China's domestic storage industry made steady progress in 2016. Electricity system reforms continued to roll out while new regulations in China’s "Three North" Region (三北) allow storage to provide and receive compensation for ancillary grid services. All of these and more contributed to the industry's continued growth as well as carving out market space for future storage technologies. China Energy Storage Alliance (CNESA) has closely followed the market developments this year, and here are the top 10 take-aways.
1) Storage Listed as "Key Technology" in National Energy Action Plan
On April 7, 2016, The National Development and Reform Commission (NDRC) along with the National Energy Administration (NEA) jointly released the “Action Plan for Innovation in the Energy Technology Revolution (2016-2030)” 《能源技术革命创新行动计划（2016-2030年）》classifying energy storage as one of the 15 “key technologies” to develop over the upcoming 15 years. CNESA’s Expert Committee along with Alliance industry members worked together providing contributions to the “Innovations in Advanced Storage Technologies” section.
The Action Plan laid out goals for 2020, 2030, and an outlook for 2050 regarding thermal storage, compressed air storage, flywheel storage, high temperature superconducting storage, high capacity supercapacitor storage, as well as battery storage technology.
2) Liaoning Province Announced Plans for the World’s Biggest Chemical Storage Project
Dalian City's reform commission, in order to increase city and province-wide load shifting ability as well as curb curtailed wind energy, submitted plans for a 200 MW/ 800 MWh vanadium flow storage project. Once approved, this marked the first time the NEA has signed-off on a national-level large scale chemical storage project. Total investments for the project are at US$500 million with construction to begin by the end of 2016. The first 100 MW capacity is expected to be installed by the end of 2017 with the the remaining 100 MW coming in by 2018.
3) Energy Storage Conference & Expo 2016 Successfully Completed its 5th Year
On May 11, 2016 CNESA wrapped up the 5th annual Energy Storage Conference & Expo in Beijing. The event brought together policymakers, industry leaders, and technology experts for three days of high-level talks, networking, and collaboration. CNESA also released its 2016 White Paper announcing predictions for China's storage market to reach 24.2 GW by 2020 under ideal conditions, and 14.5 GW with business as usual conditions (all figures excluding pumped hydro storage).
CNESA is pleased to further announce the 6th Annual Energy Storage Conference & Expo is set to take place in Beijing May 22-24, 2017, with plans to release the 2017 White Paper at that time.
4) China's North Opened to Energy Storage
On June 7, 2016 the NEA released “Announcement on Promoting Electrical Storage Participation in Ancillary Service in the ‘Three Norths’ Region” 《关于促进电储能参与“三北”地区电力辅助服务补偿（市场）机制试点工作的通知》 opening up power markets in China's North to energy storage. The announcement states that that up to five projects will be eligible to participate in peak regulating and ancillary services compensation mechanism trials. Payment, similar to United State's FERC Order No. 755 “mileage” payment mechanism, is based on services provided to increase effectiveness of the scheme. This announcement was a milestone in storage related policy, marking the first time storage received recognition to participate in providing grid services.
5) CERS Established Storage Committee, Naming CNESA Secretariat
The China Energy Research Society, a research body formed under the China Association for Science and Technology, founded an Energy Storage Committee in May of 2016 in order to promote academic exchange in the energy storage field, promote innovation, and provide a platform for collaborations and research discoveries. Soon after, the committee named CNESA as secretariat, together aiming to promote the implementation of industry-related policy, encourage exchange, and develop business models. On September 9th, 2016, the Committee convened for the inaugural meeting with attendees representing industry as well as high-level government agencies.
6) Chinese Premier Calls for Storage Technology Breakthroughs
On November 17, 2016, Chinese Premier, Li Keqiang, emphasized the need for technology breakthroughs in energy storage and microgrid technology. In order to meet China's goals to increase adoption of renewable energy resources, Premier Li stressed the need for energy storage. Additionally Premier Li called for increasing China’s global competitiveness in the energy technology sphere, calling for breakthroughs in microgrid technology and the construction of the “Internet+” Smart Energy, promoting grid system adjustability, increasing renewables consumption, and developing state-of the art high-efficiency energy technology. He also voiced the need for reforms in state-run energy enterprises, and increasing support for privately-run energy companies entering the industry.
7) NEA Project Guidelines Include Energy Storage
On November 22, 2016, the NEA published the “National Electricity Project Demonstration Management Guidelines” 《国家电力示范项目管理办法》clarifying the application procedures for demonstration project assessment and approval. Among these guidelines, the document also states that energy storage projects fall under this jurisdiction. The release of the document marks a big step for energy storage, showing official, legal recognition by the National Energy Administration, thereby laying the groundwork for future storage projects, policies, and wide-scale implementation.
8) Battery Companies Massively Invested in Storage Projects
As more and more consumers move to purchase electric vehicles, supply has struggled to meet demand. As such, in 2016 companies like BYD, Lishen, China Aviation Lithium Battery Co., Guoxuan, and Optimum Nano released investment expansion plans. Additionally, lead-battery producers like Mengshine, Shuangdeng, and Narada invested heavily in constructing Li-ion battery production centers. On November 22, the Chinese Ministry of Information and Technology published a draft proposal on electric vehicle industry standards 《汽车动力电池行业规范条件（2017年）》 stipulating future Li-ion factories must have annual production capacities of 200 MWh. The figure, however, was later updated to 8000 MWh, a move which will likely further increase investments.
9) New Specialized Storage Companies Emerged
Several specialized storage companies were founded in 2016 deploying large scale storage production capacity totaling over 100 MWh. New companies largely originated in one of two ways: either 1) battery manufacturers and PCS companies combining with system integrators, or 2) PV manufacturers moving into storage applications. In the first category, examples include Sungrow’s collaboration with Samsung SDI, Clou Electronics with LG Chem, and Eve Battery with Alpha ESS. The second category of PV manufacturers expanding to storage operations includes GCL Technology Integration Co. who recently founded GCL Integrated Storage announcing a 500 MWh annual capacity production center in Suzhou, along with Trina Solar announcing Trina Storage.
10) Electricity System Reforms Continue to Roll Out
Following the 2015 release of Document No. 9 (9号文) additional provincial, city, and regional-level reforms have begun to take shape introducing electricity retail reform pilots. So far, the NDRC has already reviewed plans comprehensive reform trials for 18 provinces and autonomous regions including Yunnan, Guizhou, Shanxi, Guangxi, Hainan, Gansu, Beijing, Hubei, Sichuan, Liaoning, Shaanxi, Anhui, Henan, Xinjiang, Shandong, Ningxia, Shanghai, and Inner Mongolia. The following 8 provinces and regions have also already launched retail reform pilots: Guangdong, Chongqing, Xinjiang Production and Construction Corps, Heilongjiang, Fujian, Hebei, Zhejiang, and Jilin. Additionally over 1,000 new electricity retail companies have been registered across the country.