China’s Energy Storage Industry Shifts from Scale to Quality
TREE NEWS reports: China’s energy storage sector is entering a new phase. At the World Energy Storage Conference on October 15, Vice Minister of Industry and Information Technology Xiong Jijun called for improving capacity warning mechanisms and accelerating the transition from scale expansion to quality and efficiency. The same day, Haichen Energy Storage announced cumulative shipments exceeding 200GWh, with long-duration storage orders booked through the end of 2027. Company co-founder and president Wang Pengcheng noted that the cost-reduction dividend from simply expanding production is gradually narrowing.
Long-Duration Demand Reshapes the Market
Data from the China Automotive Power Battery Industry Innovation Alliance shows that China’s energy storage battery sales reached 73.5GWh in September, up 104.4% year-on-year, far outpacing the 35% growth in power batteries. A key driver is the shift toward longer-duration storage. Four-hour-plus projects accounted for 66.75% of the 112GWh in storage system procurement tenders in the first three quarters of 2025. Extending duration from two to four hours doubles the battery capacity required per project, even if the number of projects remains constant.
This structural shift is pushing manufacturers like Haichen and EVE Energy to develop larger cells and integrated systems. Haichen’s 1,175Ah cell for four-hour storage and upcoming 1,300Ah cell for eight-hour applications are designed to reduce component and assembly costs. EVE Energy has already mass-produced its 628Ah cell. The goal is to make longer-duration products affordable for customers who must balance higher upfront investment against operational returns.
Market Implications: Margin Pressure and Competitive Shifts
The transition from selling cells to delivering complete systems is altering the competitive landscape. Battery makers are increasingly competing directly with system integrators for the same customers. In the first half of 2025, EVE Energy’s energy storage battery revenue grew 69.15%, but gross margin fell 1.36 percentage points. Sungrow’s gross margin dropped 7.49 percentage points, while Haibo Si Chuang’s margin improved by about 3.5 percentage points, highlighting divergent outcomes based on project mix and regional exposure.
For investors, several implications stand out:
- Margin compression is structural: As scale-driven cost reductions fade, companies that innovate on product design, manufacturing efficiency, and system integration will outperform those relying solely on capacity expansion.
- Overseas markets are critical: Haichen expects overseas revenue share to rise further, with demand shifting from DC systems to AC-side and full-station delivery. Local service and O&M capabilities are becoming key differentiators.
- New applications emerge: Data centers are a growing demand source, with Haichen proposing a lithium-sodium hybrid solution—lithium for long-duration energy shifting and sodium for high-rate load fluctuations.
- Policy tailwinds continue: Beijing’s push for quality-oriented development and capacity warnings may curb irrational expansion, supporting pricing discipline and long-term project returns.
Key Takeaways
The era of easy growth through sheer scale is ending for China’s energy storage giants. Companies that can deliver longer-duration, lower-cost systems while building overseas service networks will capture the next wave of demand. Investors should watch for margin trends, order backlogs, and the ability to move up the value chain from cell supplier to full-system provider. The shift toward quality over quantity is likely to separate winners from laggards in the coming years.
