Can Hainan’s Closed-Door Policy Become the Engine for Energy Storage?

The news of Hainan Free Trade Port's island-wide customs closure has garnered significant attention in recent days.

Starting December 18, 2025, Hainan will officially enter a new phase of island-wide customs closure. Looking back at the history of reform and opening up, only the Shenzhen Special Economic Zone has pioneered the practice of establishing customs closure zones within its territory.

Shenzhen, leveraging its special economic zone status and policy support, has transformed from a small border town into an innovation-driven international metropolis and a globally important hub for the energy industry. In 2024, Shenzhen's GDP reached 3.68 trillion yuan, exceeding the economic scale of some countries.

Unlike Shenzhen, Hainan is not a single city or region, but a provincial-level administrative region with a larger land area and a larger resident population. Therefore, Hainan's customs closure will open up a broader and more imaginative new space for development.

With the island-wide customs closure implemented, what impact will it have on the Energy Storage system industry, and what development opportunities will it bring?

I. Hainan's Customs Closure Opens the Door to Globalization of Energy Storage

The core of Hainan's island-wide customs closure is "open at the first line, controlled at the second line, and free within the island." Specifically, for energy storage companies, the benefits are reflected in the following aspects:

Firstly, in terms of cost and supply chain, "open at the first line" allows companies to enjoy zero-tariff treatment for imported raw materials, production equipment, and key components, thereby reducing initial investment and production costs.

It is worth noting the "tariff-free processing and value-added processing" policy. After purchasing raw materials or basic components from overseas, companies can process, purify, restructure, or integrate them in Hainan. As long as the value-added portion exceeds 30%, their products sold to the mainland are exempt from import duties.

This makes certain import-dependent, high-tariff, and high-value-added processes economically feasible in Hainan. Under this model, compared to production on the mainland, companies can effectively reduce the tax burden of imported materials and gain stronger market competitiveness.

Secondly, there are tax and financial incentives and talent attraction. According to the customs closure policy, eligible energy storage companies can enjoy a 15% corporate income tax rate, which is significant for the energy storage industry, whose profit margins are currently squeezed by fierce market competition, compared to the general 25% tax rate in mainland China.

Simultaneously, the policy also exempts high-end, scarce talent from personal income tax exceeding 15%, precisely covering high-income groups such as R&D engineers and core technology experts, effectively reducing the cost for companies to attract and retain top talent.

Furthermore, there is the market location aspect. Hainan is adjacent to Southeast Asia, one of the fastest-growing markets in terms of global energy storage installed capacity. After the customs closure, relying on the RCEP agreement and free trade port policies, logistics and capital flows between Hainan and Southeast Asia will be smoother, and trade will become more frequent.

Hainan has a typical tropical maritime climate, similar to that of Southeast Asia. Energy storage products developed, tested, and assembled here have undergone rigorous testing for reliability and climate adaptability, better meeting the needs of markets with similar climates in Southeast Asia, Australia, and Latin America.

Finally, a series of trade facilitation policies provide support for the global operations of enterprises. For example, the open offshore trade policy allows companies to complete international trade and settlement in Hainan, enjoying preferential low tax rates.

The international transshipment port policy further improves logistics efficiency and facilitates the assembly and export of large-scale energy storage equipment. Meanwhile, in recent years, Hainan has continuously improved its business visa processes and internationalized business environment, which is conducive to energy storage companies attracting overseas customers and establishing technical training and service centers.

It can be said that for energy storage companies eager to expand into international markets, the Hainan Free Trade Port, after its customs closure, provides a highly attractive industrial environment.

In summary, Hainan's customs closure policy is not simply about tariff reductions and financial subsidies, but rather a comprehensive approach that systematically guides energy storage companies to establish their R&D, pilot testing, high-end manufacturing, and even international operations in Hainan, thereby creating a high ground for the new energy industry. This is achieved through various support measures, including reducing trade costs, alleviating tax burdens, aligning with application markets, and incentivizing technological upgrades.

II. Accelerated Power Market Reform: Expected Returns on Energy Storage Exceed Imagination

While the entire island is under customs closure, Hainan is actively promoting power market reform.

Recently, the Hainan Power Exchange Center issued the "Notice on Matters Concerning the Participation of New Energy Storage in Hainan's Power Market Transactions," which stipulates regulations regarding market access and registration for new energy storage, and the participation of independent energy storage in the medium- and long-term power market, the spot power market, and the power ancillary services market.

The "Notice" clarifies the market access conditions for independent energy storage, stipulating that independent energy storage projects with a rated power of 5 MW or above and a sustainable charging and discharging time of no less than 1 hour at rated power can participate in power market transactions.

This means that qualified energy storage Power Stations can participate in transactions as independent market entities on an equal footing with power generation companies and power users, and their regulation capabilities and the value of their electrical energy can be directly realized through market mechanisms.

At the same time, the policy incorporates independent energy storage into the management of power ancillary services, compensating for the charging electricity used for deep peak shaving, and setting an upper limit on the average daily number of charge-discharge cycles and the operating state of charge range. This effectively provides investors with a measurable return model and asset utilization boundary, significantly reducing investment uncertainty. Following the border closure, Hainan's power market reform will deepen alongside the upgrading of the new energy industry. According to Document No. 136, the on-grid price of new energy will be determined by market supply and demand. Under this trend, the value of energy storage will become increasingly prominent.

With the stable growth in electricity demand brought by industries introduced through the border closure, such as data centers and high-end manufacturing, the space for local consumption of new energy will expand. New energy power generation projects equipped with energy storage can effectively cope with spot market price fluctuations through peak shaving, valley filling, and frequency regulation, discharging when electricity prices are high, thereby improving the stability and upper limit of the project's overall revenue.

Furthermore, in a market-oriented environment, the grid's demand for fast frequency regulation and reserve capacity will be purchased on a paid basis. Independent or integrated energy storage is an ideal resource for providing these high-value ancillary services, opening up a second growth curve for enterprises besides electricity trading.

III. Hainan's Energy Storage Industry Landscape is Accelerating its Formation
From upstream key materials to downstream system integration, and then to after-sales operation and maintenance at the user end, an energy storage industry cluster covering key links of the industrial chain has emerged in Hainan.

Market pioneers are often the most indicative of trends. CATL, a global lithium battery giant, is one such example. Since signing a strategic cooperation agreement with the Hainan Provincial Government, CATL has accelerated its strategic layout in Hainan. In July 2025, CATL's joint venture, Xiamen Xineng'an Technology Co., Ltd., reached a strategic cooperation agreement with local Hainan enterprises to jointly promote the large-scale application of advanced energy storage technology throughout Hainan, marking its accelerated entry into the Hainan industrial and commercial energy storage market.

CATL stated that it will promote the development of Green Energy,new energy storage, low-carbon industrial parks, and lithium battery recycling in Hainan in the future.

Another battery manufacturer, Wuhan Weilai Energy, jointly owned by NIO, CATL, and others, also established a new battery technology company in Chengmai, Hainan in October 2025, with business scope covering energy storage technology, battery leasing, and charging/swapping operations.

Furthermore, breakthroughs have also been achieved in key upstream materials of the industry chain in Hainan. In Danzhou Yangpu Economic Development Zone, Hainan Xingzhihai New Materials Co., Ltd.'s 20,000-ton battery-grade lithium hydroxide project, with an investment of 1.056 billion yuan, entered the trial production stage in the first half of 2025. The project is expected to generate over 2 billion yuan in annual output value, marking a significant step forward for Hainan in the field of new energy materials manufacturing.

The intensive actions of leading enterprises not only bring cutting-edge technology and substantial capital but also send a strong signal to the entire industry: Hainan has become an indispensable strategic location for the energy storage industry.