Transformative Changes Ahead in Energy Storage: The Shift Beyond Capacity Expansion

The Evolution of Energy Storage: A Turning Point Beyond Capacity

On one hand, following the opening of the renewable energy market and the cancellation of the mandatory storage policy outlined in Document No. 136, the General Office of the Central Committee and the General Office of the State Council have released opinions on improving the pricing governance mechanism. On the other hand, industry leaders such as CATL, Huawei, and BYD are significantly entering the energy storage sector, targeting disruptive energy storage models that could lead to a transformative evolution in the industry.

By 2025, the energy storage industry is poised for a true “earthquake-like” transformation. In addition to the policies mentioned, on April 2, a new set of guidelines was issued to enhance energy pricing policies that facilitate green and low-carbon transitions. This includes establishing pricing mechanisms for resources like natural gas power generation and energy storage, which are essential for supporting the development of a new power system. This policy is another significant move following Document No. 136, further propelling energy storage into a trading era.

This shift indicates that energy storage will become a frequently utilized resource rather than merely a built but unused “ornament.” International examples show that frequent utilization relies on guaranteed project returns and the restructuring of energy storage ecosystems.

Over the past decade, China’s energy supply and demand dynamics have shifted from a relatively loose state to a tight balance. The power generation structure has also undergone significant changes, with the share of thermal power capacity in total installed capacity dropping from about 66% in 2015 to approximately 43% in 2024, while the total installed capacity of renewable energy is set to nearly equal that of thermal power.

As the industry focuses on a competition of “bigger and more efficient” capacities, recent annual reports from leaders like CATL, Huawei, and BYD reveal that while they are expanding their share of the energy storage market, they are also initiating a paradigm shift centered around technological restructuring, potentially leading to a transformation in energy storage application scenarios and business models.

In 2024, CATL’s revenue from energy storage batteries reached 57.29 billion yuan, accounting for 15.8% of its total revenue. Although BYD did not separately disclose its energy storage performance, it is evident that its involvement is substantial. The company’s revenue from automotive products, transportation equipment, and electrical manufacturing reached approximately 617.38 billion yuan, which constitutes 79.45% of its total revenue. Both photovoltaic and energy storage products are included in this category.

Following CATL and BYD, Huawei has also reported impressive results in the energy storage sector. In 2024, Huawei achieved global sales revenue of 862.1 billion yuan, with its digital energy business contributing 68.7 billion yuan, comparable to Tesla’s energy storage revenue in 2024. This segment has surpassed Huawei’s cloud computing division to become the company’s third-largest revenue pillar.

Looking at the evolution of energy storage from multiple dimensions, beyond increasing cell and system capacities, there will be more diversified changes. Technologically, the industry is transitioning from merely “how much electricity can be stored” to “how to use electricity more intelligently.” In terms of application scenarios and business models, significant transformations are anticipated.

The annual reports from CATL, BYD, and Huawei reveal a common trend: a continuous and intensified focus on energy storage business development. CATL believes that over a 3-5 year horizon, the growth rate of the energy storage market will exceed that of the power battery market, approaching a range of 25%-30%. Beyond energy cells, CATL is equally ambitious in system integration. It has launched the world’s first energy storage system with zero degradation in power and capacity over five years, with a single unit energy capacity reaching 6.25 MWh, along with the UniC series targeted at commercial and industrial energy storage applications.

BYD is also making strides in energy storage, developing a new generation of systems characterized by ultra-high capacity density, safety, longevity, and low cost, aiming to capture the largest share of the global energy storage market. Leveraging its blade battery and CTS patent technology, the system capacity density has improved by 18% compared to the previous generation product, with the BYD cube achieving a single-unit capacity of 6.432 MWh. It features an advanced intelligent battery management system, which allows for one-click startup without debugging, fault diagnosis, and intelligent temperature control.

Huawei’s core business in photovoltaic inverters has evolved, as reflected in its recent reports where it emphasizes “networked energy storage” solutions, showcasing a strategic shift from photovoltaic systems to energy storage. CATL, BYD, and Huawei are all ambitious in the energy storage field, and it is clear that industry giants are engaging in a significant battle for market dominance.

The evolution of energy storage may bring about a fundamental transformation. From a technological perspective, lithium battery storage will continue to make breakthroughs in long-duration and safety aspects, while the application scenarios and business models are set to undergo substantial changes.

One key challenge is pushing the limits of long-duration lithium battery storage. The National Development and Reform Commission has identified long-duration energy storage as a “critical support technology” in its “Action Plan for Accelerating the Construction of a New Power System (2024-2027),” which will offer revenue guarantees through capacity pricing mechanisms. It is expected that by 2025, the proportion of tenders for energy storage projects with durations exceeding four hours will significantly increase.

The competition in long-duration energy storage technologies is prompting lithium batteries to extend 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 named EnerQB, which is claimed to be the world’s first true 8-hour battery storage system. The plan involves deploying over 3 GW of storage capacity at multiple sites in Australia, serving both existing partners and emerging commercial and industrial clients. The introduction of this product aims to enhance energy density by 80% through infrastructural innovation and facilitate a new era of renewable energy consumption and grid upgrades.

The launch of CATL’s EnerQB not only redefines the technological boundaries of lithium energy storage but also reshapes the foundational logic of global energy transition.

Moreover, addressing safety in energy storage has become paramount. In March 2025, an explosion incident at the Moss Landing energy storage station in California prompted a global reevaluation of the industry, especially when individual station capacities exceed GWh levels. The economic loss from this incident was over $1 billion, highlighting critical flaws in traditional liquid lithium batteries. Companies like Sungrow, BYD, Huawei, Trina, and Ruipu Lan Jun are redefining safety standards in the industry by conducting real machine combustion tests to raise safety entry thresholds. For example, Sungrow invested 30 million yuan to conduct open-environment combustion tests on the 20 MWh PowerTitan 2.0, which showed no fire spread under extreme conditions.

In parallel, battery manufacturers like CATL and BYD are increasing their investment in solid-state batteries, hoping to accelerate the development of safer battery technologies. The Ministry of Industry and Information Technology has listed solid-state batteries as a key area for breakthroughs in its “Action Plan for High-Quality Development of New Energy Storage Manufacturing Industry (2024-2027).” Cities like Beijing and Shanghai are providing 30% investment subsidies for demonstration projects. In the capital market, over 20 billion yuan has been raised for solid-state battery developments in 2024, while CATL and BYD are exploring “mixed lithium-sodium” transitional technologies.

Furthermore, Huawei’s digital energy division is working on intelligent grid-connected storage solutions, promoting a shift from merely supporting the grid to enhancing it. With renewable energy generation surpassing 40%, challenges such as insufficient grid inertia and voltage fluctuations have intensified. In this context, networked energy storage has progressed from a “cutting-edge technology” to a “strategic necessity.” Major companies like Sungrow, Huawei, XJ Electric, and Nari Technology are actively releasing technological advancements.

The core of networked energy storage lies in simulating synchronous generator characteristics using power electronic devices to achieve voltage source control. Huawei’s “multi-site self-synchronization amplitude-frequency modulation technology” can enhance reactive power response speeds to the millisecond level, supporting stable operations of gigawatt-scale photovoltaic-storage microgrids. Sungrow’s PowerTitan 2.0 system uses a full-link simulation platform to validate black start capabilities under extreme conditions such as 4,500 meters altitude and -40°C temperatures in Tibet.

The National Energy Administration has identified networked technology as a key area for research and development, with cities like Beijing and Guangdong offering 30% investment subsidies for demonstration projects. As networked energy storage transitions from a “choice” to a “necessity,” its significance transcends mere technology—it represents a paradigm revolution in the power system, moving from “source-driven load” to “collaboration between source, network, load, and storage.” According to GGII forecasts, global installations of networked energy storage will exceed 200 GW by 2030, with a market penetration rate of over 40% in China.

In the age of AI, the energy storage value chain is also evolving. AI is an essential wave that no company can afford to miss. Huawei’s Meng Wanzhou revealed that the company is seizing opportunities through the “Tianshui Plan,” “Dizhi Plan,” and “Pacific Plan,” aiming for long-term success in the computational era. The “Dizhi Plan” targets the flow sources of data centers, parks, and households. The explosion in AI computing demand is driving a surge in energy consumption in data centers. Huawei proposes a “computing and electricity synergy” model to address the pain points of data center power supply. Their reports emphasize that energy consumption in data centers accounts for over 80% of the ICT industry, and Huawei aims to reduce consumption and enhance efficiency through simplified architectures and high-density deployments.

BYD continues to invest heavily in AI data centers, establishing a comprehensive product layout that includes AI servers, liquid cooling systems, power management, and high-speed communication, opening up vast growth opportunities. Leveraging its strong technological platform, BYD has fully laid out its core components and systems for AI robots. CATL has also indicated significant demand for data centers and storage solutions in Australia and the Middle East, where stable electricity supply is crucial due to high power consumption, marking it as a promising growth market. Current trends indicate an increasing demand for data center storage, with projects like the Ali project reaching a scale of 19 GWh, which is just the beginning.

AI technology is enhancing real-time monitoring of battery health (SOH), predicting thermal runaway risks, and optimizing operations and maintenance. For instance, Sungrow’s PowerTitan 2.0 employs full liquid cooling and AI bionic thermal equilibrium technology, ensuring battery temperatures remain stable around 25°C, improving discharge capacity by 8%.

Lastly, energy storage is evolving from a grid-centric focus to a broader “pan-storage” ecosystem. By integrating battery swapping, energy storage, and renewable energy, CATL is leveraging its “Chocolate Battery Swap” ecosystem to create a more efficient “solar-storage-charging” integrated energy network. The enhancement of B2G technology marks a significant step in CATL’s transformation from a mere battery manufacturer to an energy service provider, reflecting its grander ambition of establishing a “zero-carbon grid,” a self-sufficient energy system capable of powering large data centers or even entire cities. According to Zeng Yuqun, the revenue potential from developing and managing a “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 business could exceed 2.5 trillion yuan. CATL describes the “zero-carbon grid” not merely as an energy storage system but as a comprehensive energy solution integrating solar, wind, storage, and electric vehicle charging technologies.

Meanwhile, Huawei frequently mentions its “solar-storage-charging” integrated strategy in its annual reports, which seeks to unify photovoltaic, energy storage, and charging facilities to create a closed-loop energy ecosystem. For example, its smart photovoltaic solutions are expected to ship 176 GW in 2024, with energy storage shipments increasing by 66%. Through initiatives like “Spark Ignition,” Huawei aims to drive high-quality industry development in partnership with other stakeholders. Over the next three years, Huawei plans to deeply integrate its “Tianshui Plan” and “Dizhi Plan” with grid operators, automotive companies, and data center customers to construct a three-in-one ecosystem of “energy storage + computing power + transportation.”

On March 17, BYD introduced its megawatt fast-charging technology, which offers a peak charging power of 1 MW (1000 kW), enabling a range extension of 400 kilometers in just five minutes. BYD has developed a “1 main unit + 1 energy storage cabinet” charging system, with the storage cabinet having a capacity of 225 kWh and a maximum output power of 800 kW. When the storage cabinet works in conjunction with the grid, the total output power can reach 1360 kW, with single-gun charging peaking at 1000 kW and dual-gun charging reaching a total of 1360 kW. This evolving charging-storage model is set to become a new growth trend by 2025.

As Trina Solar’s chairman Gao Jifan stated, achieving carbon neutrality hinges on three key elements: first, continuous technological innovation to improve solar conversion efficiency and reduce costs; second, the vigorous development of energy storage systems, including lithium-ion and sodium-ion batteries; and third, the advancement of high-voltage transmission, particularly direct current distribution technologies and systems, to establish a new zero-carbon low-carbon energy system dominated by renewable energy. Among these, the most crucial aspect is to integrate carbon-free electric energy with end-use electrification, leading to the development of zero-carbon buildings, factories, mining operations, and transportation.

From discussions on energy storage safety to AI-driven operational revolutions, as well as the deep coupling of long-duration storage and new power systems, 2025 is poised to mark a historical turning point for energy storage, transitioning from “scale expansion” to “value creation.” This technological transformation may well set the stage for the industry’s landscape over the next decade.