Upcoming “531” Milestone Brings Significant Changes to the Energy Storage Market

As we approach early 2025, the release of Document No. 136 marks a pivotal moment for China’s new energy sector, initiating a period of intense and comprehensive policy adjustments aimed at accelerating the establishment of a new power system and promoting the marketization of the new energy sector. The energy storage industry is currently undergoing a transformation, evolving from “policy dependency” to “value creation.” This evolution not only reconstructs the underlying logic of the energy storage sector but also drives systematic breakthroughs in technology iteration, model innovation, and ecological restructuring.

Is a Surge in Installations on the Horizon?

On February 9, 2025, the National Development and Reform Commission and the National Energy Administration jointly issued a notice regarding the deepening market-oriented reforms of on-grid electricity prices for new energy sources. Commonly referred to as Document No. 136, this document clearly states that the installation of energy storage systems cannot be a prerequisite for the approval, grid connection, or on-grid operation of new energy projects. This announcement signifies the end of the era marked by excessive mandatory installations, which had faced criticism for being constructed without proper operational strategies.

Furthermore, the document promotes the full integration of on-grid electricity from new energy sources into the electricity market, heralding the beginning of a fully market-driven era for electricity pricing. The energy storage industry is transitioning from being “policy-driven” to “market-driven.” Starting June 1, 2025, new energy projects will be categorized into “old” and “new” segments. Projects that commence operations before this date will still benefit from a certain degree of guaranteed purchase mechanisms and must improve their competitiveness through equipment upgrades. In contrast, projects that begin operations on or after June 1 will have their entire output enter market trading, with prices determined through competitive bidding.

As a result, analysts believe that the policy will have two significant impacts on the energy storage market: the first being a temporary disruption in energy storage installations due to the loss of policy support; the second being that new energy companies will expedite project construction to take advantage of favorable electricity pricing policies, leading to a rush in the installation of energy storage projects.

Current Trends in Energy Storage Installations

Recent data shows that several organizations reported a quarterly decline in newly installed energy storage capacity for the first quarter. However, according to the CESA Storage Application Branch’s industrial database, the energy storage bidding market and new energy storage installations are experiencing rapid growth. From January to April 2025, the combined bidding scale for energy storage EPC/PC (including direct current equipment), energy storage systems, and battery procurement reached 34.52 GW/125.6 GWh, reflecting a year-on-year increase of 156%.

As of May 20, 2025, there are 487 new energy storage projects connected to the grid in China, totaling 11.9 GW/32.32 GWh of installed capacity, with a year-on-year growth of 70.98% in power and 76.9% in capacity. Among these, there are 62 new projects on the grid side, with a total capacity of 6.34 GW/14.63 GWh, marking respective increases of 74.18% and 52.4% compared to last year; while 76 projects on the generation side have a total capacity of 4.15 GW/13.73 GWh, with power and capacity growth rates of 59% and 102.2% respectively.

This data indicates that project owners are placing a significant number of orders before the “531” milestone to secure income under the price difference settlement mechanism and mitigate risks associated with market price fluctuations. Although some organizations observed a decline in installations, this is typical as the first quarter is usually not peak delivery season. It is expected that the second quarter and the latter half of the year will see concentrated deliveries of energy storage projects, continuing the trend of rapid growth in new energy storage installations throughout the year.

Local Regulations Following Document No. 136

Document No. 136 is seen as a fundamental restructuring of the energy storage industry’s development logic and a key turning point in the transition to a trading era for the power market. Therefore, local supporting measures are crucial. Since May, provinces such as Shandong and Guangdong have introduced detailed regulations, with Guangxi also releasing draft regulations online. This indicates that the market reform for new energy is entering a new stage of accelerated implementation at the local level, providing a reference for future policies in other provinces.

Shandong was the first province to publicly announce the implementation details of Document No. 136. Key highlights of the policy include direct enhancements to storage profitability by improving the electricity market mechanism. Shandong mandates that by the end of 2025, wind and solar energy must fully participate in the electricity market, with competitive bidding for projects starting in June 2025.

In terms of pricing mechanisms, Shandong has adjusted the price limitations in the spot market to widen the price gap between charging and discharging. For existing projects (those operational before May 31, 2025), all electricity will enter the market, with a mechanism price capped at 0.3949 yuan/kWh, about 12.8% higher than the 2024 average spot price for new energy. New projects starting on or after June 1, 2025, will have their mechanism prices determined through competitive bidding, requiring a declaration of at least 125% availability.

Additionally, the policy clarifies that independent storage facilities supplying electricity to the grid will not incur transmission and distribution fees or government fund charges, significantly enhancing the profitability of energy storage stations.

In Guangdong, the policy focuses on the full market entry of new energy sources, creating potential space for energy storage development. The local regulations specify that starting June 1, 2025, all new energy projects, including wind and solar, must fully participate in the electricity market, with prices determined through market transactions.

Future Outlook

The upcoming changes in the energy storage market are expected to drive both innovation and competition. The release of the “394 Document,” which aims for nationwide coverage of the power spot market by the end of 2025, will facilitate a continuous settlement operation. This policy, alongside Document No. 136, forms a comprehensive framework for the market-oriented reform of the energy sector, promoting high-quality development of renewable energy and supporting the establishment of a new power system.

As the energy storage industry transitions from administrative allocation to market allocation, companies must adapt to policy and market changes actively, cultivating core competitiveness through technological innovation and establishing ecological advantages through model innovation. In doing so, they will harness certain opportunities amid market fluctuations, ensuring their role as a central hub in the new power system.