Energy Storage Industry Set To Ride the AI Tailwind; UBS: Global Demand May Surge 40% Next Year

On Wednesday, UBS Securities said that propelled by artificial intelligence data centers, the energy storage sector will enter a “prosperity cycle” over the next five years, as electricity demand is set to soar and storage needs will rise in tandem.

UBS Securities power and new energy analyst Yan Yishu forecast that by 2026, global energy storage demand could increase 40% year‑on‑year.

She believes the United States has exceptionally strong demand for AI data centers, but electricity is the biggest bottleneck, so storage demand will surge accordingly. Meanwhile, she expects emerging markets in the Middle East, Latin America, Africa, and Southeast Asia to see energy storage demand growth of 30% to 50% or higher. U.S. energy storage demand to enter a breakout phase

Driven by booming cloud computing and artificial intelligence, demand for U.S. data centers is at unprecedented levels, yet aging power infrastructure and regulatory barriers have made electricity supply the primary constraint.

Reports indicate that because local utilities cannot deliver power, two data center projects from U.S. providers Digital Realty and Stack Infrastructure in Santa Clara, California—home to NVIDIA’s headquarters—may sit idle for years. This is a typical demonstration of the U.S. AI industry being “choked” by electricity and related transmission equipment.

Yan Yishu pointed out that against this backdrop, the U.S. urgently needs to accelerate its power supply capacity. However, in the U.S., renewable energy is the only generation segment likely to grow significantly in the next five years, and because renewables are intermittent, the grid will inevitably need more batteries to store electricity.

Therefore, Yan Yishu believes that in the coming years, the U.S. market will remain a key destination for Chinese energy storage manufacturers and one of the highest‑margin markets—currently, Chinese energy storage manufacturers hold a 20% market share in the U.S.

China’s energy storage projects to accelerate. Yan Yishu said that in China, advancing market‑based pricing for renewable energy will further spur the development of storage projects—these projects profit by charging when electricity prices are low and selling power when prices are high.

She noted that in China, as long as the peak‑to‑valley price spread reaches 0.4 yuan per kilowatt‑hour, independent storage projects or those not combined with renewable power plants can be profitable.

UBS expects that provinces in China may introduce a “capacity compensation” mechanism, providing compensation to battery owners when needed, to further incentivize energy storage.