What does China's 180GW energy storage target for 2027 mean?
In JPMorgan Chase's view, "the target of 180 gigawatts is not high," and China often "exceeds related targets." More importantly, this refutes market concerns about the previous "cancellation of the mandatory storage policy," leading the bank to believe that China's energy storage industry will experience a V-shaped recovery, and it may even recover ahead of schedule
Recently, the National Development and Reform Commission and the National Energy Administration of China issued the "Special Action Plan for the Large-Scale Construction of New Energy Storage (2025-2027)." This plan clearly states that by 2027, the installed capacity of new energy storage nationwide is expected to reach 180 million kilowatts (i.e., 180 GW) or more, driving direct project investment of approximately 250 billion yuan, with lithium-ion battery storage remaining the main technology route for new energy storage.
According to news from the Chasing Wind Trading Platform, JP Morgan pointed out in its latest report that the significant meaning of this event lies not in the target number itself, but in the policy determination it conveys.
In their view, "the target of 180 GW is not considered high," as China often tends to "exceed" related targets. More importantly, this dispels market concerns regarding the previous "cancellation of the mandatory storage policy," leading the bank to believe that China's energy storage industry will usher in a V-shaped recovery, which may even occur earlier than expected.
The target is not impressive; it may just be the "lower limit"
According to the report's analysis, the target of 180 GW may not be "very exciting" compared to market expectations. For example, China completed the target of exceeding 1.2 billion kilowatts of total installed wind and solar power generation six years ahead of schedule in July 2024, when the total installed capacity of wind and solar power reached 1.206 billion kilowatts.
The report pointed out that as of the 2024 fiscal year, China has cumulatively installed approximately 75 GW (about 170 GWh) of energy storage systems. Even considering a temporary slowdown in 2025 due to the "cancellation of the mandatory storage policy," by 2027, China's cumulative installed capacity is expected to reach approximately 215 GW (about 550 GWh), far exceeding the official target.
The report reminds investors to pay attention to this key fact: China has a tradition of "exceeding" renewable energy-related targets. Therefore, the target of 180 GW is not high.
Dispel doubts: Injecting confidence into the "V-shaped recovery" of energy storage
JP Morgan believes that the most important impact of this policy is that it "dispelled market concerns." Since the "cancellation of the mandatory storage policy" at the beginning of this year, there has been uncertainty in the market, worrying whether this means a wavering of support for energy storage development.
Earlier this year, the National Development and Reform Commission and the National Energy Administration jointly issued a notice on "Deepening the Market-Oriented Reform of New Energy Grid Connection Prices to Promote High-Quality Development of New Energy." It stated that energy storage configuration should not be a prerequisite for the approval, grid connection, and online access of new energy projects, and set June 1, 2025, as a node to delineate existing and incremental projects, incorporating them into the mechanism price.
The report clearly states that this top-down action plan has completely dispelled these doubts. It indicates that China's determination to promote energy storage development remains unchanged, but the approach has shifted to more market-oriented incentive mechanisms, such as peak-valley electricity price arbitrage and capacity price compensation.
The bank stated that this top-level design, combined with the recent capacity price policies introduced by provinces such as Inner Mongolia and the strong momentum of monthly energy storage EPC bidding, has made them more confident in the judgment that the energy storage industry will experience a "V-shaped recovery," and they even believe that the turning point of recovery may arrive earlier as a result
Multi-Scenario Applications: Energy Storage Becomes the Core of Energy Transition
The report states that the current energy storage plan details the key directions for promoting energy storage applications:
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Generation Side: Mainly configuring energy storage in large renewable energy bases (such as desert areas) to assist in the scheduling and consumption of renewable energy.
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Grid Side: Promoting the deployment of independent energy storage projects in grid bottleneck areas. The revenue models for these projects include arbitrage of peak and valley price differences in the spot electricity market and/or capacity compensation fees.
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Innovative Applications: Encouraging innovative applications of energy storage in industrial parks, integrated photovoltaic charging stations for electric vehicles, data centers, and distributed photovoltaic projects.
These measures aim to enhance the flexibility and stability of the power grid, ensuring the efficient grid connection and utilization of renewable energy.
Industry Recovery is Promising
The report analyzes that, structurally, China's power system currently has insufficient energy storage capacity. If measured according to the ratio of energy storage to renewable energy capacity in the United States, China's energy storage installed capacity should reach 300GWh by 2024, while the actual capacity is only about 170GWh.
This indicates that there is significant growth potential in China's energy storage market. The recent policies from the National Development and Reform Commission are aimed at filling this gap and activating industry vitality through market mechanisms.
It is foreseeable that with increased policy support and improved market mechanisms, China's energy storage industry is expected to achieve significant growth in the coming years and may once again exceed the targets set by the government.
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