The Gigawatt Gold Rush: How China’s Power Overhaul and the Global AI Boom are Igniting a Battery Frenzy

A seismic shift is underway in the global energy market, and it’s being fueled by two seemingly separate but equally powerful forces: a dramatic revamp of China’s electricity system and the insatiable power demands of the world’s rapidly expanding data centers. The result? A massive, unprecedented boom for battery storage manufacturers, with Chinese firms cementing their dominance at the center of this new energy economy.

For years, the economics of large-scale energy storage in China were sluggish, with a lot of installed battery capacity sitting idle because it simply wasn’t profitable to run. That all changed with recent electricity market reforms. Policies rolled out across the country, including a critical shift toward market-based auctions and away from fixed pricing, have fundamentally changed the equation for storage operators. Now, facilities can make money through a process called “energy arbitrage”: charging their batteries when power prices are low and selling that stored energy back to the grid when prices spike during peak demand periods.

This simple change in profitability has had an immediate impact. Following the reforms, energy storage plants began running longer, with operating hours hitting an average of 3.08 hours per day in the third quarter, a notable increase from the year prior. This policy momentum is only accelerating, backed by a central government plan committing $35 billion to nearly double the nation’s battery storage capacity by 2027, alongside new provincial subsidies and special “capacity tariffs.”

But the story isn’t just about domestic policy. It’s also about the soaring global hunger for digital power. The worldwide buildout of colossal, energy-intensive data centers, particularly those powering the explosion of cloud computing and artificial intelligence, has become one of the fastest growing sources of electricity demand. These facilities require vast amounts of battery energy storage systems (BESS) for two main reasons: to provide reliable, uninterruptible power supply (UPS) for critical operations, and to integrate the increasing amount of renewable energy—like solar and wind—they use to meet their sustainability goals.

The numbers illustrate the scale of this new gigawatt gold rush. Global data center electricity demand is projected to soar by over 180% through to 2030. In response, Chinese manufacturers are on track for a staggering 75% jump this year in global shipments of lithium-ion battery cells specifically for energy storage. Their success is so profound that all six of the world’s top suppliers of energy storage cells are currently based in China. In fact, battery exports, encompassing both EV and energy storage systems, are now China’s most lucrative clean-technology export, having surpassed solar photovoltaics since 2022. With the International Energy Agency forecasting that global investment in battery storage facilities will rise to $66 billion this year, this confluence of domestic policy and international demand has solidified China’s position as the powerhouse of the global battery supply chain.