Recently, the Binhe Haoyu 100MW/200MWh independent energy storage station in Zhucheng completed acceptance and entered commercial operation. The project was invested in by an energy storage industry fund jointly initiated by Corun, CALB, and Kaibo Capital. It was jointly developed by members of the large energy storage ecosystem consortium, including Corun, CALC, Goxia Technology, Duanrui Technology, and Star Energy New Energy. The station adopts a hybrid energy storage technology route combining "lithium iron phosphate + all-vanadium redox flow batteries," which can meet the grid's full-time-scale regulation needs while significantly reducing the lifecycle levelized cost of energy, enhancing overall system economy and safety, and maximizing operational efficiency and economic benefits.

Capacity side, according to incomplete statistics, China’s alkaline electrolyzer market remained at 43.77 GW and the PEM electrolyzer market remained at 2.7 GW, with no new capacity added. There was no offline delivery information this week. Project-related updates: Binyang County Haoyuan Industrial Investment Co., Ltd.: Competitive consultation was launched for the Binyang County Green Electricity Hydrogen Production Pilot Construction Project (procurement of hydrogen production equipment and facilities). The budget amount was 2.85 million yuan, with a maximum price limit of 2.85 million yuan. The project entity was Binyang County Haoyuan Industrial Investment Co., Ltd. It is understood that the company is a wholly owned subsidiary of Binyang County Kunpeng Water Affairs Co., Ltd. Kunpeng Water Affairs has registered capital of 448.6 million yuan, and its ultimate controller is the Binyang County Finance Center. Datang Inner Mongolia Duolun Coal Chemical Co., Ltd.: Inquiry-based procurement was conducted for the feasibility study and green methanol certification consulting technical services for the CNCEC Duolun coal chemical coal-based process biomass co-firing coupled with green electricity green methanol production project. It is understood that the Datang Duolun 150,000-kW integrated wind and solar power hydrogen production demonstration project was China’s first medium-to-large-scale technological demonstration project for off-grid wind and solar power hydrogen production deeply coupled with coal chemicals. It was invested in and constructed by Datang Duolun Ruiyuan New Energy Co., Ltd., with a total investment of about 1.3 billion yuan. Construction officially began in November 2023, construction officially began in November 2023, hydrogen was successfully produced on December 29, 2024, and the project was officially connected to the grid and put into operation on January 17, 2025. Shaanxi Construction Engineering Installation Group Co., Ltd.: The Guyang-Baiyun Obo gas transmission pipeline project, undertaken by Shaanxi Installation Group, achieved important progress, with its Guyang initial station and valve chamber successfully passing completion acceptance. It is reported that the gas transmission pipeline project has a 20% hydrogen blending transmission capacity and is a key planned construction project under the “County-to-County Coverage in Western Inner Mongolia” initiative in the Inner Mongolia Autonomous Region’s 14th Five-Year Plan for Oil and Gas Development. The pipeline has a total length of 125 km, starting from the Guyang initial station and running overall from south to north, successively passing through Guyang County, Darhan Muminggan Banner, and the Baiyun Obo mining district in Baotou City, and ultimately reaching Barun Industrial Park. PetroChina Shenzhen New Energy Research Institute Co., Ltd.: It released a processing tender for its brine hydrogen production electrolyzer. Funding for the tender project was self-raised by the enterprise, with a contribution ratio of 100%. It is understood that procurement of necessary raw materials and components includes, but is not limited to, integrated electrolyzer materials such as electrodes, end plates, bipolar plates, separators, and gaskets. Suppliers were also required to provide essential auxiliary electrolyzer accessories such as cooling towers, chillers, and potassium hydroxide in accordance with the purchaser’s requirements. Tianjin Saihong Environmental Engineering Co., Ltd.: A groundbreaking and pile foundation commencement ceremony was held in the Dagang Petrochemical Industrial Park of Tianjin Binhai New Area. It is understood that the project uses the polyploid giant reed “Lüzhou No. 1,” carefully cultivated by Ruihengmao Group, as its core raw material, successfully overcoming the bottlenecks of existing gasification technologies and the economic challenges of biomass raw materials. Tangshan Haitai New Energy Technology Co., Ltd.: recently entered into a strategic cooperation agreement with Beijing Shougang Gas Co., Ltd. During the meeting, Haitai New Energy gave a detailed presentation on the planning layout and current progress of its long-distance hydrogen pipeline project. The two sides then conducted in-depth discussions and exchanges on the development direction of the hydrogen energy industry and successfully signed a strategic cooperation agreement. In view of Shougang Gas’s continuously rising future demand for hydrogen, Haitai New Energy will leverage its comprehensive advantages in hydrogen transportation to provide Shougang Gas with stable and reliable green hydrogen supply services and comprehensive integrated solutions. Shanghai Juna New Material Technology Co., Ltd.: its water electrolysis hydrogen production electrode company, Juna Technology, completed a new round of financing, exclusively invested by CATL, which has become the company’s largest external institutional shareholder at present. Previously, Juna Technology had completed its first round of financing led by Lenovo Star and its second round led by Changjiang Innovation. This round of financing also marked the company’s first introduction of industrial capital. To date, the company has accumulated 8 external institutional shareholders. Shanghai Juna New Material Technology Co., Ltd.: formally signed a strategic cooperation agreement with Zhejiang Sunshine Green Hydrogen Technology Co., Ltd. This cooperation mainly focuses on the industrialisation and deployment of megawatt-class AEM electrolyzers. Leveraging its advanced JE series high performance AEM hydrogen production electrodes, Juna Technology will provide core component support for Sunshine Green Hydrogen in the R&D, testing, and scaled mass production of megawatt-class electrolyzers. Xinjiang Qingda Energy Technology Co., Ltd. : the environmental impact report for its integrated production line project with annual output of 120,000 mt of green hydrogen and 700,000 mt of green ammonia is planned for submission for approval and public disclosure. According to the disclosure, the project is a new-build project located in the western zone of Wusu Industrial Park and invested in and constructed by Xinjiang Qingda Energy Technology Co., Ltd., with a total investment of 4.1914 billion yuan. The project includes extensive construction content, specifically: six water electrolysis hydrogen production unit lines, each with annual output of 20,000 mt, to achieve annual output of 120,000 mt of green hydrogen; meanwhile, one ammonia synthesis unit line with annual output of 700,000 mt to produce 700,000 mt of green ammonia; in addition, one nitrogen production unit line with annual output of 560,000 KNm³ is also planned. In terms of auxiliary facilities, the project will build 6 electrolyzer workshops, 1 office building, 1 circulating water station, 1 central control room, 1 liquid ammonia tank farm, 1 hydrogen tank farm, 1 demineralised water station, and other supporting facilities, with total gross floor area of 127,083.72 m² and total site area of 330,883 m². The construction period is expected to be 12 months. In the water electrolysis hydrogen production segment, the project adopts the alkaline electrolyzer (ALK) hydrogen production process, equipped with 86 2,000-Nm³ electrolyzers, as well as 2 purification units and 2 gas-liquid treatment units, and is expected to produce 120,000 mt of hydrogen annually, mainly as raw material for ammonia synthesis. For the ammonia synthesis unit, the project will build one new unit adopting Casale axial-radial technology, with major equipment including ammonia compressors and synthesis towers, and is expected to produce 700,000 mt of liquid ammonia annually. CRRC Zhuzhou Electric Locomotive Research Institute Co., Ltd.: CRRC Zhuzhou Institute successfully won the bid for 8 water electrolysis hydrogen production systems for Phase I of Kaishan Group’s Kenya green fertilizer project. It is understood that this is the first export of CRRC electrolyzer products to Africa and also the world’s first project to produce green hydrogen/ammonia using geothermal new energy. The Kaishan fertilizer project uses geothermal steam from a Kenyan energy company to generate clean electricity, and then uses this clean electricity to produce hydrogen and green ammonia, ultimately producing more than 480,000 mt of green fertilizer. The hydrogen production section of the project uses a total of 90 sets of 1,000 Nm³/h. Xinqing Energy Technology (Fukang) Co., Ltd.: the EPC general contracting tender for the Xinqing Energy photovoltaic hydrogen production coupled resource clean utilisation low-carbon integrated project (chemical section) was recently released. It is reported that the project is located about 28 km east of Fukang City, Changji Prefecture, Xinjiang Uygur Autonomous Region, about 72 km west of Jimusar County, about 7 km north of Ganhezi Town, and adjacent to the east side of Xinjiang Jinxiang Sairui Coal Chemical Technology Co., Ltd. The project plans to build a new 383.3 MW PV power generation system to achieve hydrogen production capacity of 20,000 mt per year, together with a supporting ammonia synthesis system with annual output of 130,000 mt. In addition, one 220 kV step-down substation will also be built. Inner Mongolia Baofeng Coal-Based New Materials Co., Ltd.: Power Station Group has formally signed a cooperation agreement with Inner Mongolia Feng Coal-Based New Materials Co., Ltd. Power Station Group will supply key equipment for the Phase I water electrolysis hydrogen production project of the other party’s wind and solar power hydrogen production project, specifically including 8 alkaline electrolyzers of 1,250 Nm³/h and the world’s largest single-set 5,000 Nm³/h separation and purification system. In addition, Power Station Group will also provide the industry’s first outdoor three-dimensional layout design supporting services. Policy Review 1. Notice of the Ministry of Industry and Information Technology and Three Other Departments on Issuing the Implementation Plan for the High-Quality Development of Energy-Saving Equipment (2026-2028). The document states that by 2028, mass-produced water electrolysis hydrogen production equipment will achieve DC power consumption below 4.2 kWh/Nm³ under rated operating conditions. 2. Notice of the General Office of the National Energy Administration on Issuing the Guidelines for Project Approval of the 2026 Energy Industry Standards Plan. The key areas for project approval under the 2026 energy industry standards plan include 8 items. In the hydrogen energy field, the key directions include fundamentals and general applications, hydrogen production and conversion, hydrogen storage and transportation, hydrogen refueling, hydrogen power and generation, and hydrogen equipment. 3. Notice of the People’s Government of Heilongjiang Province on Issuing the Outline of the 15th Five-Year Plan for National Economic and Social Development of Heilongjiang Province. The document states that Heilongjiang will step up development of the bioenergy industry, foster green liquid fuel industries such as green hydrogen-to-ammonia, green methanol, and green aviation fuel, strive to achieve annual production capacity of 1 million mt of green hydrogen and 3 million mt of green liquid fuels, and accelerate the scaled and commercial development of bio-natural gas. Corporate Developments CIMC Enric Holdings Limited: Yang Baoying, honorary president of its hydrogen business center, and his delegation recently visited Pengfei Group. During the exchange, the two sides held discussions on promoting the implementation of the “hydrogen cylinder replacement” operating model for hydrogen heavy-duty trucks in Lvliang and ultimately reached consensus. This move has injected strong momentum into the commercialisation and scaled promotion of hydrogen heavy-duty trucks, pressing the “fast-forward button.” Yuchai Xinlan (Jiangsu) Hydrogen Energy Co., Ltd. : formally entered into a strategic cooperation agreement with Henan Hitachi Xin Co., Ltd. The two sides will carry out in-depth cooperation around key links in the hydrogen energy industry chain and jointly advance hydrogen technology innovation, product R&D, and market applications. Shaanxi Construction Engineering Installation Group Co., Ltd.: the Guyang first station and valve chamber of the Guyang-Baiyun Obo gas pipeline project, which it constructed, successfully passed completion acceptance. This milestone means that the innovative infrastructure project, equipped with 20% hydrogen blending transmission capability, is on the verge of official operation. It is understood that the Guyang-Baiyun Obo gas pipeline project not only has 20% hydrogen blending transmission capacity, but is also a key planned construction project under the “county-to-county connectivity in western Inner Mongolia” initiative in the Inner Mongolia Autonomous Region’s 14th Five-Year Plan for oil and gas development. The pipeline has a total length of 125 km, starting from the Guyang first station and generally running from south to north, passing through Guyang County, Darhan Muminggan Banner, and Baiyun Obo mining district in Baotou City before finally reaching Barun Industrial Park. Jiangsu Guofu Hydrogen Energy Technology Equipment Co., Ltd. : a delegation from Thailand’s water resources, electricity, and related institutions came to China for exchanges on the new energy industry and made a special trip to Zhangjiagang, Jiangsu, to visit the rooftop PV hydrogen production project jointly developed by ZNShine Solar and Guofu Hydrogen Energy. It is understood that the project relies on a distributed PV system installed on factory rooftops to provide clean and stable electricity for the enterprise’s production and energy applications through PV power generation, balancing efficient energy utilisation and green development. At the same time, it integrates hydrogen application scenarios and is equipped with an ESS to ensure stable energy supply for hydrogen production. It is a leading distributed PV hydrogen production demonstration project in China, showcasing China’s advanced achievements in the integrated development of PV and hydrogen energy. CSIC 712 Research Institute: the 100-kg-class hydrogen-powered hexacopter UAV “Hydrogen Peak No. 1,” which it led in developing, successfully completed its maiden flight. It is understood that Hanhydrogen Power, as the main supplier of the hydrogen supply system for hydrogen fuel cell UAVs, participated in the formulation of T/CEEIA265-2017 Technical Specification for Fuel Cell Fuel Systems of Unmanned Aerial Vehicles by the China Electrotechnical Society. Shanghai Yigong Hydrogen Energy Technology Co., Ltd.: Yigong Hydrogen Energy has seen concentrated batch shipments of its hydrogen compressor products, which have been delivered to project sites across the country for commercial operation. Guofu (Jinan) Hydrogen Energy Technology Development Co., Ltd.: registered capital is 2 million yuan, and the legal representative is Ding Leizhe. Equity information shows that Jiangsu Guofu Hydrogen Energy Technology Equipment Co., Ltd. holds 80% of the company, while Zhejiang Lingniu Yishi New Energy Technology Co., Ltd. holds 20%. Patent Applications 1. Shanghai Institute of Ceramics, Chinese Academy of Sciences (China) disclosed patent CN2025110028, developing a ceramic-based anion exchange membrane with laboratory-tested service life reaching 80,000 hours. 2. Johnson Matthey (UK) filed patent WO2025109876, disclosing an Fe-Ni-Mo ternary non-precious metal catalyst formulation with activity close to platinum-based materials. Technology Footprint/Technical Specifications 1. Professor Yu Ying’s team at Central China Normal University developed a three-dimensional graded nanostructured catalytic electrode, a core component for seawater hydrogen production. 2. Dalian University of Technology designed an electron-pump catalyst with an asymmetric photoresponse structure to maintain asymmetry in electron distribution. 3. Research teams from the School of Electrical Engineering at Xi’an Jiaotong University and the State Key Laboratory of Electrical Materials and Electrical Insulation successfully developed a Ru/Ti3C2Ox@NF bifunctional electrocatalyst for seawater electrolysis. 4. Johnson Matthey and Syensqo achieved efficient recycling and reuse of platinum group metals and ionomers in PEM fuel cells and electrolyzers, significantly reducing carbon footprint. 5. Teams from Xi’an Jiaotong University and Peking University jointly developed a new-type osmium-based catalyst, significantly improving the efficiency and economics of AEM water electrolysis hydrogen production and supporting the scaled deployment of low-cost green hydrogen.

Recently, the first grid-forming ESS project in the northern Hebei power grid—the Beijing Hengyuan Zhangbei County 300 MW/600 MWh standalone ESS power station—was officially connected to the grid and began generating electricity. The grid-forming ESS capacity is 50 MW/100 MWh, using Sungrow’s grid-forming technology, adding an adjustable “dam” to conventional new energy plants to make the “green electricity river” more controllable and stable. This strongly enhances the reliability of power supply in the Beijing-Tianjin-Hebei region and sets a new milestone for high-quality transmission of new energy.

In 2025, driven by supply contraction and multiple demand growth , the global sulfur market saw supply-demand mismatch throughout the year, with prices rising sharply to new highs in recent years. Entering 2026, sulfur’s byproduct nature will constrain supply; Russia’s supply recovery will be slow; the Middle East will centrally control prices; the resonance of rigid demand from spring plowing and new energy “scrambling for sulfur,” together with heightened shipping risks in the Strait of Hormuz, will drive the global sulfur market to continue in a tight balance, keep the price center at elevated levels, and further reshape the regional supply-demand pattern. 2025 Review: Widening Supply-Demand Gap, Sharp Price Increase (I) Supply Side: Pronounced Rigid Contraction, Intensified Regional Supply Divergence According to the SMM survey, current global sulfur capacity is approximately 85 million mt. The entire industry is operating at close to full capacity, but incremental growth is limited, with annual production at around 80 million mt. As the core of global sulphur supply (with total Middle East production accounting for over 30% of the global total), some resources are prioritised for local markets and emerging markets such as Indonesia (long-term contracts first + high-price diversion). Resources exported to traditional demand countries have been heavily diverted, exacerbating tightness in resource circulation. Meanwhile, Russia, as a core global sulphur producer, has shifted from a net exporter to a net importer due to the Russia-Ukraine war. Coupled with shipping disruptions, geopolitical disturbances, and capacity release falling short of expectations, globally circulating resources remain persistently tight, driving sulphur prices higher. (II) Demand Side: Stable Traditional Rigid Demand +Growth in Emerging New Energy, with a Significant Increase in Total Volume In 2025, global sulfur demand presented a dual-engine pattern of “traditional rigid demand providing a floor, and emerging demand surging”: agriculture remained the largest consumption mainstay, with phosphate fertiliser production at its core forming a solid base of demand; traditional chemical demand such as titanium dioxide and caprolactam grew steadily; the new energy track saw explosive growth , becoming the core engine boosting incremental sulfur consumption. Together, these three sectors drove total sulfur demand to keep rising, in stark contrast to the rigid contraction on the supply side caused by its oil-and-gas associated nature. Compared with previous years, the most notable change in the global sulfur market in 2025 was the explosive growth in new energy demand, which had become the central driver of incremental demand. Sulfur consumption in the new energy sector was highly concentrated in two major tracks—LFP and mixed hydroxide precipitate (MHP)—and formed a clear global regional division of labor: LFP production was highly concentrated in China, while MHP was focused in Indonesia; the two production hubs jointly dominated sulfur demand for new energy. Against the backdrop of an accelerating global green energy transition, China’s NEV and energy storage industries have continued to expand. Leveraging core strengths of high safety, long cycle life, and significant cost advantages, LFP has become the preferred cathode material for large-scale energy storage and NEVs, boosting the continued expansion of domestic capacity. According to the SMM database, global LFP production reached 3.77 million mt in 2025, of which China accounted for 3.75 million mt , representing more than 99%, corresponding to a boost in total sulfur demand of over 3 million mt . Meanwhile, relying on world-class laterite nickel ore resource endowments, Indonesia has vigorously developed HPAL hydrometallurgy, converting low-grade nickel ore into high value-added battery-grade nickel raw materials (MHP). By extending the industry chain and enhancing product value-added, it has become deeply embedded in the global power battery supply chain. According to the SMM database, Indonesia’s MHP production reached 443,900 mt Ni in 2025 , directly boosting sulfur consumption by over 5 million mt; and after planned capacity comes on stream in 2026, Indonesia’s share of global MHP capacity will further rise from 67% to 77% , becoming the most explosive source of incremental sulfur demand globally and a key variable reshaping global sulfur trade flows. Outlook for 2026: The Supply-Demand Gap Further Widens, and Prices Hover at Highs In 2026, the global sulfur market further maintained a tight balance, with supply growth failing to keep pace with demand growth and the supply-demand gap widening further, becoming the core factor supporting prices fluctuating at highs. （I）Supply Side: Limited Growth, Constrained by Multiple Factors As a by-product of oil and gas extraction and refining, sulfur’s supply capability is highly dependent on the level of activity in global crude oil and natural gas production, while also being directly affected by geopolitical conditions, the smoothness of international shipping, and changes in trade policies. Disruptions at any stage will significantly impact the stability of global sulfur supply, the pace of price movements, and the distribution of trade flows. In 2026, the global sulfur supply side will exhibit operating characteristics of “ constrained growth and a diverging regional landscape .” According to the SMM survey, incremental global sulfur supply in 2026 was only about 2.6 million mt, including about 500,000 mt in China and about 2.1 million mt in the Middle East. According to the International Energy Agency (IEA), under the long-term trend of the global energy transition, global refining capacity and crude oil throughput are expected to enter a peak plateau around 2035 and then gradually pull back, which will fundamentally constrain the long-term growth potential of sulphur supply. According to the SMM survey, global crude oil demand growth in 2025 only remained at around 1%, with relatively weak growth momentum. As the core producing region for high-sulphur crude oil globally, the Middle East saw OPEC+ confirm a temporary pause in production increases in Q1 2026, further suppressing upstream supply elasticity. Meanwhile, Iran has long been subject to US sanctions, with crude oil production and exports continuously constrained. The most-traded refineries in Russia continued to come under impact, with both production stability and logistics channels significantly affected; sulphur output and export capacity were sharply constrained and are expected to be difficult to recover in H1 2026, further exacerbating the tight globalised sulphur supply landscape. In early 2026, geopolitical conflicts in the Middle East intensified, and shipping risks in the Strait of Hormuz rose markedly ; nearly 50% of global sulfur trade volumes passed through this corridor. Vessel detours, longer voyages, and a sharp rise in war-risk insurance premiums directly pushed up the landed cost of sulfur. In 2025, Middle East sulfur FOB prices climbed from about $170/mt at the beginning of the year to the latest level of about $520/mt , an increase of more than 200%. Meanwhile, continued turmoil in the Red Sea further extended shipping cycles and lifted overall import costs. Disrupted logistics and rising costs created dual pressure, reducing effective market circulation and slowing the pace of arrivals, becoming a key factor supporting sulfur prices fluctuate at highs. The natural gas sector brought marginal improvement to supply: according to the latest quarterly report released today by the International Energy Agency (IEA), global natural gas demand in 2025 was about 1.3% . As a substantial increase in LNG supply eased market fundamentals and drove strong demand growth in Asia, global demand growth in 2026 will accelerate to about 2% . New projects in the US, Canada, and Qatar will come on stream in succession, and LNG supply is expected to increase by 7%, i.e., 40 billion m³. With natural gas consumption rising steadily, sulfur production as a by-product of natural gas desulfurization will increase accordingly, providing some supplementation to overall supply. According to the SMM survey, global sulphur production growth slowed to 2.28% in 2025. In 2026, supply-side expansion will be limited, and supply growth will remain at a low level, with total annual supply expected to reach 82-83 million mt. (II)Demand Side: New Energy-Driven, with Continuous Structural Optimization Global sulphur demand in 2026 will sustain strong growth, with demand growth significantly outpacing supply growth . The key drivers are underpinned by rigid agricultural demand and a growth in incremental growth from new energy. According to the SMM survey, global phosphate fertiliser consumption will grow steadily at an annual rate of about 1.6%. As the largest downstream demand segment for sulphur, it provides a solid foundation for the overall market; demand in the chemical sector will also expand steadily at an annual rate of about 4%–6%. The most noteworthy incremental growth in 2026 will come from the concentrated ramp-up across the global new energy industry chain. According to the SMM database, newly built and commissioned LFP capacity in China in 2026 will exceed 2.5 million mt ; together with the release of existing capacity, the industry’s effective capacity is expected to surpass 9 million mt, driving a sharp increase in demand for high-purity sulphuric acid and sulphur. Meanwhile, Indonesia’s nickel hydrometallurgy projects are accelerating, adding about 400,000 mt Ni of new MHP capacity. Based on its sulphur intensity of as high as 11.7 mt, this will generate incremental sulphur demand on the order of 1 million mt, creating a global “competition for sulphur” alongside global phosphate fertiliser, traditional chemicals, and new energy materials, further exacerbating tight global sulphur supply. SMM has launched SMM CIF Indonesia Sulfur and Sulfur (Solid) price assessments for market reference. SMM CIF Indonesia Sulfur Definition:CIF Indonesian main ports; Quality: Sulfur 99.5% min, Particle; Price Origin: Indonesia. Sulfur (Solid) price Definition: Ex-works, China; Quality: Sulfur（S) 99.00% min，conforming to GB/T 2449-2006; Price Origin: China.

In times of peace, oil and gas are cost variables; in a war context, traditional energy becomes a security variable. The escalation of conflict in the Middle East at the end of February led to a high opening for oil prices on the first trading day of March. During peacetime, energy prices fluctuate around the supply-demand gap, with the market focusing on production, inventory, and cost curves. However, in a war environment, the market first trades not on production but on deliverability. Whether key shipping routes are open, whether insurance costs soar, and whether sanctions spread, all quickly translate into risk premiums. As a result, oil prices exhibit high fluctuations, even if actual supply has not significantly decreased, as prices are pushed up by delivery uncertainties. Energy thus transforms from a commodity into a strategic resource. As an analyst in the new energy sector, I believe that this change does not simply benefit new energy. Rising oil prices reinforce the logic of electrification, making EVs and renewable energy more economically attractive. However, the macroeconomic uncertainty brought about by war may also dampen consumer and investment confidence. If high oil prices drive inflation and slow growth, overall demand for cars and industry will slow down, and new energy will not be immune. Therefore, the investment logic for new energy is no longer unidirectional, but depends on the balance between substitution effects and macroeconomic contraction effects. A deeper change lies in the fact that capital is beginning to re-evaluate energy security. The traditional oil and gas system is highly dependent on cross-border transportation and continuous fuel supply, with its vulnerabilities lying in shipping and geopolitics. In contrast, wind and PV do not require continuous fuel input during operation, and energy storage can enhance the stability of the power system, giving new energy strategic value in a war environment. They are not only low-carbon tools but also a path to reducing external dependence. The security attributes of new energy are thus being revalued. However, it must be recognized that this security attribute is not absolute. The manufacturing of new energy is highly dependent on critical minerals such as lithium, nickel, and cobalt, with their mining and processing concentrated and heavily reliant on transportation. If upstream resource policies tighten or logistics are disrupted, risks will also propagate through the industry chain. Therefore, the security of new energy is operational security, not supply security. This means that future investment logic will shift from simply pursuing the lowest cost to focusing on supply chain control capabilities and regional diversification. In a war environment, the allocation of risk premiums by capital changes. Transportation premiums, geopolitical premiums, and supply chain concentration premiums all rise. The volatility of traditional energy intensifies; new energy generation assets gain a security bonus; and critical minerals and midstream processing capabilities become new strategic nodes. Efficiency is no longer the sole criterion, with redundancy and controllability becoming important components of the valuation system. Deglobalization and supply chain restructuring may push up the cost center of the industry, but they also enhance the strategic position of assets. In this context, the value of energy storage and power grid assets stands out. If conflicts persist, the core goal of the energy system will shift from cost optimization to system resilience. Distributed energy, microgrids, and energy storage have insurance-like attributes, and their value becomes more evident in extreme scenarios. Even if high raw material prices increase project costs, an elevated policy priority may still provide long-term support. Over the past five to ten years, the narrative of the energy transition has largely focused on new energy as a tool for decarbonization to ensure sustainable development of the planet. However, geopolitical tensions in the last two to three years have redefined new energy as part of the energy security framework. Within new energy, it is not just the power generation assets that are being repriced, but also energy storage and the power grid. 1) In a war environment, the core issue of the energy system shifts from efficiency to resilience During peacetime, the goal of the energy system is to maximize efficiency: lowest cost, highest utilization rate, and optimal allocation. Cross-border trade and centralized power generation have made the global energy structure highly globalized and scaled. War exposes the vulnerabilities of such a system. Maritime transport routes, natural gas pipelines, tanker insurance, key ports, and large power plants can all become risk nodes. At this point, the system's priority is no longer efficiency but resilience – the ability to maintain basic operational capacity under shocks. Energy storage and the power grid are at the core of a resilient system. 2) Energy storage: from an arbitrage tool to system insurance In normal circumstances, the value of energy storage mainly comes from electricity arbitrage, ancillary services, and peak load regulation, with its return on investment depending on fluctuations in electricity prices and policy subsidies. However, in a wartime context, the value of energy storage is redefined. It is no longer merely an economic optimization tool but a guarantee of power system stability. Energy storage can provide emergency support during fuel supply disruptions or grid shocks, preventing the power system from collapsing due to a single point of failure. This means that energy storage assets have insurance-like attributes. When system risks rise, capital's risk appetite for these assets increases. Even if high raw material prices drive up project costs, there may still be stronger policy support because of the rising strategic value. The valuation logic of energy storage thus transitions from "IRR-driven" to "system safety premium." 3) Power grid: an undervalued strategic hub The impact of war on the energy system often first manifests in the transmission and distribution network. Centralized energy structures rely on a few key periods, and once damaged, the impact is widespread. Therefore, power grid upgrades and digitalization have become the focus of secure investments. Enhancements in smart grids, regional interconnections, grid redundancy, and distributed access capabilities can significantly strengthen the system's resilience to shocks. The investment logic for power grid assets becomes clearer in a wartime context: it is not only infrastructure but also the backbone of national energy security. In the long term, power grid upgrades will be a necessary prerequisite for the expansion of new energy. The fluctuations in new energy generation require more robust transmission, distribution, and dispatching capabilities. When risk environments rise, countries are more inclined to accelerate grid construction to reduce dependence on external energy. 4) Distributed Energy and Microgrids: The Strategic Significance of Decentralization While centralized energy systems are efficient, they are also highly vulnerable. Although distributed PV, community energy storage, and microgrids are relatively small in scale, they possess the capability for independent operation. In a war context, distributed energy has two advantages: first, it reduces the risk of single-point failures; second, it decreases reliance on cross-border fuel transportation. The strategic value of such assets is being re-evaluated in high-risk environments. 5) Deep Changes in Investment Logic The rising value of energy storage and power grids means that new energy investments no longer solely revolve around installation growth and cost reduction, but rather around system security and supply chain control. Key changes include: a. Capital is more focused on localized manufacturing and supply chain diversification; b. The weight of security in investment decisions has increased; c. The cost center may shift upward in stages, but the strategic premium has risen. The valuation system of the new energy industry is transitioning from a growth premium to a strategic premium. What opportunities and risks does geopolitics bring to China's new energy industry? 1) China's Energy Security Structure: From Import Dependence to Electrification Advantage China has long been one of the world's largest crude oil importers, with persistent energy security issues. In a wartime environment, oil price fluctuations and transportation risks increase, directly affecting energy costs and macro expectations. However, unlike before, China has established the most complete new energy manufacturing system globally. The high integration of the PV, wind, energy storage, battery, and EV industry chains gives China a manufacturing and scale advantage during the energy transition. In a war context, this advantage is beginning to translate into security attributes: an increase in electrification means a reduction in dependence on external fuels; an increase in new energy installations means a more resilient energy structure. Thus, China's new energy system has the potential for alternative security. 2) Energy Storage and Power Grid: China's Most Strategic Assets If the war becomes protracted, the core of the energy system will no longer be power generation capacity itself, but system stability. China's layout in energy storage and power grid gives it a relative advantage at this stage. In terms of energy storage, China possesses the world's largest battery manufacturing capacity and cost advantages. Under the logic of energy security, energy storage is no longer solely about economics, but has become an important tool for ensuring the stability and emergency response capability of the power system. At the policy level, there may be an emphasis on increasing the proportion of energy storage in the power system. Regarding the power grid, China has developed the world's largest ultra-high voltage transmission network and grid construction capabilities. The increased redundancy and interconnectivity of the grid help to absorb more new energy installations while enhancing the system's resilience against shocks. In a high-risk environment, investment in the grid may accelerate. This means that, under the security logic, China's energy storage and power grid assets have structural strategic premiums. 3) Critical Minerals and Supply Chain: Advantages and Risks Coexist China has advantages in the new energy manufacturing sector, but still relies on overseas layouts for upstream resources. The supply chains for critical minerals such as lithium, nickel, and cobalt are highly internationalized, and wars or geopolitical risks may amplify policy and logistics uncertainties. For China's new energy industry chain, the real challenge lies not in the manufacturing end, but in the stability and cost fluctuations of the resource end. The trend of supply chain deglobalization may push up the cost center, compressing profit margins. The core of future competition will shift from scale expansion to resource control capabilities and the diversification of global layouts. 4) New Energy Vehicles: China's Structural Advantages and Short-term Fluctuations The impact of the war environment on new energy vehicles also has a dual nature. On one hand, rising oil prices reinforce the economic advantages of EVs. In a context of high oil prices, the cost advantages of using EVs become even more evident, which is conducive to increasing the penetration rate among end-users. China has the world's largest EV capacity and supply chain system, with scale and cost advantages. On the other hand, high oil prices may suppress consumer confidence through inflation and macroeconomic uncertainty. If the war continues for a long time, global economic growth may slow down, putting overall car demand under pressure. Although new energy vehicles have a substitution logic, they cannot be completely independent of the macro cycle. Therefore, the short-term performance of China's new energy vehicle industry will depend on the relative strength of the substitution effect and macroeconomic drag. 5) Long-term Structure: Re-stratification of Strategic Assets In the era of energy security, the competitiveness of China's new energy system will be more reflected in three aspects: First, manufacturing scale and cost control capabilities; Second, the system support capacity of the power grid and energy storage; Third, the diversification of upstream resources and supply chain layout. War has accelerated the stratification of the global energy system. Traditional energy bears higher fluctuation risks; new energy power generation and power grid assets gain a safety premium; critical minerals become the focal point of geopolitical competition. For China, the new energy industry is no longer just an engine for growth but also a part of the energy security system. The investment logic will shift from pure growth rate and subsidies to strategic position and supply chain stability. Overall, as energy transitions from a cost variable to a security variable, the strategic value of China's new energy system rises, but it also faces higher supply chain risks and global competitive pressures. Energy storage and the power grid are becoming the core of system stability; new energy vehicles benefit under the substitution logic, but one must be wary of macro cycles; critical minerals will determine the cost center and industrial profit margins. In an era where war reshapes the energy order, stability is more important than growth. SMM New Energy Analyst Yang Le 13916526348

According to State Grid Corporation of China, during the "15th Five-Year Plan" period, State Grid will strengthen the power grid's resource allocation capacity, enhance its ability to accommodate new energy, and support the high-quality development of new energy. It is reported that during the "15th Five-Year Plan" period, State Grid will strengthen the construction of power grids at all levels, strive to put 15 UHV DC projects into operation, increase inter-provincial power transmission capacity by 35%, expand flexible power exchange capabilities between regions by more than double, and meet the needs for efficient large-scale allocation of new energy.