenges must be overcome.
In summary, while sodium-ion batteries may have lower energy densities, their affordability, excellent low-temperature performance, high safety, and resource availability provide them with significant advantages. With continued technological advancements, breakthroughs in core technologies and production processes could enable sodium-ion batteries to replicate the rapid growth trajectory of lithium-ion batteries, capturing a share of the lithium iron phosphate market. Even if they do not become mainstream, they will serve as an important complement to lithium batteries, positioning themselves for success.
4. Will Grid-Forming Storage Become the Future Market Mainstream?
Grid-forming storage is an energy storage system based on grid-forming control technology, capable of autonomously supporting different voltages and frequencies. It enhances system short-circuit capacity and inertia, suppresses wideband oscillations, and improves grid impedance characteristics, ensuring the stability of high-penetration power electronic systems. Compared to current grid-following storage, grid-forming storage offers advantages such as providing synchronous voltage and current, supporting grid inertia, and offering fault ride-through capabilities in extreme environments. However, it also has higher overall costs, and parallel connections may induce circulating currents.
As of the end of March 2024, the largest grid-forming storage power station in China, located in Ningdong, Ningxia, has successfully connected to the grid with an installed capacity of 100 megawatts/200 megawatt-hours. As an advanced power technology, grid-forming storage can closely couple with the grid, providing frequency regulation and voltage control similar to synchronous generators. China’s power system currently faces the dual challenges of high proportions of renewable energy and electronic devices, leading to low inertia, low damping, and weak voltage support, thus presenting a development opportunity for grid-forming storage. Since 2023, several provinces in Northwest China and Tibet with significant wind and solar installations have issued policies encouraging the exploration of grid-forming storage, with some mandating its implementation. The year 2024 is anticipated to mark the “rise” of grid-forming storage in China.
According to predictions by GGII, a Shenzhen-based organization, the shipment of grid-forming storage in China is expected to reach 2GW in 2024, increase to 7GW by 2025, and potentially reach 30GW by 2030, with an average annual growth rate of 56%. However, the widespread promotion of grid-forming storage faces challenges, particularly high technical barriers, lack of standards, and issues such as circulating currents affecting grid stability and high investment costs. Given the current inefficiency and unclear profitability of new energy storage, promoting grid-forming storage nationwide will undoubtedly encounter numerous difficulties, and the ability to fully replace the more common grid-following storage will be a challenging path filled with obstacles.
5. Will the Status of “Ning Wang” Be Challenged?
As the world’s leading supplier of new energy batteries, CATL has maintained a dominant position in the global battery market, particularly in the power battery sector, for eight consecutive years. In 2023, it achieved a market share of 36.8%, a historical high, which is more than double that of the second-ranking competitor. If excluding self-sufficient BYD, CATL’s market share exceeds 60%, making it a formidable presence in any competitive market, often referred to as “Ning Wang” (King Ning).
CATL’s strength lies in three main areas: first, its fully integrated supply chain, from upstream lithium, cobalt, and nickel resources to midstream cathode materials and a highly concentrated downstream market; second, its strong operational capabilities and market demand insights, maintaining a unit gross profit of over 0.2 yuan/wh, largely unaffected by upstream raw material price fluctuations; third, its continuous technological innovation, with products like “Shenxing,” “Qilin,” and “Tianxing” not only meeting diverse market demands but also setting industry trends, thus creating a robust technological barrier for CATL.
Meanwhile, as the domestic market reaches saturation, CATL is expanding its overseas presence, continuously exploring markets in Europe and Southeast Asia. It partners with automakers through technology licensing and collaboration models to navigate restrictive regulations and capture the U.S. market. In short, during the golden decade of development in the electrochemical battery industry, CATL has seized the opportunity, becoming a leader and making it difficult for other enterprises to catch up. Unless a new generation of disruptive battery technologies emerges or there is a groundbreaking change in business models, CATL’s position is unlikely to be shaken.
6. Will New Energy Storage Become the Fourth Pillar of the New Power System?
In recent years, China has seen rapid development in renewable energy, primarily wind and solar, with the installed capacity reaching 1.41 billion kilowatts by the end of 2024, achieving the target of 1.2 billion kilowatts set for 2030 six and a half years ahead of schedule. If the annual addition of wind and solar capacity continues at 200 million kilowatts through 2025 and into the “15th Five-Year Plan,” the total installed capacity of wind and solar energy in China could exceed 2.6 billion kilowatts by the end of 2030, more than double the set target.
The current major challenge for renewable energy development is the traditional power system’s insufficient adaptability to integrate and consume renewable energy. This is the primary reason for the national push to accelerate the development of a new power system. In reality, energy storage and renewable energy are interconnected, and their integration is critical for the stable operation of the new power system. Compared to the traditional “source-grid-load” model, the essence of the new power system lies in the integrated collaboration of “source-grid-load-storage.” Through various interactions such as source complementary, grid-load coordination, and load-storage interaction, the system can effectively respond to fluctuations in renewable energy output and diverse load demands, enhancing resilience and effectively addressing challenges in renewable energy consumption.
Energy storage could become the “fourth leg” of the power system beyond the traditional “source-grid-load” model, underscoring its critical importance. With the massive growth of renewable energy, new energy storage is expected to expand rapidly, surpassing traditional pumped storage for the first time in 2024, with lithium-ion battery storage accounting for 55.2% of power storage projects. In 2025, the installed capacity of new energy storage is projected to exceed 100 million kilowatts. New energy storage not only effectively balances the “time difference” between power generation and consumption but also assists conventional power sources like thermal power in peak shaving and frequency regulation, making it an indispensable component of the new power system. It may eventually take on a significant role alongside traditional storage methods like pumped storage, collectively serving as a stabilizing force in the future power system.
7. Will the Lithium Battery Industry Follow the Path of “Photovoltaics”?
The lithium battery industry is undergoing significant changes after explosive growth in the past two years. The industry is now facing severe overcapacity while new capacity continues to expand. Prices for lithium carbonate and the overall supply chain have fluctuated, leading to increasingly fierce price wars. Although storage demand continues to grow rapidly, profitability remains low. This situation mirrors the photovoltaic industry in recent years, where many companies are on the brink of loss due to intense competition. Will the storage sector repeat the photovoltaic industry’s mistakes and face widespread losses across the entire industry and supply chain?
It is often said that solar and storage go hand in hand, making them the “best partners.” The photovoltaic industry has previously followed a path that the storage sector seems to be replicating: local governments announcing various incentives to attract investments, leading to a surge in capacity expansion that exacerbates overcapacity. This raises the question: will the same operations yield similar outcomes?
However, there are significant differences between storage and photovoltaics. Firstly, the storage industry has a longer supply chain, potentially mitigating market fluctuations. Secondly, the market for storage is broader, with power and storage battery companies largely overlapping, enhancing market demand resilience and development potential. Furthermore, the competitive landscape differs; storage has a “dominant player with many strong competitors,” while photovoltaics feature “many strong players coexisting,” which can lead to internal conflicts. Finally, the government is intensifying efforts to address “involutionary” competition and regulate corporate behaviors, effectively reducing disorganized competition.
In summary, while the development trajectory of storage batteries is increasingly resembling that of the photovoltaic sector, with a transition from “blue oceans” to “red oceans” and intensifying competition, many leading storage companies are still profitable. The absence of widespread losses is coupled with government measures to curb “involution.” More enterprises are realizing that blind capacity expansion and aggressive price competition are detrimental to their growth and the industry’s overall development. Focusing on fundamental strengths and enhancing new productive forces is essential for improving quality and efficiency.
8. Will Hydrogen Storage Become the Next Booming Trend?
In recent years, with the introduction of hydrogen energy policies and breakthroughs in key technologies for wind and solar hydrogen production and seawater hydrogen production, China’s hydrogen energy industry has entered a fast track. Following the rise of hydrogen fuel vehicles, “hydrogen storage,” regarded as the “next wave” in energy storage, has emerged as a popular term. Major state-owned enterprises like State Grid and Southern Power Grid have launched hydrogen storage demonstration projects that are now operational. Combined with renewable energy generation, the production of “green hydrogen” through water electrolysis represents a new model that not only achieves green cleanliness throughout the lifecycle but also expands the utilization methods of renewable energy.
Compared to electrochemical storage, hydrogen storage is not limited by geography and offers advantages such as large capacity, long storage duration, minimal degradation, and flexible dispatching. Its energy density surpasses that of electrochemical storage by more than 100 times, effectively complementing its shortcomings. Therefore, from the perspective of developing a new power system, small-scale, short-cycle, distributed storage can rely on lithium iron phosphate and other electrochemical batteries, while long-cycle, large-scale, centralized storage is more suitable for hydrogen and its carriers. Thus, hydrogen storage is poised to be the best option for large-scale, long-cycle storage of centralized renewable energy.
Currently, the primary challenge facing hydrogen storage is the high production cost of green hydrogen, which constitutes only 1% of total hydrogen production. Moreover, safety remains a critical concern, as the minimal mass of hydrogen atoms makes it difficult to fully resolve “hydrogen embrittlement,” posing significant challenges for transport and large-scale application. The International Energy Agency (IEA) has projected that to achieve net-zero emissions, at least 10% of renewable energy must rely on long-cycle storage technologies, and hydrogen storage is undoubtedly one of the best options. Although hydrogen storage currently lags behind in technology, cost, and commercial models, it is likely to emerge as a new contender on the energy stage, following “wind and solar storage.”
9. Will Artificial Intelligence (AI) Bring Transformation to New Energy Storage?
It has been said that “the end of AI is new energy.” This new energy certainly includes new energy storage. When storage technology meets artificial intelligence, a new energy revolution can be expected. AI, as one of the hottest industries, relies heavily on robust computational support; and as a major consumer of energy, it requires a continuous supply of electricity to avoid disastrous outcomes in case of supply disruptions. Thus, the relationship between the two is mutually empowering and symbiotic.
In the past year, AI has surged forward, driving industry updates and iterations. The next generation of AI technology has found wide applications in the new energy storage sector, serving as a new engine for industrial development. First, AI can shift the safety of new energy storage from passive to proactive. When storage systems experience anomalies, big data models can facilitate early diagnosis, quick responses, and immediate risk shutdown, thus minimizing accidents. Second, AI integration enables full lifecycle traceability of real-time data throughout the processes of component procurement, manufacturing, project site selection, installation, operation, and transactions. Third, AI scheduling algorithms can empower power trading with real-time and day-ahead pricing forecasts and intelligent control strategies, significantly enhancing storage trading profits and maximizing value for owners.
As a highly disruptive and pervasive technology, AI is changing the landscape at an incredible pace, also transforming the development dynamics of energy storage. From traditional data processing to complex decision support, and from single automation tasks to fully intelligent services, the “AI data center + renewable energy + energy storage integration” model is emerging as a new industry development pattern and optimal solution to meet diverse energy demand scenarios. AI is leading the energy storage industry to break through development bottlenecks, bringing unprecedented changes and unleashing limitless possibilities.
10. Is Going Global the Lifeline to Solve the “Involution” of New Energy Storage?
As domestic market competition intensifies, many energy storage companies are turning their sights overseas. “Going global” has become a crucial strategy for energy storage companies to escape domestic “involution,” considering overseas market expansion as vital for their survival. Some industry insiders argue that “if you don’t go global, you’ll be eliminated,” suggesting that electrochemical storage companies that have not established a global strategy in the coming years may find it increasingly difficult to do so later.
Although lithium batteries have become a major export item for China, alongside electric vehicles and solar cells, with typically higher profit margins in foreign markets and less fierce competition than in China, the path to internationalization is not without its challenges. As domestic storage companies compete fiercely in global markets, mutual price-cutting has been driving down product profit margins. To establish a firm foothold abroad, Chinese storage companies must also overcome barriers such as trade discrimination, tariff barriers, standard recognition, environmental pressures, currency fluctuations, cultural differences, political instability, and localization challenges.
Thus, “going global” is not merely a wishful thinking endeavor, nor is it a guaranteed success. The ability to navigate and succeed internationally hinges on whether companies possess core competitive advantages and flagship products, as well as the collaborative efforts across the entire industry chain and the robustness of the ecosystem. This is not only an inevitable choice for the internationalization strategy of Chinese storage companies but also a critical pathway to ascend the global value chain. While the overseas energy storage market presents vast opportunities, domestic companies should collaborate rather than undermine one another, jointly building a storage ecosystem with local enterprises and expanding their international presence together. Cooperation and mutual development will be the primary theme in the future of the overseas energy storage market.
