Affordable Chinese battery technology is powering renewable energy projects in the Gulf

2024 saw battery cell prices falling to an “unsustainably low level”, producing energy at $50 per kilowatt hour, according to a report by the Volta Foundation. Prices of Chinese components, which play a significant role in the supply chain, were centrally responsible for this affordability. This was supported by newfound access to battery components such as lithium in greater quantities than anticipated, and at cheaper prices. Simultaneously, the quality of Chinese battery products has been increasing, with Dave Jones, director of global insights at think-tank Ember stating, “First it was solar technology to change. That’s got so much cheaper, and now the battery technology has actually improved itself.”  

The fact that Gulf countries now have more affordable access to the batteries needed to store surplus energy, has enabled Gulf states to increase initiatives such as building solar fields harnessing the sun in support of clean energy goals. Saudi Arabia has set for itself an ambitious goal of powering as much as 50% from renewables, while the UAE has set for itself a goal of 44%, neither of which are feasible without adequate, and affordable battery storage for surplus energy. 

To continue to play a central role in the global battery ecosystem, China has not only been stepping up production, but is also forging global partnerships with leading regional actors through Chinese semi state-owned enterprises. In India for example, the biggest economy in Asia after China, Hithium Energy Co, among the biggest companies in the global stationary energy storage battery market, and one in which the Chinese government is a significant investor, has been reported to be forging a licensing agreement which will see Chinese technological knowhow shared with partners in the battery production space in India at the country’s biggest company, Reliance Industries. 

Hithium, which ranked as the world's third-largest ESS battery company in 2024 has reportedly been facing financial and operational pressures, although its bottom line was bolstered by CNY 414 million in government subsidies — exceeding net income. The firm’s trade receivables surged to CNY 8.31 billion by 2024 year-end, with a 73% debt-to-asset ratio and deteriorating cash flow metrics, according to company reports. The importance of government support as well as financial investment in companies in the industry to the future of battery storage technology and the renewable energy fields, both of which are fields that require significant investment for both R&D as well as production, more broadly can clearly be seen. 

Gulf investors, particularly sovereign wealth funds and venture capital firms, have been drawn to the high-growth potential of such sector for financial returns and to foster innovation. At the same time, Chinese companies are bringing advanced battery technology and manufacturing capabilities to the Gulf, supporting the development of renewable energy infrastructure and the battery and EV ecosystem. This symbiotic relationship is facilitating Gulf nations’ shift away from fossil fuels, allowing them to pursue ambitious renewable energy targets while venturing into new economic sectors.