[SMM Analysis] Huaneng Reveals Shortlisted Candidates for 4 GWh ESS Framework: Lowest Price at 0.513 yuan/Wh

On May 27, China Huaneng Group Co., Ltd. announced the shortlisted candidates for its 2026 energy storage system framework procurement. As one of China’s major state-owned power generation groups among the “Big Five and Small Six,” Huaneng’s latest framework tender totals 4GWh, with the agreement valid through March 31, 2027. The procurement covers energy storage systems required for infrastructure and operational projects across the group’s subsidiaries and regional companies.

The market has focused primarily on two aspects of this tender: first, the pricing levels reflected in the three bidding segments; and second, the progress of large-format battery cells above 450Ah entering central SOE framework procurement. Based on the disclosed bid prices, ESS quotations in this procurement are largely concentrated in the RMB 0.51–0.60/Wh range, with the 450Ah≤cell capacity<700Ah segment posting the lowest pricing, indicating that the cost advantages of large-format cells at the system integration level are becoming increasingly evident.

Pricing Across Three Segments: Large-Format Cell Segment Shows Lower Average Pricing Than the 314Ah–450Ah Segment

The framework procurement is divided into three segments. Segment 1 covers centralized electrochemical energy storage systems using cells with capacities ranging from 314Ah to below 450Ah, with an estimated procurement volume of 2GWh. Segment 2 also covers centralized systems, but with cell capacities ranging from 450Ah to below 700Ah, totaling 1GWh. Segment 3 covers distributed modular and string-type electrochemical energy storage systems, also totaling 1GWh.

Estimated pricing based on disclosed bids is as follows:

• In Segment 1, the lowest bidder was CRRC Zhuzhou Institute Co., Ltd., with a bid price of RMB 1.063 billion, equivalent to approximately RMB 0.532/Wh. However, the top-ranked candidate was China Huaneng Group Clean Energy Technology Research Institute Co., Ltd., with a bid price of RMB 1.104 billion, or approximately RMB 0.552/Wh.
• In Segment 2, the lowest bidder was again CRRC Zhuzhou Institute, with a bid price of RMB 513 million, equivalent to approximately RMB 0.513/Wh. The top-ranked candidate was NARI Relays Electric Co., Ltd., with a bid price of RMB 533 million, or approximately RMB 0.533/Wh. This segment attracted particular market attention as the dedicated large-format cell category, with CATL, Hithium, CRRC Zhuzhou Institute, NARI Relays, and Huaneng Clean Energy Research Institute all shortlisted.
• In Segment 3, the lowest bidder was NARI Relays Electric Co., Ltd., with a bid price of RMB 561 million, equivalent to approximately RMB 0.561/Wh. The top-ranked candidate was Huaneng Clean Energy Research Institute, with a bid price of RMB 565 million, or approximately RMB 0.565/Wh.

Notably, none of the three segments followed a simple “lowest price wins” logic. The lowest bidders in Segments 1, 2, and 3 ranked fifth, fourth, and fourth respectively among shortlisted candidates. This indicates that Huaneng adopted a comprehensive evaluation approach in this framework procurement, where pricing was not the sole determining factor. Corporate track record, product certifications, system integration capability, and in-house battery cell or PCS capabilities also carried significant weight.

Large-Format Cells Officially Enter GWh-Scale SOE Procurement as Cost Advantages Begin to Reflect in System Pricing

The most significant development in this tender is Huaneng’s establishment of a dedicated 1GWh segment for large-format cells with capacities ranging from 450Ah to below 700Ah. This signals that 500Ah-class and larger storage cells are no longer merely concepts showcased in product launches and pilot projects, but are now entering GWh-scale procurement frameworks of central SOEs.

Based on the bidding results, the average quotation for the large-format cell segment was approximately RMB 0.540/Wh, lower than the RMB 0.561/Wh average for the 314Ah–450Ah segment and also below the RMB 0.568/Wh average for distributed/string-type systems. Although differences in storage duration, system configuration, and integration boundaries across segments prevent direct comparisons, the pricing trend partially validates the system-level cost reduction logic associated with large-format cells.

The core advantages of large-capacity cells are reflected in three areas. First, larger single-cell capacities reduce the number of cells required for the same system capacity, thereby lowering the quantities of PACKs, wiring harnesses, connectors, monitoring points, and BMS channels. Second, higher integration density at the battery cabin or DC-side system level improves energy density while reducing structural component, auxiliary material, and O&M costs. Third, large-format cells support the evolution toward higher-capacity single-container systems and lower levelized storage costs, aligning with the scalability and lifecycle cost requirements of large-scale utility-side storage projects pursued by central SOEs.

However, large-format cells are unlikely to fully replace 314Ah cells in the near term. Huaneng’s 314Ah–450Ah segment still accounts for 2GWh, making it the largest among the three segments. This suggests that 314Ah cells and their upgraded variants continue to offer strong applicability in current SOE storage projects. Large-format cells are more likely to accelerate penetration first in long-duration (4-hour and above), high-capacity, centralized projects, while 314Ah–450Ah products will continue to maintain advantages in maturity, supply chain stability, and project validation.

Pricing Implications: System Quotations Remain Around RMB 0.5/Wh as Irrational Low-Price Competition Eases

For the energy storage supply chain, Huaneng’s procurement sends a relatively clear signal: system pricing remains around RMB 0.5/Wh, but room for further sharp declines appears limited.

The lowest quotation in Segment 2 reached approximately RMB 0.513/Wh, with an average of RMB 0.540/Wh; Segment 1 averaged RMB 0.561/Wh; and Segment 3 averaged RMB 0.568/Wh. These levels are broadly consistent with recent centralized procurement pricing by major state-owned enterprises, indicating that after a period of rapid decline, ESS pricing is gradually entering a phase of bottom stabilization and structural differentiation.

On one hand, large-format cells, economies of scale, and improved system integration efficiency will continue to create room for cost reductions. On the other hand, costs associated with battery cells, PCS, fire protection, thermal management, grid compliance, transportation and installation, warranties, and after-sales services remain relatively rigid. Meanwhile, central SOE projects are placing increasing emphasis on safety, grid friendliness, and long-term operational capability. Excessively aggressive low-price bidding may therefore expose suppliers to future risks related to project execution, quality, and profitability.

Broader Market Impact: Confirmation of the Large-Format Cell Trend and Reshaping of Competitive Dynamics

The impact of Huaneng’s framework procurement extends beyond pricing benchmarks. More importantly, it reflects the confirmation of the large-format cell pathway, the reshaping of competition in system integration, and evolving directions in energy storage technology development.

First, the large-format cell route has gained further validation from central SOE project owners. The 1GWh dedicated segment is expected to accelerate certification, mass production, and project deployment of 500Ah-class and larger products, while also pushing battery manufacturers to provide more comprehensive validation data on safety design, thermal runaway protection, consistency management, and cycle life.

Second, competition in system integration is likely to become increasingly concentrated among leading players. Higher requirements for project references, certifications, in-house R&D, and manufacturing capabilities in SOE framework procurement will squeeze the participation space for purely trading- or assembly-oriented companies. Going forward, companies with battery supply capability, PCS expertise, EMS/BMS control capability, and large-scale project delivery experience will be better positioned to secure framework procurement qualifications.

Third, string-type and distributed modular systems continue to command premium pricing potential. Segment 3 recorded higher average pricing than centralized system segments, while attracting fewer shortlisted candidates, reflecting the higher technical requirements for PCS modularization, system control, safety isolation, and O&M convenience. As renewable penetration increases and grid operators place greater emphasis on storage safety and grid compatibility, technologies such as string-type systems, distributed architectures, high-voltage cascaded systems, and grid-forming solutions are expected to gain stronger value recognition in specific application scenarios.

Overall, Huaneng’s 4GWh energy storage framework procurement is not merely a pricing event, but rather a reflection of changing procurement logic in China’s utility-scale storage market. Pricing floors are becoming clearer, large-format cells are entering scaled deployment, market concentration among leading players is increasing, and system safety and grid integration capabilities are gaining importance. For the industry chain, the next phase of competition will shift from “who can quote the lowest price” to “who can deliver reliably, operate safely, and pass validation in central SOE projects while maintaining competitive costs.”