Is the New Energy Storage Industry a Hot Trend Right Now?

The new energy storage industry is indeed a hot sector, but its essence is far more complex than superficial growth data suggests. While the industry is filled with opportunities, it also faces significant challenges. This isn’t a simple story of “explosive growth” but rather a long-term race requiring careful strategic consideration.

1. Rapid Growth, But Hidden Risks Lurk Beneath

The energy storage market is undeniably booming. Data shows that China’s installed energy storage capacity grew by 45% year-on-year by the end of 2023, while global new energy storage installations reached 187 GWh, a 92% increase. By 2025, global new installations are projected to hit 250 GWh, a 33% annual growth. These figures appear impressive, but a closer look reveals a slowdown in growth rates—from 92% in 2024 to 33% in 2025—indicating a transition from a “boom phase” to a “stable growth phase.”

More critically, supply-side expansion may already be outpacing demand. Since 2023, announced capacity expansion plans by storage manufacturers have exceeded 900 GWh, with total investments surpassing ¥471.7 billion. This oversupply has triggered cutthroat price competition, leading to a “race to the bottom” where low-quality products threaten to dominate the market. Technologically weaker players are slashing prices to gain market share, squeezing profit margins and risking the industry’s long-term health.

2. Overreliance on a Single Technology: A Looming Crisis

Lithium-ion batteries currently dominate the energy storage market, accounting for over 95% of installations. While mature and cost-effective, they face inherent limitations: safety concerns, dependency on scarce resources (e.g., lithium and cobalt), and performance nearing theoretical limits in energy density and lifecycle.

Emerging alternatives like solid-state batteries, flow batteries, and compressed air energy storage offer distinct advantages. For instance, flow batteries excel in large-scale storage, while solid-state batteries promise improved safety and energy density. However, these technologies remain commercially underdeveloped and prohibitively expensive. Without rapid diversification in technical pathways, the industry’s growth could face severe constraints.

3. Policy Support: A Double-Edged Sword

Government policies have been instrumental in driving the sector’s growth. In 2024, “new energy storage” was explicitly included in China’s Government Work Report for the first time, signaling strong policy backing. Yet such support carries risks. While it attracts capital and accelerates market expansion, it also fuels overinvestment, exacerbating oversupply and unhealthy competition.

Policy uncertainty adds another layer of risk. For example, the gradual phase-out of subsidies for new energy vehicles has already impacted related industries. If policy support for energy storage weakens, market confidence could falter. Sustainable growth requires long-term policy stability, but companies cannot afford to rely solely on government incentives.

4. The Future: From “Hot Trend” to “Deep-Water Zone”

The industry’s potential remains undeniable. As renewable energy scales up—particularly wind and solar—storage technologies will find broader applications. Flow batteries for long-duration storage, solid-state batteries for high-safety scenarios, and grid-integrated storage systems for smart grids and distributed energy networks all represent promising opportunities.

However, the sector is shifting from a “gold rush” to a “deep-water zone.” The core challenge is no longer rapid growth but achieving high-quality development. Companies must balance innovation, cost control, and market positioning, while investors should focus on firms with true technological advantages and competitive moats.

5. Strategic Recommendations: Choose Your Battles Wisely

For those considering entering the storage industry—whether as investors or entrepreneurs—prioritize the following areas:

Technology Innovation: Track breakthroughs in flow batteries, solid-state batteries, and other emerging technologies, but assess their commercialization timelines and cost trajectories.

Application Scenarios: Explore niche opportunities like offshore wind storage, solar-storage integration, and vehicle-to-grid (V2G) systems.

Policy & Market Dynamics: Stay attuned to regulatory shifts and evolving demand. Avoid reckless expansion and focus on building durable technological and product advantages.

The energy storage industry is a high-potential sector, but it’s no easy “get-rich-quick” play. Its future hinges on innovation and rational market evolution. For those who identify strategic niches and seize emerging opportunities, the rewards could be substantial—but only with patience and precision.