Shifting Trends in Energy Storage Investment for Q1 2025: Navigating Technology Barriers and Commercial Viability Amid Valuation Risks

Investment Trends in Energy Storage for Q1 2025: Technical Barriers and Commercialization Capabilities, Beware of Valuation Bubbles!

In the first quarter of 2025, China’s energy storage industry showed vibrant activity in the capital market. According to incomplete statistics from the CESA Energy Storage Application Branch’s industrial database, there were a total of 92 financing events in the energy storage sector during this quarter, with the highest single amount reaching 1.42 billion yuan. This reflects strong confidence from capital investors in the sector. Major capital players like CATL, China International Capital Corporation, and Yangtze River Capital continued to increase their investments, focusing on three key areas: battery technology, hydrogen energy storage, and smart energy, thereby promoting rapid industry development. These investments not only enhance the research and application levels of energy storage technology but also lay a solid foundation for the future development of the industry.

The IPO market has seen a “breakthrough,” with Haibosi Technology opening the capital gates last December. Shihang New Energy, after a three-year effort, finally appeared on the Growth Enterprise Market. Even Sig New Energy, which was established less than three years ago, quickly submitted its application for an IPO in Hong Kong. However, amid this excitement, the industry faces three major challenges: technology implementation, valuation bubbles, and policy changes, which are gradually unfolding in the energy storage landscape akin to a “Game of Thrones”.

IPO Market: A “Breakthrough” for Energy Storage Companies, Accelerated Policy Dividends

The continuous favorable policies for the energy storage industry have led to a significant acceleration in companies’ IPOs and financing activities, making the market increasingly lively. Although the new “National Nine Articles” policy issued by the State Council in 2024 temporarily put the brakes on IPOs, in the long run, it actually paves a more solid institutional path for energy storage firms to go public. This policy not only aims to optimize the assessment standards for listed companies and upgrade market infrastructure but also emphasizes cultivating public funds focused on long-term investments, thus attracting more long-term capital into the market and providing a robust policy backing for energy storage companies’ IPOs.

As we entered 2025, the IPO process for related energy storage companies has noticeably accelerated. On December 19, 2024, Haibosi Technology received IPO registration approval, marking a significant event for the new energy industry. Its successful listing injects vigor into the industry and demonstrates the positive effects of policy dividends. Haibosi plans to use the raised funds for the annual production of 2GWh energy storage systems and for research and development and industrialization projects related to energy storage systems, showcasing the company’s ambition in technology development and capacity expansion.

After nearly three years of meticulous preparation, Shihang New Energy officially submitted its listing application on January 23, 2025, and launched its issuance process on March 24, eventually successfully landing on the Shenzhen Stock Exchange’s Growth Enterprise Market on April 2. Although affected by market fluctuations, its financing scale was significantly adjusted from the expected 3.512 billion yuan to 487 million yuan, the successful listing still reflects the capital market’s continued optimism toward the energy storage sector. The company stated that it will accurately channel raised funds into energy storage system construction projects and the R&D and manufacturing of new energy products, aiming to enhance core competitiveness through technological upgrades and product innovations, and to accelerate the expansion of both domestic and international market shares.

Despite being established for only two years and eight months, Sig New Energy submitted its listing application to the Hong Kong Stock Exchange on February 21, 2025, officially starting the IPO process. According to a report by Frost & Sullivan, the company ranks first globally in the stackable distributed photovoltaic storage solutions sector, commanding a market share of 24.3%. Although it is not yet profitable, its revenue continues to grow rapidly, and its gross margin levels have significantly improved, showcasing the company’s strong capabilities in technological breakthroughs and market promotion, indicating vast development prospects and significant market potential.

Meanwhile, Youyou Green Energy, after being accepted for an IPO on the Growth Enterprise Market on December 15, 2022, submitted its registration on February 26, 2025, and its registration took effect on March 14. Shuangdeng Co., Ltd., a leading player in the domestic communication energy storage sector, also submitted its prospectus to the Hong Kong Stock Exchange on March 11, 2025, primarily to raise funds for building lithium-ion battery production facilities in Southeast Asia and establishing R&D centers, demonstrating the company’s ambition to expand into global markets.

Investment Market: Capital Competes for Technological Breakthroughs, Differentiated Heat in Sub-sectors

In Q1 2025, China’s energy sector financing market experienced explosive growth, with capital intensely concentrating in new energy, energy storage technology, and green manufacturing sectors, reflecting a dual momentum of technological drive and industrial upgrade. According to incomplete statistics from the CESA Energy Storage Application Branch’s industrial database, the disclosed financing amount in the first quarter totaled 8.29535 billion yuan. In terms of business classification, the energy storage financing market displayed a diverse investment trend, encompassing multiple key areas. Hydrogen storage led with 14 projects, indicating its strong development momentum and investor confidence in this technology. The negative electrode material sector followed closely, attracting investments for 8 projects, highlighting its crucial role in enhancing storage device performance and market recognition.

The lithium-ion battery and positive electrode material sectors also performed well, securing 8 and 7 projects respectively, underscoring the mainstream status of lithium-ion batteries in the energy storage market and the importance of innovation in positive electrode material technology. In the energy storage system integration field, 6 projects caught capital’s attention, reflecting the market’s keen interest in efficient and integrated storage solutions. Emerging technologies such as solid-state and flow batteries each attracted investments for 5 projects, emphasizing their development potential and investors’ high interest in future markets. Additionally, energy storage electrical equipment, auxiliary materials, structural components, sodium-ion batteries, battery materials, battery recycling, and project development also received funding support, further confirming the increasing maturity of the energy storage industry chain and the diversification of market demand.

In terms of investment distribution, hydrogen storage, negative electrode materials, lithium-ion batteries, and positive electrode materials are the hottest investment areas, attracting over half of the investment projects. This indicates that investors have a clear understanding of the diversity of energy storage technologies and the broad market demand, and they are actively positioning themselves along the relevant industry chain. At the same time, emerging energy storage technologies like solid-state and flow batteries are also gaining attention from investors, showcasing the innovative vitality and market potential of energy storage technologies.

In Q1, regional differentiation in capital flow within the domestic energy storage sector became evident, forming a coexistence of “core focus and diversified breakthroughs.” The core provinces in the Yangtze River Delta and the Pearl River Delta became highlands for capital gathering. Jiangsu led with 18 financing events, leveraging its complete industrial chain covering lithium-ion batteries, system integration, and negative electrode materials. Guangdong and Zhejiang followed with 14 financing events each, emphasizing the differentiated competitive landscape, with Guangdong focusing on hydrogen storage and positive electrode material R&D, while Zhejiang made breakthroughs in solid-state battery technology.

Municipalities showcased their unique characteristics; Beijing, leveraging its research resources, secured 7 investments in battery material innovation and utilization, while Shanghai, relying on its financial advantages, positioned itself in high-end equipment such as PCS inverters, new electrode materials, and flywheel storage. Central and southwestern provinces are accelerating breakthroughs, with Anhui and Sichuan each securing 6 financing events, focusing on flow battery integration and the entire electrical equipment chain. Although provinces like Jiangxi and Fujian only garnered 1-3 investments, they have already covered various scenarios such as user-side storage and flywheel storage, reflecting the deepening stratification of market demand. This “three-pole leadership and multi-pole support” financing landscape not only reflects mature market preferences for industry chain integration but also signals the innovative vitality of emerging regional technological breakthroughs, marking a new development phase for China’s energy storage industry driven by market forces and technological innovation.

Stock Market: Driven by Technology Implementation and Policy Promotion, Valuation Bubbles and Uncertainties Coexist

Currently, the energy industry in China is undergoing a critical transformation phase, characterized by both capital enthusiasm and commercialization challenges, driven by technological breakthroughs and policy dividends. From a technical perspective, although new battery technologies are receiving significant capital attention, their industrialization process faces multiple constraints. The sodium-ion battery sector grapples with slow energy density improvements and incomplete industrial chain support; solid-state battery technology has shown remarkable lab results but encounters high production costs and unproven market acceptance; while flow energy storage technology, despite its long-duration storage advantages attracting investment, still needs to overcome high initial investment costs and long return cycles.

On the policy front, positive signals intertwine with potential risks. The dual carbon goals are driving ongoing growth in demand for new energy, yet adjustments in subsidies, grid parity, and decoupling storage from grid connections are reshaping the industry ecosystem, putting performance pressure on some companies that rely heavily on policy dividends. Domestic substitution policies present new opportunities for green manufacturing and high-end equipment sectors, but sub-sectors with high reliance on imported key equipment still face technological barriers, and breakthroughs in “choke-point” technologies for high-end photovoltaic equipment and core hydrogen energy components are urgently needed.

Beneath the capital frenzy, valuation bubbles and performance pressure are becoming increasingly evident. Some energy storage companies are highly valued but risk falling into “valuation traps” after going public due to technology industrialization not meeting expectations. Coupled with external factors such as policy changes in overseas markets and fluctuations in raw material prices, corporate performance volatility is intensifying, and the fragility of the industrial chain is becoming apparent.

Investment Trends and Outlook: Balancing Technical Barriers and Commercialization Capabilities

The energy storage sector is undergoing profound changes in capital layout, with investment logic shifting from “broad net” to “precise targeting,” forming a new pattern driven by both “technical hard power and commercialization verification.” Two major breakthrough directions in technology are emerging: first, disruptive technology industrialization breakthroughs, represented by flow batteries, need to overcome the “hundred-megawatt-hour” grid-level project verification threshold to demonstrate peak-shaving and frequency-regulating performance advantages; second, regional collaborative innovation is accelerating, with areas like the Yangtze River Delta and Beijing-Tianjin-Hebei overcoming technical efficiency bottlenecks through government-led, enterprise-driven, and university-supported models.

On the commercialization front, core indicators are being upgraded comprehensively. Flow energy storage must achieve a scaling leap from demonstration projects (<10MWh) to commercial power stations (>100MWh), while commercial models are rapidly evolving, with a diversified revenue model of “capacity leasing + auxiliary services” reconstructing the industrial value chain. Capital is beginning to demand that projects possess both technological advancement and economic feasibility; companies capable of passing grid-level verification and forming replicable business models are becoming new targets for capital pursuit.

This transformation from extensive expansion to focused cultivation is essentially the energy storage industry entering a value-return stage. Investors are no longer buying into concepts but are focusing on technical implementation capabilities and commercial monetization efficiency, pressuring companies to build “technical moats and production capacity barriers” as dual insurance. The latter half of the energy storage race will be a joint struggle between technical hardmen and commercial wise individuals.

Conclusion: The Energy Storage Sector Presents Opportunities and Challenges, Requiring Precise Investment Layout

In 2025, the new energy storage sector is witnessing a capital frenzy. On one hand, technological breakthroughs combined with policy dividends are driving explosive market demand; on the other, the challenges of valuation bubbles, technological route disputes, and policy fluctuations loom large. For investors, this represents both opportunities and pitfalls. The current market heat conceals complexities. The competition among technological routes, such as sodium-ion and flow batteries, is fierce; a slight misstep could lead to significant losses. More critically, with the decline of subsidies, real demand is beginning to surface, exposing companies that rely solely on concept hype.

Investors must sharpen their vision: How valuable are the technology patents? Can mass production capabilities surpass the GWh-level threshold? Is the profit model sustainable? The essence of this game is a return to value investment. True winners need to possess three key traits: a deep technical moat—continuous R&D investment, mastering core patents; a robust production capacity barrier—capable of large-scale manufacturing; and keen policy insights—accurately anticipating market trends post-subsidy decline. Like marathon runners, they must sprint towards the forefront of technology, steadily manage the industrial chain, and understand policy directions. When market bubbles burst, the unprepared will be exposed. Investors must transform into dual-skilled players in “technology and business”: holding a patent list in one hand and calculating costs in the other, while keeping an eye on policy changes. Only in this way can they uncover the true “pearls of the race track” in the depths of the energy storage revolution.