Envision VP Warns of Three Hidden Risks in Booming Energy Storage Market

Risk 1: Looming Capacity Glut and the Threat of a Price War

Tian warned that the industry's massive expansion plans are dangerously outpacing global demand. He noted that planned production capacity is set to exceed 2 TWh by the end of the year, far surpassing market needs .

"If a product glut emerges, companies will inevitably fall into a price war to survive," Tian cautioned, drawing a parallel to the painful overcapacity cycle experienced by the solar PV industry. "The energy storage sector must not follow that path. It concerns our national interest," he stated .

He specifically urged Chinese companies, which dominate the global supply chain, to avoid simple price competition as they expand into overseas markets.

Risk 2: The Perils of Rapid "Giantism" Without Proper Testing

The second major risk identified is the rapid move toward larger and larger battery cells and systems. While large-format cells are key to reducing costs, Tian emphasized that testing and verification must keep pace .

Drawing on his prior experience in the wind power industry, he recalled quality failures that occurred when wind turbines were scaled up without sufficient validation. "The bigger the product, the more you cannot cut corners on testing and validation," Tian warned .

He called for stronger industry-wide standards and more rigorous international certifications, particularly for companies eyeing global markets .

Risk 3: The Overlooked Challenge of Long-Term Operations

Tian's final and most urgent warning focused on the long-term operational risks of energy storage assets, which have a lifespan of 15 to 20 years .

Many current project economic assessments, he argued, are based on assumptions that may not hold true over such a long period. Revenue streams—including spot market arbitrage and frequency regulation services—are highly sensitive to changing power market policies .

"Future operational risks are actually very high," Tian said, noting that the market environment over 15-20 years will be vastly different. He stressed that robust operational capabilities and product quality are not just a competitive edge but a necessity for asset safety .

A Broader Context: Market Boom and the AI Connection

Tian’s warnings come as the energy storage market experiences both a boom and growing pains. Earlier in 2025, he noted that system costs had plummeted by about 80% over three years, driving a surge in demand . This demand is also being fueled by new applications, such as AI data centers (AIDCs), which require reliable, green power and are creating a massive new market for energy storage .

Despite the short-term optimism, Envision's message is clear: sustainable growth requires the industry to move beyond price wars, prioritize quality, and develop the sophisticated operational intelligence needed to navigate volatile energy markets.