Triple Revolution in Photovoltaic Energy Storage by 2025

On September 12, the National Energy Administration of China unexpectedly released the “Special Action Plan for Large-Scale Construction of New Energy Storage (2025-2027)”, which clearly states plans to accelerate the deployment of energy storage over the next three years. On the same day, the International Energy Agency (IEA) published a report indicating that global energy investments will exceed $3.3 trillion by 2025, with investments in energy storage soaring to $65 billion, a staggering 49% increase year-on-year. The influx of both policy support and market capital has positioned the photovoltaic storage industry on the brink of explosion.

Policy Direction and Market Dynamics

China is paving the way for scaled energy storage deployment through policy initiatives. Although the “Special Action Plan” does not specify exact installation targets, it emphasizes “independent energy storage stations as the main focus, promoting cross-regional sharing” and aims to reduce the cost of new energy storage systems by 30% compared to 2023 by 2027. This policy has directly stimulated the market—data from the Jiangsu Energy Regulatory Office shows that in the first half of September alone, the domestic bidding scale for energy storage projects reached 25.8 GW/69.4 GWh, a remarkable 521.7% increase year-on-year. Regions like Shandong and Shanxi have seen price differences soar to 0.7 yuan per kilowatt-hour, with the Internal Rate of Return (IRR) for independent energy storage stations surpassing 12%.

In contrast, Europe and the U.S. are erecting barriers for localization. The EU’s “Net Zero Industrial Act” mandates that by 2030, at least 40% of net-zero technologies such as photovoltaic modules and batteries should be manufactured locally. Germany and France have already implemented bidding rules requiring a “30% domestic content” threshold, penalizing non-EU components in public projects. Although the U.S. Inflation Reduction Act (IRA) continues a 30% tax credit, it will require a 60% localization rate for battery components starting in 2026, pushing companies like CATL and BYD to hasten the establishment of factories in Mexico. This dual-track system of “Chinese manufacturing scale versus EU and U.S. standards” is reshaping the global supply chain landscape.

Technological Advancements

The sector is witnessing significant technological leaps from “short-term peak shaving” to “long-duration dominance.” Long-duration energy storage technology is breaking the “8-hour barrier.” Haicheng Energy has produced the world’s first 1175Ah kilowatt-hour battery, offering a capacity increase of 3.7 times compared to traditional 314Ah batteries, with a cycle life of 8,000 cycles (capacity retention ≥ 90%). The accompanying 6.25MWh liquid cooling system enables 4-8 hours of continuous discharge, reducing the cost per kilowatt-hour to below 0.2 yuan.

At the Borlin Steit Power Station in Germany, BYD’s project, which utilizes this technology, boasts a capacity of 103.5 MW/238 MWh, achieving over €4 million in annual arbitrage revenue—a 25% improvement over traditional lithium battery systems. Liquid cooling technology has become essential in high-temperature environments. Tests in the Middle East show that the liquid cooling energy storage system from Sungrow maintains a temperature difference of less than 2°C in 50°C conditions, improving efficiency by 12% compared to air cooling systems. In Saudi Arabia’s Red Sea New City project, the utilization rate of energy storage soared from 85% to 98% after adopting this technology.

Network-structured energy storage addresses the issue of “inertia loss” in the grid. The Schoenergie project in Germany employs network-type inverters to achieve millisecond-level frequency responses, restoring power within 100 ms during a grid failure in June 2025, preventing outages for 50,000 households.

Market Distribution

The global energy storage market is divided among China, Europe, and the Middle East, each excelling in different areas. China leads with a 40% global share, adding 28 GW of new energy storage installations in the first half of 2025, accounting for 42% of the global total. Independent energy storage on the grid side constitutes 68%, with pilot projects in Shandong and Inner Mongolia achieving over 600 hours of utilization. CATL and BYD remain at the forefront of global energy storage battery shipments, collectively holding a 53% market share.

In contrast, the U.S. and European markets are experiencing structural differentiation. Europe is witnessing a boom in large-scale storage, with Germany adding 239 MW/445 MWh from January to May, a 96% year-on-year increase. The IRR for long-duration storage projects in the UK has reached 15%. In the U.S., the anticipation of tariffs has driven a surge in energy storage orders, with Tesla’s Megapack project in Texas beginning ahead of schedule for a 5 GWh project. The Middle East is emerging as a “super buyer,” with Saudi Arabia’s NEOM city bidding for a 19 GWh storage project and the UAE’s Masdar collaborating with China Power Construction to develop a 5.2 GW photovoltaic plus 19 GWh storage project, with a single contract value of $6 billion.

New Application Scenarios

Energy storage in commercial and industrial sectors is creating “arbitrage miracles” in the Middle East. GSL ENERGY customized a 4.6 MWh container energy storage system for Lebanese commercial users, integrating a 3 MW photovoltaic system for “two charge and two discharge” cycles, generating combined annual revenues exceeding $500,000, with a payback period of just 3.8 years. On the grid side, energy storage is becoming a “stabilizer” in Germany. BYD’s MC Cube system provided to the Borlin Steit Power Station utilizes network-type control technology to discharge during peak electricity pricing periods (36 euros/MWh), achieving daily revenues exceeding €100,000 while also participating in frequency regulation services with a response rate of 50 ms—improving tenfold over traditional units.

Transportation scenarios are opening new avenues. Turbo Energy in Spain created a 1 MW/2 MWh hybrid solar storage charging hub for Uber, employing AI scheduling algorithms to charge 300 electric vehicles daily with a grid capacity of just 600 kW, enhancing peak power supply capability to 1.6 MW and reducing charging costs by 40%.

Opportunities and Challenges Ahead

The next five years will present both opportunities and challenges in a “dual spiral” of technological iteration that will accelerate industry reshuffling. Sodium-ion batteries, which are 30% cheaper than lithium batteries, are being deployed in a 1 GWh sodium battery energy storage project by CATL in Pakistan. Flow batteries are also achieving a cycle life exceeding 20,000 times, with Dalian Rongke’s 100 MW/400 MWh all-vanadium flow project operating stably for three years, reducing the cost per kilowatt-hour to 0.35 yuan. However, critical material bottlenecks are becoming increasingly evident, with global lithium carbonate demand projected to reach 1.4 million tons by 2025, and production expansion in Australia and South America taking 3-5 years, potentially causing prices to surge again.

Additionally, grid reform is crucial for overcoming “the last mile” challenges. An IRENA report indicates that 20% of current energy storage projects are delayed for over a year due to grid connection backlogs. China’s investment in grid infrastructure during the 14th Five-Year Plan is expected to reach 400 billion yuan, yet 30% of associated energy storage in western wind and solar bases remains offline. If the EU can unify energy storage grid connection standards, it is estimated that 15 GW of stalled projects could be unlocked, a more pressing need than any technological breakthrough.