From Selling Equipment to Ensuring Grid Integration and Building Ecosystems: China's Energy Storage Sector Shifts Its Overseas Strategy

From Selling Equipment to Ensuring Grid Integration and Building Ecosystems: China’s Energy Storage Sector Shifts Its Overseas Strategy

Recently, the 2026 Australia International Energy Exhibition opened at the Melbourne Convention and Exhibition Centre. This edition of the exhibition gathered more than 490 exhibitors and attracted over 16,500 professional visitors. Among them, Chinese manufacturers continued to be the largest exhibiting group from overseas, with energy storage products serving as a focal point prominently displayed by leading Chinese enterprises such as CATL, Trina Storage, Hithium, and ChnEnergy.

As the overseas expansion of China’s energy storage industry becomes increasingly mature, for Chinese enterprises like CATL, this exhibition in Australia represents more than just a product display; it offers a cross-section of the evolving pathways for China’s new energy industry in its global expansion.

When the expansion momentum encounters overseas barriers

The overseas expansion of China’s energy storage industry continues to accelerate in scale. According to data from the China Energy Storage Strategy & Technology Alliance (CNEA), new overseas orders for Chinese energy storage companies reached 366 GWh in 2025, a year-on-year increase of 144%. In the first half of this year, the scale of overseas contracts was approximately 298 GWh, up 83% year-on-year. Among the top ten global shippers of lithium-ion energy storage batteries, nine are Chinese companies, collectively accounting for nearly 89% of the market. As the world’s largest power battery supplier, CATL is also the largest global energy storage battery supplier. In 2025, its global market share in energy storage batteries reached 30.4%, marking its fifth consecutive year at the top.

Similar to the new energy vehicle sector, the push for China’s energy storage industry to go global is primarily driven by profit pressures in the domestic market. In the first half of this year, the installed capacity of new domestic energy storage systems fell 19.6% year-on-year, and the lowest winning bid price for energy storage systems dropped to 0.4999 yuan per Wh. For some independent energy storage projects, revenues are insufficient to cover capital costs. Taking Sungrow as an example, the gross margin of its overseas energy storage systems was 40.36%, a gap of more than 20 percentage points compared to its domestic operations during the same period.

However, the surge in Chinese energy storage orders does not mean that the path to international markets is widening. In recent years, restrictions by the United States and the European Union on Chinese energy storage have expanded from tariffs to a systemic level encompassing industrial policy and market access. The comprehensive tariff on Chinese energy storage batteries in the U.S. has risen to 48.4%. Under the Foreign Entity of Concern (FEOC) rules, projects must have less than 75% Chinese ownership and a limited share of Chinese technology in project costs; otherwise, they lose eligibility for tax credits. The EU’s Net Zero Industry Act requires that in public procurement projects, the share of components from any single non-EU country must not exceed 65%. Furthermore, the ban on energy storage power conversion systems (PCS) issued in April this year excludes Chinese inverters from EU public financing channels. For Chinese companies, the issue is no longer about price, but about whether they can gain market access at all.

Even if policy hurdles are overcome, differences in grid structures determined by geographic conditions, the impact of climate environments on equipment reliability, the fragmentation of grid-connection and certification regimes across countries, and varying market requirements for long-term operation and maintenance and community acceptance still constitute a series of non-tariff barriers. The combination of these factors further narrows the room for relying solely on cross-border supply and price advantages, compelling Chinese energy storage companies to shift their competitive focus from product pricing to system delivery capabilities.

“Those who understand batteries don’t understand the grid”

In Australia, a country that occupies an entire continent and is characterized by vast land and sparse population, the complex challenges currently facing China’s new energy industry overseas are vividly illustrated.

According to Sally Berg, Senior Vice President of Renewable Energy and Power Business at Rystad Energy, a participant in the exhibition, Australia primarily has three power grids: the National Electricity Market (NEM), which covers multiple states and extends to Tasmania, meeting approximately 90% of Australia’s electricity demand; the independent wholesale power grid in Western Australia, one of the most isolated grids in the world, which cannot import electricity from other regions and must be entirely self-sufficient; and a smaller third grid in the Pilbara region of northern Western Australia, serving industrial loads such as large-scale iron ore and liquefied natural gas exports. Berg noted that the lack of interconnection among these grids means that each region must rely on local resources and regulatory capabilities to maintain power supply.

Against this backdrop, Australia’s demand for energy storage has begun to rise significantly. Data from the Australian Energy Market Operator (AEMO) shows that in the third quarter of 2026, the instantaneous supply share of renewable energy and energy storage in the NEM reached a historical peak of 80.4%, while the average cumulative share of renewable energy generation reached 44%.

However, high penetration rates have not automatically brought system stability; instead, they have highlighted the structural contradiction of insufficient regulatory resources. Xu Jinmei, President of the Energy Storage Solutions Department, Chief Technology Officer (CTO) of the Energy Storage Business Division, and President of the Energy Storage Europe Business Division at CATL, revealed that increased integration of renewable energy means a corresponding reduction in stable power sources, making system vulnerability more pronounced.

“Chairman Zeng Yuqun once said: those who understand batteries do not understand power grids, and those who understand power grids do not understand batteries,” said Xu. She noted that the common bottleneck for global energy storage is not production capacity, but grid connection and delivery. Equipment can be installed, but the grid cannot accept it; grid connection delivery is slow, and waiting times are getting longer.

Shortening the grid connection cycle for customers tests the core capabilities of global energy storage companies. Australia is one of the most difficult “testing grounds” in the global market: the spot market settles every five minutes, frequency regulation requires second-level response, grid connection reviews are strict, and investor due diligence is meticulous. The five-minute real-time dispatch mechanism of the NEM, along with the ultra-fast frequency response requirement of one second in the Frequency Control Ancillary Services (FCAS) market, not only requires energy storage to “react quickly” but also to complete the closed loop from receiving instructions to delivering power within an extremely short time window. Australia’s grid connection compliance process is also widely regarded as one of the strictest in the world.

“Developers and investors are most afraid of this: equipment can be found everywhere, but who can guarantee grid connection? Many companies are actually just assembling equipment, but there is still a step to go before grid connection,” said Xu. She noted that some top-tier market projects in Australia have experienced delays of more than a year. For example, last year, the Waratah super battery energy storage project in Australia, with an installed capacity of 850MW/1680MWh, suffered progress delays due to transformer failures. Payments within the 5.5-year contract period were reduced by more than 90 million Australian dollars, with total contract payments dropping from approximately 602.6 million Australian dollars to 512.6 million Australian dollars.

She also emphasized that grid-connection issues are particularly acute in Australia, but this uncertainty is not unique to the country: developed nations, developing countries, and underdeveloped regions all face similar challenges. According to data from the U.S. Lawrence Berkeley National Laboratory, as of the end of 2025, the U.S. energy storage grid-connection queue reached a capacity of 749 GW, with a median period of over 61 months from project application to commercial operation. Traditional energy storage in the Middle East market faces the risk of derating or even shutdown due to high-temperature environments, while weak grid structures require energy storage systems to actively provide frequency and voltage support, making grid-forming capability a prerequisite for market entry. Although market environments and regulations vary by region, they all point to the same reality: equipment can be shipped across borders, but system capabilities cannot be delivered in the same container.

System Capabilities and Local Ecosystem

In the face of numerous challenges, the overseas strategies of Chinese energy storage companies are undergoing a shift: rather than relying solely on equipment exports as the primary pathway, they are now treating system integration, grid-connection verification, and localized services as prerequisites for entering overseas markets.

“How do we move from understanding batteries to understanding the grid? This is an area where we need to grow rapidly. We have already made strategic deployments, but we need to quickly prove our capabilities to the market,” said Xu Jinmei. In her view, grid-connection capability can be summarized in three steps: possessing simulation and emulation capabilities, completing hardware adaptation, and conducting actual verification. To this end, CATL has invested approximately 3 billion yuan to build a dedicated testing laboratory, using hardware-in-the-loop simulation to verify pre-grid-connection variables in a laboratory setting.

This assessment directly informs CATL’s overseas product strategy. At this year’s energy exhibition, CATL primarily unveiled the next-generation liquid-cooled energy storage system platform TENER+ for grid-scale long-duration energy storage (LDES), as well as TENER Sodium, the first sodium-ion liquid-cooled energy storage system to complete whole-station-level verification. TENER+ can provide approximately 9.0 MWh of capacity within a single 7-meter container, designed for a 25-year service life. Its “no hot spot” top-exhaust architecture addresses project-level pain points in Australia, such as tight land availability, high costs of grid connection points, and power conversion system (PCS) derating caused by high summer temperatures. TENER Sodium offers a single-system capacity exceeding 30 MWh and can operate within an ambient temperature range of -35°C to 55°C. Under 45°C conditions, its cycle life exceeds 10,000 cycles, providing a new option beyond lithium-ion batteries for high-temperature, coastal, and long-duration scenarios.

Beyond products, integrating system capabilities into local ecosystems also tests the operational resolve and wisdom of Chinese companies abroad. “Localization is a continuous commitment that requires constant optimization on a project-by-project basis.” According to Zhou Huan, General Manager of CATL’s Australian subsidiary, CATL has categorized its localization priorities into three areas: optimizing product and system details by combining local engineering experience with global R&D resources; collaborating with local delivery partners to identify issues early and translate local needs into improvement measures; and advancing localized construction to build a talent and resource team covering the entire process of design, delivery, commissioning, and service. During this energy exhibition, CATL signed three memorandums of understanding with Hitachi Energy, EPEC Group, and the University of New South Wales in Sydney, focusing on grid access, system integration, and local talent development.

Zhou Huan candidly acknowledged that market competition for energy storage in Australia is inevitable, but overseas markets are not entirely price-driven. Instead, greater emphasis is placed on how companies cultivate the market, rectify mistakes, and demonstrate long-term commercial integrity: “On one hand, we bring high-quality products; on the other, we build a good reputation locally so that customers are willing to pay a certain premium over the long term, supporting the brand’s better growth. It is not about selling one order this year and two or three next year, only to find that market growth falls short of expectations and that we cannot sustain 20 years of operation and maintenance before leaving.”

This approach, which replaces simple equipment pricing with system certainty and local credit records, is also the main thread for Chinese companies across various global regions. For instance, EVE Energy officially established its energy storage company in Australia in July this year, proposing a localized operational model of “In Australia, for Australia.” Meanwhile, companies such as Sungrow and Hithium Energy Storage are simultaneously advancing production capacity and delivery deployments in Europe and the Middle East. What Chinese energy storage companies are taking overseas is evolving from containers and battery racks into comprehensive system capabilities that include grid adaptation, engineering delivery, and long-term operation and maintenance.

Conclusion

Currently, the overseas expansion of China’s energy storage industry faces an environment where opportunities and constraints coexist. Global demand for energy storage continues to expand, and Chinese companies’ advantages in supply chain completeness and delivery speed are difficult to replace in the short term. However, grid connection rules, certification systems, and localization requirements in major markets are also being tightened simultaneously. This means that going global is no longer about fulfilling one-off orders, but about completing the capability embedding from equipment to assets in each target market.

Similar to the new energy vehicle industry, the globalization of China’s energy storage sector is no longer a straight line focused solely on order growth. “Customers are highly selective. Therefore, any Chinese technology company needs to demonstrate a certain level of resolve: only by being able to take root in this market long-term and provide value will customers be willing to support you, offering a certain premium and room for imagination,” said Zhou Huan. What truly determines long-term positioning is the ability to transform equipment into grid-connectable, operable, and financeable assets in each target market. Steady progress is the key to long-term success.

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