Investment Rating - The report maintains a "Positive" investment rating for the energy storage industry [4]. Core Insights - The "Great Beauty" Act introduces changes that impact energy storage, including tax credit adjustments and new material assistance restrictions for foreign entities, but the overall effect on Chinese companies is less severe than initially feared [44]. - Demand for energy storage in the U.S. remains strong, driven by increasing renewable energy installations and the need for grid stability, despite potential cost increases from tariffs and tax credit reductions [26][28]. Summary by Sections 1. Overview of the "Great Beauty" Act - The act outlines tax credit structures and requirements for clean energy investments, with specific provisions for energy storage and foreign material assistance [10][12]. 2. Impact on Foreign Entities - The definition of foreign entities under the act may restrict Chinese companies' ability to supply components, necessitating a reduction in ownership stakes to comply with new regulations [12][13]. 3. Material Assistance Guidelines - The act specifies that components must meet certain cost ratios to qualify for tax credits, with significant implications for battery cell sourcing and overall project costs [15][16]. 4. Existing Orders and Supply Chain - Existing contracts for subcomponents signed before June 16, 2025, are exempt from new material assistance calculations, allowing for continued tax credit eligibility [18]. 5. Demand Analysis - U.S. energy storage installations saw a 49.5% year-over-year increase in early 2025, indicating robust demand despite regulatory changes [26][28]. 6. Battery Manufacturers' Outlook - Current supply agreements for battery manufacturers remain unaffected, and there is potential for a surge in demand before the tax credit phase-out begins in 2030 [36]. 7. Integrated Manufacturers' Strategy - Integrated manufacturers may need to adjust pricing strategies and source from overseas battery manufacturers to maintain competitiveness under the new regulations [41][43]. 8. Conclusion - The overall impact of the "Great Beauty" Act on the Chinese energy storage supply chain is more favorable than pessimistic forecasts suggested, with opportunities for continued market presence through strategic adjustments [44].