The lingering energy shock is driving overseas orders for China’s energy storage companies, with more than 25 gigawatt-hours (GWh) of capacity to be built in the US and European countries.

The global demand for energy storage facilities has been driven by disruptions to oil and gas supply chains stemming from the Middle Eastern conflicts and the urgent need by developed markets to upgrade ageing grids, according to Matty Zhao, co-head of China equity at BofA Global Research.

Regardless of the recent US-Iran agreement to end the war, “governments realise they need structural energy security,” said Zhao, adding that it would push the governments of the US and Europe to allocate more funding for energy storage in the coming years.

An energy storage system (ESS) acts like a massive power bank for the electrical grid during the transition towards renewable energy sources, such as solar and wind, stabilising the power grid and preventing widespread blackouts. One GWh could power about 100 average American households for a year.

In the first two weeks of June alone, Contemporary Amperex Technology Co Limited (CATL) bagged a combined 5.4 GWh of storage orders.

The world’s largest energy-storage battery maker will partner with Finland’s Merus Power to deploy 3 GWh of systems across the Nordic region, and struck a deal with Edify Energy to supply 2.4 GWh for the Smoky Creek and Guthrie’s Gap projects in Australia.

On June 10, CALB Group – another Chinese battery leader – entered the Japanese market by signing a 220 MWh system procurement agreement with Japan’s Kitahama GRF to focus on grid-side storage and data centre backup power.