Industrial and Commercial Energy Storage Reaches a Significant Turning Point!
On March 13, 2025, the Sichuan Provincial Development and Reform Commission issued a notification regarding the further improvement of the new energy storage pricing mechanism. This announcement states that for user-side energy storage projects operational by the end of 2026, the newly added capacity demand charges will be managed collectively across the province for two years. This regulation opens up new opportunities for industrial and commercial energy storage.
Capacity demand charges are fixed fees paid by users based on transformer capacity or maximum demand, constituting 15%-30% of industrial and commercial users’ electricity costs. In the investment landscape for industrial and commercial energy storage, the insufficient transformer capacity has long been a hurdle for investors and owners. The issue of capacity demand charges, resulting from equipment upgrades, has been a significant burden for companies. The new regulation explicitly states that for user-side energy storage projects launched before December 31, 2026, the capacity demand charges incurred within the first two years of operation will be managed collectively by the province. This makes Sichuan the first province to introduce a clear exemption for user-side energy storage capacity charges, offering unprecedented relief (with two years of full exemption). During this period, companies will not have to pay additional charges for capacity upgrades of their energy storage devices, effectively providing 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, reducing project costs by at least 20%.
The specifics of the new regulation include:
- Capacity Pricing: Determined by the additional capacity of dedicated transformers for energy storage devices;
- Demand Pricing: Based on the maximum demand during the month, with average values taken from adjacent periods if no data is available;
- Charging Side: Engaging in market transactions as an independent energy user during energy storage charging, exempt from transmission and distribution fees, further reducing purchasing costs;
- Discharging Side: Before the operation of the spot market, discharge prices will reference coal power contract prices and be linked with time-of-use electricity rates, significantly increasing earnings during peak periods.
Notably, this policy from Sichuan is not an isolated innovation. In 2024, the province issued a notification to promote the healthy development of new energy storage, simplifying the grid connection processes for storage projects. Earlier in 2025, Zigong City in Sichuan implemented a policy exempting capacity charges for operational centralized charging facilities until the end of 2030, successfully facilitating the establishment of several demonstration projects by companies like China Petroleum Sichuan Zigong Sales Company.
This pricing mechanism innovation provides comprehensive support for energy storage projects throughout their lifecycle—from construction and grid connection to revenue generation.
The new regulation particularly emphasizes “user-side energy storage,” targeting high-energy-consuming scenarios such as data centers and industrial parks. This focus arises because Sichuan, as a major clean energy province, generates over 80% of its electricity from hydropower but has long faced seasonal challenges, with excess water during wet seasons and power shortages during dry periods. With the acceleration of joint projects between Sichuan and Chongqing and a surge in new energy installations, the pressure on the grid for peak regulation has significantly increased. Thus, Sichuan’s new regulations align with the province’s energy structure and existing policies.
The essence of the new regulations is to reconstruct the economic model for industrial and commercial energy storage through a dual approach of “reducing initial investment plus expanding revenue channels,” thereby stimulating social capital’s active participation in energy storage. If this policy proves effective in Sichuan, it could accelerate the implementation of local energy storage projects and encourage other provinces to follow suit, offering a “Sichuan solution” to the national challenge of scaling up industrial and commercial energy storage.
It is important to note that while the new regulation clearly states a two-year exemption period, the future allocation of the capacity demand charges after this period remains uncertain. Industry insiders indicate that if users are responsible for these charges after the two years, it could lead to a “policy cliff effect.” In response, officials from the Sichuan Provincial Development and Reform Commission have revealed plans to explore a mechanism of “dynamic adjustment plus market-based allocation” to potentially include some costs in transmission and distribution prices or green electricity surcharges to ensure a smooth transition of policies.
According to the CESA Energy Storage Application Branch’s industry database, it is estimated that in 2024, the newly installed user-side energy storage capacity nationwide will reach 2.67GW/6.35GWh, accounting for 5.79% of total capacity, primarily concentrated in Jiangsu, Zhejiang, and Guangdong provinces. The East China region alone will account for 1.45GW/3.47GWh, representing over half of the national user-side capacity.
For user-side energy storage stations, time-of-use electricity pricing is a crucial factor determining profitability. In 2024, several provinces, including Zhejiang, Anhui, Hubei, Jiangsu, Henan, Gansu, Heilongjiang, Shandong, and Yunnan, adjusted their time-of-use pricing policies. Provinces with an average peak-to-valley price differential exceeding 0.7 yuan/kWh account for over 40% of the country, with 28 provinces now capable of implementing two-charge two-discharge systems. Many regions have set up midday low-peak and deep-peak periods, establishing seasonal pricing that generally sees higher peak-to-valley price differentials in winter and summer compared to spring and autumn.
In comparison to 2023, while the overall peak-to-valley price differentials have slightly decreased in 2024, the rapid decline in energy storage system costs has led to better profitability for user-side industrial and commercial storage. The Guangdong Pearl River Delta region continues to have the highest peak-to-valley pricing differentials in the country (reaching 1.2843 yuan/kWh in March 2025), and its time-of-use pricing features double peak periods (10 AM to 12 PM and 2 PM to 7 PM), supporting the “valley charge-peak discharge-flat charge-peak discharge” strategy. For a 1MWh project, the internal rate of return (IRR) can reach 15%, with a static payback period of about 5.4 years.
In recent years, the rapid advancement of artificial intelligence (AI) has dramatically increased the demand for data centers and related projects. According to the China Academy of Information and Communications Technology, by 2030, the electricity consumption of data centers in China could exceed 700 billion, 400 billion, and 300 billion kilowatt-hours under high, medium, and low scenarios, respectively. The share of data centers in total electricity consumption is expected to grow from 1.6% to around 5% from 2023 to 2030.
On February 10, 2025, the Ministry of Industry and Information Technology and seven other departments released an action plan for the high-quality development of the new energy storage manufacturing industry. This plan emphasizes expanding the diverse applications of user-side energy storage tailored to data centers, intelligent computing centers, communication base stations, industrial parks, commercial enterprises, and highway service areas, all of which have high requirements for power reliability and quality.
Driven by the rising demand for AI computing power, a growing number of energy storage projects linked to data centers are emerging. The CESA Energy Storage Application Branch’s industry database records that since 2024, over 1.8GWh of energy storage projects for data centers/intelligent computing centers have progressed, with total investments exceeding 7 billion yuan across 14 provinces, including Henan, Guangdong, Guangxi, Hubei, Qinghai, and Inner Mongolia.
In April 2024, Cloud Storage New Energy Technology Co., Ltd. won a bid for a 64.8MW/259.2MWh lithium iron phosphate energy storage battery system in the “National Integrated Computing Power Network” and Linhe Data Center Cluster green energy supply demonstration project, with a total procurement price of 180 million yuan. This project is part of a key technology research and application demonstration for the computing and electricity coordination based on the Inner Mongolia hub and Linhe Data Center cluster.
In December 2024, China Railway 14th Bureau Group Co., Ltd., in collaboration with Liuzhou Electric Power Survey and Design Institute Co., Ltd., jointly won a bid for the EPC general contracting of a 400MW/800MWh independent energy storage station in the Xingshan District of Laibin City, Guangxi, amounting to 3.63686 billion yuan. In February 2025, Yongtai Shuneng successfully delivered the “Digital Xichong City Super Brain” energy storage project, marking the first energy storage project in the local data center, ensuring stable operation for the super brain AI system.
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 the “Wind-Solar Major Base + Data Center + Energy Storage” in the west and the “Data Center + Source-Grid-Load-Storage” model in the east will emerge, making data center energy storage the next growth point.
In overseas markets, the capital market response has been very clear. The UPS industry has shown a 17% compound annual growth rate, with the market size expected to reach $87 billion by 2027. Analysts at Goldman Sachs have referred to data center energy storage as a “digital age oilfield equipment vendor,” highlighting the rapid emergence of this sector. Currently, the development of data center energy storage in the U.S. is leading globally, with Tesla’s Megapack battery storage systems being deployed in various large data centers, including those of Google, Amazon, and Microsoft. These companies have committed to using 100% renewable energy and are exploring intelligent coupling between data centers and energy storage systems to optimize energy utilization.
According to estimates from the International Energy Agency, in 2022, U.S. data centers consumed about 200 billion kilowatt-hours of electricity, accounting for approximately 4.5% of the total electricity consumption, with projections indicating this will rise to 260 billion kilowatt-hours by 2026, increasing its share to around 6%. The annual growth rate from 2023 to 2026 is expected to be 6.8%. The Electric Power Research Institute has stated that as major tech companies invest in expanding computing centers, the electricity consumption by U.S. data centers may double by the end of 2030, potentially representing 9% of total electricity generation. Clean energy sources such as solar, wind, and nuclear power are viewed as key solutions to meet the energy demands of AI.
Looking ahead to 2025, overseas industrial and commercial energy storage is expected to grow by over 100%. While domestic industrial and commercial energy storage primarily relies on time-of-use pricing arbitrage, overseas applications of microgrids, solar storage, and various industrial and commercial energy storage scenarios are more diverse and less standardized, creating many opportunities for Chinese energy storage companies to expand internationally. In 2024, a number of industrial and commercial energy storage enterprises, including BYD, Sungrow, Singularity Energy, Jingkong Energy, Daqin Energy, and Telongmei Storage, accelerated their international expansion, with some companies reporting that overseas revenue accounts for over 50% of their total income. Many firms expect overseas industrial and commercial energy storage growth to exceed 100% in 2025, targeting regions such as Europe and North America for expansion.
In contrast to the past, where residential energy storage dominated, in 2024, large-scale energy storage projects in Europe surpassed residential 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 goal is to increase renewable energy generation to over 40% by 2030 and further raise it to 45%. Amid geopolitical tensions and extreme weather causing energy shortages, European electricity prices have surged, negatively impacting the manufacturing sector. As energy expenditures for European manufacturers have significantly increased, production costs have also risen sharply. Data indicates that in 2024, industrial electricity costs in Germany soared by 42% year-on-year, severely squeezing profit margins for businesses. As large-scale industrial and commercial energy storage more effectively matches the large-scale consumption of renewable energy, reduces energy costs, and enhances operational flexibility, the demand for such solutions is increasingly urgent in the context of Europe’s energy transition.
Statistics from the CESA Energy Storage Application Branch’s industry database indicate that in 2024, Germany’s industrial and commercial energy storage capacity increased by 240MWh, a rise of 19.3% year-on-year, capturing a 4.21% market share. Although the scale remains small, with improved economic efficiency and regulatory conditions, Germany’s industrial and commercial energy storage installations are expected to see significant growth in the coming years. Additionally, the EU has introduced the “Energy Storage Recommendations” policy to promote the large-scale deployment of energy storage technologies, supporting the integration of renewable energy and enhancing grid flexibility while providing a comprehensive regulatory framework to facilitate energy storage grid integration and improve the stability of renewable energy supply, laying a favorable foundation for the development of industrial and commercial energy storage systems.
European governments are also implementing a series of incentive policies, such as tax reductions and subsidies, to encourage the development and application of energy storage technologies. Overall, the European market is shifting from residential-dominant to large-scale industrial and commercial development, driven by policy direction, electricity price fluctuations, and technological advancements. According to BloombergNEF, it is projected that by 2030, cumulative industrial and commercial energy storage projects in Europe will increase from 0.7GW in 2020 to 8.8GW.
Companies that can provide customized solutions for multiple application scenarios will have a competitive advantage. It is noteworthy that Chinese energy storage companies face many challenges abroad, including technical, market, policy, and cultural dimensions. First, differences in technical standards and regulations require companies to adapt to the requirements of target markets, including voltage frequency and grid access standards, which may necessitate redesigning or adjusting products. Secondly, barriers to market entry and protectionist policies, such as high tariffs and quota restrictions, along with time-consuming certification and compliance processes, present significant obstacles. Furthermore, the complexity of supply chain management, brand marketing strategies, and compliance with environmental protection and social responsibility also need to be considered by companies looking to expand internationally. Additionally, due to the highly diverse application scenarios for industrial and commercial energy storage, including factories, shopping malls, and data centers, the needs in each scenario vary widely. In the future, companies that can offer customized solutions for various complex applications will have a stronger competitive edge.
2025 CIES Energy Storage Conference Introduction
The CIES 2025 Energy Storage Conference is jointly organized 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 a variety of sessions, including an opening ceremony with invited academic reports, innovations in smart distribution networks and new energy storage integration, new power systems and grid dispatching, collaborative development of new energy storage and large renewable energy bases, international energy storage, power auxiliary services, spot trading and capacity markets, industrial green microgrids, national energy storage standards promotion, and more.
During the conference, several research outcomes will be released, including the “2025 White Paper on the Development of China’s New Energy Storage Industry,” the “2025 White Paper on the Development of Industrial Green Microgrids,” the “2025 Report on Bidding and Price Analysis of New Energy Storage Projects in China,” and the “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, power grid companies, power generation groups, EPC contractors, system integrators, energy storage device companies, energy service providers, project developers, investment institutions, and international buyers will attend the event.
As a benchmark for promoting the high-quality development of the energy storage industry, the China International Energy Storage Conference and Exhibition (CIES), established in 2011, has consistently focused on high-end, quality, and international characteristics, facilitating over 500 billion yuan in domestic and international supply chain and channel cooperation, assisting local governments with investment attraction projects exceeding 100 billion yuan, and supporting various capital collaborations reaching 300 billion yuan. This year’s exhibition will feature “4+1+1” exhibition areas, including energy storage system integration, power generation groups, electrical equipment, temperature control equipment, control systems, energy storage batteries, testing and certification, and safety and fire protection products.
The exhibition will focus on global cutting-edge technologies and practices in the energy storage field, actively build communication channels between governments and enterprises, explore new paths for the high-quality development of the energy storage industry, promote deep integration of “specialized, refined, unique, and innovative” technologies, capital, and services, display new products, technologies, and services from domestic and international exhibitors, help exhibitors expand their brand influence and visibility, actively develop domestic and international market channels, enhance the competitiveness and market share of self-controlled products, and accelerate the growth of China’s energy storage brand enterprises, contributing “energy storage wisdom” and “energy storage solutions” to building a green, efficient, flexible, intelligent, and sustainable modern energy system.
We look forward to welcoming you to the 15th China International Energy Storage Conference and Exhibition in 2025.
