Energy security meets transition: Energy security disruptions reinforce the case for storage, hybrid renewables and supply-chain diversification

Overview

This JPMorgan Transition Talks note examines how energy-security concerns and the energy transition are interacting across oil, power and storage markets. It sees energy storage, hybrid renewable projects, offshore-wind infrastructure and selected utilities as beneficiaries, while emphasizing supply-chain and domestic-manufacturing constraints.

Core views

The report first frames global energy prices around two interacting forces: disruption risk in the Strait of Hormuz and seasonal demand. With global oil inventories already drawn down, even partial flow reductions could tighten physical availability quickly. At the same time, winter preparation lifts demand from its early-summer trough. China is presented as a swing market: crude imports fell sharply from early-year levels into mid-year and subsequently recovered alongside better domestic oil-product demand, rather than a major return of strategic buying. Prices could ease if winter-preparation demand fades, particularly in a warmer-winter outcome, but a lasting decline would require incremental supply. JPMorgan identifies strong energy-storage-system installation growth across regions as the practical mechanism for converting greater renewable penetration into grid reliability and investable economics. In Korea, government efforts to accelerate solar and wind targets and expectations for larger ESS tenders support demand. In Europe, a more pronounced renewable-driven duck curve is making trough prices cheaper while peak prices remain expensive, widening storage-arbitrage opportunities and encouraging longer-duration systems. India shows a similar pattern: coal plants reduce output during solar hours while peak-hour merchant prices tighten, leading power-procurement agreements toward renewable-and-battery hybrid structures. In emerging markets with weak grids and widespread diesel use, higher fuel costs make diesel generation and solar-plus-storage increasingly interchangeable, supporting behind-the-meter and island-market deployment. Supply reshoring and diversification are advancing but face execution constraints. India is expanding battery energy storage from a low base, yet near-term deployment relies heavily on imported systems, notably from China. Efforts to obtain technology-transfer or joint-venture routes for domestic cell manufacturing face limited counterpart interest. The report says reliability needs will therefore be addressed through several parallel channels: pumped storage, which is execution-intensive and has multi-year lead times; new coal-capacity orders to support non-solar-hour stability; and continued policy backing for batteries and hybrids. In the United States, diversification is reflected in lower reliance on China-origin ESS battery imports and increased Korean shipments. A proposed Korean local incentive modeled conceptually on U.S.-style production credits could improve made-in-Korea economics, but the outcome depends on policy design, including tax-offset mechanics, and companies' ability to scale domestic capacity. Within this backdrop, the report favors OW-rated transition exposures. It highlights Sungrow and Deye for exposure to ESS installation growth in Europe and emerging markets; Orient Cables and Dajin for European and Chinese offshore-wind development; NTPC as a defensive Indian utility with a visible regulated growth runway from capacity additions; and SK Innovation for refining and lubricants strength plus a right-sized battery strategy that improves balance-sheet flexibility and could support a catch-up rerating.

Analysis framework

The report links oil-market supply risk and seasonal demand with regional power-market conditions, then traces how renewable penetration changes intraday price shapes and storage economics. It compares regional policy, procurement and supply-chain conditions before identifying companies positioned to benefit from the resulting demand for storage, grid infrastructure, wind development and regulated utility capacity.

Methodology notes

• Industry AnalysisSupply-demand framework

  Oil-price analysis based on disruption risk, inventories, seasonal demand and incremental supply.

  The report explains oil-price pressure through the balance between possible Hormuz supply disruption, low inventories, winter demand preparation and the need for additional supply for a durable price decline.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Transmission from renewable penetration and grid conditions to storage, hybrid procurement, battery supply and related companies.

  The report connects power-price shapes and grid reliability needs to demand for storage systems, batteries, hybrid projects, grid infrastructure and selected corporate beneficiaries.

Asset mapping & comparison

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

• Sungrow - A (300274.SZ)

  Beneficiary of ESS installation growth in Europe and emerging markets.

  Strengths

  Exposure to expanding energy-storage deployment.

  Comparison

  Highlighted alongside Deye for ESS exposure.

  Risks

  ESS demand and regional deployment conditions may vary.

• Deye - A (605117.SS)

  Beneficiary of ESS installation growth in Europe and emerging markets.

  Strengths

  Exposure to expanding energy-storage deployment.

  Comparison

  Highlighted alongside Sungrow for ESS exposure.

  Risks

  ESS demand and regional deployment conditions may vary.

• Orient Cables - A (603606.SS)

  Linked to offshore-wind development in Europe and China.

  Strengths

  Exposure to offshore-wind development.

  Comparison

  Highlighted alongside Dajin for offshore-wind exposure.

• Dajin - A (002487.SZ) and Dajin - H (1081.HK)

  Linked to offshore-wind development in Europe and China.

  Strengths

  Exposure to offshore-wind development.

  Comparison

  Highlighted alongside Orient Cables for offshore-wind exposure.

• NTPC Ltd. (NTPC.NS)

  Defensive Indian utility with regulated growth from capacity additions.

  Strengths

  Visible regulated growth runway from capacity additions.

• SK Innovation (096770.KS)

  Potential beneficiary of refining and lubricants strength and a resized battery strategy.

  Strengths

  Refining/lubricants strength and greater balance-sheet flexibility from a right-sized battery strategy.

  Risks

  The benefit of Korean localization incentives depends on policy design and domestic-capacity ramp-up.

Key data

• Discussed-stock ratingsDajin A 002487.SZ: OW; Dajin H 1081.HK: OW; Deye 605117.SS: OW; NTPC.NS: OW; Orient Cables 603606.SS: OW; SK Innovation 096770.KS: OW; Sungrow 300274.SZ: OWRatings stated in the report's companies-discussed section.
• Discussed-stock pricesDajin A: Rmb42.93; Dajin H: HK$31.78; Deye: Rmb77.85; NTPC: Rs323.50; Orient Cables: Rmb35.33; SK Innovation: W149,300; Sungrow: Rmb82.81All prices are as of market close on 29 September 2026 unless otherwise indicated; SK Innovation is dated 30 September 2026.
• SK Innovation prior price targetW170,000Shown in the report's historical recommendation table for 12 July 2026, with an OW rating.

Impact & implications

JPMorgan sees energy security as reinforcing, rather than displacing, the transition: storage and hybrid renewable projects can support reliability, while offshore-wind infrastructure and regulated capacity additions can benefit. The opportunity is tempered by imported-equipment dependence, lengthy pumped-storage execution and uncertainty around domestic-manufacturing incentives.

Risks

• A partial disruption of Strait of Hormuz flows could rapidly tighten physical oil availability because global inventories are already drawn down.
• India's near-term battery-storage rollout remains reliant on imported systems, while technology-transfer and joint-venture pathways for domestic cell manufacturing face limited counterpart appetite.
• Pumped-storage projects are execution-intensive and have multi-year lead times.
• The economics of a proposed Korean local-production incentive depend on its final design and companies' ability to ramp domestic capacity.