Global ESS battery market Report Interpretation

Overview

This industry update examines July 2026 global ESS battery shipments, regional demand, supplier shares and implications for the Asia ESS value chain. J.P. Morgan sees demand momentum as intact through 2026, supported by China installations, exports to Europe and Rest of World, and US opportunities for Korean battery suppliers.

Core views

Global ESS battery shipments accelerated in July. ICCSino data showed 105.5GWh of shipments, up 88% year on year and 5% month on month, compared with June growth of 66% year on year and 3% month on month. This brought 7M26 shipments to 613.8GWh, up 96% year on year, after 93% growth in FY25. J.P. Morgan considers the industry on track to meet or exceed its 1.1TWh FY26 forecast, which implies 78% growth. It attributes the July acceleration to resilient China demand, robust exports outside the US, production and shipment volumes above seasonal levels, and an easier July 2025 comparison base affected by policy-related shipment pull-forwards. China is the principal demand engine. China domestic demand accounted for 46% of global ESS demand in 7M26, versus 40% in 2025, and Chinese suppliers' China shipments rose 148% year on year over the period. July China domestic shipments reached 49.2GWh, up 187% year on year. The institution remains constructive on China's full-year installation outlook after CNESA reported 15.77GWh of July installations, up about 75% year on year. It links the outlook to improving returns for independent ESS plants, longer battery duration and supportive policies. It also reconciles conflicting first-half installation data: NEA reported 45GWh, down 17% year on year, while CEC reported 60GWh, up 78%. J.P. Morgan attributes the gap to different coverage and measurement conventions, as well as potential timing differences in project booking or operational status. Overseas demand is robust but increasingly differentiated by region. Chinese suppliers shipped 20.3GWh to the EU in July, up 108% year on year, and 25.3GWh to Rest of World, up 113%. For 7M26, EU and Rest-of-World shipments rose 128% and 131%, respectively, and together made up 45% of Chinese suppliers' end-market mix. By contrast, Chinese suppliers' US shipments fell 56% year on year to 7.0GWh in July and 42% to 44.9GWh in 7M26. The report connects this decline to OBBBA-driven sourcing changes: China-origin lithium-battery imports into the US fell 64% year on year in 1H26, while Korea-origin imports rose about 10%, largely led by Samsung SDI. Korean and Japanese suppliers' global ESS shipments rose 187% year on year in July, positioning LG Energy Solution and Samsung SDI for US ESS opportunities. Supply remains heavily China-led. Chinese producers accounted for 97% of global ESS shipments in 7M26, unchanged from 2025 and 2024. CATL remains the global volume leader, followed by EVE, Hithium and BYD, but leading suppliers faced capacity constraints. CATL's share fell by 2 percentage points in 7M26 versus FY25; BYD, EVE, Hithium and CALB also each declined by about 2 points, while several tier-three suppliers gained about 2 points. J.P. Morgan views these shifts as capacity-driven rather than a change in the industry’s underlying demand profile. CATL retained a 16% China market share, up from 14% in 2025, and the institution expects it to keep gaining share after Doc 136 and capacity expansion. The application mix also supports the demand case. Utility-scale ESS represented 73% of July Chinese supplier shipments and 76% of 7M26 shipments, with 451.4GWh in 7M26, up 84% year on year. Commercial and industrial ESS shipments reached 68.1GWh in 7M26, up 150%, while residential ESS reached 60.1GWh, up 132%. Overseas residential restocking slowed in July and August after heavy channel loading in 2Q26, but is expected to normalize in September. J.P. Morgan expects August production and shipments to rise 4-5% month on month and September growth to accelerate to 6-8% as new capacity starts, supported by overseas demand and a pickup in China tender awards and grid connections. CATL's first-half results reinforce the institution’s constructive medium-term ESS view. CATL's ESS sales volume was 109GWh in 1H26, up about 110% year on year and roughly 25% of total battery sales; separate production estimates put ESS at about 22% of CATL's total battery production volume year to date. Its reported ESS average selling price fell 9% year on year as domestic shipments rose and CATL gained about 2 percentage points of domestic share. Management noted that certain ESS shipments can take six to twelve months to be recognized as revenue because of system delivery, installation and commissioning. For BYD, ESS represented 21% of total battery production volume year to date, up from 17% in 2025 and 11% in 2024. The report sees a new China consumption tax as manageable in the near term. The tax on domestically produced and sold lithium-ion batteries will be 2% from 1 September 2026 and 4% from 1 September 2027; exports and overseas production are not directly affected. J.P. Morgan estimates that full pass-through of the 4% tax could reduce ESS project IRR by around 0.5-1 percentage point, but believes the final demand effect depends on cost sharing among battery makers, integrators and owners. It therefore frames the tax primarily as a margin and cost-pass-through issue rather than a near-term demand constraint. J.P. Morgan flags limited risk of broad ESS-growth deceleration in 2H26, but a higher China-specific slowdown risk beginning in 2H27 because battery shipments typically lead installations by about six months. Its base case assumes China ESS installations exceed 320GW by 2027, compared with the official 180GW target and about 75GW in 2024. It forecasts China installation growth to slow to 4% in 2028 from 25% in 2027, with a more meaningful slowdown likely in 1H28. The report nevertheless considers any softness temporary rather than structural: China’s renewable mix is expected to rise from about 24% at end-2025 toward about 35% by 2030, while ESS penetration is expected to rise from about 7% toward about 18%. Europe and emerging markets are expected to become more important contributors, and China ESS is expected to account for less than 20% of total battery demand in 2026. Across covered stocks, J.P. Morgan favors CATL for global leadership and non-US share gains; Sungrow for utility and data-center ESS demand, product quality and direct-sales re-rating potential; and Deye for distributed-generation storage, emerging-market positioning and cost leadership. It also favors BYD for overseas EV-model demand and vertical integration, while LG Energy Solution and Samsung SDI are viewed as beneficiaries of the US sourcing shift and improved ESS visibility.

Analysis framework

The report combines ICCSino shipment and production estimates with installation data from EIA, NEA, CEC and CNESA, US battery import data, company disclosures, channel checks and J.P. Morgan estimates. It compares month-on-month and year-on-year volume trends by region, application and supplier, then links demand, policy, capacity and sourcing developments to covered companies' ESS exposure.

Methodology notes

• Industry AnalysisSupply-demand framework

  Regional shipment, installation, production and inventory analysis

  The report assesses ESS momentum by comparing supply volumes with demand by China, the US, EU and Rest of World, and by identifying capacity constraints and demand drivers.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  ESS value-chain and policy pass-through analysis

  It traces how battery tax costs, project returns, installations, system delivery and battery sourcing may affect battery makers, integrators, project owners and covered suppliers.

• Industry AnalysisIndustry Concentration Analysis

  Supplier market-share comparison

  The report compares Chinese and Korean/Japanese supplier shares and explains recent share changes through leading suppliers' capacity constraints.

Asset mapping & comparison

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

• CATL (300750 CH; 3750 HK)

  Global ESS battery leader and J.P. Morgan's top China battery value-chain pick

  Strengths

  Market-share gains in non-US regions, global leadership, capacity expansion and ESS becoming a larger earnings contributor.

  Weaknesses

  ESS ASP fell 9% year on year as domestic mix increased; revenue recognition may lag shipments by six to twelve months.

  Comparison

  Ranked first globally in ESS shipments; maintains a leading position versus EVE, Hithium and BYD.

  Risks

  Capacity constraints and potential China ESS shipment deceleration from 2H27.

• Sungrow (300274 CH)

  Covered PCS, EMS and ESS integration supplier

  Strengths

  Largest solar inverter producer by volume, cost advantage, product quality, brand recognition and expected utility and data-center ESS orders.

  Comparison

  The report says its product quality and brand recognition are stronger than domestic peers.

• Ningbo Deye (605117 CH)

  Covered distributed-generation ESS supplier

  Strengths

  First-mover advantage in emerging markets, solar-plus-storage adoption, resilience-driven policy support and in-house fabrication supporting cost leadership.

  Comparison

  Positioned around distributed-generation ESS rather than utility-scale supply alone.

• LG Energy Solution (373220 KS)

  Covered Korean battery supplier positioned for US ESS demand

  Strengths

  Strong ESS order-win momentum and, in J.P. Morgan's estimate, the largest LFP ESS order backlog among Korean battery makers.

  Comparison

  Benefits relative to Chinese suppliers from the US sourcing shift.

• Samsung SDI (006400 KS)

  Covered Korean battery supplier positioned for US ESS demand

  Strengths

  Improving ESS visibility as Korea-origin US battery imports rise sequentially.

  Comparison

  The report identifies Korea-origin imports as largely led by SDI.

• BYD (002594 CH; 1211 HK)

  Covered integrated EV and ESS battery supplier

  Strengths

  Strong overseas EV-model demand, vertical integration and ESS accounting for 21% of battery production volume year to date.

  Weaknesses

  Market share declined by about 2 percentage points year to date according to the report's shipment-based analysis.

  Comparison

  Ranks behind CATL among leading global ESS players.

Key data

• Global ESS battery shipments105.5GWh in July 2026+88% year on year and +5% month on month
• Global ESS battery shipments613.8GWh in 7M26+96% year on year
• J.P. Morgan FY26 global shipment forecast1.1TWhImplies 78% year-on-year growth
• China domestic ESS demand46% of global demand in 7M26Chinese supplier shipments to China rose 148% year on year
• Chinese suppliers' US ESS shipments44.9GWh in 7M26-42% year on year
• Chinese suppliers' global ESS shipment share97% in 7M26Flat versus 2025 and 2024
• CATL ESS sales volume109GWh in 1H26About +110% year on year and approximately 25% of total battery sales
• US BESS installations8.3GW in 6M26+22% year on year; June installations were 2.7GW, up 56%

Impact & implications

The institution sees the strongest near-term beneficiaries in China-led ESS demand and EU/Rest-of-World exports, while the US sourcing shift improves the opportunity set for Korean suppliers. It expects capacity additions, tender awards and grid connections to support further shipment growth in August and September, but identifies a potential China shipment slowdown from 2H27 as installations move beyond the 2027 target period.

Risks

• China-specific ESS battery shipment growth could slow from 2H27 as installations progress beyond the 2027 target period; the report forecasts China installation growth slowing to 4% in 2028 from 25% in 2027.
• A full pass-through of the 4% China lithium-ion battery consumption tax could reduce ESS project IRR by about 0.5-1 percentage point.
• Overseas residential ESS restocking slowed in July and August after heavy channel loading in 2Q26.
• CATL and other leading suppliers' market-share changes reflect capacity constraints.

What to watch

• August and September shipment growth, which J.P. Morgan expects at 4-5% and 6-8% month on month, respectively.
• China ESS tender awards and grid connections during July and August.
• Whether overseas residential ESS restocking normalizes in September.
• US battery import sourcing between China and Korean/Japanese suppliers under OBBBA regulations.
• China consumption-tax pass-through and its effect on ESS project economics.