China’s energy-storage industry is facing challenges in 2025 due to the escalating US-China trade war and tariffs affecting exports to the US, its largest market.

Analysts from WaterRock Energy Economics project a 10-20% reduction in capital spending in the sector this year.

The annual growth of battery energy-storage systems (BESS) in China may decline to 30 gigawatts (GW) in 2025. This is a decrease from the projected 42 GW in 2024.

In 2024, China and the US together accounted for 80% of the installed capacity, according to Infolink Consulting.

🔗 Source: South China Morning Post

🧠 Food for thought

1️⃣ Price wars are a recurring pattern in emerging clean energy industries facing oversupply

China’s battery energy storage system (BESS) sector demonstrates a common clean tech market development pattern where rapid capacity expansion leads to price competition and margin pressure.

The sector experienced nearly 10-fold capacity growth between 2020 and 2023 according to the National Energy Administration, creating significant oversupply conditions that drove average export prices down 39% during the same period 1.

This pattern mirrors earlier clean tech cycles, particularly in solar panels, where Chinese manufacturing scale created global price pressures that benefited deployment but challenged producer profitability.

The global energy storage market nearly tripled in 2023 alone, adding 45 gigawatts (97 gigawatt-hours), yet prices in China fell to record lows of $115 per kilowatt-hour for two-hour systems—a 43% year-over-year decrease 2.

China’s BESS industry now faces a critical transition phase where manufacturers must balance between maintaining market share and protecting margins, especially as export markets face new trade barriers.

2️⃣ Trade tensions accelerate technological diversification in energy storage

Trade conflicts between major economies consistently drive innovation in alternative technologies to reduce supply chain vulnerabilities.

Japan’s strategic pivot towards sodium-ion batteries (SiBs) demonstrates how geopolitical pressures can accelerate adoption of alternative energy storage technologies that rely less on contested supply chains 3.

This shift away from lithium dependency is significant as SiBs utilize abundant sodium sourced from seawater and industrial waste, potentially creating more regionalized and resilient supply chains.