The rapid growth of artificial intelligence (AI) data centers in the United States is expected to fuel a major surge in energy storage demand over the next five years, according to UBS Securities. The expansion of AI-powered computing facilities is creating a “boom cycle” for batteries and other storage solutions, which are increasingly necessary to stabilize power from intermittent renewable sources such as wind and solar.

AI Data Centres and the Growing Demand for Electricity

AI data centers are among the most electricity-intensive facilities in the modern economy. According to Yan Yishu, an analyst at UBS Securities in Hong Kong, “The demand for AI data centres in the U.S. is very robust, but electricity is the biggest bottleneck.” As these data centers expand to support AI workloads, the need for reliable, large-scale energy storage solutions becomes critical to prevent grid instability.

Renewable Energy Drives Storage Needs

The U.S. renewable energy sector, including solar and wind power, is the only segment projected to see significant growth over the next five years. However, renewable energy generation is inherently intermittent, producing electricity only when the sun shines or the wind blows. This variability creates a strong market for energy storage systems that can smooth supply, store excess energy, and release it during periods of high demand.

UBS projects that global energy storage demand could increase by as much as 40% year-on-year by 2026, driven largely by AI data center growth and renewable energy integration.

Opportunities for Chinese Energy Storage Manufacturers

The U.S. market represents a key opportunity for Chinese energy storage companies, which currently hold about 20% market share in the United States. The region is attractive due to its high-profit margins. At the same time, emerging markets—including the Middle East, Latin America, Africa, and Southeast Asia—are expected to see the fastest growth in storage demand, with potential growth rates between 30% and 50% or more, according to Yan.

Regulatory Challenges

Chinese companies exporting energy storage solutions to the U.S. face potential risks due to the foreign entity of concern requirements outlined in President Trump’s One Big Beautiful Bill, which restricts the participation of Chinese-owned or controlled firms in the U.S. energy sector.

Energy Storage Growth in China

In China, the adoption of market-based pricing for renewables is expected to significantly boost energy storage development. Independent storage projects, which are not directly tied to renewable power plants, can generate profits by purchasing electricity when prices are low and selling it back to the grid when prices peak. Even a modest peak-valley electricity price difference of 0.4 yuan ($0.06) per kilowatt-hour can make these projects economically viable.

Additionally, UBS anticipates that Chinese provinces will introduce capacity payments to further incentivize energy storage. These payments reward battery owners for being available to supply electricity during peak demand, creating a more predictable revenue model for energy storage investors.

The Outlook: A Global Energy Storage Boom

The convergence of AI-driven data center expansion and the global push for renewable energy is set to drive a multi-year surge in energy storage demand. As technology improves and energy markets evolve, storage solutions will become an essential part of the electricity infrastructure, particularly in high-growth regions and emerging markets.

With governments, corporations, and energy providers investing heavily in energy storage, the industry is entering a period of accelerated growth—what UBS calls a “boom cycle”—that could reshape how power is generated, stored, and consumed worldwide.