The Awakening of New Value in Energy Storage: Over 30,000 Manufacturers Have Fallen, with Profit Gaps Exceeding 50%
As of now, more than 30,000 companies in the energy storage sector have ceased operations, and projections indicate that over 60,000 energy storage companies may not survive in the next three years. The new survival principle in the energy storage industry must transition from price wars to value creation.
The current energy storage industry is facing challenges similar to those in the photovoltaic sector, not only grappling with price wars but also on the brink of a “death race.” Following the comprehensive policy for new energy market entry released in February, many small and medium-sized energy storage firms are now questioning their viability as mandatory energy storage requirements are enforced. A popular saying in the market is that no matter how low your quote is, there will always be someone willing to undercut you.
For instance, in January 2024, the average bid price for a large storage system was 0.93 yuan/Wh; by the end of 2024, this had plummeted to around 0.445 yuan/Wh, marking a dramatic decrease within a year, with prices continuing to decline into 2025. The competitive landscape among energy storage players is intensifying. According to CBEA, the number of companies in the energy storage supply chain has reached a staggering 290,000. The harsh reality is that over 30,000 companies have already gone out of business, whether through cancellation, revocation, liquidation, or suspension.
Media forecasts suggest that if the recent closure rate among photovoltaic companies continues, more than 60,000 energy storage firms could fail within the next three years. Clearly, competing solely on price offers no future. The energy storage industry must shift its focus toward value creation.
In the context of the marketization of new energy pricing, the cost per kilowatt-hour (kWh) over the lifespan of energy storage systems and their revenue-generating potential have become the core metrics for evaluating competitiveness. Leading firms such as CATL and Envision Energy are adopting innovative models driven by technological advancements, AI integration, and intelligent trading strategies. By actively engaging in the power market, these companies can significantly enhance profitability and establish a new energy storage ecosystem based on value co-creation.
1. Halting Mandatory Energy Storage Requirements Opens Up Greater Market Opportunities
The original intent of mandating energy storage for wind and solar projects was to smooth out fluctuations in renewable energy and enhance grid stability. However, this has devolved into an “equipment competition,” yielding counterproductive results. The mandatory storage policy has resulted in several issues:
- Low efficiency of energy storage utilization: Many renewable energy companies are compelled to comply with storage requirements merely to secure project approvals, leading to many storage facilities being built but underutilized, with a utilization rate as low as 17%. Surveys in certain provinces indicate that storage systems are called upon only once every five days, leading to significant resource wastage.
- Cost transfer traps: Compliance with mandatory storage significantly escalates the construction costs of renewable energy projects. For a typical 100MW wind and solar project, if 10% storage is required (i.e., 10MW/20MWh), the system’s cost could reach 20-30 million yuan, a cost that is often not recoverable through energy generation revenues.
- Reverse selection in bidding: Companies view storage compliance primarily as a means to obtain renewable energy project approvals, with minimal expectations regarding its actual regulatory impact. Consequently, bidding tends to favor the lowest price, which leads to the market being flooded with low-quality, low-cost storage devices at the expense of high-performance products.
This inefficient use of resources not only leads to nearly 10 billion yuan in ineffective investment annually but also severely hampers technological advancements in energy storage. The notification released on February 9 regarding the deepening reform of market pricing for new energy fundamentally changes this situation. It explicitly states that “unreasonable cost allocations to new energy sources are not permitted, and energy storage configurations should not be a prerequisite for the approval of new energy projects.” This policy relaxation means that energy storage decisions will shift from administrative orders to market choices, allowing renewable energy project owners to determine storage configurations based on actual needs and economic benefits.
This change may seem to diminish the “mandatory status” of energy storage, but it actually opens up greater space for development and will intensify industry differentiation. Previously, mandatory energy storage accounted for nearly half of the energy storage market; halting this requirement will significantly reduce demand by at least 50-60%. The impact is substantial, especially for energy storage equipment manufacturers who relied on low-quality, low-cost solutions to capture market share—those unable to adapt will be eliminated from the market.
On the other hand, the new policy eliminates storage requirements as a precondition for project approval, allowing renewable energy stations to flexibly select storage solutions based on their specific needs. This market-driven demand will prompt a shift from “passive compliance” to “active selection,” with core values evolving from mere hardware costs to comprehensive revenue-generating capabilities. In the future, energy storage facilities will engage in various market transactions, expanding revenue streams from a single “capacity compensation” model to multiple scenarios like “peak-valley arbitrage” and “black start services.” The new policy allows energy storage to return to its essence as a “problem-solving tool” rather than merely an accessory to power generation or grid systems.
2. A New Value Awakens in Energy Storage
Historically, competition in the energy storage industry has revolved around pricing. Manufacturers often reduced equipment costs and compromised performance to gain market share, resulting in an oversupply of low-quality products. With the implementation of the new policy and the deepening of market reforms, the competitive dynamic in the energy storage sector is fundamentally shifting from price wars to value creation.
Following the policy change that prohibits making storage configuration a precondition for approval, the market has started to exhibit significant changes:
- User-side energy storage is on the rise: The halt of mandatory energy storage for new energy projects and the profound adjustments in centralized energy storage will create new opportunities on the user side. In 2024, the volume of user-side energy storage filings in Jiangsu increased by 300%. One industrial park has achieved “self-use during peak hours, charging during valleys, and selling electricity at high prices” through a “storage + photovoltaic” model, shortening the investment payback period to just 4.2 years—a 60% improvement over the mandatory storage model. User-side energy storage, primarily driven by market forces, has become a healthy and promising segment.
- Higher technical barriers: In 2024, 90% of domestic energy storage projects in tenders specified a battery cycle life of at least 1,500 cycles. Leading companies like CATL, Envision Energy, and BYD have become preferred choices due to their advantages in lifecycle cost. Envision’s EnOS platform integrates meteorological, power, and market data to achieve integrated dispatching of energy storage stations across “source-grid-load-storage.” In Jiangsu’s spot market, its pricing accuracy has reached 92%, significantly surpassing the industry average of 75%.
- Innovation-driven premiums: For example, the 250MW/500MWh energy storage station in Sheyang, Jiangsu, has set records for performance since its connection to the grid on July 12. Its revenue per MWh has exceeded the average by about 11.7%. During peak summer periods, the station generated 40 million yuan in revenue over 40 days, averaging over 1 million yuan per day, outperforming the average by 30% and exceeding the second-place competitor by 15%. The station’s total revenue and revenue per MWh are ranked first in the province.
By the end of 2024, the Sheyang station also participated in the sixth round of Jiangsu’s spot market trial. In the spot market scenario, differing trading capabilities will lead to greater revenue disparities. The station has engaged in electricity spot trading through its integrated management platform, EnOS, which enables AI-driven automatic trading that adapts to local spot market rules. This has allowed it to employ higher pricing strategies, resulting in a revenue of 11.54 million yuan over a 14-day settlement period, which is 54.2% higher than the average.
As the market begins to “vote” with real monetary investments, high-performance energy storage devices demonstrate notable advantages in charging and discharging efficiency, cycle life, and safety. Additionally, intelligent trading systems have become crucial for value creation in energy storage. In the volatile and complex spot market, manual operations struggle to precisely identify optimal trading moments. However, AI-driven smart trading systems can dynamically analyze price trends, grid requirements, and storage states in real-time, automatically optimizing bidding strategies. For instance, Envision’s platform can adjust charging and discharging plans based on meteorological and historical electricity data, ensuring that energy is discharged at high price points and stored during low price periods to maximize revenue. This “hardware + software” integrated solution is setting a new benchmark for the energy storage industry.
3. Building a Value-Coexisting Energy Storage Ecosystem
The transition from “bad money driving out good” to the elimination of low-quality products is part of the natural process of market evolution and innovation. Without the removal of inefficient capacity and ineffective installations, attracting high-quality capacity and efficient installations becomes challenging. From this perspective, the new policy that halts low-efficiency mandatory storage is a catalyst for innovation in energy storage technology, enhancing installation efficiency and economic viability. This can be viewed as opening a new pathway for the high-quality development of energy storage in the future.
Looking ahead, the greater value of energy storage should evolve from singular systems to comprehensive solutions like “storage +.” Integrated projects such as “photovoltaics (or wind) + storage + hydrogen production” are creating new models with significantly improved economic benefits. However, the successful implementation of this new policy requires coordinated efforts from supporting policies, such as establishing a comprehensive revenue settlement mechanism for energy storage, clarifying auxiliary service market rules, and promoting the nationwide implementation of electricity spot markets. These are urgent issues that need to be addressed in the future. Furthermore, the energy storage industry must collaborate with renewable energy generation companies and grid operators to cultivate a healthy development ecosystem. Only through the joint forces of policy, market, and technology can energy storage truly transition from “insufficient revenue” to “revenue sharing.”
