China’s energy storage sector is rapidly expanding. As a solution to balancing the country’s growing energy needs and mass renewable energy production, the industry has attracted investments worth hundreds of billions of yuan (tens of billions of dollars).
This has seen China become the world’s largest market for energy storage deployment. Its capacity of “new type” energy storage systems, such as batteries, quadrupled in 2023 alone.
This rapid growth, however, has caused other problems, such as what one analyst described as “temporary structural overcapacity” and low utilisation.
In this Q&A, Carbon Brief explores how China has been driving the sector forwards and how it fits into the nation’s wider energy transition.
Soaring battery deployment
China is currently the world’s largest market for energy storage, followed by the US and Europe, according to BloombergNEF.
This position was driven by a combination of market need for balancing renewable energy and government efforts to build a “new power system”.
China installed a massive 301 gigawatts (GW) of renewable capacity including solar, wind and hydro in 2023 alone – more than the total renewable generating capacity installed in most countries over all time.
As of May 2024, “clean energy” generated a record-high 44% of China’s electricity, according to Carbon Brief analysis.
However, despite the renewable energy boom, China’s power system still struggles to absorb all of the generation, making energy storage – which bridges temporal and geographical gaps between energy supply and demand – a key tool for the country to improve its renewable energy integration.
The majority of China’s storage capacity comes from large-scale storage projects, such as hydropower with reservoirs on the Yangtze River and gigawatt-level battery energy storage systems in Inner Mongolia.
Pumped hydro storage is the most common utility-scale storage system and has a long history in China. It pumps water uphill to a reservoir and then releases it to generate electricity. As of 2023, pumped hydro storage surpassed 50GW, making up over half of the country’s overall storage capacity.
The remaining half is comprised primarily of batteries and emerging technologies, such as compressed air, flywheel, as well as thermal energy.
These technologies, known as the “new type” energy storage in China, have seen rapid growth in recent years. Lithium-ion batteries dominate the “new type” sector.
The deployment of “new type” energy storage capacity almost quadrupled in 2023 in China, increasing to 31.4GW, up from just 8.7GW in 2022, according to data from the National Energy Administration (NEA).
This means that China surpassed its target of reaching 30GW of the “new type” energy storage by 2025 two years earlier than planned. The goal had been set by the NEA and China’s top economic planner the National Development and Reform Commission, under the 14th “five year plan”.
(Read Carbon Brief’s Q&A: What does China’s 14th ‘five year plan’ mean for climate change?)
Wang Shurui, researcher at the Institutes of Science and Development, Chinese Academy of Sciences, tells Carbon Brief:
“Advancements in the storage sector will enable a greater integration of renewable energy into the power grid, enhancing grid stability and helping accelerate China’s emissions reduction.”
High deployment, low usage
To promote battery storage, China has implemented a number of policies, most notably the gradual rollout since 2017 of the “mandatory allocation of energy storage” policy (强制配储政策), which is also known as the “new energy plus storage” model (新能源+储能).
Under the mandate, which applies in dozens of provinces, renewable companies are required to include a certain amount of energy storage capacity alongside new solar and wind generation projects, with the storage allocation rate ranging between 5% to 20%.
“This mandate is driving storage growth, as it pushes the build-out of large-scale energy storage stations,” says Guo Shiyu, climate and energy campaigner from Beijing-based thinktank Greenpeace East Asia. She tells Carbon Brief:
“The stations may not look huge separately, but they are mostly built on the generation side [alongside generating capacity], which are still quite big compared to industrial and commercial self-built storage [on the demand side].”
Cheaper costs led by technology innovation have helped the market’s increasing adoption of batteries too, Sun Yongping, researcher of emissions trading and vice-dean of the Institute of State Governance at Huazhong University of Science and Technology, tells Carbon Brief.
“An interviewee told me in a recent field study that the cost had fallen by over a half these years,” says Sun. “Local development is so fast that too often you can’t grasp it [in a] timely [way] just by looking at the statistical numbers,” he adds.
Despite its positive intentions, the mandatory storage policy has had unintended consequences. Notably, a significant portion of the installed storage capacity remains underutilised.
In regions covered by the State Grid – the government-owned operator that runs the majority of the country’s electricity transmission network – over four-fifths of the storage systems operate less than 10% of the time, with many used only once every two days, according to a Bloomberg report.
Another challenge, according to Guo, is the additional project costs and lack of effective incentives, as many storage facilities were built or rented to fulfil government requirements but went unused afterwards.
Both Guo and Sun argue that China needs a deeper level of electricity market pricing reforms to create incentives to use storage.
For example, having electricity prices that change at different hours could encourage the adoption of storage technologies in China, suggests Sun.
Guo says: “We still hope that each place deploys new energy storage according to its needs and understands its own situation instead of adopting a ‘one-size-fits-all’ approach.”
‘New driving force’ for economy
In 2024, the NEA named the energy storage sector as a “new driving force” for the country’s “new quality productive forces ” (NQPF). It could “propel the upstream and downstream industrial chains, promote scientific and technological innovation, talent training, investment and employment”, said the NEA.
(Read more on Carbon Brief’s Q&A: What China’s push for ‘new quality productive forces’ means for climate action.)
Regional governments are also exploiting the economic opportunity in energy storage. Guangdong, for example, aimed to make energy storage a “strategic pillar industry” of its economy by setting a target of 600bn yuan ($85bn) in annual revenue from the energy storage industry by 2025, eyeing the domestic and overseas market as the global energy transition deepens.
Meanwhile, Zhejiang, Anhui and Guangdong also have ambitious targets of installing local storage capacity of 3GW each by 2025, according to a recent tally by Greenpeace East Asia, based on government documents.
The booming market has attracted more than 100bn yuan ($14bn) since 2021.
But risks of market turmoil also exist. According to battery industrial information provider Gaogong Industrial Institute, last year China saw over 70,000 newly registered companies in the sector, which indicated that the market – already seeing fierce competition – may now be undergoing an “overcapacity” period.
Guo says this period of “overcapacity”, however, is rather “temporary”. She adds:
“There exists a temporary structural overcapacity, as the current expansion of new type energy storage is outpacing the market needs.
“However, if the regional governments could provide more policy support for the application of storage projects, this ‘excess capacity’ due to insufficient market demand could be avoided.”
The post Q&A: How China became the world’s leading market for energy storage appeared first on Carbon Brief.
Q&A: How China became the world’s leading market for energy storage
SYDNEY, Thursday 30 October 2026 — In response to reports that the Albanese government is set to introduce draft legislation this year that would seek to ban data centres in Australia’s suburbs, Joe Rafalowicz, Head of Climate and Energy at Greenpeace Australia Pacific, said:
“These reports are a testament to the growing community opposition to these completely inappropriate AI factories that have sprung up across our suburbs, and Big Tech corporations should take heed — the data centre build-out must not happen without the endorsement of the Australian people.
“But the government can’t simply ship this problem out to regional Australia without addressing the fundamental issues with this extractive new industry.
“We’re already seeing a trend of AI data centre proposals moving to the regions, in areas that are more water-scarce, more environmentally sensitive, and next to sources of fracked and coal seam gas to support their massive BYO gas-fired power plans — a pattern we’ve seen play out in the United States.
“From the Beetaloo Basin in the NT to the Western Downs in Qld, we’re seeing a wave of AI data centre proposals that would see new gas fast-tracked to support their massive energy demand, and threaten to completely derail Australia’s energy transition.
“Just as suburban Australians are asking, “what for?”, regional communities like Berry Springs and Dalby do not want dirty data centres setting up shop with absolutely no benefit to their communities. Greenpeace is calling for a moratorium on AI data centre developments until strict and enforceable safeguards are in place to protect our climate and our communities.”
-ENDS-
Media contact
Kate O’Callaghan on +61 406 231 892 or kate.ocallaghan@greenpeace.org
AI data centre ban in suburbs would not address fundamental issues: Greenpeace
In the thick of the COP29 climate summit in Azerbaijan in 2024, the UN climate talks were rattled by what can only be described as a major PR disaster. The BBC, Reuters and The Guardian all carried headlines, attributed to leading climate policy experts, that the COPs were “no longer fit for purpose”.
The articles outlined a series of reforms called for in an open letter signed by 22 eminent scientists and politicians, including a former UN secretary-general and previous UN climate chief, with a further 150 lending their support. The headlines shook confidence in the COP process, just as governments were wrestling over a new climate finance goal.
The Club of Rome – which handled the media relations for the letter – hurried to say that its “constructive, supportive ideas” had been “misinterpreted”. Negotiators kept calm(ish) and carried on, in the end landing the finance goal after some high-stakes drama on the final day.
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Early speakers’ list suggests few powerful leaders will attend COP31
Just 77 heads of state or government are scheduled to address the COP31 climate summit in Antalya, a third less than the COP28 peak -
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To my surprise, when I went back this week to read the letter again, I could not find the offending line about the COPs not being fit for purpose. The Club of Rome has yet to respond to my query about its disappearance.
Whatever happened to the wording, that sentiment has been widely shared. COPs have ballooned in size while the importance of their outcomes seems to have diminished since the 2015 Paris Agreement (with the exception of the 2023 COP in Dubai where countries agreed to transition away from fossil fuels in energy systems).
The same on the surface
Two years on from those painful headlines in Baku, has anything changed for the better? You might be forgiven for thinking not. Official decisions are still made by consensus rather than the majority voting some have called for to stop blockers.
Tens of thousands of officials, activists and business execs still scurry around the halls to an ever-growing list of side events, roundtables and dialogues, while deals still come down to rows, all-nighters and jargon-filled texts adopted to rounds of applause.
But it would not be true to say that COPs have completely failed to respond to the very real need to translate the words of the Paris Agreement into action in the outside world.
Global warming is projected to be around 1.3C lower this century than it would have been if the world had not committed to tackle the climate crisis under that accord. Developing countries have a valued space at COPs in which their voices have equal weight in decision-making, unlike in many other international fora. And most importantly, perhaps, there has been a subtle shift, tipping the balance away from negotiating towards doing.
Brazil branded last year’s summit in Belém as the “COP of Implementation”, corralling the sprawling Action Agenda into six axes. This was a bid to impose some structure on the mushrooming efforts between governments, UN agencies, cities, businesses and civil society to set targets and spur faster results on their pet issues, from methane emissions to health and adaptation in conflict zones. COP30 alone saw the launch of 120 “plans to accelerate solutions”.
COP30 roadmaps off the cuff
Meanwhile, as the formal negotiations drew to a close, it was clear that consensus decision-making was evolving into something a little more improvised.
With only around half of all countries on board with the idea of a roadmap to transition away from fossil fuels, COP30 President André Corrêa do Lago announced his team would put one together over the coming year, along with another on how to meet a global goal to halt deforestation by 2030. Those roadmaps will be launched next week, presented and discussed at COP31, though it’s still unclear whether or how they’ll be incorporated into the formal negotiating agenda.
Some leading policy-makers don’t think that matters too much. Speaking to journalists before the Antalya summit, COP30 CEO Ana Toni and Dutch climate minister Stientje van Veldhoven said “coalitions of the willing” can move ahead without needing consensus from the COPs. This, they said, was evident this year at the first global conference on TAFF, co-chaired by van Veldhoven and attended by 60 countries.
“Consensus or no-consensus in the general COP doesn’t make a difference for the choices I have to make in my country to get my country to phase out fossil fuels,” said the Dutch minister. The Netherlands recently became one of the first to publish a national TAFF plan.
COP31 banks on flagship voluntary initiatives
This thinking has permeated the management and expected outcomes of this year’s COP too. Earlier this year, Türkiye, supported by international energy agencies, floated the idea of a voluntary goal to boost electrification to 35% of the world’s final energy consumption by 2035 – and this is now being touted as one of the main results to be expected from Antalya.
Türkiye is also championing a pledge on AI and climate, while co-host Australia is pushing to ease access to climate finance for least developed countries and small island states.
COP31 presidency announces AI pledge as UN climate chief says Big Tech ‘on thin ice’
None of these needs consensus. But with a political cover decision already in the works, as trailed by the COP presidents, they – and perhaps the fossil fuel roadmap – may find a home in the official text if language acceptable to most can be found, giving them them additional weight.
UNFCCC reform process in the shadows
Formal reform is underway too, if quietly. UN climate chief Simon Stiell is leading a review informed by ongoing consultations with a group of 15 well-respected climate policy experts, three of whom signed the open letter in 2024.
Among them is leading Swedish climate and sustainability scientist Johan Rockström who has strong ideas about how to make COPs function better, including a switch to majority voting. He told the same press briefing nothing stands in the way of this, because the rules of procedure for making decisions at COPs have never been formally agreed.
Still, to get away from the default setting of consensus would require agreement on a new system that may be impossible to achieve given the rise in bullying tactics by fossil fuel heavyweights.
Comment: The UN climate process was built for negotiation – now it must support implementation
The deliberations with the high-level policy gurus, as reflected in a summary of June’s session in Bonn, largely echo what’s already happening organically, calling for stronger partnerships and accountability both in and between the Action Agenda and negotiations. It doesn’t mention voting.
A general overview of the reform exercise says that “improving and optimizing the [UN climate] process over the medium to long term… will be critical to fostering trust, enhancing collaboration, and catalyzing increased ambition”.
In the short term, don’t hold your breath for anything concrete on reform at COP31 but watch for signs in what ends up dominating the headlines from Türkiye.
The post Editor’s Desk: COP reform is happening quietly, behind the headlines appeared first on Climate Home News.
Editor’s Desk: COP reform is happening quietly, behind the headlines
With the COP31 climate summit in Turkey looming, all eyes are on China to see what the country will push for in the negotiations.
At COP30 last year, China helped to secure a “dialogue” on climate-related “unilateral trade measures”, as well as a two-year “work programme” concerning