Global ESS battery demand remains highly robust, with June shipments surpassing 100GWh

Overview

This report tracks global ESS battery shipments in June and 1H26, regional demand, supply landscape, inventories, major companies' shares, and valuations. The core conclusion is that although the YoY growth rate in June fell back due to a high base, global ESS battery demand remains strong, with 1H26 shipments of 508GWh, up 98% YoY, and visibility remains for achieving the FY26 target of 1.1TWh. China's domestic demand, the EU, RoW, and emerging markets are the main sources of growth, while the U.S. market is more favorable for Korean and Japanese suppliers due to regulation and supply chain adjustments.

Core views

The report believes ESS demand fundamentals remain intact, with July-August production scheduling still constructive and most manufacturers targeting 3-4% MoM growth. Strong growth in China's domestic ESS demand, exports to the EU and RoW, as well as power tightness and data center storage demand driven by AIDC, form the current growth themes. Recent share price pullbacks are driven more by technical and sentiment pressure, as well as investor concerns about the sustainability of rapid growth in China's domestic ESS installations and shipments. In the medium term, caution is needed regarding the risk of a slowdown in China's ESS shipments starting in 2H27, but the report believes this is more likely to be cyclical than structural, as rising renewable energy penetration will continue to support storage demand through 2030.

Analysis framework

The report uses a combination of monthly industry shipment tracking, regional demand breakdown, supplier market share, end-use application mix, policy targets, and company coverage ratings. Data sources include ICCSino, EIA, Wood Mackenzie, SNE Research, and J.P. Morgan's own forecasts, and map demand in China, the United States, the EU, and RoW to exposure for companies such as CATL, BYD, EVE, CALB, Sungrow, Deye, LGES, and SDI.

Methodology notes

• Industry supply-demand trackingMonthly ESS battery shipment and production schedule analysis

  Assess industry momentum through monthly shipments, YoY/MoM growth, regional demand, and production plans.

  The report focuses on comparing June, 1H26, and FY26 forecasts, distinguishing the effects of a high base, capacity constraints, policy changes, and regional demand on growth.

• Regional structure analysisChina, United States, European Union, and RoW demand breakdown

  Observe demand sources and supply chain migration by region.

  China's domestic demand accounts for 45%, while the EU and RoW together represent a high share and strong YoY growth; the U.S. market, meanwhile, is driving a shift in supply from China to South Korea and Japan due to factors such as OBBBA, IRA, and tariffs.

• Company mappingComparison of ESS value chain stock exposure

  Link industry growth to opportunities for battery makers, system integrators, PCS manufacturers, and regional suppliers.

  The report identifies CATL, Sungrow, Deye, BYD, LGES, and SDI as key beneficiary assets and compares their regional exposure, product positioning, market share, and risks.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• CATL

  Global ESS battery leader and one of J.P. Morgan's top picks in the Asian battery value chain

  Strengths

  Leading global market share, with opportunities to gain share in non-U.S. regions; a high overseas shipment mix supports profitability; holds important market positions in China, the U.S., the EU, and RoW.

  Weaknesses

  Share declines in 2025 and 1H26 were mainly due to capacity constraints; compared with second-tier manufacturers, it is more affected by industry sentiment and technical pressure.

  Comparison

  Ranked No. 1 globally; China market share about 16%, about 60% among Chinese suppliers in the U.S. market, about 20% in the EU, and about 30% in RoW.

  Risks

  Capacity constraints, industry share price pullback, slowdown in China demand after 2027, and U.S. de-China supply chain trends.

• Sungrow

  A major global ESS system integrator and leading PCS/inverter player; the report maintains an OW view

  Strengths

  Global leader in solar inverters, with cost advantages, product quality, and brand recognition; benefits from utility, data center, and overseas ESS orders.

  Weaknesses

  Share price pressured by geopolitical concerns.

  Comparison

  Wood Mackenzie shows Sungrow ranked No. 2 among global system integrators, No. 1 in Europe and Latin America, and No. 2 in North America and the Middle East.

  Risks

  Geopolitics, overseas market access, and valuation volatility.

• Deye

  A beneficiary of distributed generation and distributed ESS; the report lists it as OW

  Strengths

  Has first-mover advantages in distributed storage in emerging markets, benefiting from energy supply shocks, diesel generation replacement, and channel expansion; home appliance business foundation supports cost leadership.

  Weaknesses

  More reliant on sustained demand in emerging markets and continued distributed channel expansion.

  Comparison

  Compared with utility-scale-focused companies, Deye has greater exposure to distributed and emerging markets.

  Risks

  Demand volatility in emerging markets, policy changes, and intensifying competition in distributed energy storage.

• BYD

  Battery and vehicle company with dual exposure to EV and ESS; the report mentions it as OW

  Strengths

  Strong overseas EV demand, with synergies from vertical integration across EV and ESS; ESS share of total battery production/shipments has risen to about 22% or above 20%.

  Weaknesses

  Recently, some capacity has been reallocated from ESS back to EV batteries, which may affect short-term ESS shipments.

  Comparison

  Ranks among the top global ESS battery players; Wood Mackenzie system integrator ranking rose to No. 3.

  Risks

  Capacity reallocation between EV and ESS, market share volatility, and U.S. supply chain restrictions.

• LGES

  Korean battery manufacturer and beneficiary of U.S. ESS opportunities; the report lists it as OW

  Strengths

  Strong momentum in winning ESS orders; J.P. Morgan estimates it has one of the largest LFP ESS order backlogs among Korean battery makers; benefits from U.S. de-China procurement.

  Weaknesses

  Compared with Chinese manufacturers, it is not dominant in global low-cost supply.

  Comparison

  Opportunities are improving amid the shift of the U.S. ESS supply chain toward Korean/Japanese suppliers.

  Risks

  Changes in U.S. policy, order execution, and competition with Korean and Japanese peers.

• SDI

  Korean battery manufacturer and beneficiary of U.S. ESS opportunities; the report lists it as OW

  Strengths

  U.S. import data show rising battery shipments from Korea, supporting improved visibility for SDI in U.S. ESS.

  Weaknesses

  Global share trails the Chinese leaders.

  Comparison

  Relatively benefits in the U.S. market from declining battery imports from China.

  Risks

  U.S. regulatory changes, customer concentration, and competition among Korean battery makers.

• EVE Energy

  One of the Chinese battery makers covered by J.P. Morgan with high ESS exposure; the report rates it N

  Strengths

  Among the covered battery makers with one of the highest ESS exposures, and a relatively high overseas shipment mix.

  Weaknesses

  Market share declined in 1H26, and the rating is less positive than OW names.

  Comparison

  Ranks among the main second-tier manufacturers globally, in China, and in niche markets.

  Risks

  Capacity constraints, intensifying competition, and pricing pressure.

• CALB

  Chinese ESS battery manufacturer; the report mentions it as OW

  Strengths

  Has a relatively high shipment share in China's domestic market and benefits from China's ESS demand.

  Weaknesses

  A larger share of shipments is concentrated in China, with relatively lower overseas exposure than some peers.

  Comparison

  Compared with CATL, EVE, Rept, and others, CALB's domestic share is about 60-65%.

  Risks

  Slower China demand after 2027, market competition, and pricing pressure.

Key data

• Global ESS battery shipments in JuneExceeded 100GWh, +3% MoM, +66% YoYThe YoY growth rate slowed versus prior months, mainly due to the high base in Jun-25 and capacity constraints.
• Global ESS battery shipments in 1H26508GWh, +98% YoYJ.P. Morgan believes the FY26 forecast of reaching or exceeding 1.1TWh remains on track.
• FY26 global ESS battery forecast1.1TWh, +78% YoYThe report says the current shipment pace supports meeting or exceeding this forecast.
• China domestic ESS demand share45%China's domestic demand grew by more than 140% YoY in 1H26, making it the main growth engine.
• EU and RoW demand shareEU 19%, RoW 26%Both posted more than 130% YoY growth in 1H26, supporting China's export demand.
• China's share of global ESS battery supplyAbout 97%Global ESS battery supply in 1H26 continued to be dominated by Chinese manufacturers.
• U.S. BESS installationsReached 5.6GW in 5M26, +11% YoYEIA data; the report believes this maps positively to Sungrow and Korean battery manufacturers.
• China 2030 energy storage target300GWChina proposed a 300GW energy storage target for 2030 for the first time in its 15th Five-Year Plan for the new energy system, which is directionally positive for long-term demand.
• China ESS installation growth forecast2027 +25%, 2028 +4%J.P. Morgan warns that because shipments typically lead installations by about six months, shipment slowdown risk may start to emerge in 2H27.

Impact & implications

The report is broadly positive on the ESS value chain, believing industry demand remains strong, but asset performance has already seen a notable pullback, creating repricing opportunities for companies with share, channel, regional, or data center order advantages. For Chinese companies, domestic and non-U.S. overseas markets remain the main sources of incremental growth; for Korean and Japanese companies, U.S. supply chain migration brings higher visibility and profit opportunities. From an investment perspective, investors should distinguish between short-term sentiment-driven pullbacks and medium- to long-term demand resilience, while also watching for a possible step-down in China's growth rate after 2027.

Risks

• There are doubts about the sustainability of rapid growth in China's domestic ESS installations and shipments, and the report warns that shipment growth may slow starting in 2H27.
• The high base in Jun-25, policy-driven front-loaded shipments, and capacity constraints have caused both YoY and MoM growth to slow.
• Policies such as the IRA, tariffs, and OBBBA in the U.S. are driving the supply chain from Chinese manufacturers toward Korean and Japanese manufacturers, pressuring China's shipments to the U.S.
• ESS value chain stocks have already corrected meaningfully from recent highs, and near-term technical and sentiment factors may still cause volatility.
• Competition in the Chinese market is intense and concentration is relatively low, so share shifts among second- and third-tier manufacturers may intensify pricing and profit pressure.
• If the 2027 official target is exceeded ahead of schedule, China's ESS installation growth in 2028 may step down significantly.

What to watch

• Whether major ESS battery manufacturers continue to achieve 3-4% MoM growth in production scheduling in July-August.
• Whether China's domestic ESS installations, tendering, and policy support continue, especially the implementation pace of the 2030 300GW target and the 2027 180GW target.
• Changes in U.S. BESS installations and battery import sources, particularly whether Korean and Japanese suppliers continue replacing Chinese suppliers.
• Whether demand in the EU and RoW can maintain YoY growth above 130%.
• Capacity constraints, regional shipment mix, and share changes among Chinese manufacturers such as CATL, BYD, EVE, CALB, Rept, and Hithium.
• Visibility on Sungrow's direct data center orders, Deye's distributed storage demand in emerging markets, and LGES and SDI's U.S. ESS orders.
• ESS battery price trends and the pricing gap between China's tier-1 and tier-2 manufacturers and Korean/Japanese manufacturers.