New players are emerging in the energy storage field. Why will zinc-iron flow batteries dominate the future?

The conflict between Russia and Ukraine has exacerbated energy tensions. The natural gas supply cuts caused by the conflict have further pushed up European natural gas prices, which in turn has caused European electricity prices to soar. Following the power rationing caused by high temperatures last year, the country has set off another storm of high electricity prices at the end of the year. The "time-of-use electricity price" blunders have occurred repeatedly, and the official response has been negative. Behind this is people's concerns about the rise in civilian electricity prices. According to incomplete statistics from the International Energy Network, 23 provinces and cities have issued 27 policies to improve the time-of-use electricity price mechanism.

1. Time-of-use electricity prices, an opportunity for energy storage to "explode"

In the context of achieving carbon peak and carbon neutrality goals, time-of-use electricity is one of the important mechanisms to support the construction of new power systems and support the rapid and sound development of new energy.

Combined with CNESA's statistics on the average peak-to-valley price difference of 10kV general industrial and commercial power in various places in 2022, the overall average price difference of 31 typical provinces and cities in China is 0.7 yuan/kWh, of which 16 provinces and cities are above the thousand-year average value, and the highest peak-to-valley price difference in Guangdong Province (five cities in the Pearl River Delta) is 1.259 yuan/kWh. In the future, as the intraday fluctuations of the power system increase, the peak-to-valley price difference is expected to expand.

For general industrial and commercial users, peak-valley electricity price arbitrage, which uses energy storage equipment to charge when electricity prices are low and discharge when electricity prices are high, is one of the main driving forces. As the "double high" characteristics of the power system become more and more obvious, the peak-valley price difference continues to widen under the time-of-use electricity price policy, providing important support for improving the economic efficiency of user-side energy storage projects.

In addition to stimulating the economic benefits of general industrial and commercial users, time-of-use electricity prices also share the capital cost pressure of the power grid and distribution system. With the booming development of electric vehicles, heat pumps, and industrial process electrification, distribution time-of-use electricity prices will help manage distribution system costs.

In 2021, Denmark readjusted and revised the pricing method for distribution companies. According to the Danish government, the revision is aimed at supporting the transition of distribution networks to a new type of grid to meet the growing needs of electric vehicles and other terminal electrification.

In other words, the commercial potential and value of time-of-use electricity prices are far greater than we imagined.

With the intensive introduction of domestic energy storage policies, the "14th Five-Year Plan for Renewable Energy" points out that by 2025, renewable energy generation will account for more than 50% of the total electricity consumption increase in society. New energy storage and shared energy storage have become the key tasks for provincial and municipal governments to focus on in 2023. Against the background of clear requirements for power generation storage, the energy storage terminal application with time-of-use electricity prices and peak-valley electricity price differences has provided huge business opportunities.

2. Competition of energy storage technologies in terminal applications

Energy storage entering the field of industrial and commercial applications has gradually become a global trend. 26 provinces and cities across the country have planned new energy storage installation targets for the "14th Five-Year Plan" period. By 2025, the total planned installed capacity of new energy storage on the power generation side will be close to 67GW. Faced with a huge market, it has also created great temptations for many technical schools, bringing the energy storage industry into a critical period of unprecedented opportunities and challenges.

From the perspective of technology and business prospects, safety and economy are important factors in the competition among energy storage schools and various energy storage technologies.

Lithium battery technology is relatively mature. It is widely used in mobile phones, home appliances, new energy vehicles and the recently emerging energy storage industry. Lithium batteries have always been considered the darling of the market. However, in the past two years, lithium batteries seem to have encountered a new opponent - liquid flow batteries.

On June 29, 2022, the National Energy Administration issued a draft for comments, stipulating that in order to prevent fire accidents in electrochemical energy storage power stations, medium and large electrochemical energy storage power stations shall not use ternary lithium batteries and sodium-sulfur batteries. The inherent disadvantage of lithium batteries with poor qualitative properties has buried safety hazards for lithium batteries. Overheating and runaway of lithium batteries caused by excessive charging and discharging, short circuits, and squeezing are the main fuses, and have become an important reason for the disqualification of ternary lithium batteries in the energy storage industry.

At the same time, lithium-ion batteries must not be installed in crowded places, or in buildings where people live or move around, or in their underground spaces. In the context of time-of-use electricity prices, this undoubtedly dealt a fatal blow to lithium batteries. Liquid flow batteries have also ushered in another spring of development.

As one of the electrochemical energy storage technologies, flow battery was first proposed by LH Thaller in 1974. This battery technology pushes the cathode electrolyte into the battery stack through pipelines respectively, and converts between electrical energy and chemical energy through the change of the valence state of the active elements to achieve charging and discharging. Since flow batteries store energy in aqueous electrolytes and energy conversion does not rely on solid electrodes, there is almost no risk of combustion and explosion, which meets the safety requirements of energy storage.

Flow battery operation principle diagram

Elements such as zinc, iron, vanadium, chromium, and bromine are favored by liquid flow battery technology, which is also the reason why liquid flow batteries are more stable. Together, they promote the development of liquid flow batteries. In addition, liquid flow batteries can not only ensure the security of energy supply, but also have obvious advantages in terms of charge and discharge times. Generally, it is greater than 15,000 times, which is more than three times that of lithium batteries. In addition, liquid flow batteries are easy to install and small in size, so there is a huge space for sustainable development and market opportunities.

3. Low cost and production capacity: the weight of zinc-iron flow battery terminal application

1. Ultra-low electricity costs provide commercial support for terminal applications such as shared energy storage

Energy storage technology has risen to the level of national, energy and strategic discourse power. All countries are paying attention to and developing energy storage. While we pay attention to safety, we also begin to explore the commercial value of energy storage.

Excluding the mature but potential safety hazard lithium battery technology path, the more unfamiliar liquid flow battery is more suitable for the needs of new energy storage scenarios. Moreover, after more than 40 years of development, liquid flow battery has formed a relatively complete technical system.

This technical path can flexibly adjust the battery capacity and easily expand the capacity by adding electrolyte without going through complicated disassembly procedures, achieving long-term, large-capacity energy storage and meeting the cost of electricity parity throughout the life cycle. More importantly, the raw materials for liquid flow batteries are abundant and low-priced in China, and do not rely on imports, making them extremely cost-effective.

In 2013, the founding team of Weijing Energy Storage took the lead in breaking through the key issues of electrochemical reduction reaction and obtained a patent. At present, the cost per kilowatt-hour of lithium batteries (the unit cost of charging and discharging 1 kilowatt-hour) is about 50 cents to 60 cents, and the cost per kilowatt-hour of all-vanadium liquid flow batteries is about 30 cents to 40 cents. Weijing Energy Storage introduced that "their team can reduce the cost per kilowatt-hour of zinc-iron liquid flow batteries to less than 20 cents, and will have obvious advantages in terms of technical costs in the future."

More importantly, as a new type of energy storage, flow batteries can achieve economic issues such as matching supply and demand during peak and valley periods in the future, helping Shanghai build a future energy industry cluster.

CCTV Finance Channel also commented: "The supply of zinc and iron raw materials is large and the price is low. After solving technical bottlenecks such as raw material preparation, zinc-iron flow batteries are competitive in the market. The cost of zinc-iron flow batteries has an absolute advantage in the market."

2. Production capacity provides guarantee for the "three-terminal" multi-scenario application of zinc-iron liquid flow batteries

According to the "Guiding Opinions on Accelerating the Development of New Energy Storage" issued by the National Development and Reform Commission in July 2021, it is clear that by 2025, the domestic energy storage installed capacity will reach more than 30GW. In other words, compared with the current level, electrochemical energy storage will usher in a 6-fold industry growth rate in the next three years. The super-fast energy storage installed capacity requires production capacity as a strong backing to support it.