Lux Research analysts studied China’s growing energy storage market in the backdrop of drivers such as environmental pollution, the push toward renewables, and government incentives. Among their findings:

• While transportation leads, stationary is a growth driver. Total demand for energy storage will grow to 31 GWh per year in 2025, with transportation again the dominant player. Transportation’s share of the market will grow to 29 GWh; the stationary market, at 2.3 GWh, is smaller but grows at a faster 30% CAGR.

• Growth of new energy vehicles (NEVs) cools. After a spike in sales of new energy vehicles (NEV) in 2014, China will settle to a more leisurely pace of growth, mainly on account of inadequate charging infrastructure. Still, the market will grow at a 19% CAGR, reaching 500,000 units in 2025, across passenger and heavy vehicles.

• Renewables will drive stationary storage. Growth in China’s stationary storage will follow from an aggressive deployment of renewables. China leads the world in installed capacity of renewables, with plans for much more. In addition, preliminary policy developments suggest the electricity sector will implement pricing reforms, encouraging efficiency-boosting technologies including grid storage.

Besides understanding the market dynamics and producing cost-competitive products, most players in these markets will require strong partnerships to succeed. Early leaders such as BYD will try their best to hold onto their positions but the diversification of the market will gradually create promising opportunities for those who operate with patience and savvy.

—Lilia Xie, Lux Research Associate and lead author

The report is part of the Lux Research Energy Storage Intelligence service.