Why are energy storage batteries experiencing a rebound, and should you follow the trend?

On March 11, the energy storage battery sector led the market, opening high and rising throughout the day, becoming one of the most watched sectors in the entire market. The Energy Storage Battery ETF from E Fund attracted 560 million yuan in a single day, reaching a scale of 5.4 billion yuan, with a clear trend of funds flowing through ETFs for strategic deployment.

Faced with this sudden surge, investors are asking two core questions: Why did the relatively lagging energy storage sector suddenly explode this year? Is this rise just a “flash in the pan”? Is it still possible to get on board now?

The answer is very clear: the explosion of the energy storage battery sector is not just short-term speculation on a single theme, but a result of the global energy shortage backdrop, where low valuation and high prosperity resonate.

Why has energy storage suddenly attracted capital attention? It is a value gap under the logic of global energy shortages:

Energy shortages have become the main focus. Currently, the global energy game has entered a heated phase—natural gas shortages, geopolitical conflicts, soaring electricity prices have become the norm—Qatar’s natural gas plants are fully shut down, and restarting takes at least 6-8 weeks. Global natural gas supply has shifted from “slightly surplus” to “tight balance,” with some regions experiencing temporary shortages; Russia may cut off European natural gas exports earlier than expected, further worsening the energy crisis; plus, geopolitical conflicts are normalized, with Ukraine’s energy infrastructure continuously damaged. These regional conflicts have made energy shortages the main logical focus of the current market.

Energy storage is an undervalued asset under the energy shortage logic. Currently, the average P/E ratio of global sub-sectors related to power shortages is 30-40 times, while leading companies in energy storage batteries, after prior adjustments, are mostly valued at just over 20 times. It’s important to note that energy storage demand continues to grow strongly this year, with domestic installations expected to double or more, and industry net profit growth rates around 30%-60%. A P/E ratio just over 20, under the current high heat of energy shortage logic and profit growth expectations, is truly undervalued, making it natural for capital to favor these assets.

Even more promising is that as the “energy security” logic replaces the previous “emission reduction” logic, the mid-term valuation of energy storage batteries is expected to further rise. With current undervaluation and the objective conditions for valuation expansion, the strategic value of the energy storage sector will become even more prominent.

Besides valuation, is the fundamental outlook for energy storage solid enough?

New energy storage has been included in government work reports for three consecutive years and listed among the “Six Emerging Pillar Industries,” with unprecedented policy support. Meanwhile, by 2026, the global computing power-to-storage ratio will enter a “mandatory year,” with the U.S. Department of Energy explicitly requiring all data centers to be equipped with independent energy storage and backup power, directly driving a surge in data center storage orders.

Data speaks for itself: Q1 is traditionally a slow season for energy storage, but this year it has been “not slow at all.” In March, many energy storage companies doubled their production and shipments month-on-month; some inverter companies’ production soared from 50,000-60,000 units in February to around 150,000 units; in the U.S., large storage installations doubled year-on-year in January, and in China, January installations doubled year-on-year, with project wins in February also doubling. The high prosperity is well-supported.

With such a strong energy storage cycle, why did the sector only rise now?

Since the beginning of the year, the main factor suppressing energy storage’s rise has been the sharp increase in upstream lithium carbonate prices. Lithium carbonate futures soared from around 90,000 yuan in early September 2025 to nearly 190,000 yuan at the peak. The market initially worried that raw material price increases would be borne by energy storage industry chain companies, significantly impacting profit growth expectations, causing the sector to lag.

This suppressive factor has now largely dissipated. On one hand, lithium carbonate prices have fallen back to around 150,000 yuan, a relatively reasonable level; on the other hand, leading companies like CATL have delivered earnings that exceeded market expectations. In Q4 2025, amid rising lithium prices, net profit increased by 57% year-on-year, gross margin rose by 13 percentage points, and quarter-on-quarter growth reached over 28%. This greatly alleviates concerns about raw material price increases suppressing industry profits. The improved earnings visibility also provides a stronger foundation for the sector’s rise.

What about the future space and allocation rhythm?

Many investors are concerned: “It rose so much in a single day, can I still chase?” The core misconception is treating energy storage batteries as a “short-term theme,” when in fact they are a “low-valuation sector with high industry trend and prosperity.”

Referring to the 2022 surge after natural gas prices skyrocketed, the energy storage sector’s index nearly doubled from May to August, driven by the core logic of “demand continuously materializing and performance steadily improving.”

Today’s energy storage logic is even stronger. Back then, the core reason for energy prices rising was geopolitical conflicts; now, conflicts in the Middle East are ongoing, dragging the entire region into turmoil. With key energy hubs and the Strait of Hormuz—handling 20% of global oil trade—being blocked, the current energy shortage and price increase logic far surpasses that of 2022.

Energy storage is not a speculative trading asset but a prosperous investment sector with real performance. Its core logic is simple: global energy shortage → urgent need for storage → high performance growth → valuation recovery. Each step is clear and verifiable.

More importantly, the rise is not a “single point explosion” but benefits the entire industry chain—from components, to battery cell manufacturing, to system integration. The whole industry chain can share the high prosperity of energy storage, making it a suitable “beta” asset for bundled allocation.

Related Products:

E Fund Energy Storage Battery ETF (159566, Connect Fund A/C: 021033/021034)

Focuses on core links of the energy storage industry chain, the largest energy storage-related ETF in the market, with a recent scale exceeding 5.4 billion yuan and ample liquidity.

E Fund Battery ETF (159175)

Covers the entire battery industry chain, including upstream resource products, midstream components, and downstream battery cell manufacturing.

Table: E Fund Energy Storage Battery ETF is more “focused” on batteries; E Fund Battery ETF is more “comprehensive.”

Data source: Wind, data as of March 2026

How to choose? The core difference between the two products is “focused” versus “comprehensive.” If you want to concentrate on the core opportunities in the energy storage battery industry, the Energy Storage Battery ETF from E Fund (159566, Connect Fund A/C: 021033/021034) is preferable. If you aim to capture the industry-wide recovery, the Battery ETF from E Fund (159175) is an ideal investment tool.