China’s Power Reforms and Global Data Centre Expansion Drive a New Battery Boom – EQ
In Short : China’s electricity market reforms, combined with the rapid global expansion of data centres, are accelerating demand for large-scale battery energy storage systems. As grids become more flexible and power consumption rises, batteries are emerging as critical assets for balancing supply, ensuring reliability, and supporting renewable integration, triggering a significant global battery investment and deployment boom.
In Detail : China’s ongoing power sector reforms are reshaping how electricity is generated, traded, and consumed, creating new opportunities for energy storage. By introducing market-based pricing, encouraging competition, and improving grid flexibility, these reforms are increasing the value of batteries as tools for managing peak demand, stabilising grids, and reducing reliance on fossil fuel-based peaking power plants.
A key outcome of these reforms is the growing role of batteries in ancillary services such as frequency regulation and peak shaving. As electricity prices become more dynamic, storage systems can charge during low-price periods and discharge when demand and prices are high, improving grid efficiency while generating new revenue streams for battery operators and investors.
At the same time, China continues to add large volumes of renewable energy, particularly solar and wind, which are inherently intermittent. Batteries are becoming essential for smoothing output fluctuations, reducing curtailment, and ensuring that renewable power can be reliably delivered when needed, aligning energy storage growth directly with China’s clean energy ambitions.
Beyond China, the global surge in data centre construction is emerging as another powerful driver of battery demand. Data centres require uninterrupted, high-quality power to support cloud computing, artificial intelligence, and digital services, making energy storage systems a critical component of their power infrastructure.
Traditionally, data centres relied on diesel generators and conventional backup systems, but sustainability goals and tighter regulations are pushing operators to adopt cleaner and more efficient solutions. Advanced battery systems now provide fast-response backup power, improved energy efficiency, and lower emissions, while also supporting participation in grid services in some regions.
The scale of data centre expansion is unprecedented, particularly in the United States, Europe, and parts of Asia. Hyperscale facilities consume enormous amounts of electricity, intensifying pressure on local grids and increasing the need for on-site and grid-connected battery storage to manage demand spikes and enhance resilience.
These parallel trends are fuelling a global battery manufacturing boom. Investments are flowing into lithium-ion production, alternative chemistries, and large-scale storage projects, as governments and private players seek to secure supply chains and reduce dependence on a limited number of battery suppliers.
Cost declines and technological improvements are further reinforcing this momentum. As battery prices fall and performance improves, energy storage is becoming economically viable across a wider range of applications, from grid-scale projects to commercial and industrial uses, accelerating adoption worldwide.
Together, China’s power market reforms and the rapid buildout of global data centres are transforming batteries from niche assets into core infrastructure. This convergence is not only reshaping energy systems but also positioning energy storage as a central pillar of the global transition toward more flexible, reliable, and low-carbon power networks.
