The Growing Importance of the Energy Storage Industry in Achieving Carbon Neutrality During the 14th Five-Year Plan Period

Addressing Carbon Peak: The Importance of the Energy Storage Industry During the 14th Five-Year Plan Period

On September 17, during the 2025 World Energy Storage Conference, Hu Ming, the Party Secretary and General Manager of the Power Planning Institute Co., Ltd., stated, “During the 14th Five-Year Plan period, new energy storage will further integrate with all aspects of power generation, grid, consumption, and storage. This will play a more significant and critical role in promoting large-scale development and consumption of renewable energy, enhancing the safe and stable operation of the power system, and supporting flexible low-carbon energy usage.”

According to reports from the conference, by the first half of 2025, China’s installed capacity of renewable energy exceeded the maximum load capacity of the grid. This indicates that the significance of energy storage for the grid during the 14th Five-Year Plan period will be even more pronounced.

At the conference, Zeng Yuqun, the Founder and Chairman of CATL, assessed the situation, stating, “The renewable energy revolution has entered its second phase, where energy storage will be the key support.” To seize this opportunity, CATL has made significant investments in cutting-edge fields such as artificial intelligence, networked energy storage, flexible control, and virtual power plants.

Interviews revealed that international markets are undergoing similar transformations in energy grids, leading to an increasing demand for energy storage. Irina Radoslavova Stefanova, Director of the IRENA Coalition, analyzed that the adjustments in national grid and market mechanisms will be essential in driving energy storage installations. This approach is likely to be more effective than merely reducing prices of storage products.

The Next Five Years: Critical for Energy Storage

Hu Ming emphasized, “The large-scale development of energy storage is the most significant indicator of the construction of a new power system.” Among the four components of the power system—power sources, grid, consumption, and storage—the scale of energy storage will determine the quality of renewable energy development during the 14th Five-Year Plan, impact grid safety, and affect the quality and economics of energy consumption.

Reflecting on the 13th Five-Year Plan, Hu noted substantial improvements in the capacity and capability of new energy storage resources, with direct investments in new projects continually rising, exceeding 300 billion yuan. In the first half of this year, China’s cumulative installed capacity of new energy storage reached about 95 million kilowatts, marking a nearly 30-fold increase during the 13th Five-Year Plan.

Hu indicated that the 14th Five-Year Plan is a crucial period for achieving carbon peaking. Energy development must achieve high-quality carbon peak goals under safe conditions, and it is essential to create conditions for a smooth transition to carbon neutrality.

He predicted that energy storage will further integrate with all aspects of power generation, grid, consumption, and storage during the 14th Five-Year Plan, facilitating large-scale development and consumption of renewable energy. Currently, China has completed the first phase of power system adjustments, where renewable energy’s share does not exceed 20%, and traditional power sources primarily support renewable energy consumption. In the first half of the year, the installed capacity of wind and solar energy exceeded the maximum load of the power system, indicating a transition to the second phase, where relying solely on traditional power sources will no longer suffice to maintain grid stability, necessitating energy storage.

Looking ahead to the third phase, wind and solar energy are expected to become the main power sources, comprising over 50%. This will require not only daily adjustments but also long-term energy management across months and seasons, making long-duration energy storage a vital development direction.

Strategic Goals Set for Energy Storage Development

At the conference, Liu Xinyan, Secretary of the Party Committee and Deputy Director of the Equipment Industry Development Center of the Ministry of Industry and Information Technology, released the New Energy Storage Technology Development Roadmap (2025—2035). The roadmap outlines development goals such as: by 2027, the new energy storage industry will enter the early stage of large-scale development, with installed capacity exceeding 180 million kilowatts; by 2030, the industry will achieve full marketization with installed capacity surpassing 240 million kilowatts; and by 2035, the installed capacity will exceed 300 million kilowatts.

Zeng Yuqun advised on fostering the healthy development of the energy storage industry. He noted that while the industry experienced explosive growth during the 13th Five-Year Plan, it also accumulated various risks. To support the requirements of the 14th Five-Year Plan, the industry needs to address these pressing issues. Zeng analyzed the health of China’s energy storage industry, stating that China currently has the most complete, large-scale, and technologically advanced energy storage supply chain globally, with energy storage batteries and systems accounting for over 90% and 70% of the global market, respectively.

However, during this critical period of transformation, it is essential to have an objective understanding of the industry landscape. Recognizing both achievements and challenges is crucial for driving high-quality development. Zeng pointed out that industry safety risks require significant attention. Intense price competition often leads to reduced quality and safety hazards. Some products have falsely advertised parameters, and the operational lifespan of certain projects falls short of commitments. Additionally, issues related to technological homogenization have emerged, with many companies opting for shortcuts through imitation and replication, leading to chaotic expansion and the emergence of abandoned “orphaned power plants.” Zeng stated that these issues reflect the need for an improved industrial ecosystem.

To achieve high-quality development in the energy storage sector, Zeng outlined four critical aspects: First, maintaining safety as a fundamental principle. Safety is the foundation of energy storage development; any safety incidents can disrupt industry investment logic and societal trust. “We must prioritize safety in all decision-making processes.” Second, creating a credible market environment is essential for sustainable development in the energy storage sector. Transparency is a basic requirement for market participants. Third, strengthening intellectual property protection to encourage innovation is vital. Without innovation, the energy storage industry lacks a future. Protecting intellectual property is equivalent to safeguarding innovation. Fourth, the innovative development of energy storage must align with a zero-carbon future. The transition to a zero-carbon electricity system and decarbonization across various sectors is generating diverse energy storage requirements and imposing higher demands on innovative technologies.

Zeng revealed that to meet energy storage development needs, CATL is promoting interdisciplinary and cross-field technology integration, deeply investing in areas such as artificial intelligence, networked energy storage, flexible control, and virtual power plants.

International Grid Transformations Triggering Energy Storage Demand

Interviews conducted at the conference indicated that international markets are also experiencing transformations in energy grids, which are driving demand for energy storage and are expected to be highly sustainable. Irina Radoslavova Stefanova analyzed that “solar power combined with energy storage” has gained a competitive edge over new fossil fuel projects. Currently, the pace of development for solar and storage is dictated by grid and market conditions rather than merely by price reductions. According to data from the IRENA, from 2010 to 2024, the levelized cost of electricity (LCOE) for utility-scale solar power has decreased by 89%, with the global average now around $0.04 per kilowatt-hour. The levelized cost of battery storage has dropped to approximately $0.15 per kilowatt-hour and continues to decline. In many global markets, the levelized cost indicates that newly built solar plus 4-hour storage projects are cheaper than new coal or gas power projects. She predicted that the main constraints on global energy storage installations include grid queuing and congestion issues; the lack of clear flexible product definitions, such as capacity-based products, ancillary services, and fast frequency response products; and an uncertain revenue framework that discourages private investments. These challenges are not unique to China but are faced globally. “Once these issues are resolved, even at current price levels, demand for energy storage will significantly increase,” she stated.

Another expert from a major energy storage company analyzed that international demand is rapidly growing, correlating with the increasing share of renewables in the grid. The United States remains the largest international market, where demand persists despite policy fluctuations. Additionally, demand is rising in regions such as South America, Europe, and the Middle East, with ongoing large projects. Many countries in these areas have older grid infrastructures with limited capacity to handle renewable fluctuations, necessitating the construction of energy storage.