Energy security fears drive global surge in orders for Chinese storage firms
The lingering energy shock is driving overseas orders for China’s energy storage companies, with more than 25 gigawatt-hours (GWh) of capacity to be built in the US and European countries. The global demand for energy storage facilities has been driven by disruptions to oil and gas supply chains ste
By Themis Qi
The lingering energy shock is driving overseas orders for China’s energy storage companies, with more than 25 gigawatt-hours (GWh) of capacity to be built in the US and European countries.
The global demand for energy storage facilities has been driven by disruptions to oil and gas supply chains stemming from the Middle Eastern conflicts and the urgent need by developed markets to upgrade ageing grids, according to Matty Zhao, co-head of China equity at BofA Global Research.
Regardless of the recent US-Iran agreement to end the war, “governments realise they need structural energy security,” said Zhao, adding that it would push the governments of the US and Europe to allocate more funding for energy storage in the coming years.
An energy storage system (ESS) acts like a massive power bank for the electrical grid during the transition towards renewable energy sources, such as solar and wind, stabilising the power grid and preventing widespread blackouts. One GWh could power about 100 average American households for a year.
In the first two weeks of June alone, Contemporary Amperex Technology Co Limited (CATL) bagged a combined 5.4 GWh of storage orders.
The world’s largest energy-storage battery maker will partner with Finland’s Merus Power to deploy 3 GWh of systems across the Nordic region, and struck a deal with Edify Energy to supply 2.4 GWh for the Smoky Creek and Guthrie’s Gap projects in Australia.
On June 10, CALB Group – another Chinese battery leader – entered the Japanese market by signing a 220 MWh system procurement agreement with Japan’s Kitahama GRF to focus on grid-side storage and data centre backup power.
In the US, system integrator HyperStrong secured a 2 GWh contract with a New York-based developer to supply its flagship HyperBlock III 5 MWh liquid-cooling systems for power arbitrage and grid auxiliary services in Texas.
Meanwhile, Envision AESC, a battery and energy-storage system integrator acquired by the Chinese wind turbine giant Envision Group, announced in mid-June a strategic three-year agreement with system integrator Prevalon Energy, a joint venture of Mitsubishi Power Americas and EES.
Envision AESC is expected to supply over 10 GWh of advanced storage cells and modules to support utility-scale projects, targeting renewable integration and power infrastructure for artificial intelligence data centres (AIDC).
The footprint of Chinese manufacturers in the Middle East has also deepened.
In mid-May, Shenzhen-listed energy titan Sungrow Power Supply announced it has secured a 7.5 GWh energy storage order in the United Arab Emirates, which came on the heels of the company finalising a 7.8 GWh project in Saudi Arabia last December, which stands as the world’s largest energy storage project.
Chinese energy storage system makers account for seven out of the top 10 suppliers in terms of shipments in the first quarter of the year, according to Taipei-based consulting firm InfoLink.
Despite the policy dynamics, Zhao of BofA expected China’s battery-energy storage system exports to remain resilient and Chinese suppliers were likely to maintain a competitive edge in the near to medium term, supported by strong overseas demand, cost competitiveness, and a highly efficient supply chain.
BofA projected global new battery energy storage system installations to reach 425 GWh in 2026 and 533 GWh in 2027, up 39 per cent and 25 per cent year on year, respectively.
AIDCs, in particular, were emerging as a source of medium-term demand, as the rapid growth of AI-related power consumption was creating a new narrative around the use of ESS, according to a report by HSBC Global Investment Research in June.