:
Iran War a Bonanza For Chinese Industries
May 11, 2026: The American-Israeli war in the Middle East has disrupted oil and gas supplies, shaking governments around the world and forcing them to face the urgent need for power grids that can withstand future alarms. For many countries, the drive to build grids based on renewable energy is creating a new reliance on technology from China.
Chinese companies dominate the production of nearly every component of the modern grid including solar panels, transformers, high-voltage cables, convertors and batteries that store energy for later use. Even before the war in Iran, they were expanding abroad, helping countries build grids designed to meet the heavy electricity demands of artificial intelligence.
For decades, China has invested nearly half a trillion dollars into green energy, making it a foundation of the country’s drive for energy autonomy. It also blocked foreign companies from competing in large segments of its domestic market, such as manufacturing wind turbines and electric car batteries, to ensure that Chinese companies could grow into giants.
Now the war with Iran has laid bare the risks of dependence on Middle Eastern oil and gas. Countries are realizing that all paths to renewable power run through China and its exporters.
Even if a cease-fire between the Americans and Iran helps ease disruptions in the Strait of Hormuz, the shock has already seized the attention of governments worldwide. Faced with energy shortages, they are quickening efforts to upgrade their power grids, bringing them to the doorstep of Chinese companies eager to supply them.
Chinese companies increasingly produce the most affordable and most efficient renewable energy and grid storage technologies. Recently, the Philippines said it was working to bring twenty two new renewable power plants online within weeks to shore up grid stability.
Already a major destination for Chinese investment in energy infrastructure, recently Brazil took bids for the construction of new power plants, and is set to do so again this month for large-scale battery storage. Brazil needs technology in this area, and China has a lot to contribute. The war in the Middle East has been a massive reminder that the world will need even more energy.
China is the main trading partner for most countries worldwide and the dominant or near-exclusive supplier of requirements like rare-earth metals and solar panels. But governments in Europe and elsewhere are growing uneasy that this reliance could undermine their economic and national security, especially after the past year, when China shut off much of the world’s supply of certain rare earths.
Sales of essential electricity-related equipment are already growing rapidly. Global shipments of batteries used to store electricity for a grid, a sector long dominated by Chinese companies. This nearly doubled in the first three months of the year.
Chinese battery manufacturers and renewable energy apparatus makers were already raising money in Hong Kong to fund an overseas push, anticipating a surge in demand from power-hungry A.I. systems. But the war has added fresh urgency and new opportunities.
Recently, CATL/Contemporary Amperex Technology Ltd., the world’s largest maker of electric vehicle batteries, set off a wave of listings with Hong Kong’s biggest public offering since 2021.
Another battery maker, Shuangdeng Group, followed in August. Since then, other companies have lined up to do the same, including Sungrow, which makes energy storage systems; Ningbo Deye, a producer of solar equipment; and Sieyuan, which makes crucial components for energy grids such as transformers.
These companies are now spending to expand beyond China. Recently, Sungrow announced plans to invest about $270 million for its first European plant, in Poland, to produce energy storage equipment. In March, Hithium, which has also applied to go public in Hong Kong, signed a letter of intent to build a $500 million battery plant in northern Spain.
Since the war began, CATL has seen surging demand in Europe for home battery systems and growing interest in Asia in grid storage batteries, a company spokesman said, especially in countries with limited electricity and little domestic oil. He said that the company could not immediately expand capacity but that it had accelerated some projects.
Fierce competition at home has pushed Chinese makers of energy storage and grid equipment to sharpen their manufacturing, innovate faster and look overseas for growth. China has tolerated ferocious domestic competition requiring companies to continuously innovate in order to stay in the game.
Renewable energy was once expensive and unreliable. It was difficult to control the intensity of the wind and the sun, and power came in bursts that grids could not absorb. Batteries and storage systems now capture that excess energy and release it when needed.
For years, high battery costs made renewable systems less competitive than fossil fuels. But advances in technology have brought costs down; renewable power paired with storage is now almost on par with the cost of conventional fuels.
Chinese companies dominate not just batteries and grid hardware but also, increasingly, the software that manages energy flows. While some governments may be wary of giving Chinese firms access to their grids via the software, they are likely to keep buying the hardware since they have few affordable substitutes.
Chinese businesses also lead in producing a new generation of battery chemicals that allow large amounts of electricity to be stored when the sun is shining or the wind is blowing, and can be used later to power homes, electric vehicles and data centers.
The new chemistry uses lithium-ion batteries made with iron and phosphate, which cost 99 percent less than the materials that they replace, nickel and cobalt. The new batteries hold slightly less energy in the same space as older lithium-ion batteries with nickel and cobalt. For grid storage, where space is less of a concern, the bulkier size matters far less. China produces nearly all of the world’s lithium iron phosphate batteries, according to the International Energy Agency.
The two dominant Chinese players are BYD, which has surpassed Tesla to become the world’s largest electric carmaker, and CATL, the leading shipper of grid storage batteries.
As in other industries, Chinese firms’ dominance in energy technology was forged through intense competition for the enormous domestic market. China has spent years building out renewable energy and grid infrastructure at a scale no other country has matched. Recently, the Chinese leader revealed plans to expand wind and solar capacity sixfold from 2020 levels, adding up to 3,600 gigawatts.
CATL’s battery factories are vast and highly automated, stretching as long as six football fields laid end to end. The company is building them at a rapid clip to keep up with the surging demand.
At its latest project in Yancheng, a port city about 200 miles north of Shanghai, more than 100 backhoes, bulldozers and other heavy machinery moved across a muddy construction site early this month.
It feels like the CATL construction site is developing very quickly, and it shifts daily.