China is dominant player in storage market, partly due to its massive lithium-ion battery manufacturing capacity – however it faces stern competition in the long-duration storage segment, which is less reliant on lithium-ion technology
For a long time China has been the most dominant player in the global energy storage market. It’s not surprising given the stranglehold the far east nation has on many aspects of the worldwide storage sector. For example, as Bloomberg has highlighted, battery manufacturing capacity in China alone in 2023 was similar to global demand – specifically, global lithium-ion battery demand across the EV and stationary storage sector in that year stood at 950GWh, roughly equivalent to China’s production. But China’s prowess in the lithium-ion battery space is expected to grow further this year, with projections showing that, in 2025, announced battery manufacturing capacity in China could amount to approximately six-times global demand (see chart below).
Consequently, it’s little surprise that China is also leading the way when it comes to energy storage deployment. In 2023, of the 92.3GWh of lithium-ion batteries deployed around the world, just under half (49 per cent) were deployed in China (see chart below).
It is anticipated that China will deploy a similar share this year, with the US being the second-biggest deployer, though at a much slower rate than the Chinese, as the chart below shows.
However, while China is dominating the lithium-ion battery storage market, the signs are that its grip on the long-duration storage segment will be weaker. The long-duration sector is characterised by considerable innovation, particularly in terms of the technology being adopted – the lithium-ion chemistry on which China has built a global reputation as a manufacturer is not the preferred technology among deployers of long-duration storage.
Indeed, of the eight to ten-hour energy storage projects in the global pipeline in 2024, less than a quarter (24 per cent) will use lithium-ion batteries. Most of the projects are based on other technologies, such as flow batteries, advanced compressed air, and thermal energy storage – there are 225 per cent more eight to ten-hour long-duration storage projects in the pipeline using one of these technologies than there are projects using lithium-ion batteries.
Lithium-ion batteries’ much smaller role in the long-duration storage sector is reflected in a smaller role for China in the segment too. Data from Wood Mackenzie shows that only 38 per cent of the global eight to ten-hour long-duration storage pipeline is located in China. One-fifth of this pipeline is in the US, while 12 per cent is in Australia, 6 per cent is in Canada and 6 per cent is in Germany (see chart below). It seems clear that, as the long-duration storage sector explores more innovative technologies, so major lithium-ion battery manufacturer China’s share of the sector, in terms of deployment at least, lessens.
There have been a number of recent examples of major long-duration storage-related investment in countries other than China. Earlier this month, Canadian long-duration energy storage developer and operator Hydrostor secured a US$200 million investment from Canada Growth Fund (CGF), Goldman Sachs Alternatives, and Canada Pension Plan Investment Board.
Meanwhile, in December last year, US zinc-based long duration energy storage systems provider Eos Energy Enterprises closed a $303.5 million loan guaranteed by the US Department of Energy’s (DOE) Loan Programs Office (LPO), marking the first Title 17 battery loan closed under the current administration. Elsewhere, in October last year, long-duration energy storage battery technology provider Energy Dome signed a supply contract with Alliant Energy for the Columbia Energy Storage Project in Columbia County, Wisconsin in the US. The project will feature Energy Dome’s 20MW/200MWh CO2 Battery, powering around 18,000 homes in Wisconsin for 10 hours on a single charge. Also in October, it was announced that long-duration storage provider Highview Power is to develop a 2.5GWh liquid air energy storage plant at Hunterston, Ayrshire in Scotland.
In addition, in September last year, Energy Storage Industries – Asia Pacific, the Australian partner of long-duration energy storage systems manufacturer ESS, raised A$65 million in public and private funding to upscale its manufacturing capability.
When it comes to short-duration storage, China’s dominance of lithium-ion battery manufacturing makes it difficult for other nations to compete. However, in the long-duration segment – which is set to see its value increase from £4.84 billion in 2024 to $10.43 billion in 2030 – it’s more common for alternative technologies to be adopted, and consequently a more level playing field exists, giving companies from countries other than China an opportunity to flourish.
Strategic communications, insight and events for the global energy transition.