Huaan Securities released a research report stating that U.S. energy storage installations are steadily growing, with capacity expected to reach 52.5 GWh by 2025. Given the slow pace and tight capacity of the U.S. power grid, energy storage stands out as one of the few core technological pathways that can be deployed at scale within a 1-3 year timeframe. It not only enhances the power supply reliability for data centers but also improves the overall resilience and economics of the grid. Energy storage is projected to become a key solution for addressing U.S. data center power shortages before 2030. The next five years will represent the core window for this wave of data center expansion, during which the logic of power shortages will continue to unfold. Huaan Securities' main viewpoints are as follows.
Analysis of the current U.S. energy storage landscape reveals steady growth in installations, with capacity expected to hit 52.5 GWh by 2025. From January to November '25, the U.S. added 36.23 GWh of new large-scale storage capacity. Beyond the foundational contributions from Texas and California, emerging states like Arizona are also providing incremental growth. The U.S. energy storage market can be categorized into three primary drivers: arbitrage-driven, capacity contract-driven, and load-driven. 1) The low-price, high-volatility model, typified by Texas, features high renewable energy penetration and significant intraday price spreads, where energy storage is primarily used for energy arbitrage and peak shaving. 2) The policy and capacity market-driven model, exemplified by California, is characterized by high electricity prices, clear targets for energy storage/clean energy installations, with capacity contract revenue constituting a major portion. 3) The data center load-pull model, seen in states like Virginia and Arizona, features low and stable electricity prices with a high proportion of data center consumption; these centers are extremely sensitive to 24/7 reliability and pricing, requiring storage to provide both capacity and local flexibility/backup power.
The AI era has exposed a timing mismatch in the U.S. between power supply and transmission construction on the one hand, and soaring demand on the other. The supply side is hampered by grid interconnection congestion and the retirement of traditional energy sources, while the demand side is experiencing a surge in load, highly concentrated and driven by data centers. The narrative of power shortage is already playing out in both electricity prices and policy responses. Energy storage can be deployed on both the grid side and the user side of data centers, offering multiple advantages. It can act as a dispatchable resource for the grid, serve as a flexible load or aid in capacity expansion for users, and even function as an upgraded UPS solution within the data centers themselves. The advantages of energy storage are clear: 1) It accelerates the process for data centers to secure power, enabling them to capture the critical window for AI deployment. 2) It reduces system peak demand and capacity costs, offering strong economic benefits. 3) It enhances power reliability and quality, reducing dependence on diesel generators. 4) It helps technology companies achieve their clean energy supply goals. Energy storage demonstrates compelling economics in terms of both Levelized Cost of Energy (LCOE) and overall electricity bills. According to Lazard's 2025 analysis, without subsidies, the cost of solar-plus-storage in the U.S. ranges from $0.05 to $0.13 per kWh, making it economically advantageous compared to nuclear, coal, and gas-fired power. From the perspective of a comprehensive electricity bill, equipping a data center with four hours of storage can achieve an Internal Rate of Return (IRR) of 20.5%, with a payback period of just 4.76 years.
A comprehensive comparison of energy supply solutions for data centers indicates that energy storage will emerge as the core solution. Under the constraints of a slow and capacity-tight U.S. grid, energy storage is one of the few core technological pathways capable of large-scale deployment within 1-3 years, simultaneously boosting data center power reliability and enhancing overall grid resilience and economics. It is anticipated to be a primary solution for U.S. data center power shortages before 2030. The real bottleneck lies in the lengthy grid interconnection queues and transmission construction timelines exceeding five years, not an overall lack of U.S. generation capacity. Solutions that can bypass major grid queues and connect to the distribution network or be placed behind-the-meter (BTM) offer genuine speed and value. Energy storage holds a comparative advantage across three dimensions: speed, cost, and strategic flexibility. Power shortages at data centers are expected to stimulate U.S. energy storage installations to exceed 110 GWh by 2027. The next five years will be the critical window for this wave of data center expansion, and the logic of power shortages will continue to unfold. Among all feasible solutions, energy storage is one of the few pathways that simultaneously meets the criteria of economic viability, rapid deployment, high flexibility, and support for 24/7 green power, underpinning strong demand for energy storage in North America. Recommended stocks include Sungrow Power Supply Co.,Ltd. (300274.SZ); Sineng Electric Co.,Ltd. (300827.SZ); Csi Solar Co.,Ltd. (688472.SH); and Contemporary Amperex Technology Co., Limited (300750.SZ, 03750).
Risks include a potential downturn in U.S. renewable energy and energy storage demand; intensified industry competition impacting profit margins; and uncertainty surrounding U.S. tariff policies.
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