Why Are There No Energy Storage ETFs? Unpacking the Market Gap

2023-07-01 11:39

The ETF Landscape: A Snapshot of Energy vs. Energy Storage

Let’s face it: ETFs are everywhere these days. From AI-themed funds to niche sectors like space tourism, there’s an ETF for almost everything—except energy storage. While energy ETFs like Energy ETF (SZ159930) and Vanguard Energy ETF (VDE) dominate headlines, the absence of pure-play energy storage ETFs leaves investors scratching their heads. Why hasn’t this booming sector gotten its own financial vehicle? Buckle up; we’re diving into the wild world of batteries, regulations, and market quirks.

The Energy Storage Boom vs. ETF Silence

Energy storage is hotter than a Tesla battery on a summer road trip. China’s battery storage capacity alone grew by 43.2% year-over-year in 2024, with projects like Vision Power’s 20GWh Cangzhou factory making headlines[1][5]. Yet, the ETF market hasn’t caught up. Here’s why:

Market Fragmentation: The sector spans lithium-ion batteries, solid-state tech, and hydrogen storage—making it hard to create a cohesive ETF.
Regulatory Speed Bumps: Unlike traditional energy, storage tech often falls into multiple regulatory buckets (utilities, tech, EVs), confusing issuers.
Revenue Visibility: Many storage firms are still in the “hype phase,” with projects like Tesla’s Megapack generating buzz but inconsistent profits.

3 Reasons Energy Storage ETFs Are Playing Hard to Get

1. The “Chicken or Egg” Problem of Liquidity

Imagine trying to launch a pizza-themed ETF… in a town where everyone’s gluten-free. That’s the liquidity challenge for energy storage. While 储能电池50ETF (SZ159305) trades actively in China[1], global markets lack enough pure-play stocks to build a diversified basket. Even giants like CATL and LG Energy Solutions derive most revenue from EVs—not standalone storage.

2. The Green Tape: Policy Hurdles

Governments love to talk about grid-scale batteries but hate to simplify regulations. Take the U.S.: Storage projects often face a 12-18 month permitting maze, spooking ETF issuers who crave stability. Meanwhile, China’s “储能强配” (storage mandate) policy boosted projects but also created oversupply fears[5]—another ETF red flag.

3. The Tech Treadmill: Today’s Innovation, Tomorrow’s Obsolescence

Investing in storage tech is like betting on smartphone brands in 2007. Solid-state, flow batteries, hydrogen—who’s the winner? ETFs thrive on predictability, but this sector’s R&D arms race (see: CATL’s 0.696元/Wh bid wars[5]) makes index-building a nightmare. As one analyst joked: “Tracking energy storage stocks is harder than pronouncing ‘pneumonoultramicroscopicsilicovolcanoconiosis’.”

Case Studies: When Storage Almost Made It to the ETF Party

The Chinese Exception: 储能电池ETF (SZ159566)

China’s 储能电池ETF proves it’s possible—with caveats. Launched in 2025, it holds battery giants like Eve Energy and CALB. But here’s the twist: 81% of its holdings also make EV components[5], blurring the “pure storage” line. It’s like a vegan burger that’s 19% beef—close, but not quite there.

Hydrogen Hype: The ETF That Wasn’t

Remember when hydrogen was the “next big thing”? So did ETF issuers. But after false starts like the never-launched Global Hydrogen Index ETF, the market learned a lesson: hype ≠ viable ETF. Hydrogen storage remains trapped in pilot phases, much like nuclear fusion (“30 years away… forever”).

The Future: When Will Energy Storage ETFs Arrive?

Don’t ditch your lithium stocks yet. Three trends hint at change:

Software Eats Storage: Companies like Stem Inc. are pivoting to AI-driven storage optimization—a moat ETF issuers love.
Mega-Projects = Mega-Revenue: With Vision Power’s 30.94万吨 CO2-reduction project[5], storage is becoming profitably measurable.
The “BESS Benchmark” Effect: As battery energy storage systems (BESS) hit $100/MWh LCOE, expect S&P to launch indices—and ETFs to follow.

So, next time someone asks “Where’s the energy storage ETF?”, tell them: “It’s charging… just wait for the green light.”

[1] 储能电池50ETF(SZ159305) [5] 储能电池ETF吧 [6] 全球能源ETF-iShares吧 [9] 能源ETF(159930)股吧