Energy Storage at a Crossroads: Are Companies Ready for the Shift to Value-Driven Markets?

The energy storage industry has reached another crossroads. During the 13th International Energy Storage Summit and Exhibition (ESIE 2025) held from April 10 to 12, discussions surrounding the Notice on Deepening the Market-Oriented Reform of New Energy Grid Pricing to Promote High-Quality Development of New Energy (Document No. 136) released in February became one of the hottest topics.

As policy direction shifts from administrative orders to market incentives, the development of energy storage enters a new phase. Several companies reported to Beike Finance that, from a long-term perspective, Document No. 136 will promote the market-oriented development of the industry. However, in the short term, the growing pains caused by demand adjustments and more stringent tests of energy efficiency and economics pose significant challenges for businesses.

The transition from “price competition” to “value competition” may have only just begun. The most significant change in Document No. 136 is the stipulation that “the configuration of energy storage shall not be a prerequisite for the approval, connection, and grid access of newly built new energy projects,” effectively eliminating the mandatory energy storage requirement. This had long been the largest demand driver in China’s energy storage market.

“In simple terms, Document No. 136 represents a shift from ‘I have to build’ to ‘I want to build’ and ‘I wish to build,’” said Wang Kai, Product Director of Midea Group’s Kelu Energy Storage.

In response to the new market landscape created by Document No. 136, many companies have expressed a positive attitude. “We are very pleased with the release of Document No. 136; it signifies the market-oriented development we have been hoping for has arrived,” stated Shu Peng, co-founder and Chief Operating Officer of Haibosichuang. He emphasized that energy storage is now at a point where it can generate real value across various industries. With the issuance of Document No. 136, the market will genuinely be willing to pay for more efficient and safer energy storage products.

Cao Wei, General Manager of the Commercial Energy Storage Product Line at Sungrow, noted that the value of energy storage stations is realized over the long-term operation. Currently, the fierce price competition often leads to an excessive focus on initial investment costs, with low-cost bidding becoming commonplace. However, merely reducing initial investment costs will not support a healthy and stable operation of energy storage stations over their lifespan of more than ten years. The policy of eliminating compulsory energy storage in Document No. 136 will facilitate the transition of the industry from “price competition” to “value competition,” driving growth through the realization of energy storage value.

With price no longer being the sole measurement criterion, companies will have the opportunity for their research and innovation costs to be recognized and rewarded. However, as energy storage stations are utilized as market products, investments with an intended lifecycle typically exceeding ten years will face rigorous evaluations.

Liu Si, General Manager of Research and Development at Ruipu Lanjun Energy Storage Systems, mentioned that the implementation of Document No. 136 has transformed the energy storage market into one driven by market forces, which will also stimulate genuine demand. For equipment manufacturers, this implies that product performance must meet real requirements. He pointed out that customers who utilize these products are more concerned with long-term operation and stability, and under genuine demand scenarios, the primary revenue for energy storage systems comes from long-term operational benefits.

Moreover, Dai Yi, Vice President of the International Marketing Center at Nandu Power, highlighted the need for detailed calculations and assessments for each project in overseas commercial energy storage markets, from development to financing to revenue models and subsequent operations. For instance, projects in Australia require warranties of 10 to 15 years. This places higher demands on businesses, emphasizing not only reasonable initial investment costs but also the project’s ability to operate stably for the required duration. With the implementation of Document No. 136, the domestic energy storage market is also gradually moving towards commercialization, and the experience gained in research, development, and operations will become a competitive advantage.

While short-term growing pains are inevitable, a sustainable profit model still needs to be established. The core logic of Document No. 136 remains focused on advancing electricity market reforms. A report by CITIC Futures indicates that from 2019 to 2024, the development of the energy storage industry has gradually shifted from policy-driven requirements to profit-driven frameworks. Once profit-driven energy storage on the grid side accounts for over 60%, the abolition of mandatory energy storage and a complete transition to market-oriented mechanisms will become an inevitable trend in the industry.

In this new market landscape, short-term “growing pains” may be unavoidable. Several companies have noted that the new policy may impact demand in the short term, with a potential “vacuum period” for orders anticipated in the second half of this year after the end of the rush to install systems. Currently, the implementation details of the new policy and the alignment of regional grids and pricing are still being worked out, leaving the industry in a state of continued observation.

In a more market-oriented environment, companies’ order strategies will inevitably change. Shu Peng shared with Beike Finance that Haibosichuang will focus on independent energy storage this year, aiming to generate profits through trading. He mentioned that the company will prioritize quality in its order selection, focusing on projects that emphasize cycle efficiency and safety, while reducing reliance on purely low-price competition.

More importantly, the energy storage industry must continue to explore reliable profit models in this new phase. Yu Zhenhua, Executive Vice Chairman of the ZGC Energy Storage Industry Technology Alliance, explained that Document No. 136 compels a reconstruction of the electricity market rules related to energy storage. The industry faces developmental challenges as it fully enters the market. In terms of future business models, energy storage should generate comprehensive revenues from peak-valley arbitrage, electricity spot market transactions, and ancillary services. However, whether specific projects can achieve profitability largely depends on the design of provincial electricity market rules. Additionally, promoting new energy storage capacity pricing mechanisms will be an effective way to help establish sustainable profit models.

Cao Wei believes that the revenue model for energy stations will shift from a primarily arbitrage-based approach to a multi-dimensional overlay. Time-of-use pricing will increase arbitrage opportunities. Furthermore, additional revenue sources such as ancillary services, demand response compensation, carbon emission trading, and monetization of carbon assets will diversify the revenue streams for commercial energy storage stations.