Global Energy Storage Market Competition Issues

Introduction

The global energy-storage market has become strategically important because batteries and other storage technologies increasingly determine how electricity generated from renewable sources is stored, dispatched and integrated into electricity grids. The market includes lithium-ion batteries, battery energy-storage systems (BESS), grid-scale storage, behind-the-meter storage, pumped hydro, flow batteries, sodium-ion batteries, storage software and energy-management systems.

Competition concerns arise at several levels:

1. concentration in battery-cell manufacturing;
2. control over critical minerals and battery components;
3. intellectual-property and patent concentration;
4. vertical integration from minerals to cells, packs and storage projects;
5. procurement and bidding for utility-scale BESS;
6. long-term supply and exclusivity agreements;
7. interoperability and access to storage-management software;
8. mergers and joint ventures between energy-storage companies;
9. government subsidies and localization requirements;
10. strategic dependence on a small number of global suppliers.

Recent market developments illustrate the scale of concentration: Chinese manufacturers are reported to account for an extremely large share of global grid-scale storage production, while governments in the US, EU and elsewhere are attempting to reduce strategic dependence on particular supply chains.

The competition-law problem is therefore broader than simply asking whether battery prices are high. Control over storage technology can produce market power over future electricity markets themselves.

I. Relevant Markets

Competition authorities may distinguish several relevant markets.

1. Battery-cell market

This concerns the manufacture and supply of individual cells, including:

• lithium iron phosphate (LFP);
• nickel-manganese-cobalt (NMC);
• lithium-ion cylindrical cells;
• prismatic cells;
• sodium-ion cells.

2. Battery-pack market

Cells are assembled into modules and packs with battery-management systems.

3. Utility-scale BESS market

A utility-scale BESS normally combines:

• battery cells;
• power-conversion equipment;
• thermal management;
• battery-management systems;
• energy-management software;
• grid controls;
• installation and maintenance.

4. Storage-as-a-service

Competition may also arise where companies own storage assets and sell:

• capacity;
• balancing;
• ancillary services;
• frequency regulation;
• arbitrage;
• reserve services.

5. Storage software

Software can become an independent competitive bottleneck where a provider controls:

• dispatch algorithms;
• forecasting;
• battery optimization;
• grid integration;
• bidding into electricity markets.

II. Major Global Competition Issues

1. Market Concentration

The first concern is oligopolistic concentration.

A relatively small group of manufacturers may control a substantial proportion of global battery production. This can produce:

• increased bargaining power over purchasers;
• greater ability to coordinate market conduct;
• barriers to entry;
• dependence of utilities on established suppliers;
• reduced technological diversity.

High concentration does not itself establish an antitrust violation. However, it makes coordination, exclusionary conduct and unilateral market power more significant.

III. Battery-Cell Cartelisation

Battery cells are particularly vulnerable to cartel conduct because manufacturers frequently interact through:

• global supply contracts;
• industry associations;
• common customers;
• technology licensing;
• joint ventures;
• component suppliers.

The strongest precedent comes from the lithium-ion battery investigations in the United States and European Union.

IV. Case Law

1. United States v. LG Chem, Ltd. — U.S.

This is one of the most important battery-industry antitrust precedents.

The U.S. Department of Justice prosecuted LG Chem for price fixing involving cylindrical lithium-ion battery cells. LG Chem entered a criminal plea agreement in 2013. The case was classified as a horizontal price-fixing matter involving storage-battery manufacturing.

Competition significance

The case demonstrates that:

• battery cells constitute a commercially significant market;
• global battery manufacturers can be prosecuted for cartel behaviour;
• price coordination among manufacturers is a classic horizontal restraint;
• competition law can apply to internationally organized supply chains.

Relevance to energy storage

Although the underlying cells were primarily associated with portable electronics, the legal principle extends to lithium-ion cells used in stationary energy storage.

2. Panasonic/Sanyo/LG Chem Lithium-Ion Battery Cartel — U.S.

The U.S. Department of Justice separately prosecuted Panasonic, Sanyo and LG Chem for conspiratorial price fixing involving cylindrical lithium-ion battery cells sold worldwide for notebook battery packs.

The investigation was particularly significant because it involved several major international manufacturers.

Competition significance

It demonstrates the danger of:

• exchange of commercially sensitive information;
• coordinated pricing;
• communication between competing manufacturers;
• international cartel activity.

The important principle is that technological sophistication does not immunize an industry from conventional cartel rules.

3. European Commission — Lithium-Ion Batteries Cartel

The European Commission identified anti-competitive contacts involving Samsung SDI, Sony, Panasonic and Sanyo concerning lithium-ion batteries.

The Commission described contacts involving:

• price-related discussions;
• commercially sensitive information;
• participation in competitive bidding;
• disclosure of submitted or intended prices;
• coordination concerning price increases. 

Competition significance

This is highly relevant to energy storage because utility-scale storage increasingly depends upon competitive procurement.

If competing BESS manufacturers exchange:

• tender prices;
• expected bids;
• capacity allocations;
• customer information;
• future pricing intentions,

the conduct may amount to bid coordination or cartelisation.

4. Dell Inc. v. LG Chem, Samsung SDI & Toshiba — U.S.

In Dell Inc. v. LG Chem, Ltd., plaintiffs brought antitrust claims concerning alleged anti-competitive conduct involving lithium-ion batteries, cells and packs against LG Chem, Samsung SDI and Toshiba.

Competition significance

The litigation demonstrates how alleged upstream coordination can generate private antitrust claims downstream.

This is important for energy storage because potential victims may include:

• battery integrators;
• utilities;
• automobile manufacturers;
• renewable-energy developers;
• storage operators;
• commercial consumers.

Thus, cartel conduct can affect an entire supply chain rather than only the immediate purchasers of cells.

5. CCI — In Re: Anticompetitive Conduct in the Dry-Cell Batteries Market in India

In CCI Suo Motu Case No. 02 of 2017, the Competition Commission of India examined anti-competitive conduct involving Panasonic and other battery manufacturers.

The case concerned coordination in the Indian dry-cell battery market. The CCI found a bilateral ancillary cartel involving Panasonic and another supplier, alongside a broader primary cartel involving major battery manufacturers.

Competition significance

The case is important for energy storage because it illustrates that competition law can reach:

• agreements between large and small manufacturers;
• supply agreements;
• price-parity clauses;
• indirect participation in cartel arrangements.

It also demonstrates that a small market participant can become part of an unlawful arrangement even when it lacks substantial independent market power.

6. CCI / Godrej & Boyce Battery Cartel Litigation — India

The subsequent Indian litigation involving Godrej & Boyce Manufacturing Co. Ltd. examined the finding of a bilateral ancillary cartel involving Panasonic.

The record describes an oligopolistic dry-cell market in which three major manufacturers had a very substantial combined market share. The court reduced the penalty imposed on Godrej while maintaining the finding of contravention.

Competition significance

The case illustrates three important principles:

First, an oligopolistic market can facilitate coordinated behaviour.

Second, contractual provisions concerning market prices may constitute evidence of cartelisation.

Third, the size of the participant does not necessarily eliminate liability.

These principles are directly transferable to battery-storage supply agreements.

7. AES / Siemens / Fluence Energy JV — European Commission

The European Commission reviewed the AES / Siemens / Fluence Energy joint venture under the EU Merger Regulation in Case M.8555.

The transaction involved the creation of a jointly controlled energy-storage business. The Commission declared the concentration compatible with the common market under Article 6(1)(b).

Competition significance

This is particularly important because it concerns energy storage itself, rather than merely batteries.

It demonstrates that competition authorities may examine:

• overlaps between energy companies;
• storage-system suppliers;
• technology portfolios;
• vertical relationships;
• potential foreclosure;
• access to storage technologies.

A transaction can therefore be lawful while still receiving substantive merger scrutiny.

V. Merger and Acquisition Risks

Energy storage is increasingly characterized by mergers between:

• battery manufacturers;
• renewable developers;
• electricity utilities;
• power-electronics companies;
• software providers;
• EV manufacturers;
• mining companies.

A merger can eliminate an important competitor even when the parties have modest present market shares.

Example

Suppose:

Battery Manufacturer A → cells
Storage Integrator B → BESS
Software Provider C → dispatch software

If A acquires B and C, the resulting firm could control the entire storage stack.

The competition authority must therefore examine vertical and ecosystem effects, rather than merely calculating horizontal market shares.

VI. Vertical Foreclosure

Vertical integration may produce efficiency, but it can also exclude rivals.

A dominant battery manufacturer might refuse or restrict access to:

• battery cells;
• proprietary battery-management systems;
• software interfaces;
• diagnostic data;
• spare parts;
• warranties;
• technical documentation.

This could make independent BESS integrators less competitive.

VII. Critical-Mineral Bottlenecks

Energy-storage competition begins well before the battery factory.

Critical inputs include:

• lithium;
• nickel;
• cobalt;
• graphite;
• manganese;
• phosphate;
• copper.

A company controlling a major upstream resource could potentially engage in:

• discriminatory supply;
• exclusive contracts;
• input foreclosure;
• refusal to supply;
• discriminatory pricing.

The competition issue is therefore increasingly vertical and geopolitical.

VIII. Intellectual Property and Patent Concentration

Patents can generate legitimate rewards for innovation but can also become competitive bottlenecks.

A dominant firm may possess patents concerning:

• cell chemistry;
• electrodes;
• electrolytes;
• manufacturing processes;
• thermal management;
• battery-management systems;
• charging technology.

The competition problem becomes particularly serious where patents are essential for interoperability.

Potential abuses

A dominant patent holder could theoretically:

• impose excessive royalties;
• discriminate between licensees;
• refuse licences;
• use litigation strategically;
• bundle patents with unrelated products.

The issue becomes especially important because major battery companies are increasingly relying upon extensive patent portfolios. For example, LG Energy Solution has publicly discussed licensing battery patents as part of its response to widespread alleged infringement.

IX. Exclusive Supply Agreements

Long-term contracts are common in energy storage because developers need predictable battery supplies.

However, exclusivity can become problematic where a dominant supplier requires customers to purchase almost all requirements from it.

Possible effects include:

• foreclosure of rival manufacturers;
• reduced access to customers;
• higher entry barriers;
• dependence on one supplier;
• reduced innovation.

The analysis should consider:

duration + market share + switching costs + customer alternatives + capacity constraints.

X. BESS Procurement and Bid-Rigging

Utility-scale storage is frequently procured through tenders.

This creates classic cartel risks.

Competitors could theoretically coordinate:

• winning bidders;
• bid prices;
• geographic allocation;
• project allocation;
• capacity volumes;
• tender participation.

For example:

Company A wins northern-region projects
Company B wins southern-region projects
Company C deliberately submits higher bids

Such conduct could constitute bid rigging, even if the parties never explicitly agree upon a single market price.

XI. Storage Software as a Competition Bottleneck

Future competition issues may increasingly arise at the software layer.

A storage platform may control:

• forecasting;
• dispatch;
• electricity-market bidding;
• battery degradation optimization;
• grid services;
• automated trading.

If one platform becomes dominant, competitors could face difficulty obtaining:

• APIs;
• operational data;
• interoperability;
• customer access;
• battery-performance information.

This creates a potential transition from hardware concentration to algorithmic concentration.

XII. Data as a Competitive Asset

Battery storage generates valuable information concerning:

• state of charge;
• state of health;
• degradation;
• temperature;
• cycling;
• electricity prices;
• dispatch patterns;
• grid conditions.

A dominant storage platform could use this data to strengthen its position.

Potential theories of harm include:

1. discriminatory data access;
2. refusal to provide interoperability;
3. self-preferencing;
4. tying software to hardware;
5. exclusion of independent service providers.

XIII. Network Effects

Energy-storage platforms can develop network effects.

More installations produce:

more operational data → better algorithms → better performance → more customers → more data.

This can produce a data-feedback loop.

A new entrant may therefore have difficulty competing even if it possesses technically superior hardware.

XIV. Government Subsidies and Competitive Neutrality

Governments increasingly subsidize domestic energy-storage manufacturing.

Competition concerns can arise where subsidies:

• disproportionately benefit incumbent firms;
• create artificial barriers to foreign competitors;
• require domestic-content conditions;
• favour particular technologies;
• encourage consolidation.

However, industrial policy and competition policy are not identical.

A subsidy may be legitimate industrial policy while nevertheless producing market-structure effects requiring competition scrutiny.

XV. National-Security Restrictions

Energy storage increasingly has a strategic-security dimension.

Governments may restrict:

• foreign investment;
• procurement from particular jurisdictions;
• sensitive battery technologies;
• critical-mineral imports;
• access to grid infrastructure.

These measures may protect national security but can also reduce the number of suppliers.

Thus there is a difficult policy balance:

security resilience vs. competitive openness.

XVI. Standardisation and Interoperability

Standards can promote competition by allowing components from different manufacturers to work together.

But standard-setting can also create risks where:

• dominant firms control standards;
• competitors are excluded;
• essential patents are incorporated;
• licensing terms discriminate against smaller manufacturers.

Competition authorities therefore need to distinguish between legitimate standardisation and strategic standard-setting designed to exclude rivals.

XVII. Energy Storage and Electricity-Market Power

The most significant future competition issue may be the interaction between storage concentration and electricity-market concentration.

A company controlling a large amount of storage capacity could potentially influence:

• electricity prices;
• balancing markets;
• ancillary services;
• congestion management;
• capacity markets.

Storage therefore changes the competitive structure of electricity markets.

A vertically integrated firm might simultaneously control:

generation → storage → transmission access → electricity trading → retail supply.

This could create powerful foreclosure opportunities.

XVIII. Emerging Algorithmic Coordination

Storage operators increasingly use automated systems to determine when to:

• charge;
• discharge;
• reserve capacity;
• bid into markets;
• provide ancillary services.

If competing storage operators employ algorithms that independently respond to each other's behaviour, markets could become more susceptible to tacit coordination.

The difficult legal question is whether competition law should intervene when:

algorithms produce coordinated outcomes without an express human agreement.

This is likely to become one of the most important future issues in storage-market competition law.

XIX. Key Competition-Law Theories

XX. Overall Legal Assessment

The global energy-storage market presents a multi-layered competition problem.

The traditional competition-law model focused on:

battery manufacturer → battery purchaser

is increasingly inadequate.

The modern market is closer to:

critical minerals → materials → cells → modules → BESS → software → electricity markets → energy services

Market power at any one layer can be leveraged into another.

The historical lithium-ion battery cartel cases—particularly the U.S. prosecutions involving LG Chem and the Panasonic/Sanyo/LG Chem proceedings, the European lithium-ion battery cartel decision, and the Indian battery-cartel cases—show that coordination among battery manufacturers is a genuine competition-law risk, not merely a theoretical possibility.

At the same time, the AES/Siemens/Fluence transaction demonstrates that competition authorities are already examining storage-specific corporate structures, including joint ventures and consolidation.

Conclusion

The central competition issue in the global energy-storage economy is the potential creation of strategic bottlenecks across the entire storage ecosystem.

The most important areas for competition authorities are likely to be:

1. battery-cell concentration;
2. critical-mineral access;
3. battery-manufacturer cartels;
4. BESS procurement and bid rigging;
5. vertical integration;
6. exclusive supply arrangements;
7. patent and technology licensing;
8. storage-management software;
9. battery and grid data;
10. mergers and joint ventures;
11. electricity-market concentration created by storage ownership;
12. algorithmic coordination.

The future competition-law challenge will therefore be to preserve open, interoperable and contestable energy-storage markets while allowing firms sufficient scale to finance the enormous investment required for battery innovation and global electricity-system decarbonisation.