Who is the biggest winner in this round of energy storage explosion?

Questioning AI · What are the key factors behind the high profits of downstream integrators?

Text by Xiao Li Fei Dao

Since early March, oil prices have surpassed $100 per barrel, and discussions about “new energy substitution” have increased. Leading energy storage companies like Sunshine Power and CATL have surged over 20% against the trend.

So, can the energy storage market continue to explode beyond expectations?

【How Hot Is the Energy Storage Market?】

In the first half of 2025, the global energy storage market was still overshadowed by overcapacity, with companies across the supply chain engaged in price wars.

However, starting in the second half, the situation suddenly reversed—whether it’s cathode and anode materials, electrolytes, or battery cell companies, capacity utilization rates soared, reaching full capacity one after another.

The reason is simple: demand for energy storage has exploded.

According to ICC Xinluo, in 2025, global energy storage battery shipments will reach 640 GWh, an increase of 82.9%. Among them, domestic battery manufacturers shipped 621.5 GWh, up 82.8%, while overseas manufacturers shipped 18.5 GWh, up 85%.

▲Source: ICC Xinluo

So, why did energy storage demand suddenly surge?

On one hand, the pressure to absorb new energy electricity is becoming increasingly prominent. Since 2025, spot prices for photovoltaic power have continued to decline, even dropping below one dime per kWh during peak generation times. This indicates that the absorption of new energy power has become a real challenge, making energy storage more necessary.

At the same time, as the peak-to-valley electricity price gap widens, energy storage stations can increasingly benefit from “charging during low demand, discharging during high demand.”

On the other hand, energy storage has crossed the economic inflection point—earning per kWh has begun to exceed costs.

In early 2025, the National Development and Reform Commission issued Document No. 136, explicitly canceling the “mandatory storage” requirement and promoting energy storage as an independent market participant. This shifted the development driver from “policy-driven” to “market-driven,” igniting demand.

Following this policy, regions like Inner Mongolia and Ningxia introduced detailed measures, announcing capacity price subsidies, further increasing project returns. It is estimated that investing in energy storage projects in Inner Mongolia can achieve internal rates of return of over 10%, even 15-20%. Such high returns naturally spurred explosive growth in energy storage installations in Inner Mongolia.

More importantly, the global energy storage boom is not a fleeting phenomenon.

【The Year of “Quantity and Price Rise”】

Currently, energy storage seems to be on the cusp of the photovoltaic boom of 2020.

From a valuation perspective, 2026 is likely to become the true year when both volume and price of energy storage rise together.

In September 2025, the National Development and Reform Commission and the National Energy Administration jointly issued policies stating that by 2027, the nationwide new energy storage installed capacity will reach over 180 GW. This means that in the next two and a half years, the installed capacity will nearly double.

However, based on the historical experience of industries like new energy vehicles, actual growth often exceeds plans. Some institutions predict that the probability of doubling domestic energy storage capacity in 2026 is quite high.

With policy guidance, detailed regulations for energy storage will be rolled out across regions. Large-scale project bidding, which was still vague in 2025, will become clearer by 2026.

The 2025 energy storage explosion was mainly driven by certain provinces; demand from more regions will be released next year, further boosting installed capacity. Even Inner Mongolia, which has taken the lead, is expected to see demand double in 2026.

On one hand, the duration of energy storage deployment is significantly increasing. Early projects typically had two-hour durations, but now new projects generally require four hours or longer. Even if the installed capacity remains unchanged, the corresponding energy storage scale will double.

On the other hand, supportive policies for energy storage are becoming more sustainable.

Take Inner Mongolia as an example: its subsidies are not borne by the grid or local government but are shared by the renewable energy generation side. With excellent sunlight conditions locally, the power generation side can fully bear these costs, making high-yield models sustainable.

The overseas market will also explode in 2026.

In fact, the combination of “photovoltaic + energy storage” is highly cost-effective overseas. The high costs of coal and natural gas power generation, coupled with the expensive investment in large transmission networks, make solar-plus-storage solutions advantageous, driving high growth in overseas energy storage demand. Currently, geopolitical tensions in the Middle East have caused energy prices to surge, further accelerating this trend.

Sunshine Power’s overseas strategy also reflects this trend. The company believes that the global energy storage market will grow by 40-50% in 2026, and its current strategy is “select the best.” This means abundant orders and the ability to maintain high profit margins.

In addition to installed capacity, prices along the energy storage industry chain are also expected to enter an upward cycle.

Before reaching full capacity in recent months, the industry experienced a long period of overcapacity and low prices, with many high-cost capacities pushed out of the market. The remaining players are mostly still in a phase of replenishing funds, and unlike the rapid expansion during the photovoltaic boom of 2020, there is no large-scale expansion now.

This suggests that 2026 could be the most tense year for supply and demand in the energy storage industry chain. Upstream materials like lithium carbonate, midstream battery cells, and downstream system integration may all see cyclical price increases.

It’s also worth noting that in late November 2025, the Ministry of Industry and Information Technology held a meeting on anti-competition among power and energy storage battery companies. The prolonged oversupply caused by the epic expansion of photovoltaics is unlikely to recur in the energy storage sector.

Generally, “volume and price rise together” is one of the best phases for investing in cyclical stocks. Although the capital market still has differing opinions, the logic is—when energy storage shifts from a “cost item” of a power station to a “profit item” generating over 10% returns, the large-scale demand for installation will become inevitable.

【Who Will Be the Major Winners of the Cycle?】

The global energy storage explosion is unstoppable. Who will be the big winners in this cycle?

From the profit distribution along the industry chain, downstream system integrators hold a higher profit share and are among the biggest beneficiaries.

Currently, the leading energy storage system integrators listed on A-shares are Sunshine Power and Haibo Sichuang. The former focuses on overseas markets, the latter on domestic. Their financial reports already reflect the high prosperity of the energy storage industry.

In the first three quarters of 2025, Sunshine Power’s energy storage revenue reached 28.8 billion yuan, up 105%. Its energy storage shipments increased by 70%, with overseas shipments rising from 63% last year to 83%. As an industry leader with a global outlook, a 50%+ growth rate in energy storage business in 2026 is reasonable.

Meanwhile, Haibo Sichuang’s revenue grew by 52%, and net profit attributable to shareholders nearly doubled, though its profitability is lower—net profit margins are 7.9% and 18%, respectively. This means Sunshine Power’s profit per GWh shipped is higher than Haibo Sichuang’s for double the volume.

▲Sunshine Power vs. Haibo Sichuang net profit margin chart, Source: Wind

Of course, Haibo Sichuang’s growth potential is not bad, as the domestic energy storage market is growing rapidly (and gradually entering overseas markets), and it has secured large supply agreements with CATL.

In November 2025, Haibo Sichuang signed a three-year framework agreement with CATL for at least 200 GWh. This is crucial because starting next year, energy storage cells will be in tight supply, even shortages, and securing stable battery supply is key to expanding market scale.

According to Dongwu Securities’ analysis, in 2026, Haibo Sichuang’s shipments could reach 70 GW (compared to an estimated 30 GW deployment in 2025), and the unit price of energy storage systems is expected to rise, leading to a sharp increase in revenue compared to this year.

Besides downstream integrators, upstream lithium miners will also benefit significantly.

In mid-November, Ganfeng Lithium Chairman Li Liangbin stated that global lithium carbonate demand is expected to grow by 30% in 2026, with supply and demand gradually balancing. If growth reaches 40%, lithium carbonate prices could continue to rise. If short-term supply and demand cannot be balanced, prices could hit 200,000 yuan/ton or higher.

The downstream demand for lithium mainly comes from power batteries and energy storage batteries. According to institutions’ estimates, the penetration rate of new energy vehicles will continue to rise, combined with increased per-vehicle charging capacity (below 100 km range cannot get subsidies) and demand from heavy trucks, with 2026 growth in power batteries at least 25% or more.

Coupled with the explosive demand for energy storage, the entire battery industry could grow by 30% or more—a highly probable scenario. However, upstream lithium mining expansion remains cautious due to painful lessons from the last cycle, making the supply-demand pattern for lithium carbonate more tense.

In this context, leading companies like Ganfeng Lithium and Tianqi Lithium have bottomed out and are expected to see further cyclical recovery as lithium carbonate prices rise.

Overall, as the industry shifts from policy-driven to market-driven, crossing the economic inflection point, energy storage is entering a golden development period. In the industry chain, downstream system integrators with technological barriers and upstream resource owners will be the core beneficiaries of this industry explosion.

Disclaimer

This article involves content related to listed companies, based on the author’s personal analysis and judgment from publicly disclosed information (including but not limited to interim reports, periodic reports, and official platforms). The information or opinions herein do not constitute any investment or commercial advice. MarketWatch is not responsible for any actions taken based on this article.