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EUPD Research analyst Ali Arfa expects changes to China’s battery export rebate to bring shipments forward, potentially building inventories in Europe. The greatest price pressure may fall on residential and commercial and industrial storage in late 2026 and early 2027; utility-scale prices are expected to remain broadly stable. Shipment volumes, actual stock levels and the extent of any discounts remain uncertain.
European battery storage inventories could rise toward the end of 2026 as Chinese manufacturers bring shipments forward ahead of changes to export tax rebates, according to Ali Arfa, an analyst at EUPD Research. Arfa expects the resulting price pressure to be most visible in residential and commercial and industrial (C&I) systems, while utility-scale battery prices are likely to remain broadly stable.
China’s export tax rebate for battery products is set to fall from 9% to 6% before being eliminated in January 2027, Arfa told pv magazine. He expects manufacturers to accelerate shipments before the change, with Europe among the destinations. The forecast is not a report of confirmed shipment totals or measured stock levels: it is an assessment of likely market effects based on shipment indications and the rebate timetable.
EUPD Research estimates that European residential storage installations will total about 15 GWh to 17 GWh in 2026. Arfa said indications from some leading manufacturers point to shipments that could exceed what the European market can absorb in the short term. He identified the capacity of installers and distributors to move products into projects as a constraint. Reports that wholesalers are already lowering prices have emerged from installers, but an example involving German wholesalers selling below manufacturers’ direct prices was described as unconfirmed.
The exposure differs by market segment. Utility-scale systems are generally supplied against specific project orders, which limits the potential for large volumes to accumulate in warehouses. Residential and smaller C&I products more often pass through distributors, wholesalers and installers, creating more points where stock can build up. Arfa said oversupply concerns could become more pronounced in the fourth quarter of 2026 and continue into the first quarter of 2027, before shipment volumes normalize after the rebate ends.
Why Home Storage Faces More Pressure
If shipments arrive faster than installers and distributors can sell and install equipment, suppliers may compete to move existing stock. That could put downward pressure on residential and C&I prices and affect buyers comparing systems or installers managing inventory. The source does not quantify expected price changes, and the forecast depends on the pace of shipments and the market’s ability to absorb them.
The outlook is not uniform across storage projects. Arfa expects utility-scale prices to remain broadly stable, citing project-based supply and relatively tight battery cell inventories as factors that may offset broader price pressure. For buyers and developers, that distinction matters: a rise in stock across distributor channels does not necessarily mean prices will fall across every type of battery storage project.
More broadly, the potential inventory buildup shows how a policy change in China can affect European supply timing even without a change in underlying demand. A temporary rush to ship before the rebate is removed could shift products into the market earlier than they would otherwise arrive, leaving local sales and installation capacity to determine whether stock clears quickly or leads to discounting.
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China’s Role in Battery Supply
Arfa said China’s share of battery manufacturing varies along the supply chain. According to estimates he cited, Chinese companies account for about 70% to 95% of raw-material extraction and processing, while their share of cathode and anode active-material manufacturing can reach around 95%. China accounts for approximately 80% to 90% of cell manufacturing and 70% to 75% of battery pack production.
Those figures describe different stages and should not be treated as a single market-share measure. Battery pack and energy storage system assembly also take place in Europe, the United States and other markets. Arfa expects China’s position to change little over the next two years, pointing to the scale of Chinese manufacturers and the difficulty European producers face competing with them.
He also said that over the medium term, Europe’s ability to expand domestic manufacturing could depend partly on EU policy, including rules addressing cybersecurity and high-risk suppliers. Arfa argued that Europe would need to establish conditions for a larger manufacturing base to challenge Chinese suppliers. The report does not specify a policy decision or forecast a date for such a change.
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Shipment Volumes and Discounts Remain Unclear
The report does not provide confirmed totals for incoming shipments, current European inventory levels or the volume of stock that distributors may hold. The estimated 15 GWh to 17 GWh refers to expected residential installations in 2026, not warehouse inventory or shipments. The comparison between prospective shipments and market absorption is based on indications Arfa said he received from some leading manufacturers; no shipment schedule or named company figures were provided.
It is also not yet clear how much, if at all, retail prices will fall, how widely any discounts will be offered, or whether reports of below-direct-price offers in Germany can be independently verified. Actual effects will depend on shipment timing, installer and distributor capacity, demand, and available battery cells. Arfa’s outlook is a forecast, not confirmation that an oversupply has already occurred.
commercial industrial battery storage
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Watch the Rebate and Channel Stock
The next markers are the rebate reduction from 9% to 6%, its scheduled elimination in January 2027, and evidence of how manufacturers adjust shipment timing around those changes. Sales and stock reports from wholesalers, distributors and installers could help show whether the forecast inventory buildup is materializing and whether discounts are spreading beyond isolated offers.
Market developments in the fourth quarter of 2026 and first quarter of 2027 will indicate whether residential and C&I equipment is clearing through to projects or remaining in sales channels. The report gives no confirmed schedule for a later normalization beyond Arfa’s expectation that shipment volumes will normalize after the rebate is removed. Utility-scale pricing will also be worth tracking separately, since Arfa expects that segment to remain comparatively stable.
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Key Questions
Why could European battery storage inventories increase?
Ali Arfa of EUPD Research expects Chinese manufacturers to bring shipments forward ahead of changes to the export tax rebate, potentially sending more products to Europe than the market can absorb in the short term.
Which storage products may face the most price pressure?
Arfa sees the greatest risk in residential and smaller C&I systems, which commonly move through distributors, wholesalers and installers. Utility-scale systems are generally supplied against specific project orders.
When could the pressure become more visible?
Arfa expects oversupply concerns to grow toward the fourth quarter of 2026 and potentially continue into the first quarter of 2027. These are forecast periods, not confirmed dates for price changes.
Are European storage prices already falling?
The report cites installer accounts of wholesalers lowering prices, including unconfirmed reports from Germany. It does not establish a broad price decline or provide a measured change across the market.
What happens to China’s battery export rebate?
According to Arfa, the rebate for Chinese battery products is set to fall from 9% to 6% before being eliminated in January 2027. He expects manufacturers to accelerate shipments ahead of the change.
Source: rss
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