At present, the global energy system is undergoing a profound green revolution. Renewable energy represented by photovoltaics and wind power is developing rapidly and is gradually moving from supplementary energy to main energy. However, the intermittency and volatility of wind and solar resources have brought huge challenges to the stable operation of the power grid. In this context, energy storage, as a key support and "ballast stone" for building a new power system, has become increasingly prominent in its strategic value. It is evolving from an option to a necessity, ushering in a golden era of rapid development.

The core logic driving the explosive growth of the energy storage industry stems from the triple resonance of policy, market and technology.

At the policy level, China’s “double carbon” goal has been established as a national strategy, and governments at all levels have intensively introduced supporting policies. The "Special Action Plan for the Large-Scale Construction of New Energy Storage (2025-2027)" issued by the National Energy Administration quantifies the development goal for the first time, that is, by 2027, the cumulative installed capacity of new energy storage nationwide will not be less than 180GW. Compared with the installed capacity base of approximately 74GW at the end of 2024, there is room for increment of more than 100GW in the next three years, and the annual compound growth rate will remain high, drawing a clear growth ceiling for the industry.

At the market level, the deepening of the power market reform has created a diversified profit model for energy storage. Previously, energy storage mostly relied on the mandatory construction of new energy power stations, which had strong cost attributes. Nowadays, with the gradual improvement of the spot market, ancillary service market, capacity compensation mechanism, etc., energy storage is transforming into an asset that can independently participate in market transactions and obtain stable returns. For example, in leading provinces such as Gansu, independent energy storage projects have achieved a life-cycle internal rate of return (IRR) of over 8% through peak-valley price difference arbitrage, capacity leasing, and participation in frequency modulation auxiliary services. The successful implementation of the business model has greatly stimulated the investment enthusiasm of social capital.

At the technical level, the continuous iteration of lithium battery technology has led to a steady decline in costs. Diversified technical routes such as sodium-ion batteries, flow batteries, and compressed air energy storage have also continued to make breakthroughs in their respective applicable scenarios, providing more economical and safer options for different application needs.

From the perspective of market structure, energy storage has shown a pattern of three major scenarios: large-scale storage, household storage, and industrial and commercial energy storage going hand in hand. Large-scale energy storage (large storage) is the absolute main force in the current market, directly serving the power generation side and the power grid side, aiming to improve new energy consumption capabilities and ensure grid security. The core lies in the maturity of the business model. Investors should focus on leading companies with profound knowledge and strong resource integration capabilities in system integration and power station operations. They can better navigate complex market rules and optimize asset returns.

Household energy storage (household energy storage) is mainly for household users and is used in conjunction with rooftop photovoltaics to achieve self-use of electricity and reduce electricity bills. Its core competitiveness lies in product brand, performance and channel construction. Against the background of high overseas electricity prices, household savings demand continues to be strong, and manufacturers with strong overseas brands and channels, such as Deye Co., Ltd. and Peneng Technology, continue to benefit. Industrial and commercial energy storage serves electricity consumers such as factories and shopping malls, and uses the peak-valley electricity price difference to achieve electricity-saving benefits. The market has just started and has huge potential. The key to its development lies in an in-depth understanding of users’ energy usage habits and precise energy management capabilities.

The surge in demand is transmitted to the upstream, and a shortage of raw materials is looming. Downstream demand has exploded beyond expectations, bringing the industrial chain from battery cells, copper foil/aluminum foil, structural parts to electrolytes to generally reach full production. In order to lock in production capacity for next year, battery factories have begun to sign long-term orders with upstream suppliers, which indicates that demand for raw materials will rise significantly.

According to industry research data, for every 100GWh of energy storage batteries produced, approximately 160,000 tons of aluminum, 65,000-70,000 tons of lithium carbonate, and 60,000 tons of copper are consumed. Calculation based on this: If the energy storage market maintains a neutral growth rate of 50% next year, the demand for the above raw materials will increase significantly. If the growth rate reaches a more optimistic 80%, some raw materials will directly face shortages.

Among the many raw materials, the tight supply situation of electrolytic aluminum is the most clear. The core contradiction lies in the production capacity ceiling and power constraints. Domestic production capacity is capped, and China's electrolytic aluminum production capacity has reached the upper limit and cannot be added. Overseas expansion was blocked, and when companies turned to Indonesia (which has bauxite and coal) to build factories, they faced a fundamental constraint - lack of electricity. Since China has promised not to build new thermal power plants overseas, companies need to find local partners to solve power problems, resulting in a power plant construction cycle (18-24 months) that is much slower than that of the electrolytic aluminum plant itself. Therefore, a large amount of planned production capacity is difficult to convert into actual production, and the production that can be released in 2026-2027 is very limited.

Overall, the energy storage market has entered a high-growth channel driven by a clear profit model and real demand. Even if subsequent provincial policy subsidies are not as strong as those in Inner Mongolia, the industry can still maintain a yield of about 10%, supporting the sustainability of growth. This strong demand is penetrating upstream. It is expected that electrolytic aluminum will be in a definite shortage next year, and the supply and demand of copper will also be tight. The supply and demand balance of lithium carbonate is highly dependent on whether the energy storage growth rate exceeds the expected 50% threshold. Capacity expansion of the entire industry chain has become an urgent issue at the moment.