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The U.S. surge in AI data centres is expected to drive a �boom cycle� in energy storage over the next five years, as batteries are increasingly required to stabilize intermittent renewable energy. Global storage demand could rise 40% by 2026, with emerging markets in the Middle East, Latin America, Africa, and Southeast Asia leading growth. Chinese manufacturers hold a strong U.S. market share but face regulatory risks. In China, market-based pricing and potential capacity payments are boosting storage projects, offering profits from price fluctuations and incentivizing battery availability for the grid.
The growing demand for AI data centres in the U.S. is expected to drive a significant surge in energy storage over the next five years, according to UBS Securities. The firm highlighted that the expansion of data centres is creating pressure on electricity supply, making energy storage critical to manage fluctuations from wind and solar power. Advertisement
UBS Securities analyst Yan Yishu noted that global energy storage demand could rise by around 40% year-on-year in 2026. He explained that electricity is the main constraint for AI data centres, as renewable energy sources generate power intermittently and batteries are needed to store excess energy for consistent supply.
Chinese energy storage manufacturers already hold a 20% share of the U.S. market, which is considered high-margin. However, emerging markets such as the Middle East, Latin America, Africa, and Southeast Asia are expected to record faster growth rates of 30% to 50% or more, driven by increasing energy storage needs.
Yan also pointed out risks to Chinese exports in the U.S., citing restrictions under President Trump?s One Big Beautiful Bill, which limits participation in the energy sector for Chinese-controlled companies.
In China, market reforms introducing price-based mechanisms for renewable energy are further encouraging energy storage projects. Storage operators can profit from buying electricity when prices are low and selling when prices rise. Even a peak-valley price difference of 0.4 yuan (around USD 0.06) per kilowatt-hour can make standalone storage projects financially viable.
UBS expects Chinese provinces to introduce capacity payments, which would reward battery owners for being ready to supply power when needed, creating additional incentives for energy storage development.
Source Reuters
5th Jun, 2025
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