As energy storage gains popularity, will it follow in the footsteps of photovoltaics?

This year, the global Energy Storage market has been booming, but problems such as disorderly expansion and irrational competition have also become increasingly prominent. This conference sends a clear signal to the industry: while encouraging the development of the energy storage industry, the government will strengthen regulation and guidance to promote the industry towards a healthy, sustainable, and high-quality development path.

I. Lessons from the Photovoltaic Era: Energy Storage Takes the Lead in Anti-Involution.

If one were to choose a keyword for the photovoltaic industry this year, "anti-involution" would undoubtedly be a strong contender.

Since the beginning of this year, the government has taken multiple actions, using a systematic set of policies to address the long-standing problem of "involutionary" competition in the photovoltaic industry.

Since July, the Central Financial and Economic Affairs Commission meeting explicitly proposed to govern disorderly low-price competition among enterprises according to law and promote the exit of outdated production capacity; the Ministry of Industry and Information Technology has twice organized symposiums for the photovoltaic manufacturing industry, emphasizing the need for comprehensive measures in accordance with laws and regulations to rectify vicious low-price competition; in addition, the revised Anti-Unfair Competition Law officially came into effect on October 15, further strengthening the institutional defenses.

With the continued efforts of policy, the long-dormant photovoltaic market is gradually showing signs of recovery. Prices across the photovoltaic (PV) industry chain stabilized and rebounded, quickly igniting capital market sentiment and leading to a significant surge in the sector, with several listed companies hitting their daily price limits.

Third-quarter reports show that most PV companies reduced losses, with some even turning a profit, indicating an overall improvement in the industry's operating conditions.

Learning from others can be beneficial; the governance experience of the PV industry can provide important reference for the energy storage industry, which is currently in a period of expansion.

At the meeting, Li Lecheng outlined several recommendations:

First, it is essential to comprehensively and objectively assess the development trends of the power and Energy Storage Battery industries, resolutely implement the central government's deployment on preventing and addressing "involutionary" competition, promptly formulate targeted policies, and legally regulate irrational competitive behavior within the industry.

Second, it is necessary to strengthen capacity monitoring, early warning, and reasonable regulation, enhance product consistency and quality supervision, and severely crack down on intellectual property infringement.

Third, enterprises should be guided to scientifically plan production capacity, orderly promote internationalization, and take multiple measures to promote high-quality development of the industry and rationally and orderly expand overseas.

Fourth, industry enterprises should actively promote entrepreneurial spirit, consciously resist disorderly competition, and jointly maintain a healthy and orderly market environment.

II. A Shortage of Cells? Energy Storage Still Has a Long Way to Go

This year, the energy storage market has shaken off the slump of previous years, presenting a booming scene. Industry experts predict that total shipments of energy storage cells will reach 580GWh this year, a 75% year-on-year increase.

Behind this surge in demand is the coordinated impetus of domestic and international policies. Domestically, the market-oriented reform of Renewable Energy feed-in tariffs is deepening, and mechanisms such as capacity price compensation are gradually improving, making the revenue model for energy storage projects increasingly clear.

The overseas market is also performing strongly. The rush to install energy due to adjustments in the US tax law and the concentrated launch of large-scale energy storage projects in Europe and the Middle East have jointly driven the global demand for energy storage.

At the same time, emerging application scenarios, such as AI data centers, are placing higher demands on power quality and continuity. Energy Storage Systems, with their flexible adjustment capabilities, have become a key link in ensuring high-reliability power supply.

However, despite the continuous rise in upstream lithium prices and the full production and sales of battery cells, prices in the energy storage system integration segment have not increased in tandem. Looking at the winning bid prices for energy storage project EPC projects in the second half of this year, they remain low, with some projects even seeing new lows.

The reasons for this can be analyzed from three aspects: First, technological advancements have led to a decrease in the cost of energy storage systems, which has offset the pressure of rising battery cell prices to some extent. Second, market growth is mainly concentrated in large customers with strong bargaining power; large projects remain a buyer's market, and the price of energy storage systems directly affects market competitiveness. Third, the energy storage battery cell market is facing a situation of both "structural oversupply" and "structural shortage."

From the supply side, new capacity additions in the industry are generally focused on large-capacity models. For example, CATL's Jining base and EVE Energy's Jingmen Phase II production lines mainly produce 587Ah and 628Ah large-capacity cells, while companies like Chuneng New Energy are also focusing on 588Ah products. However, the market introduction cycle for these new production capacities is relatively long, and current system integration solutions still primarily utilize mainstream models such as 314Ah.

This may lead to overall cell production capacity catching up with market demand next year, but shortages of some popular cell models will still occur.

Furthermore, the energy storage industry needs to be wary of the potential risks of persistently low prices. The current tight cell production capacity is partly due to the industry's capacity utilization rate remaining below 60% for the past two years, forcing some companies to shut down production lines and scale back operations.

If companies blindly expand production again due to a surge in short-term demand, they may face a supply-demand reversal next year, returning to a situation of overcapacity. The cyclical fluctuations experienced by the photovoltaic industry in recent years should serve as a warning to the energy storage industry.

III. Overseas Markets Not a Blue Ocean

Energy Storage Expands Overseas Global demand for energy storage continues to rise, and the superior price margins in overseas markets are attracting Chinese companies with complete industrial chains and technological accumulation to accelerate their expansion.

Statistics show that in the first three quarters of 2025, Chinese energy storage companies achieved remarkable results in overseas expansion. Chinese companies signed new energy storage system orders overseas reaching 180 GWh, more than doubling year-on-year. In terms of regional distribution, Europe and the Middle East each accounted for 26%, Australia and Asia (excluding the Middle East) 21% and 16% respectively, while North America, South America, and Africa combined accounted for approximately 11%.

As overseas markets become key to growth, domestic energy storage companies are increasing the proportion of their overseas business. CATL Chairman Zeng Yuqun bluntly stated, "We are not only expanding domestically, but also internationally." Competition among Chinese companies in key markets such as Europe, the US, and the Middle East is becoming increasingly fierce, especially in large-scale GWh projects. Some companies are willing to reduce prices by more than 30% to secure orders, causing price wars to spread from the domestic market to overseas markets, putting pressure on the profitability of many companies.

Faced with increasingly fierce competition, in addition to national and industry-level efforts to combat involution, energy storage companies need to further strengthen self-discipline.

First, they must adhere to the bottom line of safety and quality. Photovoltaic modules typically have a lifespan of up to 20 years, and the accompanying energy storage systems must also reach the same lifespan; therefore, safety must be the top priority. Companies should build a closed-loop quality system across the entire chain, from design, selection, production to installation and maintenance, eliminating post-event remediation and strengthening pre-event prevention.

Second, they must focus on technological innovation to build differentiated barriers. Beyond mainstream large-capacity, high-power, and grid-connected technologies, they need to develop cutting-edge areas such as long-term energy storage, high-voltage cascading, and high-rate, wide-temperature-range batteries, using technological iteration to drive cost optimization and performance improvement.

Furthermore, they must promote localized operations, realizing a shift from product export to system export. Going global is no longer simply about exporting equipment, but a comprehensive test of a company's overall capabilities. Chinese companies should systematically promote compliance certification, build local teams, construct regional supply chains, and establish a service network covering the entire project lifecycle to support long-term operation and maintenance and rapid response.

The market's prosperity cannot mask underlying concerns; the blue ocean of energy storage is turning into a red ocean. Faced with a booming market and the apparent shortage of chips, the energy storage industry needs to remain calm. Only by relying on orderly policy guidance and rational self-discipline from enterprises, and by strengthening its internal capabilities in technological innovation, quality control, and global expansion, can the industry navigate cyclical fluctuations and achieve truly sustainable and high-quality development.