Beijing, December 22, 2025 – China’s recent electricity market reforms, combined with exploding global demand from AI-driven data centers, are igniting an unprecedented boom in battery energy storage, solidifying Chinese manufacturers’ dominance in the sector.
June reforms mandated market-based auctions for new power projects, replacing fixed rates and enabling profitable price arbitrage: charging batteries when electricity is cheap and discharging during peak demand. This shift dramatically improved utilization, with energy storage plants averaging 3.08 hours of daily operation in Q3 2025—up 0.78 hours year-on-year—according to the China Electricity Council.
Supported by a $35 billion government plan to nearly double storage capacity by 2027 and new provincial subsidies, including capacity payments in 10 provinces, the reforms have unlocked previously idle assets. China already holds 40% of global battery storage capacity, surpassing traditional pumped hydro this year.
Simultaneously, surging international demand—particularly for backing AI data centers—is amplifying the boom. UBS analysts note that “pairing solar with storage has effectively become the only solution for meeting U.S. AI data-centre power needs,” amid limited growth in baseload sources like gas and nuclear. Additional drivers include Europe’s aging grid upgrades and Chinese renewable projects in the Middle East.
Chinese firms, led by CATL, HiTHIUM, EVE Energy, BYD, CALB, and REPT BATTERO—all top global suppliers—are poised for a 75% surge in energy storage cell shipments this year. Exports of storage and EV batteries exceeded $65 billion in 2025, with non-automotive batteries growing 51.4% in the first 11 months.
Analysts call this “one of the biggest surprises” in China’s energy sector, with full order books forcing double shifts at factories. Global investment in battery storage is projected to rise 16% to $66 billion this year, while installations could jump significantly by 2026.
This convergence positions China to capture the lion’s share of a market critical for renewables integration and reliable AI infrastructure worldwide.