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China

Energy storage regulation in China

Table of contents
  1. What electricity storage projects have been commissioned in your jurisdiction to date?
  2. What electricity storage projects are anticipated in your jurisdiction in coming years?
  3. Is there any specific legislation/regulation or programme that relates to energy storage in your jurisdiction?
  4. Please give examples of challenges facing energy storage projects in your jurisdiction and how current projects have overcome these challenges.
  5. What are the main entities in the electricity sector and what are their roles or expected roles in relation to energy storage?
China

1. What electricity storage projects have been commissioned in your jurisdiction to date?

According to current data available, China has 22.8 GW of pumped hydro energy storage projects, with another 8.1 GW under construction. In addition, China had 63 battery storage projects at the end of 2014. The total installed capacity in China was 84.4 MW. New installations in 2014 reached 31 MW, with a growth rate of 58% compared with the previous year. We expect this number to have increased during 2015. These projects are concentrated in renewable energy integration, distributed generation, micro-grid projects and electric vehicle applications.

China mainly operates distributed storage demonstration projects led by grid or generation companies. Project funding mainly comes from the company’s own funds, bank financing, and research and development funding from the government. Income mainly comes from the sale of electricity.

Currently, renewable energy integration and user side applications have the highest portion of total installed capacity. In China, the mainstream battery technologies are lead-acid, lithium-ion and flow batteries.

China’s National Wind and Solar Energy Storage and Transmission Demonstration Project in Zhangbei accounts for a large proportion of renewable energy integration project capacity, with four lithium-ion battery projects totalling 14 MW and a 2 MW vanadium redox flow battery in operation since late 2011.

There are over 100 lithium-ion battery manufacturers in China, many focusing on lithium-ion, such as BYD, China Aviation Lithium Battery, Lishen and others. These firms are targeting the grid-scale energy storage and electric vehicle markets with the same battery technology. BYD has installed numerous projects at home and abroad and domestic and international vendors in China are starting to expand production scale to realise price reductions.

Also, the Chinese supplier Narada has had successful projects using its lead-carbon batteries in projects such as a 1 MWh installation for a solar PV-plus energy storage micro grid project in the western part of China, Xinjiang Autonomous Region and two projects totalling 2.5 MW for a grid-connected island micro grid system on Lu Xi island near Wenzhou.

2. What electricity storage projects are anticipated in your jurisdiction in coming years?

According to forecasts by the China Energy Storage Alliance, by 2020 the Chinese energy storage market will have a capacity of 67 GW (including 35 GW from pumped hydro energy storage).

For example, recently, UniEnergy Technologies and Rongke Power announced plans to deploy an 800 MWh Vanadium Flow battery in the Dalian peninsula in northern China. This project, which could be the largest of its type in the world, aims to provide peak-shaving and enhance grid stabilisation.

3. Is there any specific legislation/regulation or programme that relates to energy storage in your jurisdiction?

China currently has no policy measures or market structures that directly support energy storage. However, national policy and grid policy from China’s two state-owned grid companies indirectly support the participation of energy storage in end user consumption and electricity use demand management applications.

The National Energy Administration (“NEA”) has confirmed the first round of innovative energy demonstration cities and industrial parks that will promote the use of local renewable energy in electricity supply, heating, gas transportation and buildings.

The National Reform and Development Commission (“NDRC”) has expressed that in the next five years, China’s retail electricity price can be expected to closely reflect the associated costs of generation.

4. Please give examples of challenges facing energy storage projects in your jurisdiction and how current projects have overcome these challenges.

Currently, China’s fixed low electricity prices are a major barrier for energy storage applications. In addition, there is a lack of established mechanisms supporting energy storage market.

5. What are the main entities in the electricity sector and what are their roles or expected roles in relation to energy storage?

The transmission, distribution and sale of power are controlled by the two state-owned electricity grid operators and their regional and provincial subsidiaries, namely the State Grid Corporation of China and China Southern Power Grid Company Limited. These two companies indirectly support the participation of energy storage in end user consumption and electricity use demand management applications.

The NDRC is a macro-economic management agency under the State Council, who is in charge of the energy price fixing in China, and could have huge influence in the energy storage industry by pushing forward its price reform plan.