Amidst the pursuit of dual carbon targets, there's a heightened focus on advancing new energy storage technologies. Lithium-ion, compressed air, and other storage methods are poised for significant development, indicating a promising future for the electrochemical energy storage industry. This sector is anticipated to experience rapid growth in the coming years.
Keyword: Competition
In 2023, new energy storage practitioners experienced intense competition as the prevailing sentiment. The pressing issue of involution spurred ongoing technological advancements and reduced prices of energy storage systems. TrendForce data indicates that the overall trend for energy storage system (ESS) prices is a continued decline in 2024. Specifically, the bidding prices for ESS in March 2024 are expected to vary based on different energy storage durations.
Winning prices for ESS in March
The cost reduction in the new energy storage process has surpassed industry expectations, along with the rapid pace of development. In March 2022, the National Development and Reform Commission and the National Energy Board introduced the implementation program for new energy storage development under the 14th Five-Year Plan. By 2025, new energy storage is projected to transition from the early stages to a burgeoning phase of commercialization. Furthermore, during this period, new energy storage systems are anticipated to meet the conditions for large-scale commercial applications, with costs expected to decrease by over 30%.
In less than two years, the new energy storage industry has surpassed its cost reduction targets. Yue Fen noted that in 2023, Chinese companies' shipments of energy storage batteries (excluding those for base stations and data centers) reached an estimated 185 GWh, falling short of initial projections for the year. She also mentioned that various factors have led to an industry-wide average capacity utilization rate of only about 50%, resulting in slowed shipments in the latter half of the year. With rapid capacity expansion and heightened competition in the sector, companies lacking capital and sufficient technological expertise will face increasing pressure.
Keyword: Innovation
Despite facing challenges, participants in the new energy storage sector remain optimistic about future development prospects. A fresh round of competition has ignited in the energy storage market, with various companies intensifying research and development efforts on high-capacity, long-life, and low-cost batteries. Cost reduction and efficiency enhancement have emerged as primary focuses for product advancement, especially within the power generation segment, which dominates the energy storage market share in China. Consequently, expanding the capacity of energy storage products has become the prevailing choice for enterprises aiming to achieve cost reduction.
Currently, storage battery capacities upgrade rapidly, with the mainstream capacity being 280Ah, and there are many other capacity such as 300Ah, 560Ah, 700Ah, and 1130Ah. Additionally, leveraging high-capacity battery cells, leading industry enterprises such as Trina Solar, CRRC Zhuzhou Institute, and CATL are pioneering advancements in single-cabin energy storage compartments to bolster solar power. These efforts have culminated in the introduction of a 20-foot single-cabin 5MWh energy storage system program, igniting a surge in standalone capacity expansion within the energy storage sector.
Furthermore, manufacturers are continually unveiling new 5MWh+ energy storage systems, catering to diverse customer needs with unique solutions.
Keyword: Breakthrough
Breakthroughs are crucial to addressing the prevalent challenge of installations outpacing applications in the downstream sector. Jiang Weiliang, Vice President of Yotai Energy, highlighted that the underutilization of Energy Storage Systems (ESS) stems from a lack of established market mechanisms and unclear profit models. Numerous drawbacks, including scheduling issues, equipment variations, and commissioning challenges, plague energy storage projects. While project bidding winners often make lofty promises, actual implementation falls short, resulting in relatively low utilization rates for energy storage projects. Finding solutions to these hurdles is paramount for driving widespread adoption and maximizing the potential of ESS.
Keyword: Profits
In the transition towards a new power system centered around renewable energy sources, effective utilization of energy storage is essential alongside its proper implementation.
Chen Jianfu, Co-President of Guangdong New Energy Storage National Research Institute Co., Ltd., emphasizes the challenges faced by large-scale integrated energy storage systems, particularly in terms of grid functionality. To address this, he suggests a comprehensive study of energy storage application scenarios and an analysis of each scenario's specific demands.
Furthermore, the increasing demand for energy storage is expected to drive improvements in policies and market regulations. In a significant development, in September 2023, the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) issued China's inaugural basic rules for the electricity spot market (trial). These rules explicitly permit new entities such as energy storage systems and virtual power plants to engage in transactions.
With the rapid expansion of the power market and widening peak-to-valley price differentials, energy storage systems are poised to play a pivotal role in transactions within the power spot market and auxiliary services market. This involvement presents opportunities for energy storage to generate profits through transactions.
Analyzing power prices in January reveals significant disparities between peak and valley rates, with the highest gaps exceeding 0.7 yuan/kWh across 19 regions. Notably, Guangdong, Jiangsu, and Hubei provinces lead with peak-to-valley differentials reaching 1.3053 yuan/kWh, 1.1414 yuan/kWh, and 1.0693 yuan/kWh, respectively. These figures underscore the increasingly substantial revenue potential for new energy storage solutions.
As the power industry marches towards the future, energy storage emerges as an indispensable asset. With the widespread integration of renewable energy sources into the grid, coupled with the imperative for peak shaving, frequency regulation, and microgrid development, energy storage assumes a pivotal role in the power system of tomorrow. In 2024, the new energy storage sector is poised to maintain its rapid growth trajectory in response to these evolving demands.
