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EUPD Research analyst Ali Arfa says Chinese battery makers may accelerate shipments to Europe ahead of a scheduled reduction and removal of China’s export tax rebate. He expects the resulting inventory risk to weigh most on residential and commercial and industrial storage prices in late 2026 and early 2027, while utility-scale prices are likely to stay broadly stable.
European residential and commercial and industrial (C&I) battery storage inventories could rise toward the end of 2026 as Chinese manufacturers bring shipments forward ahead of scheduled export rebate changes, according to Ali Arfa, an analyst at EUPD Research. Arfa expects the risk of discounting to be greatest in those segments, while utility-scale storage prices are likely to remain broadly stable.
Arfa told pv magazine that China’s battery export tax rebate is set to fall from 9% to 6% before being eliminated in January 2027. He expects the policy change to encourage manufacturers to ship products earlier, with significant volumes headed to Europe. The anticipated shipments could exceed what the market can absorb in the short term, based on indications from some leading manufacturers, he said.
The potential buildup is not expected to affect every part of the market equally. Utility-scale batteries are generally supplied for specific projects and orders, which limits the scope for large volumes to collect in warehouses. Residential and smaller C&I systems typically pass through distributors, wholesalers and installers, creating more points in the sales channel where stock can accumulate.
EUPD Research estimates that European residential storage installations will reach approximately 15 GWh to 17 GWh in 2026. Arfa said installers and distributors may not have the capacity to move incoming products into completed projects at the same pace as shipments arrive. He also cited reports of wholesalers lowering prices, including unconfirmed reports that German installers have been offered products below prices available directly from manufacturers.
Residential Buyers Face Price Pressure
If shipments outpace installations, residential and C&I equipment prices could come under pressure as suppliers compete to clear stock. Lower wholesale prices may eventually affect offers to installers and customers, although the source report does not quantify any expected discount or establish how widely price reductions are occurring. The extent of any pass-through to end users will depend on distribution costs, project demand and how quickly installers can deploy systems.
The timing matters for suppliers and buyers making decisions around the end of 2026 and start of 2027. A temporary inventory glut could make some products cheaper or harder to sell, but it would not necessarily mean that all battery storage prices are falling. Arfa expects a different near-term picture for utility-scale projects, where order-based procurement and relatively tight cell inventories may offset downward pressure.
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China’s Supply Chain Position
The anticipated shipments sit against China’s large role in battery manufacturing. Arfa said EUPD Research estimates Chinese companies account for approximately 70% to 95% of raw material extraction and processing, and around 95% of cathode and anode active material manufacturing. China’s share is estimated at roughly 80% to 90% of cell manufacturing and 70% to 75% of battery pack production.
Arfa told pv magazine that China’s supply-chain dominance is unlikely to change significantly over the next two years, citing the scale of its largest manufacturers and the difficulty European producers face competing with them. Some pack and system assembly also takes place in Europe, the United States and other markets. The report says Europe’s longer-term ability to build more domestic manufacturing could depend partly on EU policy, including rules on cybersecurity and high-risk suppliers; it does not describe a specific new EU measure.
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Shipment Volumes and Discounts Remain Unclear
The report does not provide a confirmed total for incoming European shipments, nor does it establish how much inventory is already held by distributors. The forecast relies in part on shipment indications from some leading manufacturers; the report does not identify those companies or give their projected volumes. It is also unclear how much of any wholesale price reduction will reach installers or end customers.
Reports of German wholesalers offering products below manufacturers’ direct prices are described as unconfirmed. The timing and scale of any oversupply will depend on actual shipments, sales, installation capacity and demand. Arfa’s assessment is a market outlook, not confirmation that a broad inventory surplus or price decline has already occurred.
residential energy storage batteries
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Watch the Late-2026 Shipment Window
Market participants will be watching shipment volumes and distributor pricing through the fourth quarter of 2026, when Arfa expects oversupply concerns to become more pronounced. The risk could extend into the first quarter of 2027, before shipment volumes normalize after the export rebate is removed, according to his assessment.
Developments to track include whether installation capacity and end-user demand keep pace with deliveries, whether price reductions spread beyond individual wholesalers, and how suppliers adjust shipments after January 2027. The available report does not identify a scheduled update or provide a date for revised installation forecasts.
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Key Questions
Why could European storage inventories increase?
Ali Arfa of EUPD Research expects Chinese manufacturers to bring forward battery shipments ahead of a scheduled cut to China’s export tax rebate and its elimination in January 2027. If deliveries outpace sales and installations, stock could build in European distribution channels.
Which storage segments could face the most price pressure?
Arfa expects the greatest risk in residential and C&I storage, which commonly moves through wholesalers, distributors and installers. Utility-scale systems are usually ordered for specific projects and may be less exposed to warehouse inventory buildup.
Are European storage prices already falling?
The report cites reports of some wholesalers lowering prices, including unconfirmed accounts from German installers. It does not establish a market-wide decline or quantify price changes.
When could inventory concerns peak?
Arfa expects concerns to become more pronounced in the fourth quarter of 2026 and potentially continue into the first quarter of 2027. The actual timing will depend on shipments, demand and installation capacity.
Is China’s battery supply-chain position expected to change soon?
Arfa said he does not expect China’s share of the battery supply chain to change significantly over the next two years. He cited the scale of Chinese manufacturers and the challenges facing competitors, while noting that battery pack and system assembly also occurs outside China.
Source: rss
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