China’s battery energy storage sector has entered a new phase where improving utilisation, rather than simply expanding capacity, will determine its contribution to the country’s clean energy transition.
A new analysis from Ember reveals that China’s utility-scale battery energy storage systems (BESS) could have shifted an additional 23 TWh of clean electricity in 2025 if operated closer to their full potential, helping deliver renewable power during periods of peak electricity demand.
The additional 23 TWh of electricity is equivalent to powering Singapore’s entire economy for approximately five months, highlighting the significant untapped value of China’s rapidly expanding battery storage fleet.
China remains the world’s largest battery storage market. In December 2025 alone, the country added 18.76 GW and 65.46 GWh of new energy storage capacity, exceeding the total battery storage additions made by the United States during the entire year. By the end of 2025, China accounted for more than half of global battery energy storage system capacity. By the first quarter of 2026, installed lithium-ion BESS capacity reached nearly 150 GW, while the government raised its 2030 target for new energy storage to 300 GW in June 2026.
China’s rapid battery deployment was initially driven by policies requiring wind and solar projects to install co-located battery storage, reducing renewable energy curtailment and improving grid integration. However, the policy landscape has shifted. The government abolished the renewable BESS co-location mandate through Document 136 in February 2025, followed by Document 114 in January 2026, which introduced national capacity remuneration for standalone battery storage systems, creating new revenue opportunities.
According to Ember, battery utilisation has improved significantly. Utility-scale battery systems more than doubled their utilisation between 2022 and 2025, although renewable co-located batteries still completed around 100 fewer charging cycles per year than standalone systems by 2025.
Standalone battery systems are proving more efficient because they are dispatched directly by grid operators, allowing them to respond to broader system requirements and access multiple revenue streams. In contrast, co-located batteries remain tied primarily to the renewable projects they support and cannot yet participate independently in electricity markets.
Closing this utilisation gap could unlock major benefits. Increasing renewable co-located batteries by an additional 100 annual cycles using China’s 2025 installed capacity would enable an extra 9.5 TWh of electricity to be shifted across the grid annually. Ember notes this volume is roughly equivalent to Thailand’s total solar power generation in 2025.
Under a more advanced scenario where both standalone and co-located battery systems operate at around 350 cycles per year, consistent with international best-practice utilisation levels, China’s battery fleet could shift an additional 23 TWh of renewable electricity annually.
The structure of China’s battery market is also changing rapidly. While co-located battery systems previously represented more than 70 percent of utility-scale BESS capacity, standalone storage has become the dominant investment segment. Between January and April 2026, standalone systems accounted for 84.7 percent of newly installed utility-scale battery capacity, compared with just 8.4 percent for co-located storage.
Battery energy storage is increasingly viewed as critical infrastructure for balancing renewable electricity generation, reducing renewable curtailment, improving dispatch flexibility, supporting grid stability, and providing emergency backup services. As China’s renewable generation continues to expand, battery storage is expected to play a much broader role across the national power system.
Ember says further policy reforms will be essential to maximise battery utilisation. Energy arbitrage alone remains insufficient because spot electricity price signals are relatively weak and price caps restrict returns. The report recommends broader implementation of capacity pricing mechanisms, wider deployment of joint clearing between spot electricity and ancillary service markets, and updated grid tariff structures that recognise the two-way operational value of battery storage. These measures would enable battery operators to combine multiple revenue streams while supporting China’s long-term renewable energy transition.
SHAFANA FAZAL
