China’s batteries move beyond capacity scale-up: utility-scale storage could have shifted 23 TWh more clean power in 2025

China ended the renewable BESS co-location mandate in February 2025 under Document 136. In January 2026, Document 114 extended national capacity remuneration to standalone BESS, opening up BESS to further revenue support.

BESS utilisation rates offer an indicator on the progress beyond capacity expansion and the impact from policy shift. Utility-scale BESS utilisation more than doubled between 2022 and 2025, though a 100-cycle annual gap remained between renewable co-located batteries and standalone systems by 2025.

In China’s current market context, co-located batteries, built primarily to support the renewable projects they sit behind, are dispatched less flexibly, follow relatively rigid operational patterns, and cannot yet participate independently in the power market. Standalone batteries, by contrast, are monitored and dispatched directly by the grid to respond to system-wide needs, and with more viable revenue streams, they are utilised significantly more.

Other than utilisation, the application structure is also changing in China’s BESS sector. Driven by the renewable co-location requirements, co-located batteries once made up over 70% of utility-scale BESS capacity. As the market evolves, standalone storage has now taken over as the primary market driver, accounting for 84.7% of new installed capacity between January and April 2026, compared with just 8.4% for co-located systems.

BESS is the ultimate multitool for energy systems. It can smooth out supply and demand in the electricity system, help tackle renewable energy curtailment and improve its dispatchability, and provide crucial grid service to maintain grid stability and offer emergency grid support. The goal of putting China’s battery fleet to work is not only to increase utilisation, but also to maximise the various value that BESS can provide to the wider system.

Sustaining this transition will depend on how quickly China’s market design matures. Energy arbitrage alone cannot yet support a strong business case for BESS, as spot market price signals remain relatively weak and price caps limit potential returns. A reliable capacity pricing framework, wider adoption of joint clearing between spot and ancillary service markets – an approach already being piloted in Shandong – and grid tariff rules that reflect the bi-directional role of batteries will all be needed to allow BESS stack multiple revenue streams and be rewarded for the full value it brings to the system.

“China doubled its battery storage capacity in 2025 against a backdrop of major policy shifts. With so much changing so quickly, now is the moment to watch how these market transitions actually play out,” said Biqing Yang, Energy Analyst for Asia at Ember. “As the power system integrates more renewables, the true value of batteries to China’s energy transition is becoming undeniable. Ensuring policy fully recognises this value and facilitating storage projects to stack revenues will be crucial to driving sustainable, long-term sector development beyond scale expansion.”