China Bets On Broad Scale Battery Storage

 

 

“Imagine a group of battery banks that together have enough power to keep all of Texas and California going on a peak summer day. That is what China has built in the space of just five years -- and it is just getting started.

 

With the artificial-intelligence boom straining power grids, Beijing is betting on large-scale battery storage banks the size of shipping containers to help manage the load. The technology is particularly valuable in China because the country is heavily investing in solar and wind power, which can't produce 24-hour-a-day power. Battery storage soaks up excess electricity during sunny and windy days and releases the juice later when it is needed.

 

As recently as five years ago, all the storage batteries in China had capacity of less than 4 gigawatts, little more than a rounding error in the country's huge grid.

 

As of the first quarter of this year, the country's nonconventional energy-storage capacity -- mostly batteries -- soared to around 155 gigawatts, and Beijing said in June that it was targeting 300 gigawatts by 2030.

 

And Chinese batteries dominate the U.S. energy-storage market too, generating concern in Washington about how to avoid reliance on its rival.

 

With the help of battery storage, solar and wind power account for 22% of China's electricity supply. Still, China generates more than half its power by burning coal.

 

Beijing wants nonfossil energy to become the primary source of electricity generation by 2030. The government is requiring all new data centers to derive at least 80% of their power from renewables.

 

In the late 2010s, local governments in China began mandating that power producers pair renewable projects with energy storage. Thousands of companies piled into the business. That has driven down costs but also pushed some companies to the brink in another instance of the hypercompetition sometimes blamed for afflicting China's economic health.

 

Last September, Robin Zeng, founder of the world's biggest battery maker, took aim at what he called "vicious price competition." He said hard-pressed suppliers were cutting corners on quality.

 

Zeng's company, China-based Contemporary Amperex Technology, or CATL, expects its energy-storage business to account for half of its global revenue by 2030, up from 15% in 2025, according to people familiar with the company.

 

The U.S. is second in battery storage after China, with 57 gigawatts as of the end of last year -- a figure that Wood Mackenzie estimates could reach 200 gigawatts in five years.

 

The U.S. has also been increasing investments. States including California and New York have set storage targets, and the Inflation Reduction Act passed in 2022 expanded federal tax credits for investing in energy-storage systems.

 

The challenge for Washington is that Chinese companies dominate the supply chain for energy-storage batteries. They control the processing of key raw materials including lithium, cobalt and graphite. And the world's largest battery-cell makers and storage-system sellers are almost all Chinese.

 

Since 2023, Beijing has tightened export limits on some battery materials and advanced battery technologies in the wake of geopolitical tensions with Washington.

 

In the first quarter, the world's top 10 battery-cell suppliers of energy-storage systems were all Chinese, capturing 90% of the global market, according to Benchmark Mineral Intelligence. The No. 2 company on the list, Hithium, opened a factory last year in Mesquite, Texas.

 

Last year, more than 90% of the battery-storage systems installed in the U.S. used Chinese cells, according to Benchmark.

 

Even Tesla, the leading U.S. storage-system seller, is enmeshed in the China supply chain. At its Shanghai factory, Tesla produces Megapack energy-storage systems for markets outside the U.S., using battery cells and components from CATL among others.

 

Ford licenses CATL's technology to produce energy-storage products in the U.S.

 

Iola Hughes, head of research at Benchmark, said Chinese battery makers have focused on lithium ferrophosphate, or LFP, batteries that use inexpensive iron and are suited to energy storage.

 

"No matter which market you're in the world, the obvious choice would be to go for these batteries which the Chinese players had mastered," she said.

 

The U.S. is expanding domestic manufacturing with help from companies based in allied nations such as South Korea's LG Energy Solution and Samsung SDI.

 

President Trump's tariffs on Chinese imports have eroded the cost advantage long enjoyed by made-in-China batteries. Under the One Big Beautiful Bill Act, passed by Congress last year after a push by Trump, storage projects that use components from Chinese suppliers can't receive tax credits.

 

"If it weren't for these policy constraints, Chinese companies would still be gaining market share," said Zheng Jiayue, an analyst at Wood Mackenzie.” [1]

 

Does EU also lock out China's materials here?

 

The EU does not use a blanket, tax-credit-based lockout like the U.S. "One Big Beautiful Bill Act". Instead, the EU relies on supply chain diversification, targeted public funding bans, and progressive local-content requirements in strategic legislation like the Net Zero Industry Act.

The EU restricts Chinese components through the following specific measures:

•           Public Funding Bans: The European Commission prohibits energy projects (including battery storage and solar) that utilize inverters from "high-risk" countries—which explicitly includes China—from accessing major bloc financing and the European Investment Bank (EIB).

•           Industrial Accelerator Act (IAA) Mandates: Proposed EU rules require projects participating in public procurement or benefiting from state subsidies to incorporate a certain percentage of local, European-made content.

•           Anti-Subsidy and Trade Defenses: Unlike the U.S. FEOC (Foreign Entity of Concern) material restrictions, the EU relies heavily on import tariffs, forced-labor import bans, and countervailing duties to combat subsidized clean-tech imports.

Despite these policies, complete decoupling is currently unfeasible for the EU, leaving developers dealing with higher compliance friction and ongoing reliance on Chinese components.

 

As a result, if you set China’s renewable electricity production at 100%, the USA generates roughly 34% of that amount, and the European Union (EU) generates about 51%.

 

 

1. China Bets On Broad Scale Battery Storage. Huang, Raffaele.  Wall Street Journal, Eastern edition; New York, N.Y.. 20 July 2026: B1.