07/01/26
Viewpoint: Asia energy storage to accelerate in 2026
Singapore, 7 January (Argus) — Stronger government signals and new industry
initiatives to support energy storage systems (ESS) in Asia-Pacific are set to
accelerate deployments, creating ripple effects across the battery and lithium
market in 2026 as participants eye a new growth engine. ESS deployment remains
uneven across Asia-Pacific. China accounts for 88pc of the region's 85GW
capacity in 2024, according to industry group Energy Institute. The remainder is
concentrated mainly in Australia and South Korea. These countries aim to scale
up ESS buildout further. China is targeting 180GW of capacity by 2027, while
South Korea plans to reach 2.22GW capacity by 2029. Australia has committed
A$500mn ($337.75mn) to expanding local battery manufacturing. Other Asian
nations are also picking up pace. Vietnam is targeting up to 16.3GW of ESS by
2030, while Malaysia launched its first 400MW auction this year. Governments are
increasingly supporting integrated renewables and battery projects. India and
the Philippines awarded such projects this year; Australia is auctioning
dispatchable clean power contracts , and Malaysia intends to do this year,
according to lawmakers. "In Asia-Pacific, while spot markets exist in some
jurisdictions, most markets still lack mature price signals and ancillary
service frameworks needed for merchant energy storage investment," nonprofit
EnergyTag's Asia Pacific head Shailesh Telang told Argus . ESS deployment is
still primarily backed by tenders, subsidies, regulated tariffs, or
state-supported procurement, Telang noted. "Over time, market forces can take
over, but today policy remains the primary driver," he said. Industry
initiatives could further support growth. Regional advocacy group Fessia
launched in September and will initially focus on smoothing policy for ESS
deployment and bankability in Vietnam and the Philippines. Corporate
standard-setter Greenhouse Gas Protocol is also consulting on switching from
annual to hourly matching of clean power purchases . The requirement could spur
demand for nighttime clean energy — and, in turn, batteries. But the clause is
hotly debated and could feature leeway for smaller industries and emerging
economies. Meanwhile, the South Korean government's first ESS central contract
market auction in 2025 drew intense interest, selecting eight operators out of
51 proposals for 563MW of ESS capacity — largely concentrated on the mainland. A
second auction round followed later. South Korea's ESS momentum, driven by its
2029 capacity target, aligns with domestic battery makers' pivot from electric
vehicles. Top battery maker LG Energy Solution's (LGES) plans to produce
lithium-iron-phosphate (LFP) ESS batteries domestically, citing the domestic
energy ecosystem, starting with 1GWh. South Korean battery makers' ESS focus
will likely intensify as the US EV market slows. Leading firms such as Samsung
SDI, LGES, and SK On have all redirected resources to tap the ESS market,
particularly in the US, given the data centre and renewable energy build-out.
Their once EV-dedicated lines are increasingly repurposed to produce ESS as EV
market uncertainty lingers. LFP reality sets in Chinese-dominated LFP chemistry
continues to see surging adoption in South Korea , which has firmly stepped into
the space and closed multiple LFP ESS supply deals in 2025. But China's dominant
position in LFP still appears immovable, thanks partly to the scale of its
domestic ESS and EV markets. The Chinese government is on track to more than
double its new energy storage capacity to 180GW by the end of 2027 from 2024, it
said in an action plan . Strong growth persists among Chinese domestic energy
storage firms such as Eve Energy, Cornex, Envision, Great Power Energy and
Technology, and Hithium, commented a Chinese battery recycler — though the
sector remains overshadowed by industry giant CATL. Anticipation of robust ESS
growth in China for 2026 — where Argus heard estimates between 30-100pc across
multiple analysts and market participants — reflects varying degrees of
optimism. Yet, one consensus stands out among market participants: ESS growth is
confirmed and is dominating lithium market discussions near the end of 2025,
supporting lithium prices and injecting fresh hope for market expansion. By
Joseph Ho and Liang Lei Send comments and request more information at
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