[Red Envelope] Energy storage reaches bottom and surges upward, household storage making 7 cents per Wh, large-scale storage orders exploding 50%!

Last week, we emphasized the importance of low-position energy storage, and this Friday, it reached a new high! [Taoguba]

Currently, energy storage benefits not only from the short-term catalyst of Middle Eastern energy upgrades but also from the long-term catalysts of global power shortages and AI data center storage needs. Combined with the currently undervalued high cost-performance ratio of the energy storage sector, more funds are expected to flow in to drive its rise!

Energy storage trading rhythm: Short-term focus on household storage, medium- to long-term focus on large-scale storage!!

1. The valuation and cost-effectiveness of the energy storage sector are outstanding

1. Transformer companies’ average PE over the years:

2. Current core transformer companies’ P/E ratios:

3. Current core energy storage companies’ P/E ratios:

Summary: Under the same global power shortage logic, North American transformer companies are valued at 40-50 times earnings, while energy storage companies are only valued at a few times, showing significant cost-effectiveness.

2. Factors suppressing raw material prices weaken

Lithium carbonate futures prices surged twice to 190,000 yuan/ton at the end of January and February 2026, forming a double top and marginally easing pressure on mid- and downstream performance;

1. Current prices and short-term trends (March–April)

As of March 20, 2026, spot battery-grade lithium carbonate is about 150,000 yuan/ton, with the main futures contract at 143,900 yuan/ton, significantly down from the February high of 189,000 yuan/ton.
Reasons for decline: Increased overseas lithium ore arrivals, accelerated domestic smelter resumption, and continued ample supply; slowing new energy vehicle growth, cautious downstream procurement, and a wait-and-see attitude leading to light transactions; futures market biased bearish, and export rush effects fading.
Short-term outlook: March–April is expected to be mainly volatile and weak, with spot prices likely to stay in the 140,000–160,000 yuan/ton range, with limited rebound and potential further decline.

2. Mid-term trend (Q2–year-end)

Starting Q2: The overseas peak season for new energy vehicles is expected to return the market to tight balance, gradually raising the price center to 160,000–170,000 yuan/ton.
Annual pattern: Supported by high-cost capacity (about 100,000 yuan/ton cash cost line) at the bottom and resilient downstream demand at the top, overall prices are expected to first suppress and then rise, with high volatility and low likelihood of sharp unilateral increases or decreases.
Lithium carbonate price outlook: The price center in 2026 is expected to be 150,000–170,000 yuan/ton, with an operating range of 120,000–170,000 yuan/ton.

3. Global energy storage demand is growing rapidly

In 2026, global energy storage installations are expected to grow by about 70%, reaching over 470 GWh; in 2027, growth is expected to be nearly 40%.

Considering the domestic 136 policy document promoting market-oriented energy storage and canceling mandatory storage policies, many provinces in China are expected to implement capacity electricity price mechanisms, improving the economic viability of energy storage. It is expected that domestic new energy storage installations will accelerate, maintaining rapid growth, while demand for industrial storage may slow due to policy adjustments.

In the US market, uncertainties around IRA subsidies and tariffs initially suggest a slowdown in new large-scale storage installations, but driven by AI demand, positive growth may continue. Household storage is expected to benefit from the US NEM 3.0 transition, which could release demand space.
In Europe, further energy reform improves storage economics, with many countries providing subsidies, leading to continued large-scale deployment. Household storage demand may recover due to declining photovoltaic grid-connected electricity prices.

Additionally, as global interest rates decline, the yields of large-scale and industrial storage assets dependent on credit investment are expected to further improve, potentially boosting demand growth next year beyond current forecasts.

4. Analysis of the energy storage markets in China, the US, and Europe

1. China’s energy storage market:

1. Strategic position upgrade: On March 6, 2026, the National Development and Reform Commission listed new energy storage as one of the six emerging pillar industries, a first-time mention beyond its previous role as part of the new power system.
2. Capacity electricity price policy implementation: The national capacity electricity price policy treats new energy storage equally with thermal, coal, and pumped hydro power, laying the foundation for large-scale investment by central state-owned enterprises (mainly local state-owned and private investments in 2025).
3. Project economics improvement: After the capacity electricity price policy was introduced, most regions in China saw internal rate of return (IRR) on storage projects exceed 6%, with power spot price spreads widening.
4. Significant increase in bidding volume: In late 2025, domestic EPC bids for energy storage reached 200 GWh; in the first half of 2026, at least 100 GWh are expected. January 2026 saw a 50% YoY increase in bids, with February also showing substantial growth, supporting a 300 GWh installation forecast for 2026.

2. US market:

1. New demand driven by AI power shortages: Major US tech giants have signed self-supply commitments; new data centers require backup power capacity. Under the background of generator shortages (full capacity release in 2028) and slow grid upgrades, energy storage becomes key for peak shaving and integrated solar-storage power supply.
2. Data center storage demand: In 2026, US data center storage installations are conservatively estimated at 10–20 GWh, with industry experts and listed company guidance possibly reaching 30 GWh. Some projects plan to adopt a “1 GW virtual capacity + 5 GW PV + 5 GW storage + 20 GWh storage” model, with demonstration cases emerging in 2026.
3. Positive leading indicators: By late 2025, US under-construction storage projects reached 16 GWh (up 27% YoY), with ground-mounted PV projects under construction at 30 GW (up 40% YoY); the 2028 PV subsidy phase-out will accelerate ground PV deployment, boosting storage demand.

3. European market:

1. Household storage demand drivers:

① Subsidy continuation: The UK began registration for subsidies on April 1, continuing after Australia’s subsidy phase-out; Hungary, Romania, Bulgaria, and other countries already have subsidies, with Poland expanding subsidies.
② Mandatory storage policies: Germany revised its Renewable Energy Law draft at the end of February, stopping fixed feed-in tariffs for rooftop PV, reducing grid-connected ratio below 50%, effectively mandating storage, which will increase household storage penetration.
③ Negative electricity prices: France experienced negative prices for the first time in February 2026; referencing Spain and Eastern European countries, this will boost storage demand.
④ Energy security needs: The Russia-Ukraine conflict and the Red Sea situation reinforce Europe’s focus on energy independence, with demand unaffected by short-term war developments.

2. Large-scale storage demand remains strong: Companies like Sungrow, Chint Power, KSTAR, and Airo Energy significantly increased shipments of large storage in Europe in 2026.
   After exceeding 20% penetration of wind and PV in 2023, large storage demand has become apparent, with previously blocked approval projects beginning to release.

5. Highly elastic energy storage companies

1. Updates on large storage targets:

1. ×× Power: As a overlooked North American solar-storage star, the company has a sales team of over 100 in the US (including new data center scenarios), with ground PV shipments ranking second domestically (1 GW in 2025), expected to grow rapidly in 2026; deep cooperation with Korean companies (Korean PV inverter market share near 50%) allows entry into the US market via procurement of Korean cells or OEM.
   Cost reduction potential: sales and management expenses are 10 percentage points higher than peers. Conservative profit expectation for 2026 is 520 million yuan (at 20x PE), with mid-term profits potentially reaching 900–1 billion yuan, targeting a market cap of 20 billion yuan.

2. ××××: Leading domestic energy storage integrator with significant project development advantages, gross margin around 18%; in 2026, supplying 50 GWh to central enterprises domestically, with overseas shipments increasing from 2 GWh in 2025 to 10 GWh; US team of 40 people, with data center projects expected in Q2. Profit forecast for 2026 is 2.3 billion yuan (or over 2.5 billion), current valuation at 21x PE, with a target market cap of 70 billion yuan (20–30x PE, 45% upside).

2. Updates on household storage targets:

1. ××××: Rigid supply of small battery cells (Ruipu, EVE, Penghui each hold 20–30% market share, no expansion in recent years, full capacity since late 2025), with urgent orders leading to excess price increases (current profit per Wh is 3–4 cents, expected to rise another 2–3 cents); domestic large storage accounts for 40% of orders, household storage 30%, with potential for over-proportional price hikes. Profit forecast for 2026 is 1.6 billion yuan, with significant upside.

2. ×× Energy: Clear inflection point in household storage performance, high initial investment, revenue of 4 billion yuan in 2025 reaching breakeven, with expected revenue of 7.5–8 billion yuan in 2026, mainly contributing to profit; rapid progress in large storage, with 2 GWh shipments expected in 2026 (revenue 1–1.5 billion yuan); R&D team of 1,100 people (industry top tier). Profit forecast for 2026 is 940 million yuan, current valuation at 19x PE, with 3 billion yuan cash added, aiming for 50% upside.

3. ×× Shares: Market diversification (Ukraine + Europe 40–50%, Asia 40%, Australia and others 10%), benefiting from volume growth in multiple markets; Ukraine produces 20–30,000 units monthly (20% of monthly shipments), UK benefits from Sunsynk (30% market share), supporting 600,000 households (potential profit increase of 400–500 million yuan in H2); Australian revenue from 300–400 million yuan to 1.5 billion yuan (contributing 200 million+ profit), with rapid growth in Middle East, Southeast Asia, and other markets. Industrial storage products are expected to ship over 20,000 units in 2026 (per unit 170,000–180,000 yuan, revenue over 3 billion yuan, profit per unit 40,000 yuan, contributing 700–800 million yuan profit); in Q1 2026, production doubled to 300,000 units (YoY), with profit forecast at 1.1 billion yuan (up 50% YoY, up 20% QoQ), potentially exceeding 5 billion yuan annual profit (March annualized profit over 6 billion yuan).

The above key companies are currently not publicly disclosed. Interested friends are welcome to join O for discussions!