Middle East Investment Boosts Global Energy Storage Growth to Over 50% by 2025

Middle Eastern investors are pouring money into the energy sector! By 2025, global energy storage growth is expected to exceed 50%.

Since the beginning of 2025, the global energy storage market has experienced significant fluctuations, with China and the United States, the top two regions for installed capacity, both announcing major policies. In the United States, due to the ongoing trade war with China, tariffs have recently risen to 64.9% (including 3.4% basic tariff, 7.5% Section 301 tariff, 20% tariffs on imports from China, and an additional 34% reciprocal tariff). It is anticipated that the Section 301 tariff will increase to 25% starting January 1, 2026, which would subject energy storage products exported to the U.S. to a staggering 82.4% tariff. Despite these policy challenges, the impressive performance of global energy storage in the first quarter leads us to maintain a bullish forecast for high growth in energy storage installations this year.

In 2024, global energy storage installations are predicted to add 184.95 GWh, with an estimated increase to 282.51 GWh in 2025, reflecting a year-on-year growth of 52.7%. Following the release of Document No. 136, the domestic bidding market in China has remained robust. According to data from the ICC Xinluo Energy Storage Database, the total scale of successful bids for energy storage in China reached 99.25 GWh in the first quarter of 2025, marking a substantial year-on-year increase of 339.25%.

The implications of Document No. 136 must be analyzed in terms of its impact on both new energy installations and energy storage. For new energy installations, existing land-based wind, offshore wind, centralized solar, and distributed solar projects that connect to the grid before May 31 will continue to benefit from guaranteed policies. However, according to the Management Measures for Distributed Photovoltaic Power Generation Development and Construction issued by the National Energy Administration, projects connecting to the grid after April 30 must either self-consume a significant portion of their power or enter into market trading, losing the previous fixed-price full grid connection benefits. Consequently, the first half of 2025 will feature two installation rush points for new energy: the 430 solar rush and the 531 new energy rush. The existing policy of mandatory energy storage will continue to drive demand for energy storage.

From June 1, the cancellation of mandatory energy storage will eliminate rental income from energy project capacity, which could lead to a decline in storage profitability. However, the removal of energy storage as a prerequisite for new energy grid connection will raise demands for energy storage regarding reducing power abandonment, grid support, and cycle life. The industry’s concentration will continue to increase, and low-end capacity will be phased out. There remains a rigid demand for energy storage to absorb excess new energy power. Overall, despite a potential decline in demand in the second half of the year, we still believe that large-scale energy storage installations in China will maintain a growth rate of 55-60% this year. According to the 14th Five-Year Plan for energy storage installations, a total of 86.6 GW is planned across 25 provinces (excluding Xinjiang, Heilongjiang, Tibet, Chongqing, Hainan, and Shanghai). By the end of 2024, 73.76 GW is expected to be completed. Considering that Xinjiang and Tibet are significant areas for energy storage installations, there is still a projected gap of 30-40 GW for new energy storage in 2025 under the 14th Five-Year Plan, providing strong support for installations this year.

In the commercial storage sector, the proportion of new energy entering the market continues to rise under government guidance, especially in photovoltaics, where midday generation is expected to increase further, leading to lower midday electricity prices and greater arbitrage opportunities between peak and valley pricing. This year, installations are expected to reach 12 GWh, with growth exceeding 70% year-on-year.

In the overseas market, regarding the United States: Despite recent increases in tariffs, the mainstream delivery method for exports is FOB (Free on Board), meaning domestic manufacturers technically do not bear the tariffs. As demand for installations continues to grow, U.S. integrators will still require significant imports of Chinese cells, and increased tariffs will directly elevate procurement costs. Ultimately, the tariff burden may be shared among U.S. integrators, Chinese energy storage suppliers, and end users. Although rising tariffs will likely increase the price of energy storage systems and reduce the IRR of U.S. energy storage projects, it’s essential to consider the overseas expansions of Chinese manufacturers. Companies like CATL have established factories in Germany, Hungary, the U.S., Indonesia, Thailand, Spain, and Morocco, and have licensed LFP battery technology to Ford to circumvent IRA localization requirements. EVE Energy’s factory in Malaysia has commenced operations, while BYD is building a storage battery factory in Mexico to supply Tesla Megapack cells and avoid U.S. tariff barriers. Haicheng is establishing a 10 GWh energy storage battery module and system integration factory in Texas, having signed long-term cooperation agreements with U.S. integrators Powin LLC and Jupiter. Given the aggressive overseas expansion, Chinese manufacturers are actively positioning themselves to mitigate the future impacts of tariffs.

In terms of demand, the U.S. is expected to experience a rush for installations in 2025 due to the rising costs, leading to a favorable overall demand this year. Considering the longer grid connection times in the U.S. and various impacts, we anticipate that the overall installation scale in the U.S. will reach over 40 GWh this year, with growth exceeding 20% year-on-year.

In the European market, energy storage growth is expected to decline significantly in 2024. The residential storage sector is predicted to show negative growth, while large-scale storage sees an impressive growth rate of 203.9%, marking it as the primary contributor to last year’s growth in the European market. Currently, renewable energy accounts for 48% of the power generation structure in Europe, surpassing traditional fossil fuels. However, issues such as insufficient grid regulation capacity and inadequate energy storage devices hinder the utilization of renewable energy, causing price volatility. Countries like the UK and Italy are ramping up efforts in energy storage, with increasingly rich large-scale project installations. In the residential storage sector, the average electricity prices for European households are expected to decrease in 2024. With many households having already installed solar storage systems over the past two years, demand is projected to decline significantly this year. After a year of inventory reduction, the overall market inventory level has now returned to normal (approximately two months’ worth), leading to a gradual recovery in the residential storage market, with demand expected to remain flat or slightly increase.

Recent European policies indicate strong governmental support for renewable energy and storage, including:

• Spain: The EU approved a €700 million storage subsidy, with a maximum project subsidy ratio of 85%. Independent storage and renewable energy hybrid storage projects can apply for this subsidy, which must be completed by the end of 2029.
• Poland: The EU Commission approved a €1.2 billion national aid plan to support the installation of at least 5.4 GWh of battery storage systems.
• Italy: The Minister of Enterprises and Made in Italy signed a decree to provide €320 million in energy subsidies to support small and medium enterprises in developing renewable energy.
• Greece: The Ministry of Environment and Energy launched a commercial storage subsidy program with a total budget of €153.7 million, targeting all scale enterprises.

Given the recent recovery in residential storage, large-scale installation plans, and governmental policy subsidies across Europe, we anticipate that the new energy storage installation scale in Europe will reach approximately 27-30 GWh, with an increase of over 25% year-on-year.

In the Australian market, the Clean Energy Australia 2024 report released by the Australian Renewable Energy Agency forecasts significant growth in battery storage installations, from 3 GW in 2024 to 19 GW by 2030, reflecting over 500% growth. The battery storage target for 2030 has been raised from 15 GW to 19 GW, while concentrated wind and solar installations are expected to rise from 44 GW to 57 GW. Recently, Prime Minister Anthony Albanese promised to allocate AUD 2.3 billion to launch the “Cheaper Home Battery Plan” aimed at reducing the cost for households to install battery storage systems, encouraging the integration of rooftop solar with storage systems. The government aims to support over one million households in installing battery systems by 2030, covering approximately 10% of households nationwide. If successfully implemented, this policy will officially begin on July 1, reducing installation costs by 20-30% and significantly boosting demand for residential storage in Australia. Considering pending projects scheduled for 2025-2026 (5.74 GWh), we expect overall new installations in Australia to reach 8-9 GWh this year, with a year-on-year growth rate exceeding 70%.

In the Middle Eastern market, in 2024, Sungrow won a bid for the second phase of a 7.8 GWh energy storage project for the Saudi Electricity Company (SEC), which is expected to achieve full-capacity grid connection in the first half of this year. Additionally, BYD secured a bid for a 20 GWh data center storage project in Abu Dhabi, with a planned scale of 10 GWh, aiming for grid connection by 2025. This year, the Middle East market is set to become the largest contributor to global energy storage growth, with new installations projected to reach 20 GWh, marking a staggering year-on-year increase of over 350%.