Last year, China’s battery industry’s average utilization rate plummeted to just a third of peak capacity amid serious overcapacity after years of massive investment and expansion. This put smaller manufacturers under severe pressure and drove further consolidation of the industry, while forcing producers to increasingly look for markets abroad. Fortunately, these efforts appear to be paying off: China Energy Storage Alliance has reported that Chinese forms of battery storage secured ~200 overseas orders totaling 186 gigawatt-hours (GWh) in the first half of this year, up more than 220% year-over-year. Not surprisingly, only 5.34 GWh – less than 3% of the total – came from the United States amid heavy tariffs by the Trump administration, compared to almost 60% that came from the Middle East, Europe and Australia.
In April, the Trump administration imposed tariffs of up to 3,521% on solar energy imports from Vietnam, Cambodia, Malaysia and Thailand, with the final tariffs applied to shipments from China’s solar energy heavyweights, including JinkoSolar (NYSE:JKS) and Trina Solar. Additionally, Chinese companies are increasingly diversifying their production bases in a bid to mitigate growing tariff risks from Washington. Currently, Chinese solar manufacturers have installed about 80% of their capacity overseas, including solar wafers, cells and modules in Southeast Asia.
“The industry used to say that either you go abroad or you get out of the game.“said Gao Jifan, president of Trina Solar. “Now, because of tariffs, simply exporting is not enough; It must also localize production abroad..”
China’s battery storage sector is also benefiting from a rebound in local markets thanks to political support from Beijing. China’s National Energy Administration recently unveiled a plan to mobilize 250 billion yuan (~$32 billion) in new investments to build 180 gigawatts of new energy storage capacity by 2027. Lately, Chinese companies operating in the energy storage space have been posting solid growth as fundamentals continue to improve. During the first half of 2025, 47 out of 55 listed companies in the Chinese energy storage sector were profitable. China Contemporary Technology Amperex Co. (OTCMKTS:CATL), one of the world’s largest lithium-ion battery manufacturers, reported operating income in the first half of 2025 of RMB 178.886 billion ($25.15 billion), up 7.3% year-on-year, while net profit attributable to shareholders reached RMB 30.485 billion, up 7.3%. 33.33%. In its interim report, CATL revealed that sustained rapid growth in demand for energy storage cells driven by the global transition to clean energy has been driving its impressive performance.
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That said, the expansion of battery storage is expected to be a global trend: energy research and consulting firm Wood Mackenzie has projected that global investment in battery storage will reach approximately $1.2 trillion by 2034. This investment will be needed to support the installation of more than 5,900 GW of new wind and solar capacity over that period. The report emphasizes that advanced grid-forming battery technology is crucial to maintaining grid stability as renewable energy sources become more prevalent.
US battery storage explodes
For years, battery systems have played only a marginal role in U.S. power grids, with energy companies focusing more on building capacity from natural gas plants and renewable energy sources. According to the energy data portal Cleanview, five years ago, the United States had 74 times more wind farm capacity and 30 times more solar capacity than the battery capacity within its power generation system.
However, steadily declining costs, along with rising energy density levels, have encouraged utilities to increase their battery installations, with battery storage production now outpacing other energy sources in certain energy markets. And it’s boom time for the U.S. utility-scale battery storage market: There is currently only about 5 times as much solar and wind capacity in the country compared to battery capacity, thanks in large part to a 40% decline in battery prices since 2022. Currently, 19 states have installed 100 MW or more of utility-scale battery storage. According to Cleanview, there is just under 30,000 megawatts (MW) of utility battery capacity in the US, representing a whopping 15-fold increase since 2020. For some context, the US solar sector has added 84,200 MW over the period, while the wind sector has increased its capacity by just 7,000 MW. Falling costs are the main reason for the increase in battery deployment in the United States: according to financial advisory and asset management firm Lazard, the levelized cost of electricity (LCOE) for large-scale solar farms combined with batteries ranges between $50 and $131 per megawatt hour (MWh). This makes the pair competitive with new peaking natural gas plants ($47 to $170 LCOE per MWh) and even new coal-fired plants with an LCOE of $114 per MWh.
According to Lazard’s LCOE+ 2025 report, newly built renewable energy power plants are the most competitive form of unsubsidized power generation (i.e., without tax subsidies). This is highly significant in the current era of unprecedented growth in energy demand, largely due to the rise of AI and clean energy manufacturing. Renewables also stand out as the fastest generation resource to deploy, with the combination of solar and batteries often featuring much shorter deployment times compared to building new natural gas power plants. California is by far the national leader in utility-scale battery storage, accounting for ~13,000 MW or approximately 42% of the national total. According to the California Energy Commission, the California Independent System Operator (CAISO) has installed ~21,000 MW of solar capacity and ~12,400 MW of battery capacity, allowing the state to rely heavily on batteries during periods of peak demand.
By Alex Kimani for Oilprice.com
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