During the National Day holiday, the energy storage market maintained its pre-holiday operating pace, with no clear signs of weakening on the demand side. Project construction and grid connections continued to advance in China, while markets outside China extended from order signing toward financing, construction, and commercial operations. Entering Q4, the industry's focus is shifting. Compared with the earlier emphasis on order volume and production schedule growth, whether projects can be delivered, connected to the grid, and converted into actual installations on schedule will become a more important basis for judging the sustainability of demand.

In China, energy storage projects in Xinjiang, Shanghai, and other regions completed grid connections one after another, and some projects in south China also continued to advance. The earlier project pipeline is gradually being converted into installations. However, there are still notable differences in project progress across regions. Some projects in Inner Mongolia and other areas are affected by factors such as transmission works and grid connection conditions, leaving a certain time lag between equipment delivery and actual grid connection. For projects that have already completed procurement and equipment delivery, grid connection delays reflect a postponement of demand realization rather than weaker demand for battery cells. In Q4, the Chinese market needs to focus on the grid connection conversion efficiency of earlier concentrated construction projects to assess whether the release of installations can accelerate further.

Outside China, demand support is extending from order signing toward financing and commercial operations. Some energy storage projects in markets such as the UK and the US continue to secure long-term revenue arrangements and financing, while new projects in India have also entered the commercial operation stage. The certainty of project implementation outside China is still strengthening. As project revenue models become clearer and financing conditions improve, this will continue to support subsequent equipment procurement and project construction. However, energy storage projects outside China generally have long cycles from signing to equipment delivery and then to grid connection and operation, with clear cross-year execution characteristics. Therefore, when assessing short-term demand, it is still necessary to distinguish between order volume and the actual pace of delivery.

Supply side, production schedule expectations before the holiday remained on a growth trajectory. Battery cell supply is expected to continue increasing in Q4, but the release of growth is still affected by the production ramp-up progress of large-capacity cells and the supply of some upstream materials. Currently, capacity utilization rates at top-tier players stay high, and with downstream order support, the industry's production schedule still has a foundation for continued growth. At the same time, long duration energy storage (LDES) projects continue to advance, further broadening energy storage application scenarios, but their impact on the short-term battery cell demand structure will still be released mainly in a gradual manner.

Overall, the energy storage market did not cool significantly during the National Day holiday, and earlier orders still provide strong support for Q4 demand. Going forward, the industry's focus will shift further from "order growth" to "order fulfillment." In China, the key observation will be the release of projects pending grid connection, while outside China, the focus will be on order delivery and project execution efficiency. Battery cell shipments and ESS installations are expected to maintain growth in Q4, but the mismatch in their pace will persist. As previously delivered projects are gradually connected to the grid, the speed at which installations catch up with battery cell shipments will become an important observation point for Q4.

SMM New Energy Industry Research Department

Wang Cong 021-51666838

Ma Rui 021-51595780

Feng Disheng 021-51666714

Lyu Yanlin 021-20707875

Zhang Haohan 021-51666752

Wang Zihan 021-51666914

Wang Jie 021-51595902

Xu Yang 021-51666760

Chen Bolin 021-51666836

Yang Le 021-51595898

Li Yisha 021-51666730

Huang Chencong 021-51595860