2015 was a landmark year for energy storage in China.
In March, the government announced long-awaited power sector reforms that promise new opportunities for energy storage in an increasingly market-based power system.
Policymakers prepared the country’s next Five-Year Plan, the policy lodestone which will guide China’s development through 2020. This carefully crafted document is the key to meeting China’s ambitious energy and environmental targets.
And in the Paris COP21 talks, China emerged as a world leader by arguing that clean energy can be a tool to simultaneously address climate change and meet development goals.
Looking ahead, all indicators point to continued strong growth in clean energy and a greater role for markets and innovation in China’s transition to a more sustainable economy.
Of course, this transition is already well underway. As of September, China has installed 38 gigawatts of grid-connected solar, and the country reached 100 gigawatts of wind capacity earlier this year.
Now it’s our turn.
Energy storage is going to be a big part of China’s energy revolution, and policymakers know it. Last month, China’s national governing body called for increased deployments of energy storage and smart grids, higher penetrations of distributed generation, a greater share of renewables in China’s energy mix, more efficient and low-carbon dispatch, and greater numbers of electric vehicles on the road.
For now, China’s energy storage market remains dominated by pumped hydro: only 106 megawatts of China’s 21.9 gigawatts of energy storage capacity come from battery storage, according to CNESA’s Energy Storage Project Database. Nevertheless, this number still puts China among the top five countries in terms of grid-connected battery capacity, and installations are rising fast. On average, China’s battery storage capacity has more than doubled each year since 2010.
But it’s not just batteries making the news. In October, China’s top energy ministry collected bids for concentrating solar power generation demonstration projects -- most of which included molten salt energy storage. Several more gigawatts of CSP projects are in the pipeline, suggesting that thermal energy storage in China is finally starting to turn the corner.
Where do we see the industry going in 2016 and beyond?
Microgrids and Distributed Generation
About half of China’s non-hydro energy storage capacity is paired with microgrids or distributed generation, and we foresee that these will remain strong growth areas in the coming year. Successful demonstration projects have proven that China’s islands and remote western regions are prime targets for energy storage deployments, while industrial parks, hospitals, data centers, and other urban buildings are now coming into the spotlight. And last July, the government announced a plan to promote renewable energy-based microgrids nationwide, a great sign for the development of solar-plus-storage in China.
There is enormous potential for energy storage in demand side management, thanks to policy commitments from the highest levels of government. Last year, Chairman Xi Jinping announced a campaign to promote efficient energy use in order to meet the country’s carbon emissions and air pollution targets. This drive – as well as our industry connections and technical knowledge – is why CNESA was selected by the Beijing municipal government to lead a demand response pilot program in Beijing. This past August, we helped reduce peak load by 70 megawatts just as demand was set to reach a new nationwide record.
We’re also excited by the future of electric vehicle grid integration. It’s no secret that China’s EV market is booming; automakers sold over 130,000 plug-in electric vehicles in the first three quarters of 2015, double the number sold in the same period last year. This is a great step forward in the electrification of China’s transportation sector, but it also represents a huge challenge for Chinese grid operators – a challenge that energy storage and smart grid technology companies are well-positioned to solve.
While China's energy storage market is primed for growth, challenges still remain.
China is still an emerging market, with all the risks that can bring. Regulatory changes are forthcoming, but there is still a great deal of uncertainty and a lack of well-defined value streams. That’s why our team works hard to keep you informed via our monthly newsletter, annual white paper, and customized market and policy insights.
Strong partnerships are also a must, which is one reason we organize China’s premier energy storage conference each year. In June, we held our fourth annual Energy Storage China Conference and Expo, our largest to date with over 700 attendees and 60 presentations from top policymakers, industry leaders, and energy researchers. The event is a great opportunity to learn more about China’s energy storage ecosystem and to make lasting partnerships in the world’s largest emerging market. I invite you to join us for next year’s event, to be held May 10-12th in Beijing.
Since 2010, CNESA has brought you the latest developments and opportunities for partnerships in energy storage. In 2016, I hope you’ll join us as we lead the way towards building a cleaner, smarter and stronger world.