A new report projects that China's advanced energy storage market will be four times its current market value by 2025, worth $8.7 billion and totaling 31 gigawatt-hours.
This "advanced energy storage" market identified by Lux Research covers more sophisticated electrochemical systems, such as lithium-ion cells and flow batteries, and excludes older chemistries such as lead-acid.
The title of the report, Clearing the Haze: Demystifying Energy Storage Opportunities in China, reveals some of the top drivers for energy storage in the country.
As the push to cut air pollution increases, the Chinese government has exceeded its own aggressive targets for renewable energy in an attempt to wean the country off coal.
However, the progress on renewables doesn't tell the whole story, as the report's lead author, Lilia Xie, a Lux Research associate, explained: "Once built, a wind farm -- for example -- may remain unplugged from the grid for a long time." Curtailment of wind power is a chronic problem, according to Xie.
Off-grid renewables plus reductions in curtailment could both provide opportunities for stationary energy storage, according to Xie.
Another driver could be shifts in energy policy that favor grid optimization and energy efficiency. "In a pilot scheme in two provinces, there is a focus on efficiency instead," said Xie.
There are other factors that could come into play as well. The government could break up China's monolithic state generator into smaller units. New laws could also be passed to increase distributed solar. But right now, both are highly speculative.
Because of this lack of clarity, Lux estimates that stationary storage will only make up 15 percent, or $1.3 billion, of the projected total growth by 2025. Of that figure, Xie says redox flow batteries will have a presence, with Prudent Energy and Rongke Power being strong players.
Over 80 percent of stationary energy storage -- and virtually all EV batteries -- will be lithium-ion. The chemistry will evolve, predicts Xie. Currently popular lithium-ion-phosphate will give ground to nickel and cobalt.
The Lux report predicts that 85 percent of advanced energy storage will come from powering electric vehicles. However, growth of mobile energy storage is predicted to be less than half that of stationary storage in 2025, at 19 percent CAGR.
There will also be as many EVs in China as in the U.S. by 2020, according to Lux, with China in the lead for electric-vehicle adoption by 2025.
There are already tax breaks in place for EV buyers. They also get preferential treatment in the country's license plate lottery -- a system designed to reduce the number of cars on the road by rationing the numbers of plates available.
There is also a commitment that 30 percent of all new national government vehicle purchases will be electric within a few years, followed by a similar procurement mandate for all regional governments. All of these things, according to Xie, will create a large market for mobile energy storage.
So which companies stand to benefit?
BYD already has a dominant foothold and is exporting EVs and associated energy storage technology to the U.S. and Europe. But there will be a diversity of players. These will mainly be native Chinese companies, said Xie.
Samsung SDI, LG Chem and Boston-Power -- all of which already have, or are building, battery factories in China -- are foreign companies likely to benefit.
Non-Chinese companies "will require strong partnerships to succeed" in the country, cautioned Xie.