Yu Zhenhua said that affordable energy storage is expected in the next three years

"In the past three years, the cost of energy storage systems has dropped rapidly. I believe the second 50% will be within reach in the next three years." At the beginning of the "Energy Storage Industry Research White Paper 2016", Yu Zhenhua, chairman of the Zhongguancun Energy Storage Industry Technology Alliance, expressed his high expectations for the future development of the energy storage industry.

Indeed, against the backdrop of the continued global economic downturn, the performance of my country's energy storage industry is encouraging. Yu Zhenhua revealed that in 2015, China's energy storage industry not only made significant progress in the performance improvement of technologies such as flow batteries, lithium-ion batteries, sodium-nickel batteries, compressed air, and phase change thermal storage, but also a variety of vibrant new technologies such as all-solid-state batteries, lithium-sulfur batteries, lithium-air batteries, and liquid metal batteries, forming a picture of "a dazzling array of flowers".

He concluded that in 2015, the three driving forces of energy storage development were “distributed photovoltaic + energy storage” by users, energy storage frequency and peak regulation power stations on the grid side, and large-scale energy storage on the power generation side supported by the energy service mechanism, which drove the launch of China’s energy storage market.

At the same time, distributed photovoltaic microgrid policies, power demand side management compensation electricity price policies, power ancillary service market policies driven by power market reform, peak-shaving electricity prices and compensation policies have promoted the establishment of energy storage business models, created new opportunities in the energy storage market, and paved the way for large-scale participation in energy storage finance.

Energy storage industry developed rapidly in 2015

According to incomplete statistics, as of the end of 2015, there were 327 energy storage projects (excluding pumped storage, compressed air and heat storage) in operation worldwide, with an installed capacity of 946.8 MW. Among them, China had 118 energy storage projects in operation, with a cumulative installed capacity of 105.5 MW, accounting for 11% of the total installed capacity of global energy storage projects.

In 2015, China added 28 new energy storage projects with an installed capacity of 37.5 MW. Although the number of projects and installed capacity have decreased compared with 2014, they are still developing steadily.

From the perspective of technology distribution, in the operating projects, the energy storage technologies used are mainly lithium-ion batteries, lead-acid batteries and flow batteries, and the cumulative installed capacity of lithium-ion batteries accounts for the largest proportion, accounting for two-thirds of the total installed capacity of the Chinese market; from the perspective of application distribution, the installed capacity of distributed power generation, microgrids and renewable energy grid-connected fields accounts for the largest proportion, and the installed capacity of the two exceeds 80% of the Chinese market, especially the former, which ranks first in both cumulative installed capacity and number of projects, accounting for 56% and 77% respectively.

At present, domestic manufacturers engaged in energy storage projects are mainly concentrated in lithium-ion battery, full battery and flow battery technology manufacturers. As of the end of 2015, among the top ten manufacturers of energy storage project installed capacity in China, lithium-ion battery manufacturers had the largest number of 6, and there were two full battery manufacturers and two flow battery manufacturers.

2015 is the final year of China's 12th Five-Year Plan, and it is also the year to better prepare for the 13th Five-Year Plan. In Yu Zhenhua's view, 2015 can be summarized by keywords such as "policy", "opportunity" and "new model" for the energy storage market. It can be seen that a large number of favorable policies have spawned new opportunities and new models for the energy storage industry, promoting the rapid development of energy storage.

A new round of power system reform has been launched to promote the market development of energy storage

In March 2015, China launched the reform of its power system after years of silence. Subsequently, six supporting documents were issued to promote reforms in the power industry in my country in multiple links, including power generation, power sales, and power consumption. In addition to internal factors such as performance and cost, the lack of a corresponding market mechanism has been the main reason for the slow promotion and application of energy storage in China. The new round of power reform will open up multiple power markets in my country, such as demand response, ancillary services, and energy storage.

Guidance on the construction of microgrid demonstration projects issued to boost the commercial development of energy storage

On July 22, 2015, the National Energy Administration issued the "Guiding Opinions on Promoting the Construction of New Energy Microgrid Demonstration Projects" (hereinafter referred to as the "Opinions"), exploring the establishment of an integrated local power system that can accommodate a high proportion of renewable energy electricity. In the "Opinions", energy storage was mentioned many times, indicating the country's recognition and attention to energy storage.

Yu Zhenhua said that in the past two years, the field of distributed power generation and microgrids has always been ranked first in terms of both the number of projects and the scale of installed capacity. This field is also the field in China that is most likely to be the first to achieve large-scale commercial applications. "Especially in some areas with large peak-to-valley price differences, supplemented by national and local photovoltaic power subsidy policies, some projects can already foresee certain economic benefits, but due to the limited stimulus of subsidies and low market flexibility, the investment recovery period of the projects is too long." He pointed out that once the country provides certain policy support, this field will be able to develop rapidly in the direction of commercialization. It can be seen that the release of the "Opinions" has released a positive signal, but at the same time, Yu Zhenghua also looks forward to the improvement and implementation of relevant supporting subsidy policies in the future, hoping to realize the commercial development of energy storage as soon as possible.

Frequent policies on electric vehicles and infrastructure drive the development of energy storage industry

In 2015, the State Council, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Finance, the National Energy Administration and other departments successively issued policies in the field of electric vehicles. On the one hand, these policies are no longer just at the support level, but also introduce industry norms, such as "Automotive Power Battery Industry Standard Conditions" and "Lithium-ion Battery Industry Standard Conditions", which set technology and enterprise thresholds; on the other hand, the country still lists the construction of charging infrastructure as a priority and will promote construction from multiple aspects to meet the charging needs of 5 million electric vehicles nationwide in 2020.

In addition, this year, power battery recycling has been put on the national agenda, and a power battery recycling system that links upstream and downstream enterprises will be established. "These aspects will promote the more standardized and rapid development of power batteries in the field of electric vehicles, and will inevitably lead to performance breakthroughs and cost reductions in energy storage technology, thereby promoting the application of energy storage in various fields," said Yu Zhenhua.

Implementing the "Internet + Smart Energy" action plan to create a new model for energy storage applications

Although the research on "Internet + Smart Energy" is in its infancy, there is a consensus among many parties to establish a large energy interconnection system with the power system as the core and link, and highly integrated multi-type energy networks and transportation networks.

From the current perspective, combined with the energy consumption revolution and power system reform proposed by the country, distributed energy, microgrids, demand-side management, contract energy management, data-based energy services and other fields are most likely to achieve the initial integration of energy and the Internet in the near future.

Yu Zhenhua emphasized that under the framework of "Internet + Smart Energy", energy storage is no longer limited to electricity storage technology. Hydrogen storage, heat storage, natural gas storage, etc. will all be included. In the future, more application models and business models are expected to emerge in the energy storage field to promote the development of "Internet + Smart Energy".

Energy Storage Market Outlook

When predicting the development of my country's energy storage industry in 2016, Yu Zhenhua said that 2016 will be a year full of hope for the energy storage industry, but at the same time it will still face severe challenges.

First, China's macroeconomic situation showed signs of improvement in the first quarter, and the growth rate of electricity consumption rebounded. However, the investment in thermal power has led to an overall decline in energy efficiency, and the challenges of connecting new energy to the grid have continued to intensify. In 2015, the wind curtailment rate soared to 15%, and the wind curtailment rate in Gansu was as high as 39%. Although the "Guiding Opinions on Promoting the Construction of New Energy Microgrid Demonstration Projects" was issued in 2015 and project solicitation has begun, the subsidy plan has changed again and again and has not yet received final financial support.