Why battery energy storage is more popular
As a more stable and accessible clean energy, PV has become the main force in the global energy structure change, and the supporting energy storage system is the key to determine whether the photovoltaic industry can be implemented in multiple industries on a large scale. Facing the global differentiated needs, Chinese companies including energy storage technology manufacturers are also exploring more efficient and low-cost solutions.
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Mature and efficient energy storage system is an important foundation
With the growing energy crisis and the gradual winter in the Northern Hemisphere, there is no lack of measures to restrict residents’ winter electricity and heating conditions by mandatory means in the relevant laws issued by European countries.
For example, the Swiss government is considering whether to restrict domestic residents to control the heating temperature of their houses in winter to less than 19 degrees. Those who violate the rules may face fines and three years of imprisonment.
Previously, Spain and Germany also issued similar measures, which not only stipulated that the room temperature should not be lower than 27 degrees in summer and not exceed 19 degrees in winter, but also required that shop windows and public buildings must turn off the lights at night when no one is around.
Nowadays, the world is vigorously promoting the construction of new power systems, that is, from traditional thermal power generation to clean energy power generation or new energy power generation. In China, since the establishment of the “double carbon target”, the government and the capital market have attached great importance to the new energy industry dominated by wind and light.
However, the new energy power generation system relying on the natural environment has greater uncertainty, which is different from that water and gas can be stored in containers and transmitted through pipelines. Due to its energy characteristics, electric energy cannot be directly stored in the form of alternating current.
Therefore, a mature and efficient energy storage system is an important basis for the universal development of the new energy industry, which is also the reason why the energy storage industry has received common attention from the consumer market and the industry in the global scope (such as China, the United States, Australia, etc.).
It is predicted that the scale of China’s energy storage market will reach 0.45 trillion RMB by 2025 and 1.3 trillion RMB by 2030. It should be noted that after 2030, China’s energy storage industry still has great room for development.
The Chinese government has issued a series of policies conducive to the energy storage industry
Data shows that since the end of April 2022, China’s energy storage concept index has risen by more than 60%. Since 2022, the Chinese government has issued a series of policies in favor of the energy storage industry:
● In January, the development goal of new energy storage was set;
● In April, it was proposed to speed up the tackling of key technologies in the power grid, and build an advanced smart and efficient power grid that is suitable for large-scale renewable energy and distributed power grid integration, two-way interaction between source and load;
● In June, it was pointed out that it is necessary to establish and improve the market mechanism suitable for the participation of energy storage, and encourage new energy storage to participate in the power market independently.
In addition, many local governments in China are also further refining the construction of local energy storage industry chain. According to statistics, in June this year, 48 local energy storage policies were issued, mainly involving energy storage subsidies, energy storage installation planning, energy storage facility construction, etc. Here are some examples:
Jiangxi Province of China encourages new energy utilization modes such as hydrogen energy and power generation side energy storage, explores the development mode of new energy+energy storage, reasonably determines the proportion of energy storage configuration, and improves the popularity of new energy and netizens and power support capacity.
Futian District, Shenzhen, Guangdong Province, China has provided support of up to 0.5 RMB/kilowatt for electrochemical energy storage projects that have been connected to the grid and put into operation with an actual investment of more than 1 million RMB, based on the actual discharge. Each project will be supported for 3 years, and the same project will not be supported more than 2 million RMB.
Many companies layout the energy storage track in different ways
On the industrial side, as a leading company in the new energy industry, CATL began to lay out its energy storage battery business as early as 2011, and continued to increase its size by establishing joint ventures or investing in shares. Data shows that the total revenue of CATL in 2021 was 130.356 billion RMB, an increase of 159.06% year on year.
Among them, the business revenue of energy storage system was 13.624 billion RMB, with a year-on-year growth of 601.01%, accounting for more than one tenth of the total revenue. Not long ago, CATL signed a large order with FlexGen, an American energy storage supplier, to supply up to 10GWh of advanced energy storage products.
In addition to CATL, BYD, EVE and other companies that have already accumulated in the field of new energy batteries, from large scientific and technological plants to household appliance giants to old mechanical companies, they are all laying out energy storage tracks in different ways.
● Midea acquired Hiconics, which focuses on new energy business, to undertake its new energy storage related business;
● SANY established Sany Lithium Energy in Hunan, China whose business will include battery manufacturing, sales, leasing, energy storage, etc;
● Millet and Huawei announced their joint shareholding in WeLion and released their first outdoor power product in September.
The rapid development of energy storage industry is inseparable from the traction of market demand
For the energy storage market in Europe and the United States, the economic demand brought about by the continuous rise in electricity costs and the self-sufficiency demand brought about by the poor power supply stability not only promoted the large-scale application of the photovoltaic industry, but also boosted the rapid development of household energy storage at one stroke.
However, for Chinese consumers, except for a few remote areas, citizens can enjoy a stable, reasonable price and even segmented pricing power supply, so the demand for household photovoltaic and energy storage systems is growing relatively slowly.
Nevertheless, for company users, the rational use of the time-sharing electricity price advantage of the clean energy power system can achieve the goal of “peak load cutting and valley filling” to reduce the power cost. Especially in areas with insufficient power supply in summer and winter, local companies can more flexibly cope with the impact of power restrictions on production and operation.
To be specific, “Peak cutting and valley filling” is a mode of charging the energy storage system at the low price and discharging at the peak price according to the time of use price mechanism.
Why battery energy storage is more popular
Different application scenarios also determine the difference of technologies, that is, different energy storage methods. According to the classification of technical paths, energy storage systems are mainly divided into chemical energy storage and physical energy storage. Among them, chemical energy storage consumes and stores electrical energy by converting electrical energy into chemical energy.
Furthermore, the mainstream technology path includes battery energy storage and hydrogen energy storage. Physical energy storage mainly includes flywheel energy storage, pumped energy storage, etc. The working principle of flywheel energy storage is that under the condition of electricity abundance.
The flywheel is driven by electric energy to rotate at a high speed, which transforms electric energy into mechanical energy storage, but the energy storage time is short; Pumped storage is to use electric energy to pump water to a high place and convert electric energy into gravitational potential energy for storage.
Nowadays, the market of battery energy storage is hot, but in fact, the cost per kilowatt hour of pumped storage is lower, and the market share is higher. According to statistics, by 2020, the cumulative installed capacity of China’s energy storage projects that have been put into operation is 35.6GW, of which pumped storage is the absolute dominant, reaching 31.79GW. The scale of electrochemical energy storage in the new energy storage technology ranks second, 3.3GW.
Among the electrochemical energy storage technologies, the scale of lithium ion battery is the largest, with a cumulative scale of 2.9GW. In terms of cost, it is estimated that the electricity cost per kilowatt hour of pumped storage is about 0.23 – 0.34 RMB/kWh, and the battery energy storage is about 0.67 RMB/kWh (sodium battery/vanadium battery is expected to reach 0.27/0.44 RMB as a minimum in the future).
So why is battery energy storage more popular? We should comprehensively consider the popularization of energy storage and large-scale construction after photovoltaic application starts. On the one hand, constrained by the energy storage environment, pumped storage is difficult to meet the growing demand for energy storage.
On the other hand, pumped storage is mainly used for capacity energy storage, which is still lacking in power energy storage, while battery energy storage can be considered. Specifically, from the perspective of initial investment cost, it is easy to build a pumped storage power station with hundreds of millions or even billions, while battery energy storage can be flexibly arranged according to demand.
In addition, there is a relatively complete battery supply chain in the market, and companies among them have successively entered the energy storage track, further promoting the rise of battery energy storage.