A strong rebound! Where is the capital flowing back to?

Despite a general decline at the market opening today, the broader index rebounded strongly, showcasing the resilience of China's A-share market.

Among all sectors, new energy performed the most impressively.

The Energy Storage Battery ETF (159566) rose by 4.74%, while the New Energy ETF E Fund (516090) gained 3.2%. In terms of year-to-date performance, the Energy Storage Battery ETF (159566) has surged by 66.79%, and the New Energy ETF E Fund (516090) has increased by 51.04%.

It is often said that the ultimate limit of AI is electricity.

At the intersection of global energy transition and the explosive growth of AI computing power, the new energy battery and energy storage industries are undergoing a historic revaluation of their worth.

This industry, once considered highly cyclical, is now transforming into a core asset with long-term strategic value due to its irreplaceable role in ensuring AI-related power supply, energy security, and grid stability.

According to data from the National Energy Administration and third-party institutions, the global energy storage market exhibited explosive growth in the first three quarters of 2025.

The global installed capacity of lithium battery energy storage reached 170GWh (a year-on-year increase of 68%), with overseas growth (74%) outpacing domestic growth (61%).

There are many drivers of this growth, but AI and AI-related fields have garnered the most attention.

According to data from the International Energy Agency (IEA), global data center electricity consumption is projected to reach 1,800TWh by 2025 and may grow to 2,800TWh by 2030. The power density of a single AI computing center has increased from the traditional 5-10MW to 50-100MW, placing significant demand on the power grid.

To ensure the stable operation of AI computing centers, energy storage systems have transitioned from being "optional" to becoming "essential."

For example, backup power systems are replacing traditional diesel generators, providing zero-second switching; peak shaving and valley filling to reduce electricity costs and alleviate pressure on the grid; and power support to provide instantaneous power compensation, ensuring power quality.

It is estimated that by 2026, AI data centers will contribute 34GWh of new installed capacity demand to the U.S. energy storage market.

Based on the growth of AI computing power, research institutions have calculated forecasts for energy storage demand as follows:

2025: Energy storage demand for AI data center配套设施 is 8-10GWh

2027: Growth to 25-30GWh

2030: Expected to reach 80-100GWh

This is expected to bring an annual incremental demand of over 40% for the energy storage industry.

As countries that are aggressively developing AI technology, China is also actively laying out its strategies in this field.

In terms of policy, the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) issued the "Implementation Opinions on Promoting High-Quality Development of 'Artificial Intelligence + Energy'," which sets clear goals and pathways for the development of 'AI + Energy' up to 2030, serving as a guiding document for the industry.

On the corporate front, State Grid Zhejiang Electric Power is exploring the deep integration of green computing power and AI applications, creating a green data center with a PUE as low as 1.13, and implementing 50 application scenarios such as AI-based remote safety inspections.

State Grid Shanxi Electric Power has launched the scenario of "Comprehensive Power Market Services Based on Artificial Intelligence."

Institutions such as Guangdong Power Grid have initiated a series of technology projects integrating AI with the power sector, covering research areas like AI scheduling decisions, energy storage collaborative optimization, and distributed photovoltaic forecasting, thereby building technical reserves for future applications.

Notably, China's new energy industry boasts relatively strong capabilities on a global scale.

Taking the energy storage industry as an example, from January to September 2025, China’s newly added overseas orders for energy storage systems reached 45.2GWh, representing a year-on-year increase of 131.75%, covering more than 50 countries and regions across Europe, the Middle East, the Asia-Pacific, and the Americas.

Leading company Sungrow reported a shipment volume of 29GWh for its energy storage systems in the first three quarters, with overseas shipments accounting for as high as 83%; CATL’s energy storage battery shipments continued to grow at a high rate, becoming a key driver of performance.

Reflected in corporate performance, Sungrow's revenue for the first three quarters of 2025 reached RMB 66.402 billion, representing a year-on-year increase of 32.05%; net profit amounted to RMB 11.881 billion, up by 56.34% year-on-year. Energy storage business emerged as the biggest highlight, generating RMB 28.8 billion in revenue, marking a 105% year-on-year growth, surpassing inverters to become the largest business segment.

CATL’s energy storage battery revenue share increased to 28% in the first three quarters of 2025, with gross margins significantly higher than those of power batteries. BYD’s energy storage business rapidly gained global market share and achieved breakthrough progress in high-end markets such as Europe and the United States.

Gotion High-Tech’s energy storage battery revenue accounted for 30% of total revenue. In the inverter and PCS segments, companies such as GoodWe and Ginlong Technologies reported over 80% year-on-year growth in their energy storage businesses, becoming the main driver of performance growth.

Since the second half of 2025, there have been signs of a shift in market focus from purely AI-related concepts toward tangible AI infrastructure development. As an essential energy enabler for AI computing power, the energy storage sector has become one of the key areas attracting investment.

Statistics indicate that during the third quarter of 2025, public equity funds increased their allocation to the energy storage sector by 1.8 percentage points quarter-on-quarter. Northbound capital injected RMB 8.52 billion into energy storage concept stocks, while insurance funds also expanded direct investments in energy storage power station infrastructure projects.

In the past 20 trading days, net inflows into the energy storage battery ETF (159566) exceeded RMB 539 million, bringing the total scale of the ETF to RMB 2.143 billion, making it the largest energy storage-related ETF in the market.

The immense electricity demand driven by AI represents a significant boon for the global renewable energy and energy storage industries.

Specifically, within China, there are additional favorable factors.

Firstly, at the national planning level, the draft of the new “15th Five-Year Plan” explicitly lists new energy storage as a strategic emerging industry, setting a target to reach approximately 150 GW of installed capacity for new energy storage by 2030. Compared to around 50 GW at the end of the “14th Five-Year Plan,” this implies a compound annual growth rate exceeding 25% over the next five years.

Specifically regarding policy support, the capacity-based electricity pricing mechanism to be implemented in 2025 requires independent energy storage power stations to receive capacity-based electricity fee revenue. It is expected that the overall project investment return rate could increase to 7-8%, significantly improving the economic feasibility of energy storage projects and bringing profound changes to their business models.

Local governments are increasingly raising requirements for energy storage installations in new renewable energy projects, with greater emphasis on the quality of storage systems. For instance, Hefei City plans to require newly built distributed photovoltaic projects to be equipped with storage capacities ranging from 50% to 100% of installed capacity, with a duration of two hours.

Zhejiang Province’s market-oriented reform plan for renewable energy feed-in tariffs sets an upper limit for competitive bidding-based grid access for incremental projects, encouraging energy storage facilities to generate diversified revenues by participating in electricity market trading, including peak-to-valley price spreads and ancillary services.

These policies inject greater certainty into the future growth of both the renewable energy and energy storage sectors.

Compared horizontally with other emerging technology sectors, the energy storage industry demonstrates higher levels of certainty and clearer business models.

These characteristics contribute to the market reassessing the value of the energy storage sector.

The current range of P/E ratios for energy storage companies mostly remains at 20-25 times, which is at a historically moderate level. Regarding PEG, the average PEG of the energy storage sector is approximately 0.8-1.2, lower than the average PEG of the AI computing power sector (approximately 1.2-1.5).

Considering the potential for the energy storage sector to achieve a compound annual growth rate exceeding 30% over the next three years, and using the DCF valuation model under assumptions of a perpetual growth rate of 3% and a discount rate of 9%, the reasonable valuation range for high-quality energy storage companies falls between 25-30 times. The sector's current valuation level exhibits a certain degree of reasonableness and attractiveness.

Overall, both the renewable energy and energy storage industries are at a historic inflection point.

They are connected to the energy revolution on one end and the digital revolution on the other, a unique positioning that grants them rare growth certainty.

Unlike artificial intelligence application companies still in the cash-burning phase, energy storage enterprises are already capable of generating stable cash flows and substantial profits.

Compared with emerging technology companies with sky-high valuations, the valuation of the energy storage sector appears more accessible.

Regardless of how the future of AI evolves, one thing is certain: they all require significant and reliable power support.

This demand will benefit both traditional and new energy enterprises, but new energy and energy storage companies represent the future trend of the energy sector to a greater extent.

Of course, any rapidly developing industry comes with risks, and the energy storage sector is no exception. Risks include technological route uncertainty, overly rapid capacity expansion, and changes in policies and international trade environments, all of which could impact the pace of industry development.

Taking into account industry prospects, policy support, and market preferences while balancing risk and return, three sub-sectors stand out for their relatively high quality.

First are the leaders in energy storage system integration. These companies can provide one-stop solutions and have established strong competitive advantages in branding, technology, and distribution channels, allowing them to fully capitalize on the industry's growth dividends.

Next are companies with leading positions in overseas markets. Energy storage projects in Europe and the U.S. offer higher returns, with demand remaining robust. Companies that have already secured an advantage in these markets are well-positioned to achieve excess returns.

Finally, there are pioneers in new technologies. Although technologies like sodium-ion batteries and flow batteries are not yet mainstream, they hold irreplaceable value in specific application scenarios, giving related companies significant growth potential.

The aggregation of these enterprises can be reflected in certain industry indices.

For example, the CNNE New Energy Battery Index covers key segments of the energy storage industry chain, including cell manufacturing, system integration, and supporting equipment. The main component stocks involve companies such as Sungrow, Eve Energy, CATL, Guoxuan High-Tech, Envicool, and Kedali, with a focus on new energy batteries and energy storage technologies.

The Energy Storage Battery ETF (159566) tracks precisely this index.

Another similar ETF, the New Energy ETF Yifangda (516090), has a broader layout across the new energy industry chain, covering areas such as lithium batteries, photovoltaics, wind power, hydropower, and nuclear power. Its component stocks include leading companies such as CATL, Sungrow, Eve Energy, LONGi Green Energy, and Huayou Cobalt. Notably, the total expense ratio of this product is 0.2%, which is relatively low among similar offerings.