What is the key to the explosion of energy storage-reduce cost, ensure safety and highlight value
On September 7, 2022, the Twelfth International Energy Storage Conference was opened in Hangzhou, China, discussing the cost price, business model, security guarantee, development prospects of the energy storage industry, as well as the relationship between energy storage and power market, and energy sharing.
Experts pointed out that the auxiliary service market and peak valley electricity price mechanism need to be further improved to give full play to the value of peak regulation and frequency regulation of energy storage.
At the same time, the energy storage industry should continue to explore security technology to improve security. This article will discuss the key to the explosion of energy storage in detail.
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The scale of energy storage market is growing rapidly, and the demand is diversified
China has the most complete photovoltaic and lithium battery industry chain in the world. With large installed capacity of new energy, it has great advantages in developing energy storage industry.
Under the guidance of the “dual carbon” goal, the construction of new power systems has accelerated, and the power supply structure has accelerated cleaning. Energy storage can help solve the impact of the randomness and volatility of new energy on the power grid.
With the continuous expansion of new energy installation scale, the energy storage industry has broad prospects for development. In the next five years, China will increase the installed capacity of electrochemical energy storage by nearly 26.73 million kilowatts, and the market size of related technical services will be about 80 billion RMB.
According to statistics, China’s energy storage production and manufacturing industry chain will become increasingly perfect in 2021, with a market scale of 50-60 billion RMB, an increase of more than 120% over 2020; In the field of R&D and innovation, the R&D intensity of energy storage industry will reach 12.6%, 18.7% and 15.6% respectively in 2019, 2020 and 2021.
Taking Zhejiang province of China as an example, the development of new energy storage in Zhejiang province is fast. By the end of 2021, 31 new energy storage power stations have been built in the province, with a total installed capacity of 76000 kilowatts, mainly on the grid side. As of July 2022, there are 39 energy storage projects being promoted in the province, with an installed capacity of 3.03 million kilowatts.
Among them, 11 projects will be put into operation by the end of 2022, with an estimated capacity of 345000 kilowatts. By the end of 2023, 22 projects will be newly built or expanded, with a capacity of 1.148 million kilowatts. The demand of energy storage market in Zhejiang province mainly comes from five aspects:
● The peak shaving demand of the provincial power grid
With the gradual increase of PV penetration rate and the proportion of air conditioning load, the power grid load in the province leveled at the noon peak, and the late peak growth trend was obvious, and the power grid peak regulation pressure increased. It is estimated that by 2025, Zhejiang province will need more than 3 million kilowatts of energy storage capacity in the peak shaving field.
● The demand of ultra-high voltage power grid
Nearly 1/4 of Zhejiang’s electricity is imported from other provinces in China. The construction of ultra-high voltage power grid continues to advance, and large-scale new energy storage is required near the high-voltage power grid access point. It is estimated that about 1 million kilowatts of energy will be stored.
● The configuration potential of conventional thermal power plants
The new energy storage FM has the characteristics of fast speed and strong short-term power throughput. The fire storage combined FM has become one of the first commercial fields, with an estimated potential of 1.6 million kilowatts.
● The demand for new energy allocation
With the growth of new energy installations, such as wind and solar, the demand for energy storage to support the consumption of new energy increases, and it is estimated that about 2.8 million kilowatts of energy will be needed.
● User side configuration potential
The user side is mainly used for industrial and commercial energy storage users. The capacity price is saved by adding energy storage, and the profits are obtained through the peak valley price difference.
According to the electricity price level and power consumption characteristics of various users, the allocation potential is preliminarily estimated according to the principle of marketization, and the energy storage can reach about 1.6 million kilowatts under optimistic scenarios.
Sharing energy storage can reduce investment pressure of new energy manufacturers
By the end of 2020, the cost of China’s energy storage system has exceeded 1.5 RMB/watt hour. This is considered as the inflection point of the energy storage industry. Since 2010, the cost of energy storage batteries dominated by lithium-ion batteries has continued to decline by more than 80%. However, in 2021, the cost of the energy storage system rose by about 30% – 50% due to the rise in the price of upstream raw materials.
According to the survey, the current bidding price in different application scenarios is between 1.29 RMB and 1.9 RMB/watt hour. If the scale and usage of energy storage are further increased, the cost will naturally decline. However, on the whole, the cost pressure of energy storage is still large.
The construction cost of the energy storage system accounts for about 83% of the total cost, while the battery cost accounts for 50% of the total construction cost of the energy storage system. Whether the battery cost can be reduced has become a key issue for the development of energy storage, and the price change of raw materials such as lithium iron phosphate is the main factor affecting the price of energy storage batteries.
Considering the whole operation cycle of the energy storage system, long-term energy storage and shared energy storage may become the fundamental way to solve the problem of energy storage cost. Long term energy storage can improve the efficiency of the energy storage thermal management system. The number of battery charges and discharges may increase from the current 6000-7000 times to 12000 times.
In general, the life of electrical equipment can reach 40 years. If the battery of the energy storage system can be charged and discharged for 12000 times, the life of the system will also reach 40 years, which can greatly reduce the operating cost and eliminate the need to replace the battery midway.
Sharing energy storage is also an option to improve the efficiency of energy storage system and reduce the cost of new energy in the whole society. Shared energy storage has the advantages of more efficient dispatching and operation, more controllable safety quality, and is conducive to promoting energy storage to become an independent auxiliary service provider.
It can promote the full release of energy storage capacity at all ends of the source, grid, and load, improve the utilization rate of energy storage resources, and effectively improve the stability characteristics of the power grid and the ability to absorb new energy under high permeability.
Although the scale of electrochemical energy storage is increasing in China, compared with pumped storage, electrochemical energy storage still has the disadvantages of low cumulative installed power generation capacity and high cost. Although electrochemical energy storage equipment is reliable in performance, its safety, economy and business model still need to be constantly discussed.
Improve electricity price mechanism and explore new business cooperation mode
Price mechanism and profit model are still the main contradiction of energy storage development. At present, the development of new energy storage faces a series of challenges.
It is difficult for grid side energy storage to be used commercially, the competition for power generation side energy storage is fierce, and the profit prospect is uncertain, while the user side energy storage mode is single, and the profit space is limited.
New energy storage power stations can participate in various power markets as market players. Independent energy storage power stations deliver power to the grid, and the corresponding charging power does not bear the transmission and distribution price, government funds and surcharges.
However, according to the specific peak load regulation compensation mechanism, the guarantee transfer duration is still one of the problems faced by the current energy storage power plant developers. In addition to user side energy storage, peak shaving and frequency modulation are the core values of energy storage.
Due to the high frequency of changes in the current auxiliary power service standards, the uncertainty of energy storage revenue is strong. In addition, the economy of energy storage and peak shaving can only be gradually revealed after the cost of energy storage is further reduced. At the same time, it is also difficult for energy storage to make profits when it only participates in the spot market.
In March 2022, Shandong province of China took the lead in promoting four independent energy storage power stations to participate in spot trading. According to the actual operation, the difference between high price and low price of spot trading in Shandong is about 0.5-0.6 RMB/kWh.
If the price difference is more than 0.7 RMB/kWh, the cost of energy storage can be covered only if it is calculated based on two charging and two discharging per day.
From the electricity price table of commercial users who purchase electricians by proxy, the peak valley price difference of industry and commerce in Henan and other provinces in China is also about 0.7 RMB/kWh, and the profit margin is still unclear.
In order to ease the cost of energy storage, China and its local governments have successively introduced a series of measures in recent two years to further improve the peak and valley electricity price mechanism and the market rules for electricity ancillary services.
In July 2021, China issued the requirement to further improve the peak valley price mechanism, reasonably determine the difference between peak and valley prices, and stipulate that the difference between peak and valley prices in the system shall not be less than 4:1 in principle where the difference between peak and valley prices exceeds 40%; In principle, it shall not be less than 3:1 in other places.
In May 2022, China issued a notice specifying that independent energy storage can provide auxiliary services, and the auxiliary service fees shall be reasonably shared by the grid connected entities and power users on the relevant generation side.
In order to solve the problem of how to further improve the peak and valley price mechanism, the insiders believe that the peak and valley time of use price policy should be designed to adapt to the balance of power supply and demand.
The peak and valley periods should be designed according to the load characteristics of the power system in recent years, the system regulation capacity, power supply and demand conditions, etc., to timely increase the peak and valley price difference, and consider the design of seasonal price mechanism and peak price mechanism.
At the same time, independent energy storage power stations and new energy manufacturers are encouraged to actively explore new business cooperation models, such as the two parties negotiate to determine the proportion of income distribution of auxiliary power services and write it into the lease agreement.
Improve energy storage safety technology and find new battery materials
Security is the lifeline of energy storage development. Only when security is better guaranteed, the energy storage industry can have better development. There are three lines of defense for energy storage in terms of safety technology：
● The safety of the battery body
● The use process is safe
● Fire safety
In addition to improving the safety of the battery itself from the perspective of materials, it is also necessary to develop fault diagnosis technology. At the same time, efficient fire extinguishing technology should be developed to effectively control the fire at the early stage of the fire.
To improve the efficiency of fire fighting, it is necessary to extinguish the fire quickly in case of fire, and then keep the battery cool to prevent the battery from re burning. However, there is no mature solution to the problem of fire characteristics and fire spread characteristics of battery clusters worldwide.
While continuously improving the safety of lithium ion battery, the industry is also constantly looking for raw materials other than lithium.
Magnesium battery is a possible choice. Compared with lithium, magnesium resource is very rich, with low cost, high safety and fuel density comparable to lithium battery. But at present, the development time of magnesium battery is still short, and it has great development potential in the future.