UBS has raised China’s BESS forecast to 666GWh by 2030. Here’s what’s driving the boom, how AI and data centres fit in, and how your business can benefit.
Most companies outside China are still underestimating how fast its battery energy storage system (BESS) market is moving. UBS now expects China to install 150GWh of BESS in 2025 and 232GWh in 2026, and to reach 666GWh by 2030. That’s not a niche trend — that’s the backbone of how the next decade of clean power, AI data centres and green technology will be built.
This matters because BESS isn’t just another piece of grid hardware. It’s the key enabler for high-renewables systems, 24/7 green power for AI, and the business case behind many net-zero strategies. When China’s installation forecast jumps by up to 19%, the entire global energy and technology ecosystem feels it — from raw materials to software to project finance.
In this post, I’ll break down what’s actually changing in China’s policy and market design, why UBS is more bullish on BESS, and how you can position your business — whether you’re in energy, AI, manufacturing or real estate — to benefit from this shift in green technology.
1. What’s Really Changing In China’s Energy Storage Policy
The short version: China is moving BESS from “policy obligation” to “market opportunity”.
Earlier this year, China’s National Development and Reform Commission (NDRC) and National Energy Administration (NEA) issued Document No. 136, scrapping the mandatory energy storage allocation rule for renewable projects. For years, many solar and wind plants were simply required to bolt on storage at fixed ratios.
Now the model is different:
- Less: “You must build storage with this renewable plant.”
- More: “You can make real money from storage if you respond to prices and grid needs intelligently.”
That shift is crucial for investors and developers because:
- Returns are now driven by market signals, not just policy compliance.
- Storage is starting to behave like a flexible asset class, not a regulatory checkbox.
- Project design can optimise capacity, duration and location based on real revenue potential.
UBS analyst Yishu Yan’s reading is clear: the BESS industry isn’t slowing down because of Document 136. It’s riding a new set of policy tailwinds built around market-based pricing, capacity mechanisms and ancillary services.
The new policies don’t kill storage; they push it to stand on its own economics.
For a series focused on green technology, this is exactly the transition we look for: from subsidy-dependence to self-sustaining business models supported by smart regulation and digital optimisation.
2. Standalone BESS vs Solar-Plus-Storage: The New Profit Story
UBS expects standalone BESS to become a larger slice of the market than solar-plus-storage in China, mainly because standalone projects can earn from more revenue streams.
Why standalone BESS is gaining ground
Standalone battery storage in China can tap into:
- Ancillary services (frequency regulation, reserve)
- Capacity leasing and capacity markets
- Spot market arbitrage (buy low, sell high)
- Capacity compensation schemes from grid operators
Solar-plus-storage assets, by contrast, are often physically and contractually tied to specific generation assets and PPAs. That makes them great for smoothing renewable output, but less flexible for chasing market prices and services.
From a returns standpoint, UBS gives a useful benchmark:
- With a peak–valley power price spread of RMB 0.25/kWh, a typical BESS project IRR is about 2.5%.
- If that spread widens to RMB 0.4/kWh, IRR can rise to around 8%.
- Add capacity compensation, and IRR can approach 13%.
Those aren’t theoretical improvements; they’re the difference between a marginal investment and a very bankable one.
Where AI and data centres fit in
Now add another fast-growing demand driver: artificial intelligence and data centres (AIDC).
AI training and hyperscale data centres want two things at the same time:
- 24/7 reliable power
- Authentic green power, often delivered via direct PPAs or onsite/off-grid solutions
UBS expects AIDC projects to require:
- 25–30% energy storage allocation, with
- 4+ hours of duration
This is a perfect match for standalone BESS paired with renewables or as a grid-connected asset providing 24/7 green power blocks. For developers working on AI campuses or high-density industrial parks, storage is no longer a “nice sustainability add-on” — it’s a design constraint.
If your business sells into the AI ecosystem, you should already be thinking: how do we integrate intelligent BESS, forecasting and optimisation software directly into data centre planning?
3. Cost, Utilisation And LCOS: Where The Real Economics Sit
On paper, solar-plus-BESS in China has already hit RMB 0.3/kWh in 2025, roughly the cost of coal-fired power. That’s a big milestone for green technology, but there’s a catch.
The utilisation problem
Even though hardware costs have fallen, real-world economics depend heavily on utilisation and cycle life:
- In 2024, typical systems only ran about 248 cycles per year.
- With those low utilisation rates, the actual levelised cost of storage (LCOS) lands around RMB 0.4–0.5/kWh, noticeably higher than the “theoretical” RMB 0.3/kWh.
The technology isn’t the main bottleneck here — operations and dispatch are.
This is where AI and digital optimisation become essential parts of the green technology story:
- Smarter forecasting improves when and how batteries charge/discharge.
- Algorithms can stack revenue streams: arbitrage, ancillary services, capacity payments.
- Portfolio-level optimisation (several BESS assets across regions) raises average utilisation.
UBS expects standalone BESS utilisation to rise and cycle life to extend as grid dispatch improves. That naturally pushes LCOS down into a more attractive band.
If you’re in software, analytics or optimisation, this is your opening: the hardware is scaling fast — now the market needs brains to match the muscle.
4. Why UBS Raised Its China And Global BESS Forecasts
UBS didn’t upgrade its forecasts on a whim. It’s reacting to three converging trends that are hard to ignore:
- Policy evolution toward market-based pricing and capacity mechanisms.
- Rapid cost declines in lithium iron phosphate (LFP) batteries and balance-of-plant.
- Structural demand growth from AI data centres, industrial users and high-renewable grids.
The new numbers
UBS now expects China’s BESS installations to reach:
- 150GWh in 2025
- 232GWh in 2026
- 666GWh in 2030, based on a 27% CAGR from 2027–2030
Globally, their upgraded forecast hits:
- 276GWh in 2025
- 412GWh in 2026
- 1,045GWh in 2030
China’s share of that 2030 global figure is enormous. If you work anywhere in the green technology value chain — batteries, inverters, AI optimisation, EPC, or financing — your long-term outlook should now bake in a tighter, more China-influenced storage market.
What this means for supply chains
A few practical implications:
- Component competition: More BESS means heavier demand for LFP cells, power electronics, transformers and EMS hardware.
- Price pressure: Short-term volatility is almost guaranteed as factories race to add capacity and policy nudges shift demand timing.
- Standardisation: To deliver hundreds of GWh reliably, you need standardised designs, software interfaces and maintenance practices.
The winners will be the companies that treat BESS not as a one-off project but as a repeatable, software-defined infrastructure product.
5. How Businesses Can Position Themselves In The BESS Wave
If you’re reading this as part of our Green Technology series, you’re probably not just curious — you’re looking for an angle. Here are concrete ways different players can act on this BESS acceleration.
For project developers and IPPs
- Prioritise standalone BESS where market access allows it. The revenue stack is richer and more flexible than bundled solar-plus-storage alone.
- Model IRR sensitivity to price spreads. Don’t just run a single case; understand what happens if the peak–valley spread widens by 0.1–0.2 RMB/kWh or capacity prices change.
- Design 4+ hour systems for AI, data centres and industrial loads. These customers will pay for resilience and genuine green credentials.
For AI, cloud and data centre operators
- Bake BESS into campus design from day one rather than retrofitting. You’ll get better economics and more flexibility on how you procure green power.
- Use AI twice: once to power your business, and again to optimise your own energy use and storage dispatch.
- Negotiate contracts that reward flexibility: think availability-based payments, demand response, or co-optimised tariffs.
For software and AI companies
- Target LCOS and utilisation as your core value metrics. If your platform raises cycles per year from 250 to 350 for a large fleet, you’ve created huge economic and climate value.
- Build tools for portfolio-level optimisation: cross-region arbitrage, congestion-aware dispatch, and automated ancillary bidding.
- Integrate with grid operators and market platforms so your clients can actually capture those multiple revenue streams UBS is counting on.
For financiers and corporates
- Treat BESS as an infrastructure asset, not a speculative tech bet. The policy, cost and demand signals are aligning more like transmission or pipelines than like early-stage hardware startups.
- Develop standardised funding structures (green bonds, asset-backed securities, long-term offtake) that can be repeated across dozens of projects.
- Align BESS investments with corporate decarbonisation targets, especially for Scope 2 emissions and 24/7 carbon-free power goals.
6. Where This Fits In The Bigger Green Technology Story
Here’s the thing about green technology: hardware scale without intelligent control just shifts bottlenecks around. China’s upgraded BESS forecast tells us two things at once:
- The physical buildout of storage is now inevitable at large scale.
- The next competitive frontier is how intelligently we operate those assets.
That’s where AI, advanced analytics, and smart market design come together. Batteries turn intermittent solar and wind into reliable capacity. Software turns those batteries into profitable, grid-stabilising, AI-ready infrastructure.
If your organisation wants to lead rather than follow, now’s the right moment to:
- Assess where storage belongs in your energy strategy.
- Identify which of your assets or customers can benefit from 4+ hour BESS.
- Start piloting AI-driven optimisation, not just buying hardware.
China’s move toward 666GWh of BESS by 2030 is more than a big number. It’s a preview of what a high-renewables, AI-intensive, storage-rich energy system looks like. The question isn’t whether that system is coming — it’s whether you’ll be ready to operate profitably inside it.