The surge in electricity demand from AI-powered data centres is expected to trigger a five-year boom cycle for global energy storage, according to a new analysis by UBS Securities. The investment firm projects that the world’s energy storage capacity could grow 40% year-on-year by 2026, as grids struggle to balance intermittent renewable generation with round-the-clock AI workloads.
“The demand for AI data centres in the U.S. is very robust, but electricity is the biggest bottleneck,” said Yan Yishu, analyst at UBS Securities, during a briefing in Hong Kong. With renewables forecast to be the only power segment expanding significantly in the U.S. over the next five years, battery storage will become essential to stabilise supply during peak computing hours.
Energy Storage Becomes the Backbone of AI Infrastructure
AI infrastructure — especially hyperscale data centres — requires consistent, high-density power that renewable energy sources like solar and wind cannot provide continuously. UBS expects this mismatch to drive a surge in grid-scale battery installations, creating new opportunities for both Western and Asian energy storage firms.
The U.S. market remains the most profitable for Chinese manufacturers, who currently hold about 20% market share in American energy storage systems. However, emerging economies in the Middle East, Latin America, Africa, and Southeast Asia are poised to post the fastest growth rates, potentially between 30% and 50% annually, as local governments prioritise grid modernisation and renewable integration.
Policy, Pricing, and Risk Factors
UBS cautioned that Chinese exporters face regulatory risk from the proposed “Foreign Entity of Concern” clause under President Trump’s One Big Beautiful Bill, which would restrict Chinese participation in U.S. energy projects.
Meanwhile, China’s own reforms could further accelerate domestic investment. The shift toward market-based electricity pricing allows storage operators to profit from peak-valley pricing differentials — charging batteries when power is cheap and selling during high-demand periods. UBS estimates that a price spread of 0.4 yuan ($0.06) per kWh is enough for independent storage projects to turn a profit.
The firm also anticipates new capacity payment mechanisms, where provincial governments compensate storage providers for maintaining standby power availability — a move likely to catalyse private investment and improve grid stability.
The Next Frontier of Renewable Economics
UBS’s forecast signals a structural change in how global power systems are financed and operated. As AI reshapes industrial energy consumption, batteries are set to become as critical as servers in the digital economy’s infrastructure stack.
By 2030, energy storage will not just complement renewables — it will underpin them, defining how data centres, grids, and economies manage the volatility of clean power in the AI era.
