The Smart Money Pivots to the Grid: Nomura’s Take on the post-2025 Energy Landscape
In the high-stakes game of global energy transition, the narrative is shifting fast. The days of blind exuberance for every EV startup with a PowerPoint deck are over. According to a fresh research note from Nomura, released on December 8, 2025, the smart money has moved on to the backbone of the system: storage and grid infrastructure.
Following an extensive marketing tour across Singapore, Kuala Lumpur, and Europe, Nomura analysts Ethan Zhang and Frank Fan have codified what institutional investors are actually whispering about. The focus has decisively shifted toward the lithium battery supply chain for 2026, but with a massive caveat: the obsession is now with Energy Storage Systems (ESS), while anxiety mounts over margin compression and the geopolitical minefield awaiting Chinese tech in the West.
Here is the breakdown of the current institutional sentiment toward China’s new energy complex.
The ESS “Lifeboat” and Geopolitical Anxiety
Investors are pricing in a robust demand outlook for global ESS in 2026. However, the optimism is fragile. While volume remains strong, complications abound regarding the sustainability of demand growth in the mid-to-long term. The Nomura report highlights that domestic Chinese demand is heavily propped up by provincial subsidies, raising questions about what happens when the fiscal tap runs dry.
Dominating this conversation is Contemporary Amperex Technology. Regarded as the prime beneficiary due to its stranglehold on ESS battery cell shipments, CATL is nevertheless facing intense scrutiny. The elephant in the room regarding the US market is the “One Big Beautiful Bill Act” (OBBBA).
Investors are grilling Nomura on three specific pressure points regarding Chinese battery giants:
- Technological Competitiveness: How does CATL’s LFP product quality stack up against Korean rivals in a protectionist US market?
- Sourcing Strategies: Who are the major US ESS players buying from as walls go up?
- Export Controls: There is palpable fear regarding potential countermeasures by Beijing on battery technology and equipment exports.
Furthermore, the spectre of inflation hasn't vanished. With a recent rally in lithium carbonate prices, the market remains terrified of near-term margin pressure if these higher localized costs cannot be passed downstream to consumers.
Grid Equipment: The New “Safe Haven”
Perhaps the most telling takeaway from the Nomura roadshow is the relative distaste for traditional renewables. Long-term investors are turning conservative on the Chinese solar and wind sectors. They are querying the progress of “anti-involution” initiatives—a term describing the cutthroat, race-to-the-bottom unrestrained competition that has decimated margins in the solar space.
Instead, capital is flowing toward power grid equipment—transformers, switchgears, and tap changers. The favored trade is now companies with high exposure to overseas markets rather than those reliant on the domestic grind.
In this vertical, companies like Ningbo Orient Wires & Cables are attracting attention. The thesis is simple: solid growth in domestic grid investment combined with the lucrative arbitrage of overseas expansion. However, valuations are beginning to look "demanding," suggesting the easy money in this rotation may have already been made.
Capex and The AI Bottleneck
On the manufacturing front, interest persists in equipment suppliers like Wuxi Lead Intelligent Equipment. Investors are deep-diving into individual unit capex trends, trying to discern if the era of massive capacity expansion is finally cooling off.
Meanwhile, the intersection of energy and AI remains a frustration for capital allocators. While there is broad long-term interest in the China Internet Data Center (IDC) market, the near-term catalyst is missing. Nomura notes that chip access remains a "bottleneck" for AI spending by Chinese Cloud Service Providers (CSPs).
Consequently, order visibility for third-party IDC operators is shrinking as CSPs demand faster delivery times. Stocks like GDS remain on the radar, but investors are increasingly focused on the granular details of their order books and customers rather than broad sector beta.
Conclusion
The Nomura report paints a picture of a maturing, bifurcated market. The "spray and pray" approach to abundant Chinese energy stocks is dead. Investors in late 2025 are circling the wagons around grid stability, energy storage leaders like EVE Energy, and infrastructure plays that can survive the dual headwinds of rising raw material costs and an increasingly hostile geopolitical regulatory environment.