China's Batteries Move Beyond Capacity Scale-Up

China has built the world’s largest battery energy storage fleet, adding capacity at an unprecedented pace: it installed 18.76 GW/65.46 GWh in December 2025 alone and had nearly 150 GW of lithium-ion storage by early 2026. But rapid expansion, initially propelled by rules requiring renewable projects to pair with batteries, has not ensured that storage is used effectively. An Ember analysis estimates that China’s utility-scale batteries could have shifted 23 TWh more clean electricity in 2025 to higher-need periods if operated more intensively - enough to power Singapore for five months. Raising co-located batteries’ use by 100 annual cycles alone could have shifted 9.5 TWh.

The next challenge is moving from adding capacity to making batteries flexible, valuable grid assets. Co-located systems remain less frequently cycled and more constrained than standalone batteries, which grid operators can dispatch directly; standalone storage made up 84.7% of new installations in early 2026. Policy has begun to shift in that direction: China ended its co-location mandate in 2025 and extended capacity payments to standalone storage in 2026. Further progress depends on market rules that reward batteries for multiple services, including balancing supply and demand, reducing renewable curtailment, and stabilizing the grid. Weak spot-price signals, price caps, and tariffs that do not account for batteries’ two-way electricity flows still limit the business case.