Lithium battery energy storage reshuffle warnings are frequent, and flow batteries are breaking out at full speed

Recently, news about the "product quality" and "returns" of a certain star energy storage company has spread online. In response, the company has also officially refuted the rumors.

This news spread quickly, which indirectly shows that the domestic lithium battery energy storage market is facing disorderly competition and safety problems. In fact, warnings of a lithium battery energy storage reshuffle in 2023 have been frequently sounded.

At the same time, as a representative of new energy storage, liquid flow batteries have made major breakthroughs in technology and production capacity, with the advantages of inherent safety and long-term energy storage, and are becoming an increasingly important technical route in the field of energy storage.

Lithium batteries are no longer considered the only "preferred track"

Energy storage is seen as a new development track with a long way to go and is becoming an indispensable part of the new power system. However, disorderly competition has been exposed in lithium battery energy storage in 2023, and the industry reshuffle is accelerating. The hidden worries of lithium battery energy storage development are prominent.

Since lithium itself is an active metal, lithium batteries are naturally flammable and inherently unsafe, and nearly ten safety accidents have occurred in recent years. The 2021 Beijing Dahongmen accident had a far-reaching impact in China.

Entering 2023, the lithium battery energy storage industry has seen an unprecedented development boom, but on the other hand, various doubts about the lithium battery energy storage industry have continued to be heard.

It is understood that the current doubts about the lithium battery energy storage industry are mainly reflected in: doubts about the cycle life of energy storage cells, doubts about whether the energy storage system can withstand the power grid, doubts about whether the energy storage industry is really hot or false, and doubts about whether energy storage can be traded.

In response to the safety issues of lithium batteries, the National Energy Administration proposed in the "Twenty-five Key Requirements for Preventing Power Production Accidents (2022 Edition) (Draft for Comments)" that medium and large-scale electrochemical energy storage power stations should not use ternary lithium batteries and sodium-sulfur batteries, and it is not appropriate to use second-use power batteries.

Disorderly competition is another major problem plaguing the lithium battery energy storage industry. Currently, low prices frequently appear in the energy storage system bidding market, with the lowest bid for a 4-hour energy storage system falling below 0.9 yuan/Wh and the lowest bid for a battery falling below 0.5 yuan/Wh. This year, as cross-border and battery companies accelerate their entry into the energy storage system integration track, industry competition has become increasingly fierce, and bids for energy storage systems have continued to fall.

With the disorderly competition and poor safety of lithium battery energy storage, lithium battery energy storage is no longer considered the only preferred development path. At the same time, as a representative of new energy storage paths, flow batteries are accelerating into the energy storage field due to their inherent safety, mature technology and long-term energy storage.

"Intrinsic safety + long-term energy storage", the flow battery track is taking off

Compared with lithium batteries that are prone to safety accidents, flow batteries do not burn or explode, and have outstanding inherent safety advantages. With advantages such as energy storage time of more than 2 hours, service life of more than 20 years, and cycle times of more than 15,000 times, they are more suitable for future power grids that use a large amount of new energy, and are also regarded as one of the most suitable battery technologies for long-term energy storage. In addition, as the energy storage time increases, the investment cost of flow batteries decreases marginally.

Figure: Marginal decline in investment costs for flow batteries

According to industry insiders, flow batteries can be divided into all-vanadium flow batteries, iron-chromium flow batteries, zinc-iron flow batteries, etc., depending on the active substances in the electrolyte. Among them, the electrolyte of the all-vanadium flow battery is a sulfuric acid solution of vanadium ions of different valence states, which is the largest flow battery technology in China's demonstration project. Zinc-based flow battery (ZBF) refers to a flow battery with zinc as the active substance on the negative electrode side. Zinc-based flow batteries have the advantages of high energy density, low production cost, simple structure, no hazardous waste generation and recyclability, and will also have broad application prospects in the field of large-scale energy storage.

More importantly, compared with lithium batteries with an average energy storage time of only 2 hours, flow batteries with an energy storage time of more than 2 hours can meet the increasingly important long-term energy storage needs.

As of February 2023, 27 of my country's 31 provinces, municipalities and autonomous regions have issued policies related to new energy storage, and 18 provinces have set specific installation targets during the 14th Five-Year Plan period. Among them, the policies issued by Gansu, Fujian, Hubei, Jilin, Liaoning, Heilongjiang and Anhui clearly require that the peak-shaving time of power supply storage should exceed 4 hours. In the future, as policies are promoted, it is not ruled out that more provinces will join the ranks of extending the peak-shaving time of energy storage.

At present, the domestic institutions engaged in liquid flow batteries mainly include Dalian Institute of Chemical Physics, Chinese Academy of Sciences, Dalian Rongke, Beijing Puneng, Shanghai Electric, Weijing Energy Storage, Tsinghua University, Shenyang Institute of Metal Research, Chinese Academy of Sciences, Central South University, Xingchen New Energy and other research institutes and enterprises. It has also attracted cross-border layouts from companies such as China National Nuclear Titanium Dioxide, a leader in the titanium industry.

Figure: Application scenarios of flow battery energy storage (picture from the Internet)

More and more studies have shown that as the power market's demand for power transfer increases, the demand for long-term energy storage is booming. The energy storage market is stepping up the development of zinc-based, vanadium-based and other liquid flow battery technology routes.

With large-scale mass production imminent, flow battery manufacturers are breaking through at full speed

As various problems of lithium battery energy storage become apparent, liquid flow battery energy storage is gradually being placed with high hopes. Since 2023, liquid flow energy storage has entered a period of full-speed development in production capacity and technology.

Figure: Forecast of China’s installed capacity of liquid flow batteries (Bloomberg New Energy Finance)

According to incomplete statistics, from March to June this year alone, there were more than 9 liquid flow battery production lines under construction and planning in China, with a total planned production capacity of more than 8.2GW and a potential annual output value of more than 70 billion yuan.

In January this year, Weijing Energy Storage launched the first 100-megawatt-level "liquid flow battery intelligent production line" in China in Yancheng, Jiangsu; in August this year, Weijing Energy Storage's intelligent manufacturing super G factory built in Zhuhai, Guangdong, started trial production at the end of August. After full production, the annual production capacity will reach 6GWh, making it the first domestic liquid flow battery factory with a gigawatt-level production capacity. This indicates that the liquid flow battery industry has entered the gigawatt era and stood at the window of industrialization.

In terms of projects, flow batteries have been favored by a wider market. On May 10, the Hubei Provincial Development and Reform Commission announced a list of pilot demonstration projects to be included in Hubei Province's new energy storage power stations in 2023. The list contains 21 projects, and the scale of the pilot demonstration projects to be purchased is 1GW (million KW). Unusually, there is no project in the list that uses lithium-ion batteries alone for storage, but instead uses large-scale flow batteries. In the bidding requirements, the total scale of flow batteries with three technical paths, all-vanadium, iron-based, and zinc-based, has reached 480MW, accounting for 48% of the total project scale.

In addition to the bidding in Hubei Province, other places such as Tibet and Xinjiang have also seen a large number of construction projects focusing on long-term energy storage. Energy state-owned enterprises such as China Energy Construction and Huaneng Group have also issued a large number of biddings for long-term energy storage projects this year. Although 2-hour energy storage is still the main market player at the moment, the market structure is clearly changing.

Since the beginning of this year, liquid flow batteries have become a key force in the long-term energy storage market due to their advantages such as long cycle life, high safety, and wide application scenarios, and their market share has continued to rise.

In terms of technology, liquid flow batteries are making breakthroughs at full speed. At present, through continuous iteration and upgrading, the leading players in domestic liquid flow batteries have basically achieved 25,000 cycles of battery use without performance degradation, and the service life generally reaches 25 years, which can achieve "same life of light and storage" as one of the important customers' photovoltaic power plants.