Energy storage policy in China

Four categories of energy storage policies in China

Driven by the “dual carbon” goal, the proportion of China’s new energy installed capacity has increased, which has increased the volatility of the power grid and increased the pressure on peak regulation in various provinces.

Among the hydropower stations in China’s “13th Five-Year Plan” period, the increase in installed capacity of hydropower stations with a capacity of more than 5 million kilowatts is almost zero, and high-quality large-scale hydropower has a strong scarcity.

Since 2021, China’s newly installed wind power and photovoltaic capacity has exceeded 639GW. The growth rate of traditional energy has declined. In order to ensure the reliability and safety of long-term power supply, a new power system with new energy as the main body must be built.

The large-scale access of new energy has affected the safe and stable operation of the power grid. It is urgent to rebuild the peak regulation system and dispatch system to cope with the daily power fluctuation of about 500 million kilowatts of new energy.

In recent years, China’s energy storage development has entered a window period, but the storage-to-new ratio is still lower than the global level. In 2020, the proportion of energy storage installed capacity and new energy installed capacity in China will be 6.7%, and the proportion of energy storage installed capacity and new energy installed capacity in other countries and regions other than China will be 15.8%. The growth rate of China’s energy storage industry is lagging behind the development of the new energy industry.

The growth rate of China's energy storage industry is lagging behind the development of the new energy industry

From 2021 onwards, the national level has successively issued a series of programmatic documents to assist the rapid development of new energy storage construction from the aspects of top-level design, market mechanism, price mechanism, and dispatch mechanism.

From January to May 2022, the local government issued 297 policies related to energy storage. It can be mainly divided into four categories: supply side, demand side, subsidy policy and market mechanism.

Supply side

Focusing on the energy plans of the 14th Five-Year Plan of each province, anchor the scale of new energy installations, adhere to both centralized and distributed, promote low carbonization in transportation, industry and construction, and vigorously develop new energy storage and expand energy storage aggregation applications.

China’s high-quality wind and solar resources are located in the western and northern regions, but the main power consumption is in the southeast coast (86.5% east of the Hu Huanyong Line). The northwestern region’s policies mainly focus on the large-scale wind and solar base, with a total installed capacity of 455GW.

The policies related to energy storage in the northwest region mainly focus on the construction of new energy bases, and promote the project of “source-grid-load-storage integration”. In addition, the western region is rich in lithium resources, and many provinces have issued clear plans and support policies for the layout of the energy storage battery industry.

Promote low carbonization in transportation, industry and construction

In the eastern and southern regions of China, the endowment of new energy resources is poor. Except for offshore wind power in Guangdong and Fujian, high-quality wind and solar resources are concentrated in Yunnan. However, the complex terrain of Yunnan is difficult to develop. Vigorously developing new energy in Yunnan will further deteriorate the consumption of renewable energy. accept the status quo.

The regional policy mainly focuses on distributed energy storage, energy storage aggregation applications, such as the construction of storage and charging infrastructure supporting new energy vehicles, and attention to the energy storage industry chain, such as lithium battery raw materials including Top 10 anode material manufacturers, energy storage lithium battery technology, etc.

The demand side

According to the special circumstances of each province and city, the power generation side will issue the proportion and hours of energy storage for new energy sources; the power grid side will focus on the importance of distributed energy storage, and further clarify the compensation mechanism for auxiliary services; the user side will introduce a guarantee of power supply during peak summer Relevant policies, as well as policies focusing on low-carbon transportation in the field of transportation.

Starting from 2021, in order to promote the allocation of energy storage to new energy sources and reduce the impact on the power grid, various provinces and cities have successively issued relevant policy documents, which have certain requirements for the allocation ratio of energy storage and the number of charging hours. The allocation ratio is generally 10-20%. The configuration time is usually 2 hours. However, with the rising price of raw materials for battery cells, the price of battery cells continues to rise, the cost of mandatory allocation and storage projects is unsustainable, and the willingness of new energy enterprises to allocate and store is very low.

The power grid side will focus on the importance of distributed energy storage

Some provinces and cities have clearly found that due to the differences in resources and power development status in different regions, the proportion of forced energy storage is not conducive to the sustainable development of the industry.

From a technical point of view, the construction of a new power system not only needs to rely on the large power grid structure to develop centralized dispatching technology, but also needs to respect the facts and laws of the rapid development of new energy, and support the construction of a distributed energy system. From January to May 2022, several provinces, autonomous regions and municipalities, such as Hebei Province and Zhuji City in Zhejiang Province, have put forward requirements for supporting the construction of energy storage for distributed photovoltaics.

Subsidy policy

The subsidy policy from January to May 2022 is mainly aimed at user-side energy storage, new energy vehicles and surrounding industrial chains.

The electrification rate of the terminal contributes 20% to the realization of the “dual carbon” target, of which the transportation and construction sectors have the greatest impact. Therefore, Guangxi, Yunnan, Guangdong, Shenzhen and other provinces have issued special subsidy policies for the charging of new energy vehicles. Learn more from here Top 30 power battery charging pile companies.

Subsidies for user-side energy storag

Subsidies for user-side energy storage have been gradually implemented in the city. Chengdu, Suzhou and other places have introduced subsidy policies for user-side energy storage projects. For example, Chengdu has made it clear that for the selected energy storage projects, the annual utilization hours of not less than 600 hours will be given 230 yuan per kilowatt per year according to the scale of energy storage facilities.And the maximum subsidy for a single project is no more than 1 million yuan, and the subsidy period is 3 consecutive years.

Market mechanism

New type energy storage can participate independently or jointly with other market players in medium- and long-term, spot and other power markets, and further clarify the status of new energy storage independent market players.

In order to promote industrial and commercial users to enter the market, the electricity price will be formed through a market-oriented approach, and the peak and trough electricity price of industrial and commercial electricity will be clearly increased.

It is clear that market-oriented power users will be compensated and apportioned in accordance with the principle of “who provides, who will profit; whoever benefits, who will bear”, and auxiliary service fees have channels for downstream transmission, which will help encourage the construction of new energy distribution and energy storage.

New type energy storage participates in the electricity market as independent energy storage

In addition to the operable electricity price policy, key energy storage policies at the national level have been successively introduced, and market mechanisms or subsidy policies with local characteristics have also been released at the local level around the national policy.

Refer to the current business model that achieves preliminary economic benefits, as well as the operating model of mature markets in other countries.

It is necessary to further formulate differentiated local policies according to the resource conditions and power consumption characteristics of each region, to ease the cost of energy storage, and to promote the long-term healthy development of the energy storage industry.

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