📚The TL;DR📝

1. Renewable energy storage: capturing and storing energy sources like wind and solar, given their intermittent nature, to ensure a reliable, clean energy supply.

2. The U.S.-China renewable energy race accelerated in the 2000s as China began to incorporate clean energy priorities in its economic planning. Texas and areas of the Midwest expanded their wind energy production while California enacted renewable energy usage targets.

3. Clean energy generated 44% of China’s electricity as of May 2024, demonstrating the success of China’s investments in renewable energy. China’s domination of the global lithium-ion battery market has exacerbated U.S. reliance on Chinese imports.

4. China implemented the New Power System, a national renewable energy integration and decarbonization program, in March 2021 to promote long-term energy production contracts and leverage Contract for Difference—unlike the United States—to encourage competitive bidding for energy storage projects.

5. The United States is at a decision point: either boost lithium-ion battery production or focus on its innovation advantage in next-generation batteries. The Department of Energy has already invested $4 billion in the latter option since 2023.

📌Running in Opposite Directions: The U.S.-China Renewable Energy Race📌

Energy Dominance?

Less than one month into office, President Donald Trump signed an Executive Order establishing the National Energy Dominance Council (NEDC). The NEDC announced its intention to advance private sector innovation across both renewable and non-renewable energy sources, while also lowering energy prices by restoring U.S. energy dominance through domestic fossil fuel production. 

The move sparked concerns amongst energy industry leaders and environmental groups about the United States’s ability to compete in the ongoing “renewable energy race” with China. This debate transcends power generation and intertwines elements of national security, technological innovation, and climate leadership. 

Energy storage is one of the central issues in the competition between the United States and China for dominance over renewable energy production. China has gained a significant edge in energy storage through its New Power System, a national renewable energy integration and decarbonization program launched in 2021. The central question for the global energy storage race is whether China will convert this lead into a greater edge on the global economic stage, or if the United States’ technology expertise and potentially shifting policy priorities will close the gap in the years to come.

The Rise of Renewables

While the race for renewable energy dominance has gained more attention in the past decade, it began in the 1970s, when an oil shock pushed the United States to explore alternative sources of energy such as solar and wind. Costs remained high even for small-scale projects, however, and renewable incentives remained scarce until the formation of the 1997 Kyoto Protocol, which bound signatory nations, especially developed countries, to reduce greenhouse gas emissions.

Renewable energy policy and technology accelerated in the 2000s and 2010s. The Chinese government initiated a low-carbon energy transition in 2011 through its national 12th and 13th Five-Year Plans (FYPs). Environmental concerns expressed at the 12th FYP sparked a “green revolution,” leading to a 20% reduction in carbon intensity compared to 2010 by 2015. Between the 12th and 13th FYPs, the Ten-Thousand Enterprises Energy Conservation Program, encompassing 14,641 companies, achieved its goal of saving 250 million tons of coal equivalent (Mtce); the program was thereafter extended to 30,000 companies. 

Although America’s renewable energy development has lagged behind China, it has some regional strengths. Texas became the national leader in wind energy—among other states in the Midwest such as Iowa and Kansas—as the creation of Competitive Renewable Energy Zones in the late 2000s supported wind farm development. California enacted its renewable portfolio standard (RPS) in 2002, mandating and meeting targets for renewable resources use in electricity retail sales, such as converting 33% of sales by 2017. Today, California leads national production in solar energy generation and geothermal electricity production. 

In the past two decades, renewable energy development has become a key aspect of the broader competition between the two superpowers. Key battleground issues, including energy storage, grid modernization, and green hydrogen, have carved out prominent areas of competition in the decades ahead. Among these issues, renewable energy storage—which is linked to supply chain control of critical minerals, balanced energy supply and demand, and power supply reliability—has emerged as the primary battleground upon which the future of renewable energy development lies.

Energy storage is critical to determining the trajectory of the renewable energy race for four key reasons. First, storage enables the integration of renewable energy sources such as wind and solar, which are intermittent and lack reliability without sufficient capabilities to save this energy. Batteries store and release excess generation cheaply and efficiently, directly reducing a country’s fossil fuel dependence. Second, long-duration storage protects grids from vulnerabilities such as natural disasters, blackouts, and geopolitical shocks, as stored energy can quickly replace disrupted supplies. Third, batteries represent a limiting factor in electric vehicle (EV) adoption, playing a key role in EV supply chains and grid-scale storage. Although EV adoption has remained slow, they are one of the most essential components in global decarbonization efforts in both the United States and China. 

China possesses a clear advantage over the United States in energy storage through its dominance in the global lithium-ion battery market. Clean energy generated 44% of the country’s electricity as of May 2024, marking China’s significant commitment to power decarbonization efforts. The United States has also become increasingly reliant on Chinese imports, which poses a threat to the 2024 National Defense Authorization Act’s planned ban on Chinese-sourced battery procurement, set to begin in 2027. Three aspects explain China’s lead over the United States in renewable energy development: supply chain control, combined corporate and policy leadership, and at-scale deployment. 

How China Conquered the Battery Market

China dominates battery production at every step of the production process. China currently controls nearly 80% of global lithium-ion battery production capacity, with 2024 levels reaching 1,170 Gigawatt hours (GWh). China has cornered key input markets such as cobalt, lithium, and graphite, as mines and processing facilities, especially in the United States and Australia, closed due to market pressures and environmental regulations. Chinese state-owned mining companies adopted a vertically-integrated model including both refineries and production facilities. Because of these factors, China has an effective monopoly over the entire lithium-ion battery value chain. As a result, lithium iron phosphate (LFP) battery prices in China reached a new low of $60 per kilowatt hour (kWh) last year, a 48% from the 2023 global average price of $115 per kWh. 

On the other hand, the United States is projected to own only about 10% of global battery manufacturing capacity by 2027. Supply chain gaps have led the United States to import minerals from China, although domestic mining and alternative sourcing from countries such as Australia and Chile are becoming increasingly popular. More importantly, would-be manufacturers face a major bottleneck due to China’s dominance in mineral processing, as the country controls the vast majority of annual critical mineral refinement. Europe’s electric transportation sector is similarly dependent on China’s dominance of raw materials, giving China leverage over the United States in the region.

Government investment and policy alignment stand behind China’s energy storage industry. The Chinese government pioneered the concept of a New Power System in March 2021, pledging to invest in long-term contracts for power storage as part of its Fourteenth Five-Year Plan. The Implementation Plan for the Development of New Energy Storage Technologies, released in March 2022, expanded on this, emphasizing the importance of market forces such as generation utilities and independent service providers in fostering a broader ecosystem of public-private energy storage development. 

China currently leverages Contract for Difference (CfD) auctions for its renewable energy projects, which use competitive bidding to set a strike price for electricity from wind and solar projects. China’s key corporate leaders include sodium-ion battery leader Contemporary Amperex Technology and LFP battery innovator BYD. 

In the United States, the use of CfD auctions in the renewable energy space is not widespread outside of select offshore wind power projects, reflecting a more decentralized, market-driven approach. Other incentive structures, such as Power Purchase Agreements (PPA), are more common but lack key benefits such as tax credit benefits. Although the Biden administration’s Inflation Reduction Act offered a 30% Investment Tax Credit for standalone battery storage systems, Trump’s One Big Beautiful Bill significantly reduced federal subsidies for renewable energy, hindering government coordination with the industry-wide push for battery manufacturing growth. 

While China has a clear lead in lithium-based storage solutions, the United States has begun to invest in new “post-lithium” battery technologies.. These lithium-ion battery alternatives aim to address the limitations of lithium batteries, including sourcing issues, safety concerns, and high costs. Companies such as QuantumScape and ION Storage Systems are building solid-state batteries with a high energy density, while labs and universities such as Argonne National Laboratory and Georgia Tech are also exploring sodium-ion and zinc-based batteries, potentially offering a more advanced American alternative to Chinese batteries. 

Can America Innovate Out?

The large-scale deployment of renewable energy storage systems in China has significantly expanded its storage capacity relative to that of the United States. Storage projects include grid-scale battery farms paired with wind and solar in areas such as Inner Mongolia and Qinghai. These centralized efforts focus on cost reduction, support China’s ultra-high-voltage transmission networks, and demonstrate an unprecedented construction efficiency with the help of government-led investment. 

By contrast, the United States installed approximately 82 GWh of storage capacity as of March 2025, around one-third that of China. The United States has also primarily focused on microgrids and distributed storage to improve overall energy resilience, departing from China’s approach of larger centralized projects. This pattern reflects China’s emphasis on scaling its renewable energy capabilities, which diverges from the American focus on resilient and flexible grids amidst relatively limited resources.

🌎Why It Matters🌎

As both countries develop their short and long-term strategies for renewable energy development, the United States faces a critical juncture. While prioritizing lithium-ion battery development to reduce dependence on China is a logical decision, the Department of Energy has invested nearly $4 billion over the past two years in U.S. next-generation battery development, which will see broad adoption as battery technologies evolve. In the next five years, China will likely retain its dominance given the sheer scale and cost advantage of its lithium-ion batteries. 

The long-term outlook is less certain. Although China has already begun to ramp up production in sodium-ion batteries, the United States’ domestic development initiatives and first-mover advantage in next-generation innovation may shift the global energy storage dynamic in the medium and long term (post-2030). 

The United States’ ability to capitalize on these dual goals of increased independence and innovation leadership will depend on the progress of public-private coordination in the next few decades and the chosen priorities in the United States’ long-term renewable energy strategy. The potential upside is enormous. Battery storage has become one of the fastest-growing employers of the American renewable energy sector, with jobs in the industry increasing by 17% since 2018.

Moreover, as the single most critical component of EV production, battery technology will continue to define the competitiveness and accessibility of EVs in the United States. Next-generation battery development will usher in higher energy density, longer life cycles, and reduced charging times for batteries, making EVs more efficient and affordable as global demand continues to increase, with a projected 25% growth in 2025 alone. 

Expanding grid-scale storage also makes renewable energy a more attractive investment. The International Energy Agency described grid-scale storage as “essential” to ensuring that renewable energy is both safe and reliable for consumers.