Energy storage regulations implemented, lithium battery production capacity in July reaches 283 GWh

On July 1st, two new energy storage regulations were implemented simultaneously.

One is the national standard at the technical compliance level. The "General Specification for Safety of Grid-connected Energy Storage Systems" (GB/T 46957-2025) has been officially implemented, clearly defining the safety technical standards for the entire life cycle of grid-connected energy storage systems.

The other one is the mandatory red line. On the same day, the 41st decree jointly issued by the National Development and Reform Commission and the National Energy Administration - "Regulations on the Judgment Criteria and Supervisory Management of Major Electricity Accident Hazards" (referred to as "the Regulations") came into effect. This is the first time that major electricity accident hazards have been systematically defined in the form of a departmental regulation, marking a significant upgrade in China's electricity safety supervision from "guidance and suggestions" to "mandatory constraints".

Among them, the grid-connected performance of electrochemical energy storage stations has been included in the determination scope of "major accident hazards". This regulation clearly states that for energy storage stations connected to power grids above 220 kilovolts, if their key performance indicators such as low-voltage ride-through, high-voltage ride-through, and frequency adaptability do not meet the standards, or if the grid connection test has not been completed or the control system has not been put into operation as required, it will constitute a major accident hazard and will face suspension for rectification, fines, and even criminal liability.

In simple terms, the previous "as long as it can be connected to the grid" flexible space no longer exists. The grid connection performance has been upgraded from a "suggested item" in the technical protocol to a "mandatory item" at the legal level. This also means that the storage equipment bidding will shift from "the lowest bidder wins" to a hard-constrained era where "those who comply win".

01

The lithium battery production in July was approximately 283 GWh.

The proportion of energy storage cells is nearly 43%.

The new regulations are aimed at reshaping the entry barriers at the demand end. Next, let's turn our attention to the supply end.

Industry data shows that in July 2026, the total production volume of China's lithium battery (energy storage + power + consumption) market was approximately 283 GWh, increasing by 5.6% compared with the previous month; among which, the production volume of energy storage cells accounted for 42.9%. During the same period, the global lithium battery production plan was 296 GWh, increasing by 5.3% compared with the previous month. This has been the fifth consecutive month to set a new historical peak.

June and July are traditionally the slack seasons for the lithium battery industry in terms of production and sales. However, the production schedules have continued to reach new highs. Industry experts believe that this is due to the systematic upgrading of the demand structure. Global lithium battery demand has shifted from being driven solely by the new energy vehicle sector to a multi-polar growth pattern.

The most significant change lies in energy storage. The production share of energy storage cells has risen from approximately 30% in 2025 to nearly 43% in July this year. Energy storage has become one of the core engines driving the growth of lithium batteries. Multiple factors, including the continuous strong demand for global energy storage orders, the accelerated release of storage requirements for AI data centers, and a significant year-on-year increase in domestic large-scale storage tenders, have jointly boosted the production volume of energy storage batteries.

It is worth noting that although the total production volume has reached a new high, it does not mean that all lithium battery manufacturers will benefit simultaneously. Currently, ultra-large capacity energy storage cells with a capacity of over 500 Ah are accelerating their production volume. After the new regulations are implemented, the previous logic of "the lowest bidder wins" in energy storage tenders will be upgraded to "those who comply win". Industry analysts point out that the cost of compliant battery systems is expected to increase by 15% to 20%. At the same time, during the transition to 500+ Ah large cells, the old production lines of second- and third-tier manufacturers face an investment pressure of several hundred million or even several billion yuan. Failure to make improvements will result in elimination.

From the perspective of penetration rate, industry data shows that in the first quarter of this year, the penetration rate of 500+Ah battery cells was less than 5%, but the industry predicts that it will exceed 15% by the end of the year. The iteration speed of large battery cells has exceeded expectations. In the bidding sector, since this year, central and state-owned enterprises such as Zhongchuan Technology, Huaneng, and China Energy Engineering Group have successively set ≥500Ah battery cell single-batch bids or clearly specified capacity ranges. 500+Ah has changed from a "plus point" to an "independent bid package", and the selection of system integration manufacturers has also shifted from "pilot" to "standard configuration". 500+Ah large battery cells are accelerating the transition from "future trend" to "compliance necessity".

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The compliance costs for lithium batteries have increased.

Or it will be beneficial for the application of sodium-ion energy storage

As the safety and compliance costs of lithium batteries continue to rise, the economic advantages of sodium batteries in energy storage scenarios are being re-evaluated.

Sodium batteries have unique advantages in terms of safety, low-temperature performance and energy independence. However, for a long time in the past, these advantages were mostly theoretical - higher costs compared to lithium batteries, immature industrial chain, and lack of large-scale orders - have always been the fundamental reasons why sodium batteries have received praise but not widespread adoption. In 2026, this situation is about to change.

In June this year, CATL released the "Tianheng Sodium Battery" energy storage system. It stated that this system can be adapted to energy storage projects of different durations ranging from 1 to 8 hours, and can seamlessly switch with lithium battery solutions. CATL plans to start delivering this system in September this year and aim for GWh-level shipments by the end of the year. In April of the same year, it also signed a 3-year 60GWh strategic cooperation agreement for sodium battery energy storage with Haibosichuang.

Meanwhile, the 30GWh sodium battery production line of BYD in Xining, Qinghai Province is expected to complete its capacity ramp-up by July. The 2GWh sodium battery production line of Yili Lithium Energy in Huizhou has been completed and put into operation. Its self-developed NF155L sodium-ion battery is expected to be delivered in batches for energy storage applications by the end of 2026. Enterprises such as Goxuan High-tech and Zhongke Haishan have also clearly stated that they will achieve large-scale production of sodium batteries around the end of 2026.

This means that sodium batteries are already entering the commercial market in the form of orders, production lines and delivery plans. The head of the sodium battery energy storage division of Capbio Technology once said at an open event that the entire sodium battery industry is now experiencing its own "phosphate iron lithium moment", similar to the phosphate iron lithium around 2020.

In scenarios such as energy storage in high-altitude areas, AI data centers with built-in storage, and grid frequency regulation, where high safety and wide temperature range adaptability are required, the advantages of sodium batteries are gradually being verified. Particularly noteworthy is that sodium batteries are getting closer to the "sodium-lithium parity". According to industry predictions, leading sodium battery manufacturers are expected to achieve parity in cell costs with lithium iron phosphate by the end of 2026, and sodium batteries will enter the era of parity and mass production in 2027. At the same time, technological breakthroughs are accelerating, and the costs of anode and cathode materials are continuously decreasing, which is pushing sodium batteries from "theoretically cheaper" to "actually cheaper".

Of course, sodium batteries are still in the early stage of achieving large-scale production. Currently, the cost of lithium iron phosphate battery cells is approximately 0.38 yuan per watt-hour, while the cost for leading sodium battery manufacturers is about 0.47 yuan per watt-hour. The gap still exists. However, the trend is clear: the rising cost of lithium batteries is opening up a valuable window period for the large-scale application of sodium batteries.

The industry generally believes that the energy storage sector will be a crucial breakthrough point for the large-scale application of sodium batteries and one of the largest application markets in the future. With the continuous release of production capacity by leading battery manufacturers, sodium battery energy storage is moving from demonstration to large-scale production, becoming an indispensable second growth curve in the energy storage industry.