A New Awakening in Energy Storage Value: Over 30,000 Companies Have Collapsed, with Profit Gaps Exceeding 50%
As of now, more than 30,000 companies in the energy storage sector have failed, and it is projected that over 60,000 more may not survive in the next three years. The new survival rule for the energy storage industry must shift from price competition to value creation.
Currently, the energy storage industry is facing a crisis similar to that of the photovoltaic sector, caught in a vicious cycle of price wars and a looming “survival race.” This situation has become particularly acute following the comprehensive implementation of new energy policies in February, which mandatorily require energy storage for new projects. Consequently, hundreds of thousands of small to medium-sized energy storage companies are grappling with survival challenges.
In terms of pricing, a common saying in the market is: “No matter how low your bid is, someone will always undercut you.” For instance, in January 2024, the average bid for a 2-hour large storage system was 0.93 yuan/Wh; by the end of 2024, prices plummeted to around 0.445 yuan/Wh, effectively halving in just one year, with prices continuing to decline into 2025.
The reshuffling of players in the energy storage market is intensifying. According to Battery China CBEA, the number of companies in the energy storage supply chain has reached an astounding 290,000. The harsh reality is that over 30,000 companies in the energy storage sector have already collapsed due to various operational issues. Moreover, media forecasts suggest that, if the recent closure rates of photovoltaic companies continue, more than 60,000 energy storage firms may fail in the next three years. Clearly, relying solely on price competition is not a viable future.
With the backdrop of market-driven electricity pricing in the new energy sector, the lifecycle cost per kilowatt-hour and revenue capability of storage systems have become the core metrics for assessing their competitiveness. Leading energy storage manufacturers like CATL and Envision are pioneering technological breakthroughs, leveraging AI, and implementing intelligent trading strategies, enabling them to significantly enhance owners’ revenues and construct a new energy storage ecosystem based on “value co-existence.”
Halting Mandatory Energy Storage Requirements Opens Up Greater Market Space
The initial intent behind mandating a certain percentage of energy storage facilities for wind and solar projects was to stabilize the fluctuations of renewable energy and enhance grid reliability. However, in practice, this approach has devolved into a competition for equipment, yielding counterproductive results.
Mandatory energy storage has created several issues: firstly, the efficiency of energy storage utilization is alarmingly low. Many renewable energy companies have adopted a passive approach to meet project approval requirements, resulting in numerous storage facilities being “built but unused,” with utilization rates as low as 17%. Research in a western province revealed that, on average, energy storage was only called upon once every five days, leading to significant resource wastage.
Secondly, these mandates have led to a cost-shifting trap, significantly increasing the construction costs of renewable energy projects. For a typical 100 MW wind-solar project, if 10% energy storage is mandated (10 MW/20 MWh), the estimated cost of the storage system could reach 20 to 30 million yuan, a cost that often cannot be recouped through electricity sales.
Thirdly, it has resulted in adverse selection in the bidding process. Companies view energy storage as a means to obtain renewable energy project approvals, often without expecting any real regulatory benefits. Consequently, the bidding process favors the lowest bid, which exacerbates inefficiencies and leads to a market where low-quality, low-cost storage devices frequently win contracts, pushing higher-performing products out of the market. This “storage for the sake of storage” model has resulted in nearly 10 billion yuan in ineffective investments each year, significantly hindering technological advancement in energy storage.
The new notice issued on February 9th regarding deepening the marketization of new energy pricing fundamentally alters this situation. The notice explicitly states that “no unreasonable costs should be imposed on renewable energy projects, and energy storage configuration cannot be a prerequisite for project approval, grid connection, or market access.” This policy shift indicates that energy storage configuration will move from administrative mandates to market choices, allowing renewable energy owners to decide whether to include energy storage based on actual needs and economic viability. This change, while seemingly diminishing the “mandatory status” of energy storage, actually opens up broader development opportunities and will intensify industry differentiation.
The previous mandate for energy storage accounted for nearly half of the market; halting it could reduce demand by 50-60%, representing a significant impact. Storage manufacturers that previously relied on low-quality, low-cost strategies may find themselves unable to adapt and could be pushed out of the market. On the other hand, the new policy allows for flexible selection of energy storage solutions based on project needs, shifting the demand from “passive configuration” to “active selection,” and refocusing value from merely hardware costs to comprehensive revenue capabilities. In the future, energy storage stations can participate in diverse market transactions, expanding revenue streams from the traditional “capacity compensation” to various scenarios such as “peak-valley arbitrage” and “black start services.” This policy allows energy storage to return to its fundamental role as a “problem-solving tool,” rather than merely an accessory to power sources or the grid.
A New Awakening of Energy Storage Value
In the past, competition within the energy storage industry was primarily price-driven. Manufacturers sought to capture market share by lowering equipment costs and sacrificing performance, resulting in a proliferation of low-quality products within the industry. However, with the implementation of new policies and deeper market reforms, the competitive logic of the energy storage sector is undergoing a fundamental shift—from price wars to value creation.
Following the new policy that prohibits using energy storage configuration as a prerequisite for project approval, significant changes have begun to emerge in the market. Firstly, the rise of user-side energy storage is evident. The cessation of mandatory energy storage on the renewable energy side will profoundly adjust large storage systems but will also open up new opportunities for user-side configurations. In 2024, the registered volume of user-side energy storage in Jiangsu grew by 300% year-on-year. An industrial park achieved “self-use during peak times, charging during valleys, and selling electricity at high prices” through “energy storage + photovoltaic” integration, 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, represents a positively developing niche sector.
Secondly, the technical threshold has risen. In 2024, 90% of domestic energy storage projects required battery cycle life to be ≥1500 cycles, with leading companies like CATL, Envision, and BYD becoming the preferred choices due to their lifecycle cost advantages. Envision’s EnOS platform integrates meteorological, electricity, and market data, enabling integrated dispatch of “source-grid-load-storage” for energy storage stations. In Jiangsu’s spot market, its bidding accuracy reached 92%, far exceeding the industry average of 75%.
Thirdly, the premium for technological innovation has become evident. For example, the 250 MW/500 MWh energy storage station in Shayang, Jiangsu, has performed exceptionally well since its grid connection on July 12, setting multiple records for operational energy storage stations in the province. In terms of revenue, it generated approximately 11.7% more income per MWh compared to the average, translating to an additional revenue of 21.3 million yuan over the lifecycle of 100 MWh compared to similar products. During the summer peak, the station set revenue records, earning 40 million yuan in just 40 days, with daily earnings exceeding 1 million yuan and monthly income surpassing the average by 30%, leading the province in total revenue and per MWh income.
By the end of 2024, the Shayang station also participated in the sixth trial operation of the Jiangsu spot market. In spot market scenarios, disparities in trading capabilities will lead to greater revenue gaps. The Shayang station actively participated in electricity spot trading, utilizing the EnOS platform for integrated energy management. This AI-driven trading system optimizes bidding strategies and adapts to local spot market rules, achieving higher income and a settlement of 11.54 million yuan over 14 days, exceeding the average by 54.2%.
After policy relaxation, the market began to “vote with real money.” High-performance energy storage devices are exhibiting clear advantages in charging and discharging efficiency, cycle life, and safety. Additionally, intelligent trading systems have become critical variables in creating storage value. In the spot market, frequent and complex price fluctuations make it challenging for manual operations to pinpoint the best trading moments. AI-driven smart trading systems can dynamically adjust charging and discharging plans based on real-time price trends, grid demand, and storage status, ensuring maximum revenue through optimized trading.
Building a Value Co-existence Energy Storage Ecosystem
The process of “bad money driving out good” is actually a natural selection leading to market innovation and upgrades. As inefficient capacity and ineffective installations are eliminated, quality capacities and efficient installations can emerge. From this perspective, the new policy halting inefficient mandatory energy storage is compelling energy storage technology innovation and pushing for upgrades in efficiency and economics, thereby opening a pathway for high-quality development in energy storage.
Looking ahead, the greater value of energy storage should evolve from standalone storage solutions to integrated “storage+” solutions, constructing a new energy storage ecosystem based on “value co-existence.” For instance, integrated projects combining “photovoltaics (or wind power) + energy storage + hydrogen production” are creating new models with significant economic benefits.
However, the successful implementation of these new policies will require complementary policies to work in tandem, such as establishing a comprehensive energy storage revenue settlement mechanism, clarifying auxiliary service market rules, and promoting the nationwide adoption of electricity spot markets. The energy storage industry must also collaborate with renewable energy generation companies, grid operators, and other stakeholders to build a healthy and sustainable industrial ecosystem. Only through the joint forces of policy, market, and technology can energy storage truly transition from “insufficient revenue” to “revenue diversification.”
