Key Points
- Chinese battery cell shipments are expected to grow 75% this year. AI data centers are driving a massive global need for energy storage.
- New Chinese market reforms now make it profitable to run battery plants.
- All of the world’s top six battery cell manufacturers are Chinese companies.
- China plans to spend $35 billion to double its storage capacity by 2027.
China’s energy storage industry is surging as a massive overhaul of its domestic electricity market coincides with global demand for power. Chinese companies are currently on track to see a 75% jump in battery cell shipments this year. These firms have already exported more than $65 billion in batteries in 2024, demonstrating they are the undisputed leaders in a technology now essential to the modern world.
The demand is coming from multiple sources simultaneously. First, artificial intelligence data centers are proliferating and require a constant power supply. Since wind and solar power aren’t always available, massive battery banks are the only way to keep these centers running around the clock. Additionally, Europe is trying to fix its aging power grids, and the Middle East is investing heavily in new green energy projects.
Inside China, the government recently changed the rules for how electricity is sold. In the past, many big batteries sat empty because there wasn’t a clear way for companies to make a profit.
New reforms now allow these facilities to buy power when prices are low and sell it back to the grid when prices spike. This simple change transformed energy storage into a profitable business almost overnight. To maintain momentum, the Chinese government also launched a $35 billion plan to double its battery storage capacity by 2027.
Today, the world’s top six battery cell suppliers are all Chinese. Names like CATL and BYD are becoming as important to the energy sector as oil companies once were. While Tesla is a major player in building finished storage systems, it still relies heavily on Chinese-made cells to fill them.
There are some hurdles ahead, though. The U.S. government is seeking to limit the use of Chinese technology in U.S. projects through new tax rules and trade restrictions. However, many analysts note that U.S. power needs are growing so rapidly that it may be difficult to meet demand without Chinese batteries.
For now, Chinese factories are operating on double shifts to keep up with orders that show no sign of slowing.
