A "chip shortage wave" surrounding energy storage batteries is accelerating and spreading.

The supply of upstream battery cells is tight, and first tier battery cell factories are operating at full capacity. Downstream demand is queuing up, and orders are queued until 2026. The production capacity of first tier enterprises is in urgent need, and the production capacity at the waist and tail ends is forced to be replenished.

According to feedback from the industry chain, the tight supply and demand of energy storage has led some companies to start raising prices. Some companies have also stated that the price increase is related to the rebound in lithium carbonate prices starting from the end of July.

However, the price increase of energy storage will not be too high. Some companies have disclosed a recent price increase of 0.01 yuan/Wh, and the price pressure on the integrated end of energy storage systems still exists. This price pressure will further benefit the development of energy storage batteries with cost advantages.

But in the case of scarce production capacity, how to maintain stable battery supply has become a key issue. The difficulty for system integrators to obtain high-quality energy storage cell products has increased; For battery companies focused on energy storage, the battery material supply chain will also become a test.

Overall, the energy storage shortage trend is catalyzing a reversal in supply and demand in the upstream battery industry. The battery industry is moving towards a new supply-demand balance due to explosive demand, price fluctuations, and supply chain redistribution.

The demand for energy storage has exploded across the board

The unexpected surge in energy storage demand is the direct root cause of the chip shortage trend.

The manifestation of energy storage yield further consolidates the certainty of energy storage. The utilization rate and economy of new energy distribution and storage are improving. The promotion of electricity marketization after Document No. 136 stimulates the vitality of the energy storage market.

The issuance of Document No. 136 and the cancellation of mandatory allocation and storage of new energy once caused market concerns, but the market-oriented reform of electricity has instead stimulated the economy of energy storage.

According to analysis, when the EPC cost of the power station is 1.05 yuan/Wh and the peak valley electricity price difference is 0.6 yuan/kWh, the project's return on investment (IRR) can reach 6.67%. In provinces with frequent spot price differences, the independent energy storage IRR reaches 6% to 10% or more.

From January to August 2025, the scale of domestic energy storage bidding exceeded 210GWh, a year-on-year increase of 1.5 times. Energy storage has shifted from a "policy dividend" to a "market dividend".

The demand in overseas markets also exceeded expectations.

Especially in the global energy transition wave, a highland for the export of energy storage batteries is forming. They all share the commonalities of abundant renewable energy resources, clear policy objectives, and large-scale investment in energy storage infrastructure.

As Saudi Arabia proposes to achieve 48GWh of energy storage capacity by 2030 to support the goal of 50% of electricity coming from renewable energy sources in the '2030 Vision'. To this end, the government has planned a 24GWh energy storage project between 2024 and 2025 and attracted investors through centralized bidding by state-owned power companies.

In 2025, Haichen Energy Storage won the bid for the 1000MW/4000MWh project of Saudi Electricity Company, with a total amount of 364 million US dollars. In addition to previous contracts with BYD and Sunac, Chinese companies have won bids for a cumulative capacity of over 24GWh in Saudi Arabia.

Chile plans to achieve 70% renewable energy by 2035 and carbon neutrality by 2050, with energy storage being the key to achieving this goal. The total scale of the project between BYD and Grenergy in Spain has reached 6.5 GWh, and Sunac Power has also won consecutive large orders.

In addition, the highly anticipated US energy storage market, coupled with IRA subsidies and tariff extensions, will continue the "rush to install" in 2025. The planned new capacity for 2025 will increase by over 10GW (corresponding to over 35GWh) compared to the end of 2024, and will continue to be delivered until 2026.

And after Powin's bankruptcy, a large number of orders also turned to Chinese manufacturers, even if they had to bear the import tariffs on Chinese energy storage batteries (about 40.9%).

Supply and demand reversal, chip shortage spreading

Energy storage batteries are in short supply.

Ningde Times has over 48GWh of energy storage orders in hand, and the schedule has been extended to the first quarter of 2026; Haichen Energy Storage has been fully operational since March this year, with orders scheduled for September to October; Yiwei Lithium Energy, Ruipu Lanjun, and Yuanjing Power are also operating at high loads.

Chu Neng New Energy, which focuses on energy storage, is also a beneficiary of this round of demand explosion. The company's order volume from January to May this year has exceeded 40GWh, surpassing last year's total and not far from its target of shipping 60GWh by 2025.

In September, Chu Energy signed a second phase investment agreement with the Yichang Municipal Government, planning to add an annual production capacity of 80GWh, covering power and energy storage batteries.

According to the semi annual report of CATL, the company's current production capacity is 345GWh, with a utilization rate of 89.86%, and the under construction capacity is 235GWh. However, even so, it is still difficult to ease the tension. Due to insufficient production capacity of top enterprises, some orders have to be transferred to mid to lower tier enterprises.

In terms of overall operation of lithium batteries, the sluggish climate of clearing has changed, and the overall production schedule in Q3 peak season achieved a month on month growth of 6% to 8%, continuing the rebound momentum since August. Energy storage contributed to the core growth rate, and energy storage companies maintained a year-on-year increase of 15% to 20% in Q3 production.

The production schedule of leading battery companies increased by 8% month on month in September, reaching a level of 70GWh, and has maintained a growth rate of over 5% for two consecutive months.

Expansion of Production and Supply Chain Security

The shortage of battery cells is also spreading to various links in the lithium battery industry chain.

In the first half of 2025, the total amount of newly signed and ongoing orders from equipment companies such as Pioneer Intelligence, Haimuxing, Yinghe Technology, and Liyuanheng exceeded 30 billion yuan, a year-on-year increase of 70% to 80%.

The prices of raw materials have also started to rebound, with lithium hexafluorophosphate rising by over 15% since August, entering a tight balance between supply and demand, becoming the first category in the lithium battery materials industry to achieve a supply-demand reversal.

In the context of scarcity, enterprises are strengthening supply chain security and long-term protection.

Chu Neng New Energy has successively signed long-term agreements with core material enterprises such as Tianci, Nord, and Kodali, covering 550000 tons of electrolyte, 150000 tons of lithium iron phosphate positive electrode, 310000 tons of copper foil, and 250 million sets of structural components, locking in long-term supply and building a "moat" for material supply.

It is worth noting that battery cell companies and energy storage system integrators are developing innovative cooperation models for technology licensing, which also demonstrate the function of supply chain stability maintenance.

The CLS of EVE Energy has thus developed a new momentum in the domestic energy storage market.

EVE Energy has launched "CLS terms", requiring partners to introduce their chemical systems, size specifications, BMS communication protocols, and operation and maintenance standards. In exchange, EVE Energy promises to prioritize supply and share technology. This move provides integrators with supply assurance and also allows battery companies to obtain additional benefits from technology licensing.

Under this mode, battery cell companies and energy storage system integrators have established a closer cooperation model, especially in the case of chip shortage, and the strategic value of "ensuring supply" included in technology authorization is further highlighted. For battery companies, technology output beyond energy storage cell orders has also become substantial revenue.

At present, EVE Energy has partnered with five domestic system integrators, including Haide Smart Energy, Linyang Energy Storage, and Jingke, to jointly build a 31GWh energy storage battery capacity through the CLS model. In early August, the joint energy storage battery cell factory of EVE Energy and JinkoSolar Energy Storage officially entered the mass production stage, which will supply 5GWh of 314Ah energy storage batteries to JinkoSolar Energy Storage annually.

Technological watershed

The demand is growing rapidly, and the technological threshold is also rapidly increasing. The energy storage market is thriving, but before entering a new cycle, the elimination race from technical reserves to delivery capabilities has already begun.

In June 2025, CATL announced the mass production of 587Ah energy storage large battery cells. However, most second tier enterprises are still at the 314Ah stage, and some laggards may be eliminated in the next 1-2 years. 500Ah+large battery cells will become a watershed, and the technological evolution cycle gap of enterprises will be extended from a few months to over a year and a half.

This is also driving future investment flows. GGII pointed out that 6MWh+products under 500Ah+large capacity battery cells will become the focus of enterprise expansion layout.

The energy storage industry is entering a new cycle of "dual competition of scale and technology". On the surface, it appears to be an imbalance between supply and demand, but behind it, new industrial opportunities for electricity marketization reform and global energy transformation are surging.

This means that energy storage has become a new growth engine in the new energy industry chain, beginning to show substantial growth in richer dimensions. At the same time, the coexistence of growth rate and clearance also serves as a warning: only enterprises with technological leadership, supply chain integration, and business model innovation can stand firm in future elimination matches.

For the lithium battery industry, the process of energy storage moving from a shortage of chips to a new balance is also changing the operating rules of the lithium battery industry, which used to be dominated by the power sector.