ees International
Export date: Fri Nov 16 21:34:14 2018 / +0100 GMT

Energy Storage in China

Chinese storage ambitions. The energy storage industry is no longer in its infancy. Market opportunities are being realized in different markets across the globe. China will be a crucial consumer and producer of energy storage technologies.

By Brian Caffey, China Energy Storage Alliance (CNESA) 1

The current status and future prospects of storage applications and technologies in China, as well as the policy shaping the country's energy storage market, will have important implications for the development of the global industry.

China's electric power network is the largest in the world, both in terms of installed generation capacity and total electricity produced. Home to some of the largest wind and solar farms globally, China has set aggressive renewable energy targets to further grow clean sources of energy.

China is also vigorously driving renewable energy in remote and island areas to provide universal electricity access for all of its 1.4 billion citizens. These challenges present exciting opportunities for the adoption of electrical energy storage technologies.

The development of the energy storage industry began relatively late in China; however, the industry has seen rapid developments in the last two years. Currently, China has a total 90 of electrochemical battery energy storage projects either in operation, under construction or planned with a total capacity of 90MW.

These projects are concentrated in renewable energy integration, distributed generation, micro grid projects and electric vehicle applications.

Electrochemical battery storage technologies in China

Globally, mainstream battery energy storage technology is dominated by five chemistries: lead-acid, lithium-ion, redox flow, nickel cadmium and sodium sulfur. In China, mainstream battery technology in China is limited to leadacid, lithium-ion and flow batteries.

There are over 100 lithium-ion battery manufacturers in China, many focusing on lithium iron phosphate, such as BYD, China Aviation Lithium Battery (CALB), Lishen and others. These firms are targeting the grid scale energy storage and electric vehicle markets with the same battery technology. BYD has installed numerous projects at home and abroad, including a battery project in the PJM frequency regulation market. Domestic and international vendors in China are seeking beginning to expand production scale to reach price reductions.

Lead-acid batteries, and advanced lead-acid batteries in particular, have been a popular choice for many of the solar integration projects on islands and in remote regions that otherwise rely on imported diesel for power generation.

Chinese vendor Narada has had successful projects using its lead carbon batteries in projects such as a 1 MWh installation for a solar PV-plusenergy storage micro grid project in the western Chinese province Xinjiang and two projects totaling 2.5 MW for a grid-connected island micro grid system on Lu Xi island near Wenzhou. Lead-acid is low-cost, proven technology, and enhancements to the traditional design of these batteries through the addition of carbon significantly increases performance for power intensive applications demanded by these projects such as solar PV ramp control.

Flow battery technology is growing in popularity among project developers in China. Compared to lithium-ion batteries, flow batteries are better suited for long-duration, energy-intensive applications. A number of wind farm projects have been equipped with energy storage in China's wind-rich northeastern provinces.

These battery projects are targeted at reducing wind curtailments which result from high wind penetration, limited transmission capacity and the high variability of wind. Developed by subsidiaries of China Guodian, the Woniushi wind farm in Liaoning Province has a 5MW/10MWh vanadium redox flow battery that performs forecast hedging and output smoothing. There are a number of Chinese companies offering vanadium redox flow battery systems such as Prudent Energy, Rongke Power and Chaoyang Huading.

Energy storage in China: Market by application areas

Compared with developments in more mature markets, energy storage in China has made some significant progress in areas such as renewable energy integration and end user applications while other areas are less developed. China has seen less development of energy storage on the grid and generation side, although there are some demonstration projects that are helping vendors, project developers and China's two major grid companies to gain valuable experience.

According to the China Energy Storage Alliance's (CNESA) statistics, the installed capacity of operational electrochemical battery energy storage projects in China reached 57.3 MW by June of 2014, adding 5 MW from the beginning of the year. The breakdown of current installations by application area is shown in the graph below.



fig. 1 | Operational electrochemical battery energy storage in China by application area Source: CNESA ES Project Database, 2014.

Currently, renewable energy integration and user side applications have the highest portion of total installed capacity. China's National Wind and Solar Energy Storage and Transmission Demonstration Project in Zhangbei accounts for a large portion of renewable energy integration projects, with four lithium iron phosphate battery projects totaling 14 MW and a 2 MW vanadium redox flow battery in operation since late 2011.

Integrating large scale renewable energy will continue to be a challenge for China's grid as the country strives to meet ambitious goals: a total of 100 GW of installed wind capacity by 2015 and 200 GW by 2020; and 35 GW of installed solar capacity by 2015 and 50 GW by 2020.

Energy storage applications on the user side are also very popular, representing almost a quarter of megawatts installed. Isolated grids and distributed generation projects are currently the major drivers of new end user energy storage projects. The 12th 5 Year Plan (2011 – 2015), China's high-level planning document called for electricity access for all Chinese citizens, including those in remote areas and island communities.

In addition, China's National Energy Administration is in the process of planning 30 micro grids, such as the Turpan micro grid project in Xinjiang province, where energy storage is playing a key role. Two recent policies are currently playing an important role in driving end user applications. First, State Grid recently granted permission for the grid connection of distributed generation projects less than 6 MW and guaranteed the purchase of renewably generated electricity at a rate of CNY 0.42/kWh.

Second, China's 2014 solar targets call for a total of 14 GW, 8 GW of which will be distributed solar. This marks the first year that distributed solar has accounted for the majority of annual targets and is an important development direction that will provide an excellent opportunity for energy storage technology in the future.

There are significantly less battery projects on the grid and generation side in China. Transmission and distribution is largely served by pumped hydro storage; the role of battery storage is not entirely clear in this area. On the generation side, there is potential for energy storage to play a role in providing balancing services at coal fired power plants.

At a power plant outside of Beijing, Raypower has been operating a 2 MW energy storage plant (using A123 lithium-ion batteries) that provides frequency regulation services for thermal generation units.

Energy storage policy in China

The future of these storage applications in China rests on the establishment of supporting policies. Energy storage charging and discharging tariffs must be structured in a way that recognizes the multiple benefit streams that can be achieved through the flexibility of storage resources. Subsidizing energy storage installations is another important angle of support that has helped to accelerate the deployment of storage system in the North American, European and Japanese markets.

China currently has no policy measures or market structures that directly support energy storage. However, national policy and grid policy from China's two state-owned grid companies indirectly supports the participation of energy storage in end user electricity use and electricity use management applications.

The National Energy Administration (NEA) is expected to soon release a much-awaited series of 13 energy policies that will cover large-capacity energy storage and EV charging infrastructure. The NEA has also confirmed the first round of innovative energy demonstration cities and industrial parks that will promote the use of local renewable energy in electricity supply, heating, gas transportation and buildings.

The National Reform and Development Commission (NDRC) has expressed that in the next five years, China's retail electricity price can be expected to more closely reflect the associated costs of generation. Currently, China's fixed low electricity prices are a major barrier for energy storage applications. Another important policy from the NDRC will be the implementation time-of-use pricing mechanisms by 2015.

These policy changes will greatly improve the value proposition for energy storage applications in China, especially for commercial and industrial energy management applications such as price arbitrage and demand management. China's State Grid is introducing measures that would open up markets and attract social capital in four key areas.

These changes would effectively open up the market for distributed generation and electric vehicle charging and open up investment opportunities for pumped hydro stations and peak shaving energy storage facilities. Other policies from the State Grid that indirectly support energy storage include policies on distributed solar PV management and distribution grid construction. China Southern Grid, the country's other major grid company has released a 13th 5 Year Plan that gives support for micro grid technologies as well as island electricity reliability and electric vehicle charging infrastructure.

Despite the overall lack of energy storage policy, China has identified energy storage as a strategic emerging industry and we can certainly expect to see more targeted measures to support it in high level planning documents across multiple government institutions.

Just as the country experienced massive growth in the wind and solar industries, the right policies will China has no policy measures or market structures that directly support energy storage Two recent policies are currently playing an important role set the development of energy storage onto a growth trajectory that will surely exceed the expectations of the entire industry.

Forecast: Chinese energy storage market in 2020

The CNESA has recently released a 2020 forecast of the Chinese energy storage market. Including pumped hydro energy storage, the forecast calls for a total installed capacity of 130 GW over the next six years. The breakdown of these projections by application is shown in the table below. These projections are based on China's 2020 national targets for solar and wind installation and EV production targets.

Additionally, the numbers take into account the proportion of energy storage used in large scale renewable energy and micro grid demonstration projects both in China and internationally.

Renewable energy integration energy storage projects includes large scale wind and solar PV as well as concentrated solar power (CSP) - another exciting growth area. China Guangdong Nuclear Power Company recently launched the Delingha parabolic trough CSP plant that includes 7 hours of molten salt thermal energy storage.

Electric vehicle energy storage for vehicle-togrid applications through can provide valleyfilling services to the grid by supplying extra load during times of low demand. China's State Council has set agressive targets for electric vehicles: 500,000 PHEV and EV vehicles produced and sold by 2015, and 5 million by 2020. This area already has a significant number of demonstration projects and is expected to be a strong driver in the future.

China is facing an environmental crisis caused by its overreliance on coal. The healthy transition to green and renewable sources of energy in China will require the flexibility and accuracy that energy storage is capable of providing.

The role that energy storage plays in the future of China's power industry - as well as new transportation and urbanization sectors - will ultimately be determined by government policies. The combination of a healthy policy environment, experienced technology vendors and a strong demand from multiple application areas offers excellent prospects for China's energy storage market in the coming years.


Brian Caffey is research manager for the China Energy Storage Alliance CNESA, covering global developments in energy storage technologies, applications and policies. 

Editor's note: A map of Chinese energy storage projects in operation can be found in the third issue of ees International magazine. The full magazine is downloadable free of charge here 2.

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