European storage inventories on the rise

Analyst Ali Arfa of EUPD Research states that China’s control of the battery supply chain remains entrenched, with manufacturing shares ranging from 70% to 95% across raw materials, cathode/anode production, and cell manufacturing. He highlights that China’s dominance is slightly lower in battery pack assembly, at 70% to 75%, but still overwhelming. The session 'Decoding solar supply chains' at the NetZero event in Milan on Oct. 21 will explore these dynamics and their implications for procurement strategies in a shifting global market.

Arfa anticipates minimal short-term change in China’s supply chain dominance, citing the scale of its manufacturers and Europe’s competitive challenges. A more immediate concern is China’s export rebate reduction from 9% to 6% in 2026, eliminating entirely in January 2027, which is expected to accelerate shipments to Europe before the deadline.

EUPD Research projects European residential storage installations at 15 GWh to 17 GWh in 2026, with shipment volumes from leading manufacturers potentially exceeding market absorption capacity. Installers and distributors face bottlenecks, leading to inventory buildup and price pressures, particularly in residential and C&I segments by late 2026.

Arfa expects temporary oversupply in residential and C&I storage to peak in Q4 2026 and Q1 2027, with utility-scale projects remaining insulated due to order-based manufacturing. He notes that utility-scale prices are likely to stay stable or even rise, while residential and C&I systems may see discounts as wholesalers offload excess inventory.