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, E Fund, attracted 560 million yuan in a single day, reaching a scale of 5.4 billion yuan. The trend of funds flowing through ETFs to deploy positions is clearly evident.

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 fleeting phenomenon? Is it still possible to jump on the bandwagon now?

The answer is clear: the surge in the energy storage battery sector is not just short-term hype around a single theme, but a result of the global energy shortage backdrop, where undervalued assets are resonating with high prosperity.

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

Energy shortage has become the most prominent market theme. 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 also cut off European natural gas exports earlier than expected, further exacerbating the energy crisis. Additionally, geopolitical conflicts are normalized, with Ukraine’s energy infrastructure continuously damaged. These regional conflicts have made energy shortages the main market focus.

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. In contrast, leading companies in energy storage batteries, after prior adjustments, are valued at around 20 times or slightly above. It’s important to note that energy storage demand continues to grow strongly this year. Domestic energy storage installations are expected to double or more, with industry net profit growth rates around 30%-60%. A P/E ratio just above 20, under the current high heat of the energy shortage logic and profit growth expectations, is truly undervalued. It’s no surprise that capital favors 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 valuation of the energy storage battery sector will further stand out.

Besides valuation, are the fundamentals of energy storage solid enough?

New energy storage has been included in government work reports for three consecutive years and is listed among the “Six Emerging Pillar Industries,” with unprecedented policy support. Meanwhile, by 2026, the global computing power and storage industry 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 energy storage orders for data centers.

Data speaks volumes: Although the first quarter is traditionally a slow season for energy storage, this year it defied expectations. In March, many energy storage companies doubled their production and shipment volumes 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-scale storage installations doubled year-on-year in January, and in China, January installations doubled or more, with contract awards in February also doubling year-on-year. The high prosperity is well-supported.

With such a strong energy storage industry 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, leading to a sluggish sector performance.

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 that raw material price increases will suppress 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-valued sector with high industry trend and prosperity.”

Referring to the 2022 rally after natural gas prices surged, the energy storage sector’s index nearly doubled from May to August, driven by the core logic of “continuous demand fulfillment and sustained performance improvement.”

Today’s energy storage logic is even stronger. Back then, the core driver was geopolitical conflicts impacting energy prices like natural gas. Now, not only are geopolitical conflicts ongoing, but conflicts in the Middle East have dragged 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 based on market timing 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 “beta” asset suitable for bundled, overall allocation.

Related products:

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

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

Battery ETF E Fund (159175)

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

Table: E Fund Energy Storage Battery ETF is more “focused,” while E Fund Battery ETF is more “comprehensive.”

Data source: Wind, as of March 2026

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