China's Battery Gold Rush

Welcome back to The Strawman, the daily climate newsletter that (unlike your iPhone) doesn’t run out of charge on you midday. We got that whole day battery life baby.

Today, we’re diving into what’s happening in China as everyone starts looking for an angle in the gold rush of energy independence. With China looking to hit peak carbon before 2030, and cut emissions to zero by 2060, there’s a whole load to dig into here:

Let’s dive in.

You’re an energy storage company, we’re an energy storage company, it’s all energy storage companies

Goldman Sachs forecasts that the investment opportunity in energy storage will be a $7T opportunity.

That’s a lot of moolah.

In China especially, the number of companies registered as working in energy storage has reached over 100,000 - more than doubling in the last three years.

With energy storage one of the main pillars of President Xi’s plan, everyone’s trying to get a piece of the huge amount of state funding that’s being funneled into the industry.

It’s not the first time this has happened either - when EVs and computer chips were a priority in Beijing, tens of thousands of companies sprang up to take advantage of state subsidies.

Seems like we’ve been here before…

In a rush to make the most of these subsidies, companies in seemingly unrelated industries are making a switch - one of the largest puréed food manufacturers in China is investing $500m in energy storage.

It’s like finding out your grandma is an undercover gangster rapper - never judge a book by its cover I guess?

Risks of the Rush

China needs to 70x their battery storage from 2021 by 2030 to make their renewable dream a reality - the good thing is, the government is providing certainty. This isn’t a priority that’s going to change overnight.

Before we get too caught up in the excitement, there are some speed bumps on the road to battery dominance. Analysts warn of a potential boom-and-bust cycle, as businesses without expertise chase the state funding.

It's like inviting all your friends to a party with BYOB and everyone brings Pepsi Max. Too much of a good thing isn't always great. 

There’s also the not-so-small matter of international politics. US policy is aiming to cut reliance on Chinese battery makers, which could put a damper on China’s energy party.

Regardless - it’s an exciting time to be working in energy. For the crypto-turned-AI crowd, this might be the next hype train to jump onto.

‘til tomorrow

The Strawman