China plans to nearly double its new energy storage capacity to 180 GW by 2027. This initiative, backed by the government, involves an investment of 250 billion yuan, which is about US$35 billion.

Rising Energy Storage Capacity

Currently, China has an energy storage capacity of 95 GW, mainly using lithium-ion batteries. Previous targets have been surpassed, and the 2025 goal of 30 GW was met two years early. In comparison, the U.S. is expected to reach just over 46 GW of utility-scale storage by the end of 2025. Major Chinese companies in this field include BYD and CATL. This large investment will boost the demand for lithium. It will also enhance the future outlook for companies like BYD and CATL. With such a strong government plan, there’s a clear positive sign for China’s battery supply chain. The plan seems credible, especially since China reached its 2025 target two years ahead of time. Therefore, now is the time to consider call options on key players like CATL (300750.SZ) and BYD (002594.SZ) as they will benefit from this US$35 billion investment boost. The scale of this initiative will significantly increase the demand for lithium, driving up its price. Lithium carbonate futures on the Wuxi exchange have already risen above ¥150,000 per tonne for the first time since late 2024. Traders might want to take long positions in lithium futures or call options on major producers to capitalize on this demand surge.

Market Implications and Strategies

Implied volatility in specific stocks is set to increase soon, making option premiums higher. This situation creates an opportunity for those willing to sell puts during any drops, as they can collect higher premiums believing that this government initiative supports these companies. We expect a period of upward movement followed by a stabilization at a higher level. It’s important to remember how the market reacted when the last five-year plan was exceeded; many people were surprised by how quickly things progressed. This time, the signal is even stronger. Options with expirations three to six months out may prove valuable. The goal to nearly double capacity from the 95 GW level reported in June 2025 is ambitious and demands a swift supply chain response. This initiative sharply contrasts with less progress in other regions, creating a potential trading opportunity. The latest U.S. Energy Information Administration report from August 2025 indicates that utility-scale storage installations are advancing much more slowly. This confirms China’s leading position and suggests that investments in the energy transition will increasingly favor these state-backed Chinese leaders. Create your live VT Markets account and start trading now.

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