A New Awakening in Energy Storage Value: Over 30,000 Companies Have Fallen, with Profit Gaps Exceeding 50%
As of now, more than 30,000 companies in the energy storage industry have ceased operations, and it is projected that over 60,000 more may not survive in the next three years. The new survival rule in the energy storage sector will undoubtedly shift from price competition to value creation.
The current energy storage industry faces challenges similar to those of the photovoltaic sector, not only grappling with a price war but also entering a “death race.” Following the release of comprehensive policies for new energy in February, many small and medium-sized energy storage businesses are now faced with the urgent question of how to survive as mandatory storage requirements come into play. A common saying in the market reflects the price situation: “No matter how low your quote is, there will always be someone offering a lower price.” For instance, in January 2024, the average bid price for a large-scale storage system was 0.93 yuan/Wh, but by the end of 2024, it had plummeted to approximately 0.445 yuan/Wh, effectively halving within a year, and new prices are still trending downward in early 2025.
The landscape of players in the energy storage sector is undergoing significant reshuffling. According to the China Battery Industry Association (CBEA), the number of enterprises involved in the energy storage supply chain has reached an astonishing 290,000. More striking is the harsh reality that over 30,000 companies have already exited the market due to various reasons such as cancellations, revocations, liquidations, or closures. Media forecasts suggest that if the closure rate of energy storage companies mirrors that of photovoltaic firms over the past two years, more than 60,000 energy storage enterprises could face extinction in the next three years. Clearly, engaging solely in price competition lacks a sustainable future.
The new survival rule for the energy storage industry must transition from price competition to value creation. In the context of market-oriented pricing for new energy, the cost per kilowatt-hour over the storage system’s life cycle and its revenue-generating capability have become the core indicators of its competitiveness. Leading companies such as CATL and Envision Energy have initiated a drive for technological breakthroughs, empowered by AI, and adopted intelligent trading strategies. By deeply participating in the electricity market, these companies significantly enhance the returns for owners, creating a new ecosystem of “value co-existence.”
1. Suspension of Mandatory Storage Requirements Opens Up Greater Market Space
Initially, the requirement for renewable energy projects to include a certain proportion of storage facilities aimed to smooth out fluctuations in renewable energy and enhance grid stability. However, in practice, it has devolved into a mere “equipment competition,” yielding counterproductive results. The mandatory storage requirement, characterized by its administrative nature, has led to several evident drawbacks. Firstly, the utilization efficiency of storage is low. Renewable energy companies often include storage systems merely to gain project approval, resulting in a significant number of storage facilities being built but underutilized, with a utilization rate as low as 17%. Research in a western province of China revealed that storage systems are only called upon once every five days, leading to severe resource waste.
Secondly, there is a tendency to transfer costs ineffectively. The mandatory storage requirement significantly increases the construction costs of renewable energy projects. For example, a typical 100 MW wind-solar project, if required to allocate 10% for storage (i.e., 10 MW/20 MWh), could incur storage system costs ranging from 20 million to 30 million yuan at current market prices, which are often not recoverable through electricity sales. Thirdly, it leads to reverse selection in bidding. Many view storage allocation as a prerequisite for obtaining renewable energy permits, with little hope for its actual regulatory effectiveness, leading to a bidding process that favors the lowest bidder.
This inefficient utilization not only wastes resources but also creates a chaotic market where low-quality, low-cost storage equipment frequently wins bids, pushing high-performance products out of the market. The model of “allocating storage just to meet requirements” results in nearly a hundred billion yuan in ineffective investments each year, severely hindering advancements in storage technology.
The Notice on Deepening the Market-Oriented Pricing Reform for Renewable Energy, released on February 9, fundamentally changed this situation. It clearly states that “no unreasonable costs should be imposed on renewable energy” and that mandatory storage allocation cannot serve as a prerequisite for project approval, grid connection, and on-grid operations. This regulatory easing means that storage allocation will shift from an administrative mandate to a market-driven choice, allowing renewable energy owners to determine their storage needs based on actual demand and economic benefits. This change seems to weaken the mandatory status of storage, but in reality, it opens up greater space for its development and intensifies industry differentiation.
The previous requirement for mandatory storage accounted for a significant portion of the energy storage market. With its suspension, demand may drop by at least 50-60%, a substantial impact. Storage equipment manufacturers that relied on low-quality, low-cost strategies will face elimination unless they adapt to the new market dynamics. On the other hand, the new policy cancels the storage allocation as a prerequisite for project approval, permitting renewable energy plants to flexibly select their storage solutions based on their needs. This market-driven demand will shift storage from “passive allocation” to “active selection,” with its core value evolving from simple hardware costs to comprehensive revenue capabilities.
In the future, energy storage stations will be able to participate in various market transactions, including electricity spot markets and ancillary services, expanding revenue channels from a single “capacity compensation” to over a dozen scenarios such as “peak-valley arbitrage” and “black start services.” The new policy allows storage to return to its essence as a “problem-solving tool” rather than merely an accessory to power sources or grids.
2. Awakening of New Values in Energy Storage
Previously, competition in the energy storage industry was primarily focused on price. Manufacturers tried to capture market share by lowering equipment costs and sacrificing performance, resulting in a flood of low-quality products. With the implementation of the new policy and deeper market reforms, the competitive logic in the energy storage sector is fundamentally changing—from price wars to value creation. Following the policy that prohibits making storage allocation a prerequisite for project approval, significant market changes have begun to emerge:
Firstly, user-side storage is on the rise. The halt of mandatory storage requirements for renewable energy and the subsequent deep adjustments on the power generation side may open up new opportunities for user-side storage. In 2024, the amount of user-side storage registrations in Jiangsu Province increased by 300% year-over-year. An industrial park achieved “self-use during peak times, charging during low times, and selling electricity at high prices” through a “storage + photovoltaic” approach, reducing the investment recovery period to 4.2 years—60% faster than under the mandatory storage model. User-side storage, primarily driven by market forces, represents a promising and healthy development track.
Secondly, the technological threshold is rising. In 2024, 90% of domestic energy storage tenders explicitly required battery cycle life of at least 1,500 cycles, pushing top enterprises like CATL, Envision Energy, and BYD to the forefront as preferred options for owners due to their advantages in lifecycle costs (LCOS). Envision’s EnOS platform integrates meteorological, power, and market data to realize integrated scheduling of energy storage stations across “source-grid-load-storage.” In Jiangsu’s spot market, its price quoting accuracy reached 92%, significantly higher than the industry average of 75%.
Thirdly, the ability to gain premium pricing through technological innovation is becoming evident. For instance, the 250 MW/500 MWh energy storage station in Sheyang, Jiangsu Province, the largest in the province, has performed exceptionally well since its grid connection on July 12, setting records in various metrics for operational energy storage stations in Jiangsu. In terms of revenue, it generated approximately 11.7% more income per MWh compared to the average level, potentially adding 21.3 million yuan to the lifecycle income for a comparable 100 MWh product. During the peak summer period, the Sheyang station broke provincial revenue records, earning 40 million yuan in 40 days, with an average daily income exceeding one million yuan, 30% higher than the average and 15% more than the second-place competitor, making it the top in both total revenue and income per MWh in the province.
By the end of 2024, the Sheyang station also participated in the sixth spot market trial run in Jiangsu. In spot market scenarios, varying trading capabilities will create greater income disparities. The Sheyang station reported its participation in electricity spot trading. Utilizing the integrated management platform of EnOS, the intelligent trading energy storage achieved AI-driven automated trading, adapting to local spot market rules and employing higher calling pricing strategies, resulting in a settlement income of 11.54 million yuan over a 14-day period—54.2% above the average.
With the policy loosening, the market has begun to “vote” with real money. On one hand, high-performance storage devices exhibit significant advantages in charging and discharging efficiency, cycle life, and safety. On the other hand, intelligent trading systems are becoming critical variables in creating value for storage. In the spot market, electricity prices fluctuate frequently and are complex; manual operations struggle to accurately seize optimal trading moments. Conversely, AI-driven smart trading systems can automatically optimize volume and pricing strategies through real-time analysis of price trends, grid demands, and storage statuses. For example, Envision’s EnOS platform is capable of dynamically adjusting charging and discharging plans based on meteorological data, historical electricity data, and real-time market signals, ensuring discharge during high price points and storage during low price points to maximize profits. This comprehensive solution of “hardware + software” is akin to equipping storage systems with “radar,” setting a new benchmark in the energy storage industry.
3. Building a Value Co-Existent Energy Storage Ecosystem
The transition from “bad money driving out good” to the exit of low-quality products from the market is precisely the process of sifting through the sands of time and upgrading market innovation. The elimination of inefficient capacity and redundant installations is essential for attracting high-quality and efficient installations. Viewed from this perspective, the policy’s suspension of inefficient mandatory storage requirements forces innovation in storage technology and compels upgrades in the efficiency and economics of storage installations, effectively opening a new path for high-quality development in the future of energy storage.
Looking ahead, the greater value of energy storage should evolve from standalone storage solutions to integrated “storage +” solutions, creating a new ecosystem of “value co-existence.” For instance, integrated projects combining “photovoltaics (wind power) + storage + hydrogen production” are generating new models with significantly improved economic benefits. Of course, the successful implementation of the new policy also requires coordinated efforts from supporting policies. Establishing a comprehensive revenue settlement mechanism for storage, clarifying ancillary service market rules, and promoting the nationwide implementation of electricity spot markets are all pressing issues that need to be addressed in the future.
Moreover, the energy storage industry must collaborate with renewable energy generation companies, grid operators, and other stakeholders to build a healthy industrial ecosystem. Only through the joint forces of policy, market, and technology can energy storage truly transition from “insufficient revenue” to “revenue diversification.”
