Commercial and Industrial Energy Storage Reaches a Significant Turning Point!
Recently, the Sichuan Provincial Development and Reform Commission released a notice titled “Notice on Further Improving the Pricing Mechanism for New Energy Storage” (Chuan Development Reform Price [2025] No. 14). This regulation clarifies that user-side energy storage projects launched before the end of 2026 will have their additional capacity (demand) charges coordinated at the provincial level for a period of two years. This move opens up new opportunities for “installation freedom” in commercial and industrial energy storage.
It is understood that the demand charges are fixed fees that users pay based on transformer capacity or maximum demand, constituting 15%-30% of the electricity cost for commercial and industrial users. For investors and owners in the commercial energy storage sector, the challenge of insufficient transformer capacity has long hindered project implementation. In the cost structure of user-side energy storage, the demand charges arising from equipment capacity expansion have been a substantial burden for enterprises.
The new regulation specifies that for user-side energy storage projects operational by December 31, 2026, the additional capacity charges incurred in the following two years will be managed at the provincial level. This makes Sichuan the first province to provide a clear exemption for user-side energy storage capacity charges, and the exemption is unprecedented (fully waived for two years). During this period, companies will not need to pay additional fees for increased storage capacity, 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 million yuan in waived demand charges over two years, reducing the overall project cost by over 20%.
The specific rules of the new regulation include:
- Capacity Charges: Determined by the additional capacity of dedicated transformers for energy storage devices.
- Demand Charges: Based on the maximum demand at the time of energy storage charging; if data is unavailable, the average of adjacent time periods will be used.
- Charging Side: When charging independently, energy storage is treated as a power user participating in market transactions without bearing transmission and distribution prices or surcharges, further reducing electricity costs.
- Discharging Side: Before the spot market operates, discharging prices will refer to coal-fired contract prices and will be linked to time-of-use electricity prices, significantly enhancing revenue during peak periods.
In fact, Sichuan’s policy is not an isolated innovation. As early as 2024, the province issued a “Notice to Promote the Active and Healthy Development of New Energy Storage,” simplifying the grid connection processes for storage projects. At the beginning of 2025, the city of Zigong implemented a policy to exempt capacity charges for commercial charging facilities until the end of 2030, successfully facilitating the establishment of several demonstration projects by companies such as China Petroleum’s Zigong Sales Branch.
This innovation in pricing mechanisms provides comprehensive support for energy storage projects from “construction – grid connection – revenue.” It is particularly noteworthy that Sichuan’s new regulation emphasizes “user-side energy storage,” targeting high-energy consumption scenarios such as data centers and industrial parks. This focus is due to Sichuan’s status as a major clean energy province, where hydropower accounts for over 80% of the energy mix. However, the region has long faced seasonal contradictions of water waste during wet seasons and electricity shortages during dry periods. As projects between Sichuan and Chongqing accelerate and new energy installations surge, the pressure on the grid for peak regulation has increased sharply. Thus, Sichuan’s new regulation is not an isolated occurrence but rather a synergistic effect with the province’s energy structure and existing policies.
The essence of Sichuan’s new regulation is to reconstruct the economic model of commercial and industrial energy storage through a dual-driven approach of “lowering initial investments + expanding revenue channels,” thereby activating social capital’s participation in energy storage. If this policy achieves significant results in Sichuan, it could not only expedite the implementation and deployment of local energy storage projects but also inspire other provinces to follow suit, providing a “Sichuan solution” to the national challenge of scaling commercial and industrial energy storage.
It is essential to note that the new regulation only specifies a two-year exemption period, and how the additional capacity charges will be distributed afterward remains unclear. Industry insiders suggest that if users are required 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 indicated that future adjustments would involve a “dynamic adjustment + market-based allocation” mechanism, exploring the inclusion of some costs into transmission and distribution prices or green electricity premiums to ensure smooth policy transitions.
Recent statistics from the CESA Energy Storage Application Committee indicate that in 2024, 2.67 GW/6.35 GWh of new user-side energy storage capacity was added nationwide, with a capacity share of 5.79%, primarily concentrated in provinces such as Jiangsu, Zhejiang, and Guangdong. Notably, the eastern region accounted for 1.45 GW/3.47 GWh of this new capacity, comprising over half of the national total. Standalone commercial energy storage projects made up about 80% of the new installations, while storage integrated with solar energy and microgrid projects accounted for roughly 20%.
For user-side energy storage stations, time-of-use pricing is a critical factor determining revenue. In 2024, provinces such as Zhejiang, Anhui, Hubei, Jiangsu, Henan, Gansu, Heilongjiang, Shandong, and Yunnan adjusted their time-of-use pricing policies, with over 40% of provinces experiencing an average peak-to-valley price difference exceeding 0.7 yuan/kWh. Currently, 28 provinces nationwide have implemented the two-charge, two-discharge model. Many regions have established low-off-peak periods and seasonal pricing, with winter and summer months typically enforcing peak and valley pricing. Compared to 2023, although the overall peak-to-valley price differences in 2024 have decreased, the rapid decline in energy storage system costs has improved the overall returns for user-side commercial storage.
In the Guangdong Pearl River Delta, the peak-to-valley price difference has consistently ranked first in the country (reaching 1.2843 yuan/kWh in March 2025), with dual peak pricing set from 10 AM to 12 PM and 2 PM to 7 PM, supporting strategies such as “valley charging – peak discharging – flat charging – peak discharging.” For a 1 MWh project, the internal rate of return (IRR) can reach 15%, with a payback period of approximately 5.4 years. In Zhejiang, the cancellation of peak pricing led to a narrowing price difference (over 20% decrease in 2024), but optimizing charging and discharging strategies (such as utilizing low-cost midday solar charging) helped maintain profitability. Shanghai has also become a hotspot for energy storage investment in East China, capitalizing on high load density and favorable pricing mechanisms.
In southwestern and central provinces, places like Guizhou and Hunan are attracting energy storage projects due to industrial electricity demand growth and supportive policies (such as Guizhou’s support for wind and solar hydrogen projects). The peak-to-valley price differences have surpassed 1 yuan/kWh, but local industrial load stability may impact actual returns. Additionally, Hainan, as a microgrid pilot island, sees energy storage demand stemming from supply stability, while Tibet relies on photovoltaic-integrated energy storage to address power waste issues, with price difference arbitrage being a less core revenue source.
Data Center Energy Storage Set to Explode
Since 2024, the rapid development of artificial intelligence (AI) has surpassed most expectations, from AI assistants gradually permeating daily life to large AI models advancing in fields such as autonomous driving, smart manufacturing, healthcare, finance, and energy. This rapid evolution has significantly driven global computing power demands and the growth of data center projects. According to the China Academy of Information and Communications Technology, it is predicted that by 2030, the electricity consumption of data centers in China will exceed 700 billion, 400 billion, and 300 billion kilowatt-hours under high, medium, and low scenarios, respectively. It is anticipated that from 2023 to 2030, the share of data centers in national electricity consumption may rise from 1.6% to around 5%.
On February 10, 2025, the Ministry of Industry and Information Technology and seven other departments issued the “Action Plan for High-Quality Development of New Energy Storage Manufacturing Industry,” which emphasizes expanding diverse applications of user-side energy storage for energy-intensive users such as data centers, intelligent computing centers, communication bases, industrial parks, and commercial enterprises. This initiative aims to enhance the configuration of new energy storage technologies.
Driven by the demand for AI computing power, an increasing number of energy storage orders and bidding projects for data centers are emerging. Data from the CESA Energy Storage Application Committee indicates that since 2024, more than 1.8 GWh of projects for data centers/intelligent computing centers have been updated, including registered, grid-connected, tendered, and awarded projects, with total investments exceeding 7 billion yuan (some projects include both data center and photovoltaic investments) across 14 provinces and regions such as Henan, Guangdong, Guangxi, Hubei, Qinghai, and Inner Mongolia.
In April 2024, Cloud Storage New Energy Technology Co., Ltd. won a bid for the “National Integrated Computing Network” and the Linhe Data Center Cluster’s green energy supply demonstration project, securing a procurement contract for a 64.8 MW/259.2 MWh lithium iron phosphate energy storage battery system (including UPS, cooling systems, environmental monitoring, distribution, fire protection, security, lighting, and materials) at a unit price of 0.695 yuan/Wh. This project, based in Hohhot and the Linhe New Area, supports collaborative research and application demonstrations of key technologies for computing and electricity.
In December 2024, China Railway 14th Bureau Group Co., Ltd. and Liuzhou Electric Power Survey and Design Co., Ltd. jointly won the bid for the EPC contract of the 400 MW/800 MWh independent energy storage station in the Xingtan District of Laibin City, Guangxi, with a total amount of 3.63686 billion yuan. In February 2025, Yongtai Shuneng successfully delivered the “Digital Xichong: Urban Super Brain” energy storage project, marking the establishment of the first data center energy storage project locally, ensuring stable operation of the super brain AI system. This initiative is recognized as a provincial-level regional digital transformation promotion center.
Yongtai Shuneng tailored an energy storage solution for this project, which has a capacity of 200 kW/430 kWh and is equipped with two Smart 215 L intelligent liquid-cooled industrial energy storage systems. The Smart 215 is a classic product of Yongtai Shuneng, featuring an all-in-one design that integrates lithium batteries, BMS, PCS, EMS, and other modules, providing various functions including peak shaving, grid frequency modulation, power expansion, and backup power.
In February 2025, Keda Guoxuan Energy Technology Co., Ltd. was pre-selected for the China Telecom (Anhui) Intelligent Computing Center energy storage project (Phase 1), which has a construction scale of 25 MW/200 MWh, with a profit-sharing period of 10 years based on an agreed ratio. The project budget is 373.99 million yuan. These projects indicate that energy storage is evolving 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 west and “data centers + source-grid-load-storage” models in the east will emerge, making data center energy storage a new explosion point.
In overseas markets, capital market responses are more straightforward. The UPS industry is experiencing 17% annual compound growth, with the market size expected to reach 87 billion USD by 2027. Goldman Sachs analysts describe energy storage for data centers as a suddenly booming sector akin to “oilfield equipment in the digital age.” Currently, the U.S. leads globally in data center energy storage development, with Tesla’s Megapack battery storage system being applied in several large data centers. Major cloud computing companies like Google, Amazon, and Microsoft have committed to using 100% renewable energy and are exploring smart coupling between data centers and energy storage systems to optimize energy use.
Recently, the Trump administration announced a collaboration with SoftBank, OpenAI, and Oracle to develop a 100 billion USD AI data center project, with plans to expand investments to “at least” 500 billion USD, part of which is expected to be powered by solar and energy storage systems developed by SB Energy (a subsidiary of SoftBank). According to estimates by the International Energy Agency, the electricity consumption of U.S. data centers in 2022 was approximately 200 billion kilowatt-hours, accounting for about 4.5% of the total electricity consumption in the U.S. This figure is projected to increase to 260 billion kilowatt-hours by 2026, raising its proportion to around 6%, with an average annual growth rate of 6.8% from 2023 to 2026. The Electric Power Research Institute indicates that as major tech companies invest in expanding computing centers, U.S. data center electricity consumption could double by the end of 2030, accounting for 9% of total power generation.
Clean energy sources such as solar, wind, and nuclear power are seen as primary means to alleviate AI energy demand. In 2025, overseas commercial and industrial energy storage is expected to grow by over 100%. In contrast to domestic commercial energy storage, which mainly relies on peak-valley arbitrage through time-of-use pricing, overseas applications for microgrids, solar storage charging, and various industrial energy storage scenarios are more diverse and less standardized, presenting numerous opportunities for Chinese energy storage enterprises venturing abroad. Since 2024, companies like BYD, Sungrow Power, Singularity Energy, Jingkong Energy, Daqin Energy, and Telong Energy have accelerated their international expansion, with some enterprises reporting overseas revenue exceeding 50%. Several commercial energy storage enterprises anticipate that overseas commercial energy storage will see growth rates exceeding 100% in 2025, with Europe and North America being primary targets for expansion.
In 2024, European large-scale storage (big storage) projects surpassed residential storage capacities for the first time, becoming the main driver of market growth. According to the EU’s “Fit for 55” and “RepowerEU” initiatives, the goal is to achieve over 40% renewable energy generation by 2030 and further increase it to 45%. Amid geopolitical tensions and energy shortages due to extreme weather, electricity prices in Europe have spiked, causing severe and direct negative impacts on European manufacturing. Data indicates that in 2024, industrial electricity costs in Germany rose by 42% year-on-year, significantly squeezing corporate profit margins. Energy-intensive industries in Europe are facing unprecedented cost pressures.
Due to their large scale, commercial and industrial energy storage can better match the large-scale absorption of renewable energy, reduce energy costs, and enhance operational flexibility, making them increasingly essential in Europe’s energy transition trend. According to incomplete statistics from the CESA Energy Storage Application Committee, Germany’s commercial energy storage and big storage installations are expected to increase in 2024 compared to 2023. In 2024, Germany’s commercial energy storage installations are projected to reach 240 MWh, a 19.3% year-on-year increase, capturing 4.21% of the market share. Although the scale remains modest, improvements in economic efficiency and regulatory conditions for commercial energy storage in Germany suggest significant increases in installations in the coming years.
Furthermore, the European Union has introduced the “Energy Storage Recommendations” policy to promote the extensive deployment of energy storage technologies to support renewable energy integration and enhance grid flexibility. This comprehensive policy framework aims to facilitate energy storage integration into the grid, improve the stability of new energy supply, and reduce renewable energy curtailment, creating a favorable environment for the development of commercial energy storage systems. Various European governments are also encouraging the development and application of storage technologies through incentive policies, such as tax reductions and subsidies. Overall, the European market is transitioning from residential dominance to large-scale commercial development, driven by policy guidance, electricity price fluctuations, and technological iterations. BloombergNEF projects that by 2030, the cumulative capacity of commercial energy storage projects in Europe will increase from 0.7 GW in 2020 to 8.8 GW.
Companies capable of providing customized solutions for multiple application scenarios will have a competitive edge. However, it is important to note that Chinese energy storage enterprises venturing abroad still face numerous challenges, including technical, market, policy, and cultural dimensions. First, technical standards and regulatory differences require companies to adapt to the specifications of target markets, including voltage frequency and grid access standards, which may necessitate redesigning or adjusting products. Second, market access barriers and protectionist policies, such as high tariffs and quota limitations, along with lengthy certification and compliance processes, pose significant obstacles for enterprises. Third, the complexities of supply chain management and branding strategies, along with adherence to environmental protection and social responsibility, are factors that outbound enterprises must consider. Additionally, the application scenarios for commercial energy storage are highly dispersed, including factories, shopping malls, and data centers, each with unique demands. In the future, companies that can provide tailored solutions for diverse and complex application scenarios will hold a competitive advantage.
