Background
Under the guidance of the "dual carbon" target, China's energy system is undergoing profound changes. On the one hand, the new installed capacity of grid-connected wind power and solar power will reach 47.57 million kw and 54.93 million kW respectively in 2021, accounting for 58 percent of the total installed capacity of new power generation in the year and becoming the main force of new power generation. The total installed capacity of wind power and solar power has reached 640 million kw, which is close to that of thermal power. On the other hand, the problem of new energy consumption has not been solved, and it is in urgent need of an adjustment method to smooth the output of new energy. The development of new Energy Storage is an important way to improve the flexibility of China's power system, build a new power system, and ensure the realization of the "dual carbon" target as scheduled. According to the incomplete statistics of Zhongguancun energy storage Industry Technology Alliance, by the end of 2021, the cumulative installed capacity of China's energy storage projects (including physical energy storage, electrochemical energy storage and molten salt heat storage) reached 45.74 GW, up 29% year on year. Among them, the highest accumulative installed capacity of pumped storage is 34.5 gw, but the growth rate of electrochemical energy storage is faster, especially lithium ion battery energy storage has become the fastest developing new energy storage technology.
Despite the rapid growth of new energy storage installations in recent years, the problems of high cost, poor safety and mismatch of system and mechanism have also been exposed. According to the calculation of system cost of energy storage power station of 1500 YUAN/KWH, battery cycle life of 4000 times, project cycle of 10 years and charge-discharge conversion efficiency of 90%, the charge and discharge cost per KWH of energy storage power station is about 0.5 yuan, which is significantly higher than the cost of pumped storage. On the power generation side, if the energy storage is configured with 10% power 2-hour discharge time, the unit power generation cost of wind power and solar energy will increase by 5-8 minutes/KWH, increasing the difficulty of new energy generation parity. In the user side, the national long-term encourage promotion and gradually perfect the policy of tou price, but since the industrial and commercial users fully participate in electricity trading, power grid enterprises purchasing electricity prices generally in 0.25 ~ 0.5 yuan/KWH, plus a fixed distribution of electricity and government-managed funds, the user side peak valley price differential shrinking, a new type of energy storage peak valley price adjusting economy. On the power grid side, the rational allocation of energy storage can improve the utilization rate of existing transmission and distribution lines, reduce or delay the investment of new transmission and distribution facilities, and also play a role of backup power supply and emergency power supply in the case of power grid accidents. However, due to the tightening of electricity price supervision and examination policies, the business model for power grid enterprises to participate in the investment and operation of new energy storage has not been clarified, and the construction of related projects has slowed down accordingly.
Policy
In order to promote the healthy and orderly development of the energy storage industry, five ministries and commissions including the National Development and Reform Commission issued the Guidance on Promoting the Development of Energy Storage Technology and Industry as early as October 2017, clarifying the necessity of developing energy storage and its phased development goals. Later, in July 2021, the National Development and Reform Commission and the National Energy Administration jointly issued the Guiding Opinions on Accelerating the Development of New Energy Storage (hereinafter referred to as the Guiding Opinions), which proposed that by 2025, the new energy storage should transform from the initial stage of commercialization to large-scale development, and the installed scale should reach more than 30 GW. The document also explicitly grants independent market status to new energy storage, establishes market access conditions, trading mechanisms and technical standards for energy storage to participate in medium and long-term transactions, spot and auxiliary services, encourages energy storage to participate in auxiliary services as an independent market player, and encourages shared energy storage. In terms of electricity price mechanism, the document proposes to establish electricity price of independent energy storage capacity on the grid side, and allow alternative energy storage facilities to be included in electricity transmission and distribution price. On the basis of the above documents, on March 21, 2022, the National Development and Reform Commission and the National Energy Administration formulated the implementation Plan for the Development of New Energy Storage in the 14th Five-year Plan (hereinafter referred to as the Implementation Plan). Compared with previous documents, the Implementation Plan has the following features:
Quantification of cost reduction targets. Recently, power generation side energy storage projects across The country are generally facing the problem of lack of economic efficiency, and it is difficult to make profits from the allocation of energy storage in new energy generation projects with electricity parity. Reducing the cost has become the only way for the development of new energy storage. The implementation Plan focuses on the current pain points of the new energy storage industry, emphasizes that by 2025, the new energy storage will step into the stage of large-scale development and have the conditions for large-scale commercial application, and defines the development goal of reducing the cost of electrochemical energy storage system by more than 30%.
Diversification of technical route. Recently, new energy storage technologies in China mainly focus on Lithium Battery energy storage. With the rapid growth of the power battery market in the early stage, the cost of lithium battery energy storage is gradually slowing down. Since 2021, the explosive growth of new energy vehicles has driven the price rise of lithium carbonate and other upstream materials for Lithium Batteries. It is expected that with the continuous rapid growth of global demand for new energy vehicles, the downward pressure on the cost of lithium batteries will increase. The document takes "strengthening technological breakthroughs and building a new energy storage innovation system" as an important task, and proposes to intensify r&d efforts on key core technologies and equipment of various energy storage technologies, such as sodium ion battery, new Lithium Ion Battery, lead carbon battery and liquid flow battery, to speed up the reduction of the cost of new energy storage.
Concrete demonstration work. After the guidance "to develop the power generation side, adjust measures to local conditions to develop power grid side, flexible development user side" idea, based on the "implementation plan" highlights with diverse technical route, scene area, multiple time scales to promote pilot work, and clear the qinghai new energy storage key demonstration area, zhangjiakou and so on. In addition, in terms of large-scale development, the document emphasizes the need to "steadily promote the industrialization of new energy storage" to promote high-quality development of the industry.
Policies and mechanisms are refined. The Implementation Plan proposes to continue to study the access conditions, trading mechanism and technical standards for new energy storage to participate in the power market, and further echoes the previous policy guidance in the aspects of "new energy + energy storage" incentive method, grid-side energy storage cost guidance, user-side energy storage price mechanism and so on.
Prospect
The 14th Five-Year Plan is a critical period for the development of new energy storage in China. It is necessary to promote the sustainable and high-quality development of the industry, establish and improve the policy system to adapt to new energy and new energy storage, and promote the technological progress of new energy storage itself.
At the policy level, in January 2021, the National Development and Reform Commission and the National Energy Administration issued the Guiding Opinions on Accelerating the Construction of the National Unified Power Market System, which proposed that by 2025, the national unified power market system will be preliminarily completed and the national market and provincial (regional, municipal)/ regional market will operate in coordination. The integrated design and joint operation of medium - and long-term power market, spot market and auxiliary service market have significantly increased the market allocation of cross-provincial and cross-regional resources and the scale of green power trading. Market trading and pricing mechanisms conducive to the development of new energy and energy storage have taken shape. In August 2021, the National Development and Reform Commission issued the about encouraging renewable energy power generation company self-built notice or purchase the load capacity will increase of grid scale, clear new wind power, photovoltaic projects can choose 15% power / 4 hours duration (year after year adjustment) chemical energy storage complete market grid configuration, energy storage power station to obtain corresponding capacity compensation. In February 2022, Haiyang 101MW / 202MW-h energy storage power station of State Power Corporation successfully completed the day-ahead transaction of Shandong Power spot market, and the energy storage power station obtained the dual benefits of spot market and capacity rent. Recently, State Grid also proposed to actively support large-scale application of new energy storage, and proposed to strive to increase the electrochemical energy storage in the company's business area from 3 million kilowatts to 100 million kilowatts by 2030.
Technology level, with the increasing contradiction between supply and demand of raw materials of lithium-ion batteries, lithium battery energy storage costs showed a trend of rising recently, domestic lithium carbonate lithium battery cathode materials upstream raw materials prices since the beginning of 2021, 50000 yuan/ton quickly rose to 500000 yuan/ton at the beginning of 2022, six fluoride phosphate lithium price from 110000 yuan/ton rose to 550000 yuan/ton, The overall cost of materials increased by more than 2 times, and the overall cost of batteries increased by 50%. Affected by the rising battery cost, the cost of lithium battery energy storage power station system has risen from about 1,500 yuan/KWH at the beginning of 2021 to nearly 1,800 yuan/KWH. Considering the market demand for power batteries and the climbing speed of upstream capacity, it is expected that the scarcity of upstream raw materials will continue in the short term, and the cost reduction of lithium battery energy storage will face great resistance. According to the Implementation Plan, pilot demonstration is expected to accelerate the diversification of new energy storage technology and cost reduction, which is conducive to the formation of a new energy storage business model.
While promoting the development of new energy storage technology, we also need to see some new models and new business changes. For example, with the popularity of electric vehicles, more and more interactive projects of vehicle network such as orderly charging, V2G and changing stations have been implemented. The continuous warming of green hydrogen industry has also increased the attention of all circles to hydrogen energy storage. Driven by the "dual carbon" goal, all kinds of crossover elements will also deeply participate in the operation of the power system, and jointly build a new power system with energy storage technology.
