Energy Storage in Distributed Generation and Microgrids in China

 Nanji Island, Zhejiang, home of a two-megawatt lithium-ion battery supported microgrid.

Nanji Island, Zhejiang, home of a two-megawatt lithium-ion battery supported microgrid.

According to the CNESA database, half of energy storage deployments in China are applied in distributed generation and microgrids, making these applications the most common application of energy storage technology in China.

Within this, industrial and commercial use is greatest, followed by applications in remote and island communities, accounting for 54% and 39% respectively.

There are three reasons that applications in microgrids and distributed generation have become so popular.

  1. Solar PV deployments in China are moving away from purely large-scale ground-based solar farms to a mix of large-scale deployments and distributed generation.
  2. For isolated and island communities, renewable generation is becoming economically competitive when compared to the costs of burning diesel or building out transmission lines.
  3. In the context of a growing interest in an “internet of energy,” results from demonstration projects shifted attention towards microgrids and distributed generation.

       Source: CNESA

However, there are problems preventing the wider deployment of energy storage in this sector. In CNESA’s annual conference held in June, Energy Storage China 2015, experts discussed what is holding the industry back:

  • Pricing – The price of residential-use electricity is too low. Demand charges are also not widespread, and where they exist, the difference isn’t big enough to support energy storage installation.
  • Incentives – There are currently no subsidy programs specifically for energy storage technology. With feed-in tariffs for solar PV set at 0.42CNY/kWh (US$0.07/kWh), interest in installing energy storage to complement solar PV has been minimal.
  • Management – Energy management systems for industrial installations are complex, which is hampering the expansion of rooftop PV and accompanying storage systems.
  • Overlap – In some isolated communities where microgrids were built, grid companies built out transmission lines anyway, making the original microgrid installations largely extraneous.
  • Technology – Technical problems have plagued existing demonstration projects, including inconsistencies resulting in diminished recharge capacity among lithium batteries, imprecise BMS systems, and a lack of technical and testing standards for PCS equipment resulting in long maintenance downtime.

Despite all this, the consensus is that distributed generation and microgrids are still going to take leading roles in commercializing energy storage in the near future.