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China’s makers of energy storage systems, including Contemporary Amperex Technology (CATL) and Gotion High-Tech, stand to benefit as conflict in the Middle East keeps fossil fuel prices elevated, raising demand for their products in green energy projects, according to analysts. The tailwinds are expected to outweigh a slowdown in the local market, where weaker-than-expected demand has dragged stock prices in the lithium-ion battery supply chain down by more than 46 per cent over the past six months. Amid the war in the Middle East, demand had risen for battery energy storage system (BESS) products in the Middle East and Southeast Asia, said Lucas Zhang Liutong, director of Hong Kong-based consultancy WaterRock Energy Economics. Solar and wind projects relied on BESS, and Chinese companies dominated the market, Zhang added. “Economically, solar plus BESS for 24/7 operation can be cost competitive against new liquefied natural gas-fired combined-cycle gas turbine projects in Asia,” he said. “Thus, in countries with sufficient space for large-scale solar projects, demand for [Chinese] BESS is expected to increase materially in the coming years.” In the first half of the year, Chinese BESS integrators accounted for nine of the world’s top 10 providers of such products by shipments, with Shenzhen-based BYD leading the pack, according to Taipei-based consulting firm InfoLink. By the volume of energy storage batteries, CATL led nine other Chinese manufacturers, as the country’s producers occupied the entire top 10 during the same period, data from Seoul-based SNE Research showed. Besides cost advantages, Chinese companies can leverage their high product quality and fast delivery to capture new demand overseas, said Yale Zhang, managing director of Shanghai-based consulting firm Automotive Foresight. “Only Chinese companies have the technical talent and dedicated teams capable of handling stable, long-term plant operations and maintenance that could last over 20 years,” he added. Gotion and BYD have reduced delivery timelines for some overseas projects to three months from five to seven months earlier. For example, Gotion sent the first batch of BESS products for Africa’s largest stand-alone project only three months after a signing ceremony, according to a statement from the company. The first 50 trucks departed for the project in Egypt at the end of September, said the company, based in Hefei, the capital of central China’s Anhui province. BYD broke ground on Poland’s largest manufacturing facility for battery storage systems in late September with partner Greenvolt Group. With a planned capacity of 2.4 gigawatt hours, the commercial operation is expected to start by the end of 2027. Zhang of WaterRock warned that shortened timelines from signing to delivery could indicate BESS overcapacity and high competition among Chinese companies in overseas markets. CATL pushed back against oversupply warnings in its earnings call on October 21, saying that it expected BESS demand in international markets to “remain robust” next year. Overall, the global demand for batteries might not be as pessimistic as the market had worried, with relatively good growth potential, executives of the world’s leading producer of batteries for electric vehicles told investors after the firm reported a sharp slowdown in its third-quarter net profit.