The Transformative Evolution of Energy Storage: Preparing for a New Era in 2025

In addition to large capacity, the evolution of energy storage may lead to significant changes
In 2025, the energy storage industry is undergoing a transformative “earthquake-like” shift. Following the introduction of policies that opened the market to the full capacity of renewable energy and eliminated mandatory storage requirements, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued opinions on improving the price governance mechanism on April 2. The document proposes to enhance energy price policies that promote a green and low-carbon transition, establish price mechanisms for regulating resources such as natural gas and energy storage, and optimize pricing mechanisms for nearby transactions of renewable energy. This new policy is another significant step following the previous landmark policy, further accelerating the entry of energy storage into the trading era. This indicates that energy storage will become a norm in high-frequency usage, moving away from being merely a built and unused “ornament.”
International examples have shown that the core of high-frequency usage lies in ensuring project returns and restructuring the energy storage ecosystem. Over the past decade, China’s energy supply and demand situation has shifted from a relatively loose state to a tight balance. The structure of power generation has also changed significantly, with the share of thermal power generation falling from approximately 66% in 2015 to around 43% in 2024, while the total installed capacity of renewable energy is nearing that of thermal power.
As the industry focuses on a competition for “greater and more efficient” capacity, recent annual reports from leaders such as CATL, Huawei, and BYD reveal that while industry pioneers are expanding their share of the energy storage market, they are also preparing for a major shift centered on the reconstruction of technological paradigms. This could lead to a transformation in energy storage applications and a disruption of existing business models.
In 2024, CATL’s energy storage battery revenue reached 57.29 billion yuan, accounting for 15.8% of its total revenue. Similarly, while BYD has not separately disclosed its energy storage performance, it is evident that this segment holds substantial value. The company reported total revenue of approximately 617.38 billion yuan from automotive and related products, which constituted 79.45% of its total income, with photovoltaic and energy storage included in this category. Following CATL and BYD, Huawei has also reported strong performance in the energy storage sector, achieving global sales of 862.1 billion yuan in 2024. From various perspectives, the evolution of energy storage will not only focus on increasing battery cell and system capacity but will also witness more diversified changes.
On a technological level, the energy storage industry is shifting from simply “how much energy to store” to “how to use energy more intelligently.” In terms of application scenarios and business models, energy storage is likely to experience multi-faceted changes.
1. Reports from CATL, BYD, and Huawei
In the annual reports from CATL, BYD, and Huawei, a common theme emerges: a continuous increase in investment in energy storage. CATL believes that, over a 3-5 year horizon, the growth of the energy storage market will outpace that of power batteries, approaching a range of 25%-30%. Beyond battery cells, CATL is ambitious in system integration, launching the world’s first energy storage system with zero degradation in power and capacity for five years, with a single unit energy capacity of up to 6.25 MWh, along with the UniC series targeted at commercial and industrial energy storage scenarios.
BYD is developing a new generation of energy storage systems with ultra-high capacity density, safety, longevity, and low cost, aiming to achieve the largest market share globally. Based on blade battery and CTS patent technology, system capacity density has improved by 18% compared to the previous generation. The BYD cube unit can reach 6.432 MWh. It features a new intelligent battery management system that allows for one-click startup without debugging, fault diagnosis, and smart temperature control. Huawei’s photovoltaic inverters have historically been its flagship business, but in its 2024 report, Huawei emphasized its “grid-forming energy storage” technology, reflecting a strategic shift from photovoltaics to energy storage.
CATL, BYD, and Huawei are all demonstrating ambitious goals in the energy storage sector, and it is clear that these giants are engaging in a major competition.
2. The potential for transformative changes in energy storage
From a technological standpoint, lithium battery energy storage will continue to make breakthroughs in long duration and safety. From the perspective of application scenarios and business models, energy storage is on the verge of significant transformation. First is the extreme challenge of long-duration lithium battery storage. The National Development and Reform Commission has identified long-duration energy storage as a “key supporting technology” in the “Action Plan for Accelerating the Construction of a New Power System (2024-2027),” providing revenue protection through capacity pricing mechanisms. It is expected that by 2025, the proportion of tenders for energy storage projects lasting over four hours will significantly increase. The competition in long-duration storage technology is compelling lithium batteries to expand their boundaries.
In March of this year, Quinbrook Infrastructure Partners announced a collaboration with CATL to develop an 8-hour long-duration energy storage system called EnerQB, touted as the world’s first true 8-hour battery storage system, intended for deployment at multiple sites in Australia with a total capacity exceeding 3 GW. This product aims to achieve an 80% increase in energy density through innovative underlying architecture and propel renewable energy consumption and grid upgrades into a new era.
EnerQB is designed to maintain a high efficiency for charging and discharging while offering a 25% reduction in levelized cost of energy compared to traditional lithium long-duration systems, and is compatible with Quinbrook’s Quintrace platform for real-time optimization of grid carbon intensity and returns. The launch of CATL’s EnerQB not only redefines the technical boundaries of lithium energy storage but also reshapes the fundamental logic of global energy transition.
Second, the ultimate solution for energy storage safety has become crucial. In March 2025, an explosion incident at the Moss Landing energy storage station in California prompted global reflections on how to prevent disasters as single-station scales exceed GWh levels. This incident resulted in direct economic losses exceeding $1 billion and exposed fatal flaws in traditional liquid lithium batteries. Companies like Sungrow, BYD, Huawei, Trina Solar, and Ruipu LanJun are reshaping industry safety standards through real machine combustion tests, raising safety thresholds for energy storage systems. For instance, Sungrow invested 30 million yuan in open environment combustion tests for its 20 MWh PowerTitan 2.0, which showed no spread of fire under extreme conditions.
Moreover, battery manufacturers such as CATL and BYD are increasing their investment in solid-state batteries, hoping to hasten the arrival of safer batteries. The Ministry of Industry and Information Technology’s action plan for high-quality development of new energy storage manufacturing (2024-2027) lists solid-state batteries as a key breakthrough direction, with cities like Beijing and Shanghai offering 30% investment subsidies for demonstration projects. In the capital market, solid-state battery financing exceeded 20 billion yuan in 2024, with CATL and BYD exploring “lithium-sodium hybrid” technologies to bridge the transition period.
Third, breakthroughs in grid-forming energy storage across all fields are being emphasized. In its report, Huawei Digital Energy highlighted its development of intelligent string-type grid-forming energy storage solutions, advancing technology from “supporting the grid” to “enhancing the grid.” With renewable energy installation surpassing 40%, issues such as lack of grid inertia and voltage fluctuations are intensifying. Against this backdrop, grid-forming energy storage has transitioned from “frontier technology” to a “strategic necessity.” Leading companies like Sungrow, Huawei, XJ Electric, and NARI Technology are releasing significant technical breakthroughs. The core of grid-forming energy storage lies in simulating synchronous generator characteristics through power electronic devices to achieve voltage source control.
Huawei’s “multi-station self-synchronization amplitude-frequency modulation technology” enhances reactive response speed to 10 ms, supporting stable operation of gigawatt-level photovoltaic storage microgrids. Sungrow’s PowerTitan 2.0 system verifies black start capabilities in extreme conditions such as high altitudes and extreme cold. The National Energy Administration’s “High-Quality Development Action Plan for New Energy Storage” has clearly identified grid-forming technology as a key focus area, with Beijing and Guangdong providing 30% investment subsidies for demonstration projects. As grid-forming energy storage transitions from “optional” to “essential,” its significance surpasses technical considerations—representing a paradigm shift from “load following” to “coordinated source-grid-load-storage” systems.
According to GGII forecasts, global installed capacity for grid-forming energy storage will exceed 200 GW by 2030, with China’s market penetration rate exceeding 40%.
4. The energy storage value chain in the AI era
AI is a wave that no company can afford to miss. Huawei’s Meng Wanzhou revealed that the company is seizing opportunities through its “Tianshui Plan,” “Dishi Plan,” and “Pacific Plan” to achieve long-term success in the computing power era. The “Dishi Plan” targets traffic sources from data centers, parks, and households. The surge in demand for AI computing power is driving a spike in power consumption at data centers, prompting Huawei to propose a “computing power and electricity synergy” model to address the power supply challenges faced by data centers. The annual report emphasizes that data center power consumption accounts for over 80% of the ICT industry. Huawei aims to reduce energy consumption and enhance efficiency through streamlined architecture and high-density deployment.
BYD continues to invest heavily in R&D for AI data centers, establishing a comprehensive product layout that includes AI servers, liquid cooling systems, power management, and high-speed communications, opening up vast growth potential for the company. Leveraging its strong technological platform, BYD has made comprehensive plans for various core components and systems for AI robotics. CATL has indicated that there is substantial demand for data centers and supporting storage in Australia and the Middle East, as these facilities require stable electricity and high-quality storage batteries, representing a promising incremental market.
Current trends show that the demand for storage solutions at data centers is also growing rapidly. For instance, the company’s Alian project has reached a scale of 19 GWh, which is just the beginning. AI technologies are enabling real-time monitoring of battery health status (SOH), predicting thermal runaway risks, and optimizing operations and maintenance. For example, Sungrow’s PowerTitan 2.0 employs fully liquid cooling and features AI bionic thermal balance technology, allowing for rapid cooling, micro-cooling, and heating modes, ensuring stable battery temperatures around 25°C, with an 8% increase in discharge capacity.
5. From grid sides to a “pan-storage” ecosystem
Utilizing battery swapping models, energy storage, and renewable energy integration, CATL is leveraging the “chocolate battery swapping” ecosystem to create a more efficient “photovoltaic-storage-charging” integrated energy network. Strengthening B2G technology marks a significant step for CATL in its transformation from a pure battery manufacturer to an energy service provider. This reflects its grander goal of developing a “zero-carbon grid,” a self-sufficient energy system capable of powering large data centers or even a city. Former executive Zeng Yuqun predicts that the revenue from developing and managing the “zero-carbon grid” could be ten times that of supplying electric vehicle batteries. Based on CATL’s projected revenue of 253 billion yuan from power battery systems in 2024, this new business could potentially exceed 2.5 trillion yuan.
According to CATL, the “zero-carbon grid” is not just a simple energy storage system but a comprehensive energy solution that integrates solar energy, wind energy, energy storage, and electric vehicle grid integration. Huawei’s annual report frequently mentions its “photovoltaic-storage-charging” strategy, integrating photovoltaic, energy storage, and charging facilities to build a closed-loop energy ecosystem. For example, its smart photovoltaic solutions achieved a shipment volume of 176 GW in 2024, with energy storage shipments growing by 66%, and the company is promoting high-quality industry development through the “Spark Initiative” in collaboration with partners. Over the next three years, Huawei will deepen its connections with grid operators, automotive manufacturers, and data center clients through the “Tianshui Plan” and “Dishi Plan,” creating a “storage + computing power + transportation” integrated ecosystem.
On March 17, BYD launched its megawatt fast charging technology, which offers a peak charging power of 1 megawatt (1000 kW) and can replenish 400 kilometers of range in just five minutes. BYD has developed a “1 host + 1 energy storage cabinet” charging system, with the energy storage cabinet having a capacity of 225 kWh and a maximum output power of 800 kW. When working in conjunction with the grid, the total power output can reach 1360 kW. When charging with a single gun, the maximum charging power is 1000 kW, while dual-gun charging can achieve a total of 1360 kW.
The charging-storage model is evolving further, exploring new business models for development in 2025. As Trina Solar’s chairman Gao Jifan noted, achieving carbon neutrality relies on three key factors: first, continuous technological innovation to improve solar conversion efficiency and reduce costs; second, the vigorous development of storage systems, such as lithium battery storage and sodium battery storage technologies; and third, the promotion of high-voltage transmission, especially direct current distribution technologies and systems, to construct a new low-carbon energy system dominated by renewable energy. The most crucial aspect involves integrating zero-carbon electricity generation and terminal energy into a fully electrified system, such as zero-carbon buildings, zero-carbon factories, zero-carbon mining, and zero-carbon transportation.
From discussions on energy storage safety to the AI-driven operational revolution, and the deep coupling of long-duration storage with new power systems, 2025 may become a historical turning point for energy storage as it transitions from “scale expansion” to “value creation.” This technological upheaval may define the industry landscape for the next decade.
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