Energy storage
in China
Energy storage in China
Current regulatory developments
Updated September 2026
Cumulative installed capacity target of 180 GW by end 2027, with an estimated project investment of RMB 2.5 trillion (~USD 347.2 billion)
National mandatory wind & Solar co-location storage mandate removed (effective January 2025; while voluntary matching remains allowed)
Capacity pricing mechanism: first inclusion of grid-side standalone BESS in the capacity pricing mechanism since January 2026
Mandatory national safety standard GB 44240-2024
65 GWh of new capacity deployed in December 2025 alone (92% of global)
Five things to know about BESS in China.
No specific national regulation exists, but provincial mandates and standards shape the market. Three-tier national regulatory classification for BESS: grid-side standalone BESS, wind–solar co-located storage, and customer-side behind-the-meter storage. While there is no dedicated national regulation for commercial-scale batteries, many provinces previously imposed co-location requirements (5–30% of installed capacity) for renewable projects, which were abolished at the national level in January 2025. Licensing requirements vary by project type: grid-side standalone BESS must obtain a power generation business license, whereas customer-side and bundled storage projects are subject to differentiated provincial implementation rules. All grid-connected storage stations must enter into grid connection agreements with local grid companies and complete mandatory grid performance testing. The mandatory national standard GB 44240-2024 on lithium cell safety and the recommended grid-connection standard GB/T 36547 now apply.
The market is transitioning from policy-led to market-led, with the removal of the co-location mandate being the watershed moment. In January 2025, China abolished the requirement that new wind and solar projects be bundled with energy storage. This shifts the industry from guaranteed demand (through mandatory co-location) to competitive market participation, requiring firms to improve technology and operations. Despite this, growth remained stable: China installed 100 GWh of new energy storage by September 2025 (30 times the 2020 figure and over 40% of world total).
Revenue is derived from provincial spot markets, capacity mechanisms, and ancillary services, with a new national capacity pricing mechanism. In China, BESS operators generate multi-layered revenue via provincial spot power arbitrage, national/provincial capacity remuneration and power ancillary services. Core income streams include spot market peak-valley arbitrage, capacity payments, frequency regulation, peak shaving and grid backup services; customer-side BESS also gains returns from commercial demand charge reduction and virtual power plant aggregation. Power market trading is implemented on a provincial basis, and revenue product availability varies across regions. A nationwide unified capacity pricing mechanism covering grid-side standalone storage took effect in January 2026, representing the first national-level capacity compensation policy for BESS. More than 20 provinces have released dedicated operational rules and subsidy standards for energy storage ancillary services.
Provincial/municipal governments provide subsidies in various forms. Subsidies may be given as per-kWh power generation subsidies, one-off subsidies based on installed capacity, or one-off funding to new projects based on total investment. However, profitability remains challenging, many projects still struggle to turn a profit due to small peak-trough price spreads in certain provinces.
Intense price competition and global export dominance define the competitive landscape. China dominates the global BESS supply chain amid fierce domestic price competition. China accounted for 66% of the 246 GWh installed globally in 2025, deploying 65 GWh in December alone. However, one-third of energy storage retailers are selling products below cost, with domestic price competition spilling into export markets. Chinese firms signed 308 overseas export deals in the first nine months of 2025, representing 210 GW of capacity, double the previous year.
Credentials
Ampd Energy on multiple financing rounds and venture lending facilities supporting deployment of mobile battery storage technology globally
"They have excellent resource coordination abilities, are very familiar with and understand the energy and power industry and can communicate well.” “Eversheds Sutherland’s team handles complex cross-border and multi-jurisdictional projects in Hong Kong, mainland China and throughout Asia. They continue to distinguish themselves from peers with their approach to relationship building, holistic service and commerciality.” Legal 500 China
Explore other key BESS markets
© Eversheds Sutherland. All rights reserved. Eversheds Sutherland is a global provider of legal and other services operating through various separate and distinct legal entities. Eversheds Sutherland is the name and brand under which the members of Eversheds Sutherland Limited (Eversheds Sutherland (International) LLP and Eversheds Sutherland (US) LLP) and their respective controlled, managed and affiliated firms and the members of Eversheds Sutherland (Europe) Limited (each an "Eversheds Sutherland Entity" and together the "Eversheds Sutherland Entities") provide legal or other services to clients around the world. Eversheds Sutherland Entities are constituted and regulated in accordance with relevant local regulatory and legal requirements and operate in accordance with their locally registered names. The use of the name Eversheds Sutherland, is for description purposes only and does not imply that the Eversheds Sutherland Entities are in a partnership or are part of a global LLP. The responsibility for the provision of services to the client is defined in the terms of engagement between the instructed firm and the client.
Connect with us
