The high growth potential of energy storage is gaining significant attention, especially as current market expectations remain low. The energy storage battery ETF is drawing considerable interest.
Industry Turning Point: Following the implementation of Document No. 136, the widening gap between peak and valley electricity prices and the decline in profitability for renewable energy plants have become inevitable trends, significantly increasing the necessity for energy storage. As various provinces announce energy storage pricing policies, energy storage plants are projected to achieve an Internal Rate of Return (IRR) of 6% to 10% or more, indicating strong economic viability.
Market Turning Point: Starting in September, the core logic of the energy storage industry began to unfold, primarily due to the unexpected growth in bidding data from August. This development alleviated concerns that the sustained prosperity of bidding data this year was merely a response to the rush for installations driven by Document No. 136, thus highlighting the long-term growth potential of energy storage.
Current Expectation Gap #1: The continuity of energy storage policies impacts long-term demand. There are worries that potential adjustments to capacity pricing and discharge compensation policies could affect economic viability. However, it is important to consider that: 1) Capacity pricing allows for the transfer of new costs to commercial and industrial electricity consumers, which has a minimal impact on end-user electricity prices. This creates a small policy burden while significantly supporting the profitability of energy storage systems, thus raising the IRR above 6% to meet capital requirements, making future adjustments unlikely. 2) More aggressive policies, such as discharge compensation, were introduced in specific regions due to a lack of energy storage. The cancellation of such policies would not adversely affect the long-term logic of the market. 3) In the long run, additional profits for power plants will increasingly derive from peak-valley arbitrage. The widening gap between peak and valley prices is a necessary path for countries to achieve market-driven green electricity trading, further releasing the profit potential from peak-valley arbitrage.
Current Expectation Gap #2: The impact of canceling mandatory energy storage policies is beneficial for long-term logic. Document No. 136 explicitly mandates the cancellation of mandatory energy storage requirements, which were previously a significant component of energy storage demand. There were concerns about a potential negative impact on storage demand; however, the cancellation of these policies is expected to have a positive influence on the long-term outlook for storage. Previously, products required to comply with mandatory storage policies often had poor quality, which hindered the positive engagement with the power grid, creating persistent issues within the industry. With the cancellation of mandatory storage and the full market entry of renewable energy, power plants will naturally seek high-quality energy storage solutions to enhance profitability, thereby facilitating the exit of inferior storage products and potentially improving grid engagement, thus cleverly addressing long-standing industry problems.
Current Expectation Gap #3: Market pricing has already factored in sufficient space for growth. Industry analysts believe that even under the most cautious assumptions, the National Securities New Energy Battery Index, which tracks energy storage batteries, still offers significant growth potential. As of September 17, following the introduction of AIDC-related component stocks (valued using artificial intelligence), the remaining targets reflect a 2026 estimated price-to-earnings (PE) ratio of just 19.4x. With a neutral target of 24x, there remains a 23.7% upside. Even under the most conservative estimate of 20x, the stocks are not considered overvalued. Regarding profitability, as of September 17, the Wind Consensus expects a 2026 net profit growth rate of 24.5%, significantly lower than the anticipated 40.8% growth for 2025. However, it is crucial to consider that: 1) The high demand observed in the first half of the year cannot be fully realized in the 2025 results, and 2) Even under the most cautious estimates, the industry growth rate for 2026 is unlikely to be weaker than that of 2025. Overall, the growth rate for 2026 should exceed that of 2025, with a neutral expectation projecting growth of over 50%. If we conservatively assume that 2026 growth remains similar to 2025, around 45%, there still exists a 16.5% potential upside.
The energy storage battery ETF (159566, connection A/C: 021033/021034) tracks the National Securities New Energy Battery Index and focuses on the energy storage supply chain, making it the largest ETF product dedicated to the energy storage industry in the market.
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