How International Energy Players Enter the Energy Storage Industry

CNESA’s tracking of the global energy storage market reveals that over the past two years, many large energy industry players have purchased energy storage companies.  Examples include Enel’s purchase of Demand Energy, Total’s purchase of Saft, and Aggreko’s purchase of Younicos.  Such purchases have continued through 2018.  According to CNESA tracking, at least ten battery energy storage companies were acquired by large energy enterprises in the first nine months of 2018.  Two notable examples include ENGIE’s purchase of French microgrid and energy storage company Electro Power Systems (EPS), and international inverter leader SolarEdge’s purchase of Korean energy storage solutions provider Kokam.  Below, we take a look at these two case studies to discuss how these two major energy companies have taken different strategies to enter the energy storage industry.

1.       ENGIE purchases EPS

ENGIE, formerly known as GDF Suez, originates from the July 22, 2008 merger of Gaz de France and Suez.  On April 24, 2015, GDF Suez changed its name to ENGIE, focusing on natural gas, electricity, and energy services as its three main business areas.  The company is currently devoted to becoming a leader in the global energy transition. In recent years, the company has been continuously exploring the use of energy storage as part of its efforts to transition to become a low-carbon energy and solutions provider.

In May of 2016, ENGIE purchased 80% stock equity in American industrial-commercial energy storage systems provider Green Charge Networks (GCN), marking a big leap into the energy storage sector.  After the purchase, GCN changed its name to “ENGIE Storage,” continuing to provide its industrial-commercial behind-the-meter solutions in the United States while also using ENGIE’s foundation in the traditional energy sector to expand its products to grid-scale storage.  One example of such is ENGIE North America’s 3MW/6MWh grid-scale energy storage project developed in conjunction with Massachusetts utility Holyoke Gas & Electric (HG&E) in September 2017.  The project’s equipment, construction, and maintenance was provided by GCN. At the time of its launch, it was also the largest grid-scale energy storage project in Massachusetts.

If ENGIE’s purchase of GCN was made in order to capitalize on a strong industrial-commercial energy storage market in the United States, then ENGIE’s January 2018 purchase of 51% stock in French microgrid manufacturer Electro Power Systems (EPS) can be seen as a move to expand its energy storage business more comprehensively and at a larger geographic scale.  EPS focuses on microgrid projects and energy storage project development, construction, and operations.  Its energy storage projects are concentrated in European countries such as Italy and Spain as well as Africa.  ENGIE’s purchase of EPS strengthens its abilities to provide distributed energy and microgrid solutions while helping the company further its goal of becoming a low-carbon solutions provider.  For EPS, the purchase has also provided a channel and support to expand globally.  According to CNESA’s Global Energy Storage Project Database, following ENGIE’s purchase of EPS, ENGIE quickly helped EPS acquire a bid for a 35MW solar PV plus 45MWh energy storage microgrid project and 30 year PPA in the Pacific island of Palau.

2.       SolarEdge Purchases Kokam

SolarEdge was founded in 2006 and is headquartered in Israel. The company is a leading global provider of an intelligent solar PV power optimization and inverter system solution.  The company’s main business is the R&D, production, and sales of optimized DC PV inverter systems.  Such a system includes a power optimizer, inverter, and cloud monitoring system.  SolarEdge’s products are utilized mainly in distributed PV systems, including residential rooftop power stations and industrial-commercial distributed power stations.  SolarEdge began bringing its products to energy storage applications in 2015.

According to CNESA’s Global Energy Storage Vendor Database, prior to 2018, SolarEdge’s primary advantage was in its inverter business line.  The company collaborated on energy storage projects with major international battery manufacturers such as LG Chem and Tesla.  LG Chem’s 400V RESU10H high voltage residential storage series, featuring 7kWh and 9.8kWh capacities, utilizes SolarEdge’s Storedge single-phase DC inverter.  The product has been sold throughout the North American market.

Since 2018, SolarEdge has begun horizontal expansion into energy storage.  In May, SolarEdge launched a VPP software platform in preparation for the move toward smart management systems.  In October, SolarEdge purchased 75% of shares in South Korean battery manufacturer Kokam for the price of 88 million USD, with plans to purchase the remaining shares in the future. The move allows SolarEdge to now provide batteries as part of its business line.  Aside from providing some energy storage projects with systems integration and turnkey systems, Kokam also provides a full line of batteries, including high-power nickel-magnesium-cobalt (NMC) Li-ion batteries.  According to CNESA tracking, Kokam already possesses over 700MWh of Li-ion deployed in the aerospace, electric vehicle, and energy storage sectors.  The purchase of Kokam has increased SolarEdge’s product line, while also ensuring that SolarEdge inverter solutions and Kokam battery products will be able to integrate seamlessly.

3.       CNESA Summary

ENGIE and SolarEdge’s experiences demonstrate how companies often take different strategies to enter the energy storage sector.  ENGIE’s choice of purchasing GCM was in part due to recognizing the company’s existing accumulation of technology and projects, though more importantly was a recognition of the industrial-commercial behind-the-meter storage market in the United States.  ENGIE’s purchase of EPS also shows that the company also has an optimistic view of future distributed energy storage and microgrid markets in Africa and the Pacific.  In contrast, SolarEdge has looked more towards technology integration, starting with early collaboration with major battery manufacturers on energy storage projects and accumulating experience, to the recent purchase of battery product supplier Kokam, allowing SolarEdge to “fill in the gaps” in its own systems solutions services. SolarEdge has taken steps toward becoming a provider of a complete set of energy storage solutions.

Author: Yue Fen
Translation: George Dudley

Thoughts on the Present and Future of Energy Storage Development

Energy storage applications have the ability to alter China’s traditional models for the supply and use of energy, providing major support to China’s energy transition, the user-side energy revolution, ensuring energy safety, energy conservation, and emissions reduction goals.  The development of energy storage has already attracted the attention and support of government regulatory agencies, the power system, and numerous related industries such as renewable energy and transportation.  Energy storage is no longer being left on its own to mature.  Instead, we have seen energy storage being included within the definition of “energy” in the policies of many countries, particularly as a form of renewable energy or listed as a key technology and/or component for support of the energy system.

Energy storage applications can help encourage the use of large-scale renewable energy, increase the proportion of generation sourced from wind and solar power, increase the efficiency of electricity use, decrease reliance on fossil fuels, conserve resources, and lower environmental pollution. Recently, with the push for large-scale reforms of the power system and development of Internet of Energy technologies, we have seen better and brighter prospects for the widespread use of electricity, thermal, and other storage technologies.  Energy storage can connect flexibly at the power supply, transmission, or end-user side, allowing multiple energy sources to complement and optimize with one another.  The development of energy storage supports the simultaneous development of China’s energy structure and power reforms, bringing a new source of innovative strength to the energy sector.

We can trace the beginning of energy storage in China back to the year 2000.  Over the following ten years, energy storage went from early R&D, to demonstration projects, to the early stages of commercialization.  Although development during this period was fraught with challenges and setbacks, it was also a period full of innovation and success. In 2011, energy storage left the laboratory, and the “Zhangbei Wind, Solar, and Storage” project, China’s first large scale energy storage demonstration, was launched, signifying the first big step in the creation of a true storage industry.

Energy storage developed rapidly in the years following.  According to China Energy Storage Alliance statistics, by 2017, China’s accumulated electrical energy storage capacity (including pumped hydro) totaled 28.88GW. Among this total accumulated storage capacity, electrochemical energy storage growth was most striking, at nearly 390MW by the end of 2017, reflecting an annual growth rate of 45%.  From 2016-2017, the total capacity of China’s energy storage projects either planned or under construction neared 1.6GW, 10 times the total accumulated capacity of 2000-2015.  China’s energy storage industry is now rapidly transitioning from demonstration applications to the early stages of commercialization.

Many have been delighted to see how quickly the industry has developed, yet this period has not been without problems, some of which have been roadblocks in the path to commercialization.  As an emerging technology, energy storage faces challenges including how to define its identity within the power and energy markets, how to create a suitable pricing mechanism for storage to participate in the market, how to manage the dropping of technology costs, how to increase safety and efficiency, and how to create industry standardization and verification systems.  Resolving such questions are keys not only to ensuring energy storage can be profitable, but also to ensuring the sustainability of the industry.

In order to promote the healthy development of the energy storage industry, five agencies including the National Development and Reform Commission and National Energy Administration jointly released the Guiding Opinions on Promoting Energy Storage Technology and Industry Development on October 11, 2017.  The Guiding Opinions is China’s first guiding policy for large-scale energy storage technology and applications development.  The policy outlines the direction in which energy storage should develop from now through the mid- to long-term, including goals for the next ten years.  The policy also establishes the five main areas and 17 important tasks for energy storage development, as well as defines safeguard measures based on considerations such as government policy, project demonstrations, compensation mechanisms, and social investment.

In regards to the main issues facing energy storage, the Guiding Opinions stresses energy storage marketization, including the creation of an energy storage market mechanism and price mechanism. The policy also stresses that energy storage should develop in conjunction with power system reforms and the Internet of Energy.  At present, one of the greatest barriers to energy storage marketization is that the current market is not able to quantify the value that energy storage applications provide, and storage is therefore unable to act as a true market product.  Therefore, for most energy storage applications, the first step is determining what identity storage will have in the market, followed by the second and more important step of defining a reasonable price (compensation) mechanism.

Energy storage in China currently has four major application categories: renewable integration, ancillary services, grid-side, and behind-the-meter.  According to CNESA statistics, as of the 2017 year’s end, the proportion of China’s total electrochemical energy storage capacity in renewable integration, ancillary services, grid-side, and behind-the-meter applications totaled 29%, 9%, 3%, and 59%, respectively.  Compared to the installation capacities for 2015, ancillary services increased 7 percentage points, and behind-the-meter increased 3 percentage points. These two application areas are ones that hold the greatest earnings potential and the greatest likelihood of seeing initial commercialization.

Recently released power reform policies and supporting documents have provided a foundation and support for the use of energy storage in ancillary services and demand response.  These policies have had a great effect on increasing the economic effectiveness of ancillary services and behind-the-meter energy storage, and have been designed to coordinate with market development and the creation of market and pricing mechanisms.

In over ten years of development, the energy storage industry chain has seen a marked improvement.  In the early period of application demonstrations, the main market participants included Li-ion battery, lead-acid battery, and flow battery suppliers.  Chinese companies in this category include BYD, CATL, eTrust, Narada, Shoto, Rongke, and Puneng.  Once China entered the Thirteenth Five-Year Plan period, energy storage applications became more diverse and began expanding into new areas.  Some solar PV companies also began expanding into energy storage, such as GCL Power, Trinasolar, and others, who founded energy storage subsidiaries or special departments to expand into combined energy storage and solar applications.  At the same time, PCS and other traditional power equipment vendors began expanding into energy storage systems integration.  Recent systems integrators of note include Sungrow-Samsung, CLOU, Narada, Shoto Group, Sunwoda, and ZTT.

With the expansion of energy storage applications and the participation of a wide variety of companies, the roles of equipment vendors, systems integrators, and EPCs have largely become clearly defined.  The next steps in energy storage development are closely aligned with energy transition and power system reforms.  Energy storage has already begun participating in multi-energy systems, Internet of Energy projects, and “energy storage cloud+” virtual power plant demonstration projects.  In the future, commercial park developers, energy service companies, and power companies all area likely to become purchasers of energy storage systems and systems integrators.  Energy storage systems will thereby become a closer part of the energy and power markets.

The next ten years will be a period of rapid development for energy storage.  The Guiding Opinions provides clear goals for the Fourteenth Five-Year plan period: energy storage projects should become widespread, a complete industry system must form, energy storage should become a tool for creating a more economical energy sector, the industry should see large-scale development, and energy storage should become a motivator in the energy transition and development of the Internet of Energy.  These goals are objective, and provide a set of guidelines for the direction in which the industry should develop.  CNESA has modeled predictions for the future of the energy storage market based on its Global Energy Storage Database.  It is expected that the total installed capacity in China will reach 1.794GW by 2020, and 10.794GW by 2025.  Based on current development trends, the prospects for meeting such predictions are very good.

At the same time, we do see that energy storage still has a long way to go before it reaches large-scale development. To reach such a goal will require a combined effort from all industry stakeholders.  With power market reforms ever increasing, energy storage applications continue to spread throughout the energy sector, and new business models appear.  During this period, it is the China Energy Storage Alliance’s goal to support the healthy growth of the energy storage industry, both through tracking and analysis of storage policies, creating a bridge between the government and the storage industry, responding to the needs of the industry, and supplying objective and realistic guidance.  The Alliance is also determined to continue providing comprehensive market research, including expansion of the Global Energy Storage Database and providing stakeholders and the public with objective data that will help contribute to the creation of a solid foundation for the industry.  Finally, CNESA is dedicated to promoting communication within the industry, including international exchange, market meetings, and standardization committees, platforms that bring stakeholders together and move the industry forward as one.

Author: Tina Zhang, China Energy Storage Alliance
Translation: George Dudley

CNESA Global Energy Storage Market Analysis – 2018 Q3 (Summary)

1.       The Global Market

As of the end of September 2018, global operational electrochemical energy storage capacity totaled 4037.6MW, or 2.3% of the total of all energy storage technologies, and an increase of 80% in comparison to the end of September 2017.

In the third quarter of 2018 (July through September), global newly operational electrochemical energy storage project capacity totaled 413.9MW, an increase of 173% in comparison to 2017 Q3, and a decrease of 22% in comparison to 2018 Q2.

In a geographic comparison, China showed the greatest increase in newly operational energy storage capacity, at 159.5MW, or 38% of the total, an increase of 667% in comparison to 2017 Q3 and 110% since 2018 Q2.  In applications, the greatest newly operational electrochemical energy storage capacity was concentrated in grid-side projects, at 179.1MW, or 43% of the total, an increase of 1785% from 2017 Q3, and 76% since 2018 Q2.  In technologies, new electrochemical energy storage projects most frequently utilized Li-ion batteries, at 374.7MW, or 91% of the total, an increase of 170% in comparison to 2017 Q3 and a decrease of 29% since 2018 Q2.

2.       The Chinese Market

As of the end of September 2018, China’s operational electrochemical energy storage capacity totaled 649.7MW, 2.1% of the total for all of the country’s energy storage technologies, and an increase of 104% in comparison to the end of September 2017.

In the third quarter of 2018 (July through September), China’s newly operational electrochemical energy storage project capacity totaled 159.5MW, an increase of 697% in comparison to 2017 Q3, and 110% since 2018 Q2.

In a geographic comparison, Jiangsu province showed the greatest increase in newly operational electrochemical energy storage capacity, at 111.5MW, or 70% of the total.  In applications, the greatest newly operational electrochemical energy storage capacity was concentrated in grid-side projects, at 97.6MW, or 61% of the total, an increase of 100% in comparison to 2017 Q3, and 332% since 2018 Q2.  In technologies, new electrochemical energy storage projects most frequently utilized Li-ion batteries, at 137.5MW, or 86% of the total, an increase of 1499% since 2017 Q3, and 86% since 2018 Q2.

3.       About this Report

The full version of our quarterly Energy Storage Market Analysis report is available for purchase through CNESA’s “ES Research” platform: www.es.research.com.cn.

The ES Research platform was launched in January 2018 and features a diverse range of market statistics and industry data.  Sign up at www.es.research.com.cn to learn more about CNESA’s energy storage research products series.

For questions, please contact our research department by phone or email at:

Phone: 010-65667068-805

Email: esresearch@cnesa.org

The Energy Storage Industry’s Urgent Need for Detailed Policy Action

China Energy Storage Alliance Vice Chairman Johnson Yu recently spoke at a National Energy Administration forum on promoting the sustainable development of the energy storage industry.  Vice Chairman Yu provided his thoughts and suggestions on some of the current challenges facing the industry.  Last year marked the release of the Guiding Opinions on Promoting Energy Storage Technology and Development policy, which addresses industry questions regarding government regulations, demonstration projects, compensation mechanisms, social investment, testing and certification, system safety, and other topics. Yet, as the name suggests, the Guiding Opinions only serves as a guideline document.  The industry is still in need of support from specific and practicable policies.  China Electric Power News spoke with China Energy Storage Alliance Vice Chairman Johnson Yu to learn his thoughts on energy storage policy.  The CNESA research department has provided a summary of the interview below:

The Storage Industry’s Most Pressing Issues and Suggestions for How to Resolve Them

Current energy storage applications are mostly centered on renewable integration, ancillary services (such as peak shaving and frequency regulation), grid-side applications, and behind-the-meter applications.  Renewable integration projects have frequently been used to solve curtailment issues at aged solar PV stations where feed-in tariff prices are high.  These projects have a certain economic value, though also hold potential future market risks (should lowering curtailment lead to decreased earnings).  Investors for these applications have mostly been power generation companies themselves, such as Huaneng Group, Huanghe Hydropower Development, and Beijing Enterprises Clean Energy Group, who implement energy storage at solar PV and wind bases.  Such projects help to verify the technology roadmap for storage while also helping to resolve renewable energy consumption issues.

Vendors are more likely to look at the opportunities brought by policies over the next three to five years, and if the policy roadmap will become clearer.  If, in the short term, we can rely on current power policies to provide compensation to energy storage based on market prices, while in the long term taking the proper measures to anticipate the future power markets—including spot markets and ancillary services markets—the industry will be set on a positive development path.

Within the ongoing power market reforms, ancillary services such as frequency regulation and peak shifting have had an early start.  As early as 2008 a quasi-market mechanism was created to pay for services based on their effectiveness, though at present it is generation companies who provide compensation funds.

Therefore, the first suggestion is to consider the sustainability of policies.  Future compensation for storage should come from the end-user who creates the need for the service, benefiting the current “effectiveness-based compensation” model of energy storage in ancillary services. The second suggestion is that if energy storage should enter the ancillary services market as an independent entity, then it should be completely marketized so that it can compete fairly with other market services.  The third suggestion is that regions which are in the early stages of marketization and are awaiting the government to set prices should have their prices set according to contribution value and avoid cost pricing.  Early projects need to display a certain degree of profit margin and iteration.  This includes safety issues, which although can be resolved through technical engineering, are often limited in effectiveness due to cost considerations.  One of the major challenges for energy storage is determining how to ensure safety while at the same time maintaining reasonable technology costs.

According to CNESA research, since the beginning of 2018, Jiangsu, Henan, and Hunan provinces have shown the biggest proportions of new grid-side energy storage.  From the perspective of industry development, grid-side energy storage should be encouraged through the construction of new demonstration projects that can clearly define development models and obligations of all stakeholders.

One possible suggestion for the short term is to review the pricing structures for pumped hydro storage.  However, as CNESA experts have pointed out, from the perspective of the power market, grid-side energy storage investment and power station operations should be relaxed, and requisite measures should be adopted to encourage entities outside of the power grid to join in investment and construction of grid-side energy storage.  When energy storage is operated by the grid itself, it is unable to participate in future power market transactions as doing so may cause distortions in the market.  Future market mechanisms must be designed to ensure that all market players receive fair treatment, a task that will require careful consideration.

Current behind-the-meter storage projects have largely focused on energy arbitrage, relying on energy management contracts to save end users money.  According to CNESA statistics, as of the 2017 year’s end, behind-the-meter electrochemical energy storage accounted for 59% of applications, though the first half of 2018 saw a slowdown in growth, with newly added capacity making up 19% of the total.  Development of behind-the-meter projects faces three main issues.  First, the source of earnings is singular, and the rate of return is low.  In most cases, investment in such a project will have a rate of return of approximately 7-8 years or more.  When considering the total costs of investment versus the rate of return, most projects will not be appealing unless they are among the small number of cases in which peak and off-peak price differences are extremely high.  Second, investors are often focused on the potential risks brought on by future policies.  It is not yet known how the mechanism for energy arbitrage will be restructured in the future.  Such concerns have had a very real effect in causing recent behind-the-meter projects to be put on hold.  Third, more focus must be placed on safety.  Low earnings put a limit on the amounts that stakeholders are willing to invest, in turn meaning that less funding is allocated to safety measures, which can have potentially disastrous consequences.

In the future, related technologies such as electric vehicles, V2G, and demand response will also have room to develop.  The use of demand response abroad has provided a bank of experience that we can learn from, giving priority dispatch to demand side resources like energy storage and renewables.  Priority dispatch of demand-side resources is one of the most effective methods to save money and increase efficiency.  In China, demand response development has seen some experimental use, but without much intensity or significant enthusiasm from customers.

From the perspective of energy storage, if a 100 RMB/kWh~400 RMB/kWh subsidy can be provided to demand-side resources based on response type, and if a sufficient dispatch is called for, then current user-side energy storage projects will increase earnings, providing greater motivation for new projects.  One suggestion is to refer to trial subsidy programs and implement similar programs in areas of the country where power demand is strained.

Needed Market Mechanisms and Industry Regulations for Energy Storage Development

Generally speaking, all energy storage projects—whether they are behind-the-meter, ancillary services, grid-side, or renewable integration applications—are in dire need of a market mechanism that can help bring about sustainable development.

Furthermore, there are two points worthy of caution.  First, policies can easily take the place of the market in determining the technology roadmap.  Policies should be focused on increasing safety, verification methods, and standardization, not simply choosing which the technology roadmap on behalf of the market.  Second, because power marketization is still in its early stages, many models including energy arbitrage and compensation for frequency regulation are currently managed under interim policies.  Only certain regions have developed mechanisms that are capable of supporting such models, while many regions lack the capability to create such models and require subsidies in order to be implemented.

Areas with profitable energy storage projects are also facing uncertain and fluctuating policies.  Detailed regulations for market reforms are urgently needed for long term energy storage investment to become a possibility.  Short-term investment and operations development models rely too heavily on company credit, bringing them major operations risks.

From an economic perspective, our current hopes for policy support include: First, adjusting electricity prices in a way that is flexible according to varying regional conditions.  We recommend the government consider reserving space within power price adjustment for “energy storage subsidy funding” to support energy storage development.  Second, while the Guiding Opinions has laid out a framework for energy storage development, we recommend local governments examine their own capabilities and industry characteristics to create policies that will encourage energy storage development in their own regions.

Article originally published in China Electric Power News
Reporter: Qin Hong
Translation: George Dudley

Navigant Research’s Global Solar-Plus-Storage Vendor Roundup

In October 2018, Navigant Research released its “Leaderboard: Residential Solar PV Plus Energy Storage Providers” report.  The report analyzes the top 12 most active current global residential solar-plus- storage vendors according to their strategies and implementation.  The report scores the companies according to 12 factors, including vision, go-to market strategies, partnerships, production strategies, technologies, geographic reach, sales, marketing and distribution, product performance, product quality and reliability, product portfolio, pricing, and staying power.  Combining statistical analysis with the scores for each company, Navigant released a top 10 list of global residential solar-plus-storage providers.  The purpose of the list is to provide industry members with an objective review of the strengths and weaknesses of these global residential storage suppliers.

Navigant asserts that residential customers have begun turning away from the traditional purchasing of power from utilities to the using of power generated on-site.  Navigant predicts that in the next 10 years, global new deployments of residential solar and storage projects will reach 37.4GW.  Navigant also stresses three factors that they believe will helps drive the development of energy storage over the next few years:

Source: Navigant Research

Energy storage combined with solar PV can solve problems that solar PV systems on their own cannot.  Independent solar PV systems can only generate electricity when sufficient sunlight is available, therefore it is unable to provide many services that other power generation resources can.

Over the past five years, solar PV and energy storage installation costs have dropped considerably. It predicted that costs will continue to drop, particularly for residential solar and storage systems. Solar and storage systems that have had their performances verified can help bring solar and storage hardware and software resources to compete in the global retail power market.

Residential solar, energy storage, and other resources can integrate using virtual power plant networks, allowing distributed energy resources to be dispatchable, saving on electricity costs, decreasing intermittency issues, and providing grid services.

Within Navigant’s rankings, Sunrun placed first.  According to Navigant’s analysis, Sunrun is the only company to show outstanding performance in both strategy and implementation, with a strong customer base and a number of verified systems in the market.  Tesla and Vivint Solar followed closely behind, though ranked lower in sales, vision, and market attractiveness.  SolarWorld and SolarWatt have also been consistent challengers, though their products have not yet demonstrated strong business case examples.

According to Navigant’s analysis, the top 10 global residential energy storage providers include Sunrun, Tesla, Vivint Solar, E.on, Sunpower, Sunplug, Sunnova, Huawei, Soligent, and ZenEnergy.

To learn more about Navigant and access the report, view the official press release here.

A Summary of Energy Storage Development in the First Half of 2018

Electrochemical Energy Storage Maintains Rapid Growth

According to the CNESA Global Energy Storage Database, in the first half of 2018, global newly operational electrochemical energy storage project capacity totaled 697.1MW, an increase of 133% from the same time the previous year, and an increase of 24% since the end of 2017.  China’s newly operational electrochemical energy storage project capacity for the first half of 2018 totaled 100.4MW, 14% of the total new global capacity.  This new capacity reflected an increase of 127% from the previous year, and an increase of 26% since the 2017 year’s end.

Figure 1: global new operational electrochemical energy storage project capacity (2018.H1, MW)

Figure 2: China’s new operational electrochemical energy storage project capacity (2018.H1, MW)

In comparing by distribution of technologies, in both global and Chinese markets, newly added energy storage capacity was dominated by Li-ion batteries, at 99% and 94% of the total, respectively.  In applications, ancillary services dominated the global market’s new energy storage capacity, at 51%, while China’s market saw grid-side energy storage dominate, at 42%.  In a regional comparison, the United Kingdom showed the greatest increase in both newly added capacity and in comparative growth with the same time the previous year (2017.H1).  The United Kingdom’s newly added capacity totaled 307.2MW, nearly 45% of the global market, an increase of 441% in comparison to 2017.H1.

Figure 3: distribution of global operational electrochemical energy storage by application (2018.H1, MW)

Figure 4: distribution of China’s operational electrochemical energy storage by application (2018.H1, MW)

Figure 5: global distribution of operational electrochemical energy storage by region (2018.H1, MW)

Global Competitors Release Large-Scale Energy Storage Projects

At the end of 2017, Tesla launched its 100MW/129MWh Li-ion battery project in Southern Australia. Following the launch of this system, many other countries followed with their own large-scale energy storage systems, with many in the 100MW and above range (see chart below).  Energy storage is being recognized by increasing numbers of countries as a reliable and flexible source of energy.

Chart: Representative Examples of Large-Scale Energy Storage Projects

Source: CNESA Data Collection

Domestic Grid-Side Storage Projects See Large-Scale Development

In the first half of 2018, Jiangsu and Henan provinces led the way in large-scale grid-side energy storage projects. Both provinces launched similar projects consisting of a total of over 100MW of distributed energy storage stations deployed near a series of substations.  Project investors included State Grid subsidiaries such as Xuji Group, Shandong Electrical Engineering, Jiangsu Energy Services Co, and Pinggao Group, as well as battery manufacturers ZTT, eTrust, CLOU, Lishen, and Narada, and additional PCS and BMS suppliers.  Though development on the projects has been vigorous and reactions have been positive, questions such as whether the business model will be replicable and what kind of investment returns can be expected will depend on whether the industry will continue to develop at a large scale.

The Question of Safety

The fire at South Korea’s South Jeolla wind farm battery storage system once again brought attention to the energy storage system safety.  Unstandardized installation and use of battery systems can have disastrous consequences, yet current standards are still incomplete and/or flawed, in dire need of update and clarification.  Despite these issues, we cannot deny the value of energy storage applications.  The energy storage industry must grapple with the challenge of how to clarify storage standards without hindering the development of the industry, a question that is worthy of further discussion and exploration amongst industry leaders.

Major Energy Companies Update Storage Business Models

Many traditional energy companies have begun turning their business activities towards renewable energy in response to global energy trends.  For some companies, this means establishing new renewable energy operations, while for others it means the acquisition of smaller renewable energy companies.  Many traditional energy companies have also looked for outstanding renewable energy companies for business collaboration, making use of each other’s advantages for mutual benefit.  Some energy storage companies have begun reforming their business practices to better fit market needs, striving to become more economical and effective and make better use of their advantages.  For example, S&C has discontinued manufacture of PCS, instead choosing to focus on microgrid and grid-scale energy storage system aggregation.  Mercedes-Benz has discontinued manufacture of its residential storage batteries, focusing instead on grid-scale energy storage applications.  Finally, Younicos has introduce its “storage-as-a-service” model to meet the immediate energy storage needs of customers.

National and Regional Support in Response to the Guiding Opinions

Following the October 2017 release of the Guiding Opinions on Promoting Energy Storage Technology and Development a number of new policy efforts have appeared at both the national and regional levels that support the goals of the Guiding Opinions.  These include such policies as the Bijie City Energy Storage Industry Development Plan (Draft), Regulations for Operations and Ancillary Services Management of Grid-Connected Energy Storage Stations in Southern Regions, North China Ancillary Services Market Establishment Plan (Draft), standards for lead-carbon batteries and Li-ion batteries used in energy storage systems, and many other recent policy measures that have helped to stimulate the domestic energy storage market.

Author: Ning Na
Translation: George Dudley

A Look at China’s 2018 New Market Competitors

According to statistics from CNESA’s Global Energy Storage Project Database, in the first half of 2018, China’s new operational electrochemical energy storage capacity totaled 100.4MW, an increase of 127% from the same time the previous year.  Newly added electrochemical projects either planned or under construction totaled 2251.1MW.  With the scale of energy storage projects rapidly increasing, the market has seen a number of new players eager to make their name in a variety of energy storage applications.

I.       Frequency Regulation/Ancillary Services

Combined thermal power and energy storage frequency regulation projects continue to thrive in 2018 through the activities of numerous market competitors:

1.       WLY Group (万里扬集团有限公司)

In June, WLY group won a bid to supply Guangdong Yudean Power Generation Co. with a 9MW/4.5MWh combined thermal generation and energy storage frequency regulation project.  The winning bidder is responsible for engineering that includes equipment and debugging, electrical testing, grid connection, etc.  Construction on the project began in July.  The project signifies WLY Group’s formal entrance into the ancillary services market.  WLY was China’s first auto transmission company to go public.  The company provides transmissions for use in passenger cars and commercial vehicles, as well as drive systems for electric vehicles and interior components.

2.       Huatai Energy (Beijing) Tech.Co.,LTD (华泰慧能(北京)能源技术有限公司)

In August, Huatai Energy won an EPC bid to supply Inner Mongolia Power Generation Co. (IMEIGC) with a 9MW/4.5MWh frequency regulation project.  The project distributes shared earnings from AGC compensation. Huatai Energy was founded in 2016 and specializes in energy storage technologies.

3.       Zhejiang Wanke Renewable Energy Technology Co. (浙江万克新能源科技有限公司)

In May, Inner Mongolia Power Generation Investment Group announced the candidates for bidding on the new 9MW/4.5MWh frequency regulation project at the Wusitai thermal plant.  Wanke beat out both Narada and Shenzhen Advanced Clean Energy Technology Research Co. for the bid.  According to publicly released information on the tender, although Wanke’s proposed cost of 39,800,000 RMB for the project was higher than Narada’s proposed 37,500,000 RMB, Wanke’s proposal of a 50-50 share of investments return with the plant owner went far beyond the traditional return of 70-80% for the investor and 20-30% for the plant owner.  Wanke Renewable Energy was founded in 2015.  This project is the first domestic energy storage project for the company.

II.       Behind-the-meter

Wiscom (江苏金智竞泰储能科技有限公司)

In August, Wiscom released plans to construct a 500kW/1000kWh behind-the-meter energy storage system at the Huitong screw factory in Qidong.  The project is a collaborative development between Wiscom, the Huitong screw factory, and State Grid Jiangsu Energy Services Co.  Wiscom is an energy storage company formed in June of this year by a cooperative investment of 50,000,000 RMB between four energy companies.

III.       Grid-side

1.        Golmud Meiman Renewable Energy Technology Co. (格尔木美满新能源科技有限公司)

In July, Golmud Meiman begin construction of its 16MW/64MWh grid-side energy storage project at the Haixi 110KV Baiyang substation.  The project is the first grid-side energy storage project lead by State Grid Qinghai, and the first grid-side project for Golmud Meiman.

2.       Xi’an Actionpower Electric Co.,Ltd.  西安爱科赛博电气股份有限公司

In August, Henan Power Grid announced a call for bids for the second round of equipment purchases for its 100.8MW/100.8MWh battery storage demonstration project.  This second round of bids seeks 59 sets of energy storage equipment.  Bidders during the first round included well known energy storage companies such as EVE, ZTT, and Lishen, among others.  During this second round of bidding, Actionpower submitted bids to supply four containerized energy storage systems at the Xinyang energy storage station.  The company’s total bidding was more than 900,000 RMB lower than that of EVE.   Actionpower was founded in 1996.  The company is currently expanding from its main business focus of power inverters and power control products to explore renewable energy and smart microgrid technologies.  Actionpower’s bid for the Xinyang energy storage power station marks the company’s first foray into energy storage.

Summary

Active players in the 2018 energy storage market include specialized energy storage companies such as Huatai Energy and Wiscom, as well as companies heavily involved in renewable energy and/or the power industry that have recently begun expanding into energy storage activities, such as Golmud Meiman, Vanke Renewables, and Actionpower.  Other new players even include electric vehicle manufacturers such as WLY Group that have begun investing in storage projects.

In terms of market strategies, these players have frequently used low-costs to gain an advantage in the market.  These competitors have expanded the traditional project earnings models while exploring new and varied storage business models

Author: Cao Zhengxin
Translation: George Dudley

Energy Storage Safety Standards and Regulations Must Meet the Pace of Industry Development

The news of a fire at an energy storage station in Zhenjiang brought attention once again to the issue of energy storage safety.  How do we guarantee the safety of storage systems? How can the developing storage industry maintain a reasonable balance between cost and safety?  China Electric Power News sat down with China Energy Storage Alliance Vice Chairman Johnson Yu to discuss these questions.  CNESA has provided a summary of the content below:

Current Domestic Energy Storage Safety Situation

Energy storage is still an emerging industry in China.  The industry got its start relatively late in China in comparison to other countries, and domestic projects are still few.  The coexistence of numerous technologies, each with their own unique safety needs, has meant that industry regulations, standards, and verification practices are still lacking. Therefore, performing strict evaluations of energy storage systems remains difficult, and irregularity between systems exists.  Such conditions can lead to a number of hidden dangers.

Causes of Energy Storage System Accidents

At present, the major cause of accidents is the combination of Li-ion battery flammability with thermal runaway.  However, the source of the accident is usually not the battery cell itself, but an electrical accident.  Safety is a complicated issue, and it is not possible to trace the cause of an accident back simply to the choice of battery or battery cell.  The supporting system is equally important.  However, many peripheral system components and measures surrounding battery cells currently lack proper safety standards, such as the designs of battery management systems, energy management systems, and system containers, as well as emergency handling procedures, choice of insulation materials, and fire extinguishment methods.

In addition, safety issues will differ based on technology.  Because Li-ion batteries rely on an organic electrolyte solution, they are susceptible to thermal runaway and combustion.  Lead-acid and flow batteries will not combust, but this does not mean that these technologies are not susceptible to other electrical accidents.  Last year’s newly constructed energy storage capacity totaled 127 MW.  Lead-carbon, Li-ion, and flow battery technologies each made up part of this capacity, and each technology has its own different level of developmental maturity, attributes, and system needs.  Accidents also have their own degree of randomness, and it is impossible to have a complete evaluation method for one individual system.  The problem also cannot be solved by simply eliminating the use of a certain technology or battery cell to prevent accidents from occurring.

It is also difficult to compare the probability of accident occurrence due to the wide variety of settings for energy storage applications.  For example, grid-side storage and behind-the-meter storage, open air deployment and indoor deployment—such variations each have their own standardization needs.  Energy storage for grid frequency regulation requires the use of high frequencies and heavy electric current for charge and discharge, requirements that are much higher than that needed for behind-the-meter systems.  However, that does not mean we can say that grid-side systems are inherently less safe than behind-the-meter systems.  Many other factors are at play, such as the design requirements of each system, control strategies, operating regulations, etc.

The Effects of the Zhenjiang Fire on the Domestic Energy Storage Industry

Energy storage projects in China that have experienced fires are those that are innovative and exploratory, though are the types of projects that would be considered already mature in many other countries.  Safety issues can be resolved through engineering techniques, and it is unlikely that safety issues will cause a panic within the public, though it is imperative that industry players still place system safety as a priority.

Most of the accidents that have occurred have been due to a lack of strictness regarding technological thresholds and safety measures.  Another factor is that cost restrictions can lead to a lowering of requirements for safety.  One of the industry’s major challenges is guaranteeing system safety while still preserving technology costs that are reasonable.

CNESA Vice Chairman Johnson Yu sits down for an interview at ESIE 2017

Suggestions for Improving the Safety of China’s Energy Storage Systems

China’s energy storage safety standards and related regulations still have a lot of catching up to do.  Whenever an accident happens, it is crucial that we determine its true cause so that proper measures for dealing with the problem can be enacted.  Updating and improving standards will require regulators to put greater effort into research and reform. Proper verification or certification of projects before they are implemented should also not be taken lightly.

Though China has taken greater consideration to safety issues in recent years, more attention has been paid to technological choices.  In the long term, we should encourage more safe technologies to enter the market, such as solid-state batteries.  Yet in the short- and medium-term, improving system safety will require considering the entire system design, analyzing the cause and site of accidents and taking the proper measures to prevent them.  We also must of course ensure that proper measures are in place to maintain the safety of the public and our utilities.

Globally, Li-ion batteries are widespread, particularly in electric vehicles, and their qualities are well-known in the industry.  Most new energy storage projects rely on Li-ion batteries.  In the past year, projects in China, South Korea, and Belgium have all had fires, though mainstream Li-ion battery manufacturers in the European and American markets maintain a low accident rate.  Some projects have seen continued safe use for over eight years.  Much of the valuable experience accumulated in other countries has lent itself to the creation of standards and regulations.  What this means is that though Li-ion batteries still carry the risk of flammability and thermal runaway, with proper and strict management, safety of such systems can be maintained.  Increasing safety measures is not only a necessity, it will also help our industry develop in a healthy direction.

Originally published in China Electric Power News, 2018-9-27
Reporter: Deng Huiping
Translation: George Dudley

CNESA Hosts its First Webinar Event: Introducing the California Energy Storage Market

On September 5, the China Energy Storage Alliance Held its first webinar event, “Introducing the California Energy Storage Market.”  The hour-long webinar was hosted by George Dudley of CNESA, with guest panelists Melanie Davidson, Director of Marketing at Strategen Consulting, and Terry Maddox, Principal Manager of Generation for Eastern Operations at Southern California Edison. The webinar content included an overview of the California energy storage market, an introduction to SCE’s Center Hybrid energy storage facility, and highlights from the upcoming Energy Storage North America conference.   

Melanie Davidson begin the webinar by providing background on the current state of California’s energy storage market, highlighting some of the factors that have contributed to the growth of energy storage in the state.  California currently possesses 717MW of operational energy storage capacity, with 463 MW of approved additional capacity on the way.  Northern California electricity provider PG&E has also recently announced a procurement target of 567MW of energy storage, the largest such procurement goal ever released.  Recent government developments of note include SB 700, a bill that will continue funding for SGIP until 2025, providing an additional 800 million USD of funding for storage incentives in California.  The bill has already passed the state senate and is currently waiting for approval by governor Jerry Brown. An additional bill of note awaiting approval is SB 100, landmark legislation to commit California to 100% renewable energy by 2045. Should both bills be approved by the governor, California can expect to see significant growth in both front-of-the meter and behind-the-meter energy storage systems.

Melanie also provided information on the Energy Storage North America 2018 conference, to take place this November 6-8 in Pasadena.  The event will feature three days of forums, workshops, and expo events.  Pre-conference workshops include “Energy Storage 101,” “Trends in the Electric Power Industry and the Growing Role for Energy Storage,” “Best Practices in Utility Procurement of Energy Storage,” and others.  The seven forum tracks include such themes as “Mobility and Storage,” “Advanced Solutions,” “Microgrids, Resiliency, and Security,” and “North American Market Transformation.”  This year’s site tour program includes 8 different centers and installations, including Proterra’s West Coast Battery-Electric Bus Manufacturing Facility, the Romeo Power Manufacturing Facility, LADWP Beacon Solar Plant and Beacon Energy Storage System, and a variety of other tours.  The ESNA conference is one of the largest energy storage events in North America, and the can’t-miss event for industry members.  More information on the event can be found on the official website at esnaexpo.com.

Terry Maddox of Southern California Edison followed with an introduction to SCE and in-depth look at the Center Hybrid facility.  Southern California Edison is one of the largest electricity providers in California, providing 87TWh of energy annually to 15 million customers.  The Center Hybrid facility combines a 10MW/4.3MWh battery energy storage system with a 50MW traditional gas-fired peaking unit.  The facility cuts down on greenhouse gases, provides 50MW of operating reserve, instant response, primary frequency response, and black start capabilities.  The battery component helps lower fuel consumption, reduces system costs, and increases customer value.  The Center Hybrid facility is one of two such systems, both of which have been extremely successful so far.  Following Terry’s presentation, the webinar concluded with a brief question and answer session.

The webinar event also served to highlight CNESA’s planned visit to the Energy Storage North America Conference in November 2018.  CNESA will be bringing a group of China’s energy storage industry delegates to the Los Angeles area November 5-12 to participate in the ESNA forum and expo events, while also touring additional sites in the Los Angeles area.  The event hopes to provide opportunity for exchange between industry members in the United States and China, fostering understanding of the most recent updates in the global energy storage markets, and building new international business relationships.

China Energy Storage Alliance hopes to host more webinar events in the future, providing a chance for our energy storage colleagues in China and abroad to connect with one another and learn more about the latest energy storage technology, applications, and market trends around the world.

Click below to view the recording of the webinar:

CNESA Global Energy Storage Market Analysis – 2018 Q2 (Summary)

1.       The Global Market

As of the end of June 2018, the global capacity of electrochemical energy storage projects in operation totaled 3623.74MW, or 2.1% of the total capacity of all energy storage technologies, and an increase of 0.4 percentage points since the 2017 year’s end.

In the first half of 2018, global newly added electrochemical energy storage projects totaled 697.1MW, an increase of 133% from the same period the previous year, and 24% since the 2017 year’s end.  In a regional comparison, the United Kingdom had the highest amount of newly installed capacity, at 307.2MW, or 44% of the total, an increase of 441% from the same period the previous year.  In applications, ancillary services saw the highest growth in new capacity, at 354.2MW, or 51% of the total, an increase of 344% from the previous year.  In technologies, Li-ion batteries were most widespread, with a total installed capacity of 690.2MW, or 99% of the total, an increase of 142% from the previous year.

2. The Chinese Market

As of the end of June 2018, China’s electrochemical energy storage projects in operation totaled 490.2MW, or 1.6% of the total of all energy storage technologies in the country, and an increase of 0.3 percentage points since the 2017 year’s end.

In the first half of 2018, China’s newly added electrochemical energy storage projects totaled 100.4MW, an increase of 127% from the previous year, and 26% since the 2017 year’s end.  In a regional comparison, Jiangsu province saw the greatest increase in newly operational capacity at 25% of the total, a 996% increase since the end of the 2017 year.  In applications, grid-side energy storage held the largest portion of capacity, at 42.6MW, nearly 45% of the total.  In technologies, the vast majority of capacity was in Li-ion batteries, at 94.1MW, or 94% of the total, and increase of 172% compared to the same time the previous year.

Author: CNESA Research
Translation: George Dudley

SGIP Policy Revisions: How California Provides Incentives for Distributed Energy Storage

Introduction

The Self-Generation Incentive Program (SGIP) initiated in 2001 has been one of the most successful and longest-running distributed energy storage generation policies in the United States.  The plan encourages the use of a variety of behind-the-meter systems, including wind power, fuel cells, internal combustion engines, solar PV, and more.  In 2011, SGIP began support for energy storage systems, providing a subsidy of $2.00/W.  In the eight years that SGIP has been providing funds for energy storage, the policy has gone through a number of revisions and adjustments.  In the following article, CNESA’s research department provides a look at the SGIP policy, including its recent updates and revisions.  We hope this information will help shed light on the SGIP policy for our energy storage colleagues in China and abroad.

1.       The SGIP Subsidy Method

In May of 2016, California Public Utilities Commission President Michael Picker released a proposal calling for reforms to the Self-Generation Incentive Program (SGIP).  The largest of these changes was to the SGIP method of distributing yearly subsidies based on the power of systems. Instead, the updated policy would follow the example of California’s PV subsidy policy by setting capacity targets for subsidy distribution, factoring in the declining costs of energy storage, considering the economic feasibility of systems, and other factors, finally distributing subsidies according to the energy (Wh) of storage systems.

On May 1, 2017, SGIP reopened to energy storage applicants.  The new SGIP provides 75% of its incentive funding to energy storage.  15% of this funding is kept as reserve funding for residential storage projects less than or equal to 10kW.

Under the updated policy, residential energy storage projects less than or equal to 10kW can receive a subsidy of $0.5/Wh.  Projects larger than 10kW can also receive a subsidy of $0.5/Wh, but are ineligible to also receive the investment tax credit (ITC).  Should the recipient wish to also receive the ITC, the SGIP subsidy will lower to $0.36/Wh.

The updated SGIP policy distributes subsidy funds in five steps.  The first step begins May 1.  Once all step 1 funds have been applied for, there is a 20-day waiting period before the beginning of step 2.  At step 2, the subsidy will decrease by $0.1/Wh.  At step 3, the subsidies will decrease again by $0.05/Wh, then continue to decrease gradually by $0.05/Wh for each remaining step.

Subsidy payments are not only reduced with the passage of time, but also reduce according to the duration and energy (Wh) of the system.  The chart below details the specifications for such subsidy adjustments.  According to these regulations, if an energy storage system is, for example, of a duration greater than 2 hours and has an energy capacity greater than 2MWh, then the system will receive two overlaid reductions.

Table: SGIP Subsidy Reduction Standards

The following example demonstrates how the reduction process works:

A 1MW/4MWh energy storage system with a 4-hour duration applies for the energy storage subsidy during step one (at a subsidy rate of 0.5 USD/Wh). According to the capacity and duration regulations, the first 2 hours and 2MWhs will receive 100% of the base subsidy funds, while the second 2 hours and 2MWhs will receive 25% of the base subsidy funds. The subsidy payments are calculated as follows:

The total subsidy amount for the first 2 hours and 2MWhs: 2,000,000Wh × $0.50/Wh=$1,000,000.

The total subsidy amount for the remaining 2 hours and 2MWhs: 2,000,000Wh × $0.50/Wh × 25%=$250,000.

The total subsidy that the system will receive: $1,000,000+$250,000=$1,250,000

This staggered subsidy system based on combined capacity and duration has encouraged the installation of more distributed energy storage systems.  At the same time, the payment reduction standards for large-scale systems helps account for decreasing costs as systems scale up, ensuring that subsidy payments between small- and large-scale systems remain fair.

2.      SGIP Implementation

SGIP statistics reveal that from the period in which energy storage began being included in the subsidy system until August 2018, projects that were either in the process of receiving subsidies or had already received subsidies (not including cancellations) had reached 8890.  Of these, nearly 1300 projects had already received the total SGIP subsidy payment, with only slightly over 100 energy storage projects listed as “PBI (Performance Based Subsidies) in progress,” over 5500 projects had subsidy budgets reserved, and over 1500 projects had subsidy budgets pending reservation. The majority of 2017 and 2018’s distributed energy storage projects were either on reserve or pending reservation.

Figure: Subsidy Budget Classifications for Energy Storage Projects

The greatest number of projects to receive funding included those with energy storage equipment manufactured by Tesla, LG Chem, Stem, Green Charge Networks, Sonnen, and Lockheed Martin.  Tesla, in conjunction with partners such as its subsidiary Solarcity, saw nearly 4000 projects totaling 270MWh apply for SGIP subsidy funding.  These 4000 projects include those that have reserved subsidies, are pending payment, or have completed payment, amounting to a total of $215 million.

Figure: Equipment Manufacturers Receiving SGIP Funding

Due to the increase in subsidy funding provided to storage systems in 2017, SGIP applications saw a major increase for that year, particularly in household energy storage installations. SGIP applications for household storage projects from January to August 2018 have already surpassed the total applications for the 2017 year. However, because household storage projects are small in scale, the increase in household storage applications has caused the combined overall capacity of all applications to decrease significantly.

Figure: SGIP Subsidies by Project Type and Capacity

Summary:

In the 10 years since the implementation of the SGIP, the policy has been a major contributor to the development of distributed energy storage business models in California. Energy storage providers have used the SGIP experience to help attract new customers and investors.  The development of distributed energy storage in California has helped increase the stability and effectiveness of the California grid, while at the same time attracting more investments in solar-plus-storage technology.  Such support has helped assist California in its goal of incorporating more renewable energy and reducing carbon emissions.

In China, some cities and regions have considered implementing incentive policies similar to that of SGIP to encourage installation of distributed energy storage projects.  A Chinese storage incentive policy could borrow from SGIP in a number of ways: (1) setting a technological threshold for energy storage systems; (2) using a performance-based incentive structure; (3) setting an upper limit for individual project awards; (4) utilizing a subsidy reduction mechanism that takes into account multiple dimensions of the system.  Only a well-designed and properly implemented policy framework will be able to impact the energy storage industry in a positive way.  CNESA hopes that its continued tracking of updates to the structure and implementation of SGIP will help provide our followers and policymakers in China with a reference for how a successful incentive policy can be utilized.

Author: Yue Fen
Translation: George Dudley

Four Storage Companies of Note in the First Half of 2018

CNESA’s Industry Tracking Database reveals four companies that have made significant advancements in energy storage projects and new business activities in the first half of 2018: eTrust, Narada, CLOU, and CATL.  Below, we examine some of the highlights of each company’s new progress in energy storage.

eTrust: An Energy Storage “Upstart” Comes Out Ahead

On July 18, China’s largest scale battery energy storage station, the Jiangsu Zhenjiang grid-side 101MW/202MWh project, began operation.  Of the 8 energy storage stations constructed as part of the project, eTrust, China Aviation Lithium Battery, CATL, Guoxuan, and ZTT each won bids to provide lithium ion battery systems.  Of these, eTrust provided the largest battery, at 40MW/80MWh, nearly 40% of the project’s total capacity.

As a Zhenjiang based company, eTrust possessed a geographic advantage during the bidding process.  More importantly, the company also possesses top lithium ion battery technology and a body of experience initiating successful projects.  eTrust was established in Zhenjiang in June of 2016 as a holding company of CITICPE. Despite being a relatively young company, eTrust has already established 7 centers for manufacturing and R&D.  eTrust’s project experience includes the Yangyi solar-plus-storage project in Tibet, a 52.8MWh grid-side battery project in Ontario, Canada, and a 9MWh grid-side energy storage project in Irvine, California.  With the Zhenjiang grid-side battery project now added to its list of successful projects, eTrust has become a major energy storage player in just two years.

Narada Power: Frequent Winner of Behind-the-Meter Storage Projects and Collaborator on New Initiatives

According to CNESA’s Project Tracking Database, of newly operational electrochemical energy storage projects in 2017, Narada Power supplied the largest capacity, the majority of which was concentrated in behind-the-meter applications.  In the first half of 2018, Narada’s behind-the-meter storage maintained this momentum, with the company participating in a variety of projects.  Most of these projects were distributed across Jiangsu province and utilized the company’s “investment-plus-operations” model.  The Zenith Group 400MWh energy storage station is currently Narada’s largest contracted singular project, and has been a great achievement in the use of large-scale energy storage for commercial applications.  In addition, the Jiangsu Grid Corportation’s efforts to curb summer electricity peak prices in eastern Zhenjiang has also relied on the use of behind-the-meter energy storage projects powered primarily by Narada Power’s lead-carbon batteries, with over 500MWh being put to use.

In the first half of the year, Narada has also established strategic partnerships with other companies.  One example is Narada’s energy storage partnership with China Resources Power.  The partnership includes cooperation on power sales and purchases, construction of a microgrid storage system, and development of incremental distribution and storage.  Narada has also partnered with State Grid EV Service on a number of projects and initiatives, including promotion of the National Grid Energy Storage Cloud Service, exploration of new business models, demand response dispatch, green energy trading, ancillary services for grid stability, safety, and reliability, and orderly development of the grid system.

CLOU Electronics: A Major Player in the “Thermal Plant Plus Energy Storage” Frequency Regulation Service

According to statistics from the CNESA Project Tracking Database, as of the 2017 year’s end, China had in operation three combined thermal plant and energy storage projects, one of which included CLOU Electronics’s 9MW/4.478MWh project at the Tongda power plant in Shanxi.  In the first half of 2018, CLOU continued to develop its combined thermal plant and storage frequency regulation, engaging in a total of 90MW of projects across Shanxi, Inner Mongolia, Hebei, and Guangdong provinces.  These projects include the Guangdong CR Power Haifeng 30MW/14.93MWh frequency regulation project, which surpassed the Inner Mongolia 18MW/9MWh Shangdu power plant project as the largest thermal power plant plus energy storage frequency regulation project.

CLOU has potential to lead the country in the “thermal plant plus energy storage model.”  CLOU has already developed components such as energy storage batteries, BMS, PCS, EMS, and other key technologies while also providing systems integration services, allowing the company to provide a full range of storage solutions. With provinces such as Shanxi and Guangdong beginning to release market regulations that allow energy storage to take part in frequency regulation services, CLOU now has more opportunities to put its technological knowledge and project experience to work in new storage markets.

CATL: Working to Solidify the EV Battery Business While Advancing Grid-Side Energy Storage

In the first half of 2018, CATL continued to expand the EV battery business that it is most known for.  In March, CATL launched its IPO, with plans to raise 13.12 billion RMB, add 24GWh of production capacity, and invest 4.2 billion RMB in R&D for two projects the Huxi lithium-ion battery production plant project and an EV and energy storage battery research project.

While CATL expands its EV battery business, it has also made new strides in energy storage.  The company has recently begun exploring grid-side storage, including the Jinjiang Li-ion energy storage project.  The three stage project plans to begin with a system of 100 MWh, expanding to 500 MWh and finally 1000 MWh in the third stage.  The project is largely intended to support the Quanzhou city power grid dispatch, providing ancillary services for the local network.  CATL also won a bid to provide a grid-side energy storage project to eastern Zhenjiang, providing a 10MW/20MWh Li-ion energy storage system for the Xinbai storage station.

Aside from experimenting with renewable integration and behind-the-meter storage, CATL has also explored other applications.  The independent energy storage station in Jinjiang is the first time the company has tried grid-side energy storage.  With the continued development of electric vehicles and the energy storage market, CATL’s advanced battery technology is more than likely to continue expanding its energy storage into new and diverse areas.

Summary:

The projects developed by eTrust, Narada Power, CLOU Electronics, and CATL in the first half of 2018 were largely concentrated in grid-side, behind-the-meter, and ancillary services applications.  In terms of technology, lead-carbon batteries and Li-ion batteries were most frequently utilized in the first half of 2018.  Geographically, Jiangsu province lead the way in both number of new projects and total new capacity, reflecting how the province’s energy storage industry has benefited from policy support as well as its energy arbitrage system for industrial customers.

The strong market in the first half of 2018 will hopefully carry into the year’s second half, bringing further development to behind-the-meter, grid-side, and ancillary services applications.  As electricity reforms continue to advance, energy storage will have more opportunities to participate in the electricity market, helping to build greater confidence among vendors.

Author: Cao Zhengxin
Translation: George Dudley

Large-Scale Energy Storage Projects Around the Country Suggest 2018 Will See a Surge in Energy Storage Growth

China’s energy storage market saw a boost of policy support in 2017, from the release of the first national-level policy on energy storage—the Guiding Opinions on Promoting Energy Storage Technology and Industry Development—as well as regional energy storage policies such as those released in Jiangsu province, China Southern Grid, and others.  According to the CNESA research department’s domestic energy storage market tracking, the first half of 2018 saw the announcement of new energy storage project construction in Jiangsu, Henan, Qinghai, and Guangdong provinces.  These projects varied in scale from tens of megawatts to hundreds, and altogether totaled 340.5MW (including those projects planned, under construction, and already operational).  This combined new capacity nearly equaled the country’s total accumulated operational capacity of 389.4MW at the end of 2017 (source: CNESA Global Energy Storage Database). Thus far, 2018’s newly operational capacity has already achieved growth 281% higher than that of the entire 2017 year.  If the entirety of this new capacity begins operation on schedule, China’s domestic energy storage market will see an amount of growth that will make 2018 one of the most significant years yet for the industry.

When it comes to electricity, Jiangsu, Henan, Qinghai, and Guangdong provinces differ in a variety of ways, including power structure, power consumption, electricity pricing, distribution of resources, and policy support.  Such differences have naturally influenced the ways in which these provinces have implemented energy storage.

Jiangsu: Grid-side and Behind-the-meter Energy Storage Projects Work Together to Alleviate Zhenjiang’s Summer Power Loads

In response to Jiangsu province’s supply-side structure reforms and to implement the province’s “263 plan,” three generators of the Jianbi power station--totaling 33,000 kW--were shut down in 2017, having reached their age limits¹. The Jianbi power station provides power to Danyang, Yangzhong, Zhenjiang New District, and other regions of eastern Zhenjiang. The shutdown of these generators left this area with a significant power shortage. With summer loads increasing each year, the eastern region was faced with unprecedented peak load pressure this summer.

In light of these challenges, in May of 2018, State Grid Jiangsu Energy Service Co., Xuxu Group, and Shandong Electric together initiated plans for the construction of large scale grid-side and behind-the-meter storage projects in eastern Zhenjiang.  The projects capitalized on energy storage’s short construction period, flexible deployment, rapid response time, and other advantages to effectively reduce pressure on the grid.  Grid-side projects included eight energy storage power stations equipped with lithium iron phosphate batteries at a total scale of 101MW/202MWh.  Providers include ZTT Energy Storage, CLOU, eTrust, and other domestic companies.  Behind-the-meter storage has largely been supplied by Narada’s lead-carbon batteries at a total capacity exceeding 500MWh.

Henan: Developing the First Large Scale Grid-Side Energy Storage Project in the Central Region

Henan is one of central China’s major provincial power consumers.  The province possessed 66,570 MW of thermal generation capacity at the end of 2017, the fifth largest in the country.  To better adapt to new energy trends and promote the transition to new energy systems, Henan province released two policies in 2017, the Henan Province Energy Development Program for the “Thirteenth Five-Year Plan”  and the Henan Province Development Plan for the Energy Transition.  These policies highlight the use of renewables in the next generation of energy development, avoiding fossil fuels and promoting the construction of wind power projects and greater exploitation of solar power. The policies also explore the creation of ancillary service markets, encourage increased investment in grid infrastructure, and show support for the development of a national electricity spot market. Energy storage in Henan province has great development potential in wind power, integrated solar, frequency regulation, peak shaving, and T&D deferral.

In the second quarter of this year, Henan Grid experimented with its first megawatt scale grid-side battery storage project.  The project is currently Henan’s largest battery storage project, as well as one of China State Grid’s three largest storage projects of the 2017 year. The project is spread across 16 substations in 9 regions and can be charged during non-peak hours and release energy during peak periods.  The project also provides stability for wind and solar power and increases the efficiency of grid operations.  So far, two calls for bids have been announced, calling for capacity of 90MW/90MWh.  Companies including Lishen, Narada, and CLOU have submitted bids.  Of these bids, the Huanglong substation and Longshan substation projects have already begun operations.

Qinghai: Energy Storage Technology Supports Wind and Solar Resources

Qinghai possesses plentiful solar and wind resources with great potential for development.  Solar energy provides a potential 3 billion kilowatts of power, while wind resources provide a potential 75 million kilowatts.  Solar power has already become the second largest source of electricity in Qinghai, after hydroelectric power.  However, the large-scale addition of these resources to the grid has also brought safety and stability concerns, wind/solar curtailment issues, and problems related to the coordination of multiple clean energy resources.  Energy storage can help combat these problems by serving as a supporting technology, with enormous development potential for renewable integration, solar and wind curtailment reduction, frequency regulation/ancillary services, and other applications.

Huanghe Hydropower has been a leader in the clean energy industry.  The company’s efforts to develop diversified models for clean energy and create large-scale solar and wind power stations have also begun to include energy storage.  In June of this year, Huanghe Hydropower’s 1000 MW combined hydro-solar-wind demonstration project successfully connected to the power grid.  The project also included a 20MW/16.7MWh energy storage component.  In addition, Huanghe Hydropower has recently released calls for bids for energy storage support for 45 thousand kilowatts of wind power in Gonghe county and 10 thousand kilowatts of wind power in Wulan county.  The company has called for 45MW/90MWh and 10MW/20MWh of energy storage capacity, respectively.  The projects will rely on a variety of storage technologies, including lithium iron phosphate batteries, lithium ion batteries, zinc bromine flow batteries, and vanadium flow batteries.

Guangdong: Opening the Door for China Southern Grid’s Thermal Power and Storage Frequency Regulation

Shanxi has consistently lead the way in China’s combined “thermal power plus storage” frequency regulation model.  By the end of 2017, Shanxi had initiated a total of three thermal power plus storage frequency regulation projects, the only operational projects of their type in China at the time.  Two of the projects were developed by Ray Power and one was developed by CLOU.  The total storage capacity of the three projects equaled 9MW/4.5MWh.  Apart from Shanxi, Inner Mongolia and Hebei also began involvement in thermal power plus storage frequency regulation projects, the largest of which was CLOU’s  18MW/9MWh frequency regulation storage project in Inner Mongolia.  The combined thermal plant generator and energy storage system provides frequency regulation services, improving the frequency regulation capabilities of the thermal generator, reducing the risk of receiving penalties, and providing financial benefit to the plant.

Starting in Guangdong province, China Southern Grid has begun experimenting with power market reforms, including reforms to the ancillary services market.  Southern Grid has released the Guangdong Frequency Regulation Market Transaction Regulations (Trial) and begun trial operations, allowing third party ancillary services providers and generation companies to take part in the ancillary services market.  In the second quarter of this year, following Shanxi, Inner Mongolia, and Hebei provinces, Guangdong announced four “thermal power plant plus energy storage” combined frequency regulation projects at a combined capacity of 57MW/28.5MWh.  The largest of these plants is the CLOU project at the China Resources Power plant in Haifeng with a capacity of 30MW/15MWh.  Guangdong has become the first China Southern Grid region and the fourth province nationwide to develop a combined thermal power plant and energy storage frequency regulation project.

Summary

Storage projects in the four provinces above have been noteworthy for their harnessing of a variety of energy storage technologies, including lithium ion batteries, lithium iron phosphate batteries, lead carbon batteries, vanadium flow batteries, and zinc bromine flow batteries.  In addition, apart from the typical energy storage applications in renewable integration, frequency regulation, and behind-the-meter applications, Jiangsu and Henan provinces were the first in the nation to release 100 megawatt level grid-side projects, providing promise for future large-scale grid-side projects in other regions and perhaps nationwide.

The Jiangsu and Henan grid-side applications also exemplify the role of grid companies as key users of energy storage technologies. Although market mechanisms are still taking shape and the full value of energy storage applications have not yet been recognized, enthusiasm from grid companies is a positive signal providing energy storage companies with confidence.  At the same time, these projects also provide a variety of real-life data for market regulation policymakers, providing support for the growth of the energy storage market across the country.

¹The “263 Plan” is an initiative implemented by the Jiangsu provincial government and Suzhou city government to meet the central government’s environmental protection requirements and promote the construction of practical and environmentally friendly infrastructure.

Author: Ning Na
Translation: George Dudley

Development Trends in Combined Solar PV & Energy Storage

The combining of energy storage with solar PV applications has become a significant method for lowering electricity bills, increasing reliability of electricity supply, and decreasing of environmental pollution.  In 2017, the use of such solar-plus-storage systems became a prominent application for campus microgrids, islands, and industrial-commercial behind-the-meter systems.  Whether in open electricity markets such as the United States or Australia, or in island regions of Southeast Asia and the Caribbean, distributed solar-plus-storage resources have seen widespread applications.  The National Development and Reform Commission’s May 31st release of the Notice on Matters Relating to Solar PV Electricity in 2018 addresses subsidy standards and tightening of solar PV targets.  Solar PV companies are looking to energy storage as a solution, viewing it not only as the next direction for the market, but also seeing it as a new way of generating revenue for solar PV resources.  In the following article, CNESA seeks to summarize and analyze the most recent development trends and changes involving combined solar PV and storage applications in electricity markets.

The expansion of solar PV applications that has occurred in some countries can be attributed to three factors.  The first is an increase in policy support that has led to the expansion of distributed energy and renewable energy resources, allowing more solar PV applications to emerge.  The second is decreasing costs for solar PV systems that has in turn led to decreasing subsidy support for grid connection of such systems.  The third is increasingly open electricity markets that have shifted renewable energy subsidy costs to customers, causing electricity bills to rise. Other factors include government policy support for solar PV systems and energy storage systems as well as an oversaturation of renewable resources in the grid.  Such factors have stimulated customers, including industrial-commercial customers and residential customers, to make use of energy storage both for its economic advantages as well as to lessen dependence on the grid.

1.       German Investment and Policies Support the Growth of Solar-Plus-Storage

Following Germany’s decision to retire its nuclear power plants, the country has focused on increasing its renewable energy generation.  Germany has set a goal to generate 35% of total power from renewable resources by 2020, and no less than 80% by 2050.  Resolving renewable energy grid integration issues is a key factor to realizing this goal.  In 2013, Germany released a subsidy policy to support the construction of solar PV and storage projects.  The policy provided a 30% subsidy for investment in residential energy storage equipment, with additional requirements for PV operators to contribute 60% of their output to the grid.  In 2016, Germany implemented a new solar-plus-storage subsidy policy.  The policy is set to continue to the end of 2018 and will provide subsidies for energy storage systems combined with grid-connected solar generation.  The policy only permits 50% of the system’s peak power to be returned to the grid, a significant difference from previous requirements for solar-plus-storage returns to the grid.  Such changes signify how the country has begun to encourage self-generation through distributed energy resources as part of its expansion of renewable energy.  In October of 2016, Germany’s KfW was forced to halt distribution of new subsidies due to exhaustion of funds.  At the same time, the government also confirmed that beginning July 1, 2017, subsidy funding would decrease from 19% of the total investment cost to 16%, decreasing again by 3% on October 1, with a total drop to 10% by the end of 2018.

Germany’s guaranteed subsidies have helped stimulate the large-scale development of the renewable energy industry, yet at the same time have increased electricity prices for customers.  Germany’s retail electricity costs have increased from 14 Euros/kWh in 2000 to 29 Euros/kWh in 2013.  Such increases have meant that the public has had to foot the bill for increasing use of renewable resources.  Policy support has pulled back to moderate levels. Decreasing energy storage prices, decreasing feed-in tariffs (FIT) for solar, increasing electricity prices for residential customers, and increased residential energy storage subsidies have all played a role in promoting Germany’s residential solar-plus-storage market development, with the self-generation of electricity becoming a popular choice.

2.       United States Tax Cuts and Accelerated Depreciation Encourage Solar and Storage Combinations

Apart from its favorable environmental conditions, energy storage financing policies, and pressures from high electric prices, the United States has seen additional factors which have encouraged the use of solar-plus-storage applications.  Support for the construction of energy storage systems in the United States has not relied completely on subsidy programs such as California’s Self-Generation Incentive Program (SGIP).  Early efforts included Investment Tax Credits (ITC), tax credit policies created to stimulate green energy investment.  Such policies provided solar PV projects with a tax credit of 30% on the total cost of the project.  Other support includes accelerated depreciation, a tax deduction method approved by the IRS.  Solar PV projects constructed after December 31, 2005 can make use of the accelerated depreciation rule, allowing stationary assets to gradually depreciate based on the equipment’s age.  In 2016, ESA submitted proposal S3159 to the U.S. senate—The Energy Storage Tax Incentive and Deployment Act. The act specifies that energy storage technology may apply for ITC and that it may operate in support of renewable energy systems either independently or as part of a microgrid system.  To promote the simultaneous development of energy storage and renewables, policies have also required energy storage systems to source at least 75% of their stored electric power from renewable energy as a condition for receiving ITC support.  This support covers 30% of the system investment costs, lowering to 10% support by 2022.  Energy storage systems that store between 75%-99% renewable sourced energy can enjoy a partial ITC tax break.  Only those systems which store 100% renewable energy can enjoy full ITC benefits.  At the same time, energy storage systems that do not include renewable energy components can utilize a seven year accelerated depreciation plan, equivalent to a 25% reduction in initial system costs.  Although systems that source less than 50% of their charging capacity from renewable energy do not meet the requirements to receive ITC, they can still enjoy the same accelerated depreciation plan.  Storage systems charging greater than 50% renewable sourced energy can enjoy a five year accelerated depreciation plan, equivalent to a 27% reduction in initial investment costs.

Many regions, including California, have been promoting the use of solar-plus-storage microgrid applications, shrinking electricity bills.  Hawaii is a strong example of a region harnessing solar-plus-storage applications.  For many years, Hawaii has used investment stimulus plans to support the use of energy storage technologies, in part as a way to harness the region’s plentiful renewable resources.  High electricity prices have also encouraged the islands to construct solar PV systems.  By the end of 2017, 16%-20% of households on each of Hawaii’s islands owned a solar PV system.  The proliferation of distributed solar systems across the state has been a challenge for utilities.  In 2015, the state government canceled net metering regulations for the Hawaiian Electric Company and implementing a policy to restrict the transfer of electricity back to the grid, essentially encouraging the use of combined solar-plus-storage systems.  In January 2017, the region released a stimulus policy directly supporting the installation of solar-plus-storage systems.

3.       Japan Explores Solar-Plus-Storage Applications for Power Markets

The choice to abandon nuclear power has led to rising electricity prices and supply issues in Japan.  In response, the country has looked to reform its electricity system to provide safe, stable electricity and control rising prices.  In the fall of 2014, Japan’s five big power companies decided to pause purchases of solar generated electricity in response to the rapid spread of solar generation.  To address this problem, the Japanese government began to encourage renewable energy generators to adopt energy storage batteries, providing funding to power companies to develop concentrated renewable projects integrating energy storage that could lower curtailment of wind and solar resources and bring stability to the grid.  In 2015, the Japanese government allocated 74.4 billion Yen to provide subsidies to wind and solar generators integrating energy storage batteries into their systems.

Japan began introducing feed-in tariffs (FIT) for stationary solar PV in 2012, resulting in rapid expansion of the country’s solar PV market.  However, the purchasing system for renewable energy and implementation of FIT brought new problems.  One example is the stability issues brought by the excessive construction and integration of solar PV into the grid.  Such issues forced grid companies to request independent solar PV power generators to add battery storage systems to improve grid stability.  Renewable energy subsidies also resulted in the increase of electricity prices, putting greater burden on ordinary customers.  In response to these problems, Japan’s Ministry of Economy, Trade, and Industry issued reforms to the renewable energy purchasing and FIT systems.  Such measures included allowing renewable energy purchasing prices to be decided by competitive bidding between companies and establishing medium- and long-term pricing goals, measures which help to clarify a timeframe for decreasing FIT prices. The continued lowering of solar PV FIT prices and the recent rise in electricity prices are factors that will contribute to customer use of self-generated solar PV, creating opportunities for greater use of energy storage to increase economic viability of such behind-the-meter solar PV systems.

4.       The Domestic Solar-Plus-Storage Applications Environment

In contrast to the thirty years of open electricity markets in other countries, China’s “Thirty Year Power Market Reform” is still under way.  In theory, China already possesses the solar-plus-storage technologies and market conditions necessary for large scale applications.  China has begun user-to-user energy transactions, providing opportunities for customers to market their excess self-generated energy. Solar generation subsidies have also seen enormous reduction, creating an urgent need to find profit generation methods that do not rely on policy support.  Customers also show interest in reducing their reliance on the grid.  In addition, the Methods for Promoting Construction of Grid-Connected Microgrids policy stipulates that grid-connected microgrids must have a renewable energy capacity of over 50%, and the exchange of energy between microgrids and external grids should not exceed 50% of the year’s total energy use.  Demonstration projects have helped support the penetration of renewable energy into the grid, and as renewables proliferate on a large scale, demonstrations must stress the self-generation model, promoting self-sufficient systems that also make use of energy storage.

Energy storage has already become an important part of China’s energy demonstration projects, bringing attention to electricity pricing reforms and solar PV investment while  increasing the opportunities for solar PV and energy storage to be combined in hybrid applications.  At the current stage, cross-subsidization and residential power use limitations have not been enough to stimulate residential behind-the-meter energy storage applications, yet as solar PV prices continue to fall, the value of behind-the-meter solar-plus-storage applications for industrial-commercial use will become more apparent.  The movement toward an open electricity market provides new market pricing and transaction mechanisms that will help create more opportunities for solar-plus-storage applications and developments in China.  In the future, China’s solar-plus-storage developments and applications will see benefits from the retirement of current policies and the opening of the electricity market.

Author: Wang Si
Translation: George Dudley

China’s First “Grid-Side Distributed Energy Battery Storage Station” Completes Successful Grid Connection

On June 18th, 2018, Henan Power Grid’s 100 MW energy storage demonstration project—the Luoyang Huanglong station containerized battery storage project—completed its successful connection to the grid.  The project marks a critical step for grid-side distributed battery storage in China.  The project will provide Henan Power Grid with load shifting services and promote the use of renewable energy within the grid.  The project is the first grid-side 100 MW scale distributed battery storage demonstration in China.

The grid faces a number of challenges, including the rapid addition of renewable energy, ensuring safe operations, finding suitable peak shaving methods, and financing of new construction.  Large-scale battery storage provides response time in milliseconds, providing safe and speedy power support to the grid.  Battery storage also provides new strategies for peak shaving and limiting air pollution, and can increase the efficiency in which energy is utilized in a variety of ways.

The Henan Power Grid project has been led by the Pinggao Group (a subsidiary of China State Grid) with construction by Luoyang Power Supply company.  The project includes 16 substations in nine regions, including Luoyang and Xinyang.  The plan utilizes distributed deployment, modular design, independent connections, and centralized dispatch. 

Now that the project has successfully connected to the grid, Pinggao Group is expected to increase project construction speed to complete the remaining project components. The project is scheduled to be fully complete before the end of 2018.  Pinggao Group has in recent years been an active promoter of large-capacity battery storage technology and innovative business models.  The successful implementation of the Henan Grid project will be an important trial for the use of large-capacity distributed battery storage, and a significant contribution to the goals of the Guiding Opinions on Promoting Energy Storage Technology and Development.  The project creates a basis for commercialized applications and sustainability in the power grid, and is an important step for China in the advancement of the energy revolution and energy internet development.

Observing Energy Storage’s Power and Energy Applications through the CAISO and PJM Markets

According to statistics from the China Energy Storage Alliance’s Global Energy Storage Database, at the end of 2017, the United States possessed a total operational electrochemical energy storage capacity of 810.8MW.  Storage added over the past three years represents 2/3 of the current total.  Li-ion batteries account for 80% of total battery capacity.  Regionally, the combined total capacity of PJM, CAISO, ERCOT, MISO, and ISO-NE made up over 90% of the country’s total storage capacity.  The PJM region represented the country’s largest scale of energy storage in terms of power (MW), while the CAISO region represented the largest scale in terms of energy (MWh). Using information from the U.S. Energy Information Administration’s recently released “Battery Storage Market Trends” report, this article examines the characteristics of energy storage used in both the CAISO and PJM power markets.

Energy Storage in the PJM Region

PJM (PJM Interconnection LLC) became an Independent System Operator (ISO) in 1997, following the approval of the Federal Energy Regulatory Commission (FERC). PJM was later designated a Regional Transmission Organization (RTO) in 2001.  As an RTO, PJM operates and manages the power system in 13 states and the District of Columbia. The region is currently the largest centralized dispatch in the United States, and the country’s most complicated region for energy control.

The PJM region controls the United States’ largest energy storage power capacity, with current projects totaling nearly 40% of all power and 31% of all energy capacity in the United States.  Energy storage projects in the PJM region are geared toward power applications, with an average power of 12MW and an average charge/discharge time of 45 minutes.

In 2011 and 2013, the FERC released orders 755 and 784.  Order 755 required that energy storage resources for frequency regulation be compensated according to their effectiveness.  Order 784 defined the settlement and reporting policies for energy storage as a third-party resource.  With the support of these policies, PJM formulated competitive pricing and payment settlement methods for frequency regulation, creating a fast frequency regulation market.  PJM’s battery storage power capacity is largely controlled by Independent Power Producers (IPPs) who provide frequency regulation services.

Nevertheless, the rapid development of the PJM frequency regulation market also brings control system management problems.  To combat such issues, PJM revised market regulations in 2017, requiring frequency regulation services to remain neutral between energy and power, and RegD resources to no longer limit frequency regulation to short-term services.  Energy storage services were also required to lengthen their charge/discharge periods.  These market regulation updates signify that energy storage systems need to deploy at larger capacities and with longer charge/discharge periods, while also slowing the speed in which energy storage systems are installed.

Energy Storage in the California Power Market

CAISO (California Independent System Operator) is the operator of the California power market and the dispatcher for the California power grid.  CAISO provides service for 30 million California residents, controls 25,000 miles of transmission and distribution lines, and possesses a power generation capacity of over 500 million kW.

CAISO possesses the largest capacity of energy storage by energy (MWh) in the United States, with current projects covering 44% of the country’s total capacity by energy, and 18% of the total capacity by power.  California’s energy storage is largely focused on energy services, with a more varied set of applications compared to PJM.  CAISO energy storage projects have an average energy capacity of 5MW and an average charge/discharge duration of four hours.

The Pacific Gas & Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), Southern California Edison (SCE), and other investor-owned utilities (IOUs) are the principle investors in California’s energy storage.  IOUs actively promote the construction of grid-level energy storage stations and industrial-commercial customer-side storage stations while at the same time promoting shared benefit models with customers, integrating customer-side distributed energy storage resources into the power service.  SCE and SDG&E procure and use 62% of California’s total energy storage capacity.  This capacity has largely been used to counter power losses due to the Aliso Canyon gas leak, as well as to satisfy CPUC power generation demands for backup power supply of at least four hours.  California therefore has begun to trend towards development of energy storage with greater energy capacity.  In addition, California is still the primary region for the use of small-scale energy storage systems (<1MW).  90% of the United States’ energy storage systems are used in California, with commercial applications largely centered in SCE and SDG&E regions, and industrial applications concentrated mostly in PG&E regions.

In analyzing the trends in power markets such as PJM and CAISO, as well as developments in states such as California, Massachusetts, and New York, we find that revision of wholesale electricity markets and state government energy storage policies have been the two major factors in the promotion of energy storage in the United States.  Apart from FERC order 841, the major trends in the wholesale electricity market have been to treat energy storage as an independent power resource, define the model in which energy storage should take part in the power market, decrease the minimum capacity limit for energy storage to participate in the power market, allow energy storage to connect with the grid, and define energy storage duration requirements.  Among state governments, principal methods have been to create procurement plans, create economic incentives, and include energy storage as part of integrated resource plans for electric power services.

China Energy Storage Alliance Joins ADB Asia Clean Energy Forum 2018

The Asian Development Bank held its annual Asia Clean Energy Forum 2018 the week of June 4-8 at ADB headquarters in Manila, Philippines.  The forum, one of the largest clean energy events in Asia, featured a wide variety of presentations, discussion sessions, and deep dive workshops covering a diverse range of themes such as Innovations in Energy Efficiency, Innovations in Renewable Energy, and Increasing Energy Access.  The event was attended by over 1,000 guests from throughout the Asia-Pacific region.

The China Energy Storage Alliance is proud to have taken part in the “Battery Energy Storage Technology for Clean Energy” Deep Dive Workshop held on June 8th.  CNESA representative George Dudley delivered a presentation introducing China’s energy storage market and policy environment.  Representatives from the India Energy Storage Alliance and Korea Battery Industry Association also delivered presentations providing background on the energy storage policy environments in their own countries. In addition to energy storage policy, other forum themes included economics & financing, grid applications (such as frequency regulation and demand response), and renewable integration.  Over a dozen expert presenters from the non-profit and private sectors shared their knowledge and experience on battery energy storage.

Since 2006, the Asia Clean Energy Forum has been bringing together clean energy experts, developers, policymakers, non-profit organizations, and more.  Learn more about the ACEF conference at the official website.  The China Energy Storage Alliance, the first non-profit dedicated to energy storage in China, was founded in 2010.  Representing over 200 member organizations from all aspects of the energy storage industry, CNESA serves as the voice of energy storage across China.  CNESA’s own International Conference and Expo is held in May of each year. 

ESIE 2018 Media Report – Which Energy Storage Application has the Greatest Prospects for the Future?

Author: DiDi Beijixing Energy Storage Online

In recent years, the value of energy storage has become increasingly clear, whether in behind-the-meter, ancillary services, renewable integration, or other applications.  Yet when it comes to economic benefits, energy storage business models are still in an exploratory stage.  There are still many questions to be answered. What direction can energy storage develop in in the future?  How do we uncover energy storage’s potential? The author visited the 7th annual Energy Storage International Conference and Expo (ESIE 2018) to learn more about the future of energy storage in China.

According to statistics from the CNESA Global Energy Storage Project Database, as of the 2017 year’s end, China’s total operational energy storage capacity totaled 28.9GW, an increase of 19% from the previous year.  Pumped hydro energy storage made up the majority of this capacity, at nearly 99%. Electrochemical energy storage capacity totaled 389.8MW, an increase of 45% from the previous year. In a comparison of new electrochemical energy storage capacity by applications, in 2017, behind-the-meter energy storage made up 59% of the total of new applications.  Renewable integration came in second at 25% of the total new applications.

Energy Storage Provides New Energy with “Value-Added Services”

As the use of New Energy sources continues to increase, the energy structure faces a transformation.  In the future, as solar, wind, hydro, and other New Energy sources occupy a major portion of China’s energy supply, energy storage will be an important part of the country’s entire energy industry. In recent years, China has promoted multi-energy systems, wind+storage/solar+storage, and other demonstration projects.  Energy storage not only contributes to a more effective use of energy, decreasing wind and solar curtailment, it can also stabilize power generation, increase the quality of electric energy, and contribute to the balancing of grid loads.

Take solar PV as an example.  In its earliest stages, the manufacturing costs for solar PV were high, and companies focused most of their efforts on lowering such production costs and technology R&D.  With the maturation of the market and technological breakthroughs, solar energy manufacturing costs fell rapidly, bringing about opportunities for energy storage.  Energy storage can help to improve the quality of PV electricity and ease pressure on the grid.  Currently, there are many solar+storage projects in operation which help to prove through practice the value of energy storage in new energy grid integration.

Once such project is located in Shaanxi.  In 2017, Shaanxi Province’s Dingbian County achieved a total installed PV capacity of 1500MW.  In 2016, the county’s solar curtailment rate was near 10%.  The 10MWh Dingbian Li-ion battery system’s load shifting program brought relief to the curtailment issue.  The project utilized Dynavolt’s MW-scale container-style battery module technology.  Operating in conjunction with the PV station, the battery absorbs excess power, activating based on PV power prices, providing load shifting services and contributing to use of local power.

Marketization is the Outlet for Energy Storage in the Grid

The five stages of the power system—generation, transmission, transformation, distribution, and end use—all can experience the value of energy storage.

In electricity generation, energy storage can participate in ancillary services such as frequency regulation and peak shifting.  However, China’s ancillary services market is still in an exploratory stage, and questions such as proper pricing and transaction mechanisms have not yet been resolved.  While some companies have implemented frequency regulation projects, many energy storage enterprises planning to join the ancillary services market are still waiting and watching the market from afar. At present, the most frequent approach to frequency regulation is through energy storage combined with thermal generators.  As individual regions build their own ancillary services markets, energy storage in the form of peak shifting and frequency regulation has a strong chance at commercialization.

Amongst energy storage in ancillary services projects, Beijing Ray Power has created a combined energy storage and thermal generator system which functions as a new frequency regulation source that not only resolves the slow adjustment time, delays, and potential for errors of traditional thermal generators, but also removes the difficulty of adding frequency regulation to the grid due to energy (KWh) limits on energy storage. One example is the Jinneng Group’s 9MW solar-thermal power plant in Shanxi that links energy storage with frequency regulation.  The system relies on a thermal generator coupled with a 9MW/4.5MWh energy storage system. The remodeled generator system has an improved AGC frequency regulation performance factor Kp of nearly 5.0.  The energy storage system’s round cycle efficiency is nearly 88%, while the power plant’s AGC frequency regulation compensation helps create profit, bringing great benefit to the company.

The transmission and transformation side of electricity is unlikely to see energy storage applications in China.  The size and relative staunchness of the Chinese power grid in comparison to those of other countries means that energy storage opportunities in China’s transmission and transformation will be unlikely for the next few years.

Power distribution, as many know, is one of the weaker components of China’s power system.  One example is Guangdong, where numerous areas of the province have suffered from low voltage problems in distribution and transformation, leading to significant customer complaints.  Such incidents brought energy storage into focus.  However, according to insider information, the cost for a new energy storage system would be at least twice as much as that for transformer and line upgrades.  Such costs are a difficult challenge for energy storage, but if over time the costs of energy storage batteries decreases, power distribution is certain to be a large market for energy storage.

Behind-the-meter energy storage made up the majority of 2017’s new energy storage capacity in China.  No matter if used for load shifting or demand management, the value of behind-the-meter storage has already been proven.  From the point of view of businesses, the most common profit point lies in energy arbitrage.  Yet relying completely on arbitrage is not enough to bring out the complete value of energy storage.  Even extremely low costs will not be enough to bring out the best regulatory functions of energy storage.

Narada Power’s smart energy storage power station at the Wuxi-Singapore Industrial park serves as a demonstration of energy storage capabilities.  The station is powered at 20MW, and total capacity of 160MWh.  The facility is currently the world’s largest commercialized energy storage power station in operation.  Each day, the facility can provide the industrial park with 20,000KVA of load adjustment during peak periods, lowering the burden on the industrial park’s substations and transformers and eliminating the need for transformer upgrades.

Second-Life Usages for EV Batteries are Another Driving Force for Energy Storage

In 2017, over 777,000 new energy vehicles were sold.  According to predictions, China will soon be facing a large wave of battery retirement.  China has already released a number of policies to stimulate the development of the battery retirement industry.  Recycling of retired batteries can be done in one of two ways, either through disassembly of the battery or through second-life applications.  Second-life applications have several advantages.  Currently, the cost of new battery production is high, a major factor limiting the widespread deployment of energy storage.  Second-life usages help lower the initial construction costs for energy storage systems, while at the same time being environmentally friendly and having a positive socioeconomic value.

In recent years, many domestic and international agencies have undertaken second-life applications research.  In China, there have been three main industry groups that have engaged in such research.  The first is electric vehicle manufacturers, such as BYD and BAIC BJEV.  The second group is energy storage customers, such as China Tower and grid companies.  The final group is third-party energy storage groups such as Shanghai GMDE.  Internationally, the main participants in second-life battery research are car manufacturers.

Second-life EV battery projects have already been successfully launched in China.  In February 2018, Shanghai NIO completed construction of two second-life energy storage power stations.  Beijing Pride Power complete a MWh-level second-life battery system, the first application of its kind in China.  The system uses retired vehicle battery packs (lithium-iron phosphate batteries), a bidirectional PCS, and connects to the end-user distribution network through a low-to-medium voltage distribution room.

Second-life applications can lower the investment costs of new projects and shorten the return period.  Although many companies have already become involved in second-life applications, there are still many areas that require exploration and improvement:

1.       Safety Considerations – early model batteries suffer from relatively low performance and were not designed with recycling in mind.  Designs also vary greatly in size and parameters, and it can be difficult to trace complete information on the batteries.  These and other concerns create large safety issues for second-life battery usages.

2.       Technological Considerations – second-life EV batteries must go through testing, disassembly, reassembly, and other stages.  Currently, the testing process suffers from a lack of advanced technology and standards.  Most testing is done by hand, and early stage batteries do not have a unified standard for testing, creating difficulties in the reassembly of batteries.

3.       Cost Considerations – EV battery disassembly, testing, and reassembly cost a great deal in resources and manpower.  Without developed technologies for such processes, many companies face added costs for second-life battery projects.

As EV battery retirement increases, and with the support of national policies, second-life batteries are destined to become a thriving market.

Increased policy support and continued research breakthroughs lowering the cost of energy storage are helping to develop the energy storage industry in a positive direction.  Whether in microgrids, ancillary services, spot markets, or any other field, the future of energy storage looks bright.

Ukrainian Parliamentary Delegation Visits Chinese Academy of Sciences to Discuss Energy Storage

On May 8th, 2018, the China Energy Storage Alliance and Chinese Academy of Sciences warmly welcomed a group of delegates from the parliament of Ukraine for a visit to the Chinese Academy of Sciences Institute of Engineering Thermophysics research base in Langfang, China.  The visit included a tour of the research base’s compressed air energy storage system, followed by presentations and a roundtable discussion.  The event was co-organized by the China National Complete Engineering Corporation and the China Energy Storage Alliance.  CNESA member organizations including vice chair member Shoto Group, Ray Power, Puneng Energy, ZTT, and Sungrow-Samsung were in attendance to meet and discuss with the delegation.

The Ukrainian delegation was led by Mr. Oleksandr Dombrovskyy, Vice Chairman of the Committee on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety of the parliament of Ukraine.  Mr. Dombrovskyy was accompanied by four additional parliament members as well as a delegate from the Ukrainian embassy.  The purpose of the event was to help the Ukrainian government understand China’s energy storage industry and to introduce the Chinese energy storage products and technologies that are currently available. The meeting also helped the Chinese companies in attendance to understand the Ukrainian energy system and the market potential for energy storage in Ukraine.

The initial tour of the compressed air storage system was led by Dr. Zhang Xinjing, who introduced the system to the delegation and answered their questions regarding the technology.  The tour was followed by presentations and discussion.  China Energy Storage Alliance General Secretary Liu Wei delivered a presentation introducing the development of the global energy storage industry.  Dr. Tang Xisheng, General Manager of Shoto Group, introduced his company’s lead-carbon battery technology and its applications.  Guo Jintao, New Energy Products Sales Manager for ZTT’s International Division, delivered a presentation on his company’s Li-ion batteries and their applications.  The final presentation was delivered by Dr. Zhang Xinjing, who first provided an introduction to the Chinese Academy of Sciences Institute of Engineering Thermophysics before describing the development of compressed air energy storage research.  The meeting concluded with a Q&A session between the Chinese and Ukrainian guests.

This initial meeting served as a starting point for what is sure to be further cooperation and exchange in energy storage between Ukraine and China.  Both sides hope to continue to work closely to find ways in which China’s energy storage technologies and resources can contribute to the development of Ukraine’s energy system.

International Energy Storage Alliance Founding Ceremony Held at ESIE 2018

On April 2, the official founding ceremony for the International Energy Storage Alliance was held at the National Convention Center in Beijing.  The INESA is led by the Chinese Academy of Sciences Institute of Thermophysics and is supported by the Birmingham University Energy Storage Center, the China Energy Storage Alliance, and other international energy storage technology research bodies and industry groups.  The founding ceremony, co-sponsored by the Chinese Academy of Sciences Institute of Thermophysics and the China Energy Storage Alliance, received support from the Chinese Academy of Sciences International Cooperation Department, the Beijing Science and Technology Cooperation Center, and the China Energy Research Society.  Over 300 representatives from government, industry, and research institutions were in attendance for the ceremony.

China Energy Storage Alliance Chief Supervisor Zhang Jing Hosts the Foundation Ceremony

International Energy Storage Alliance Chairman Chen Haisheng Delivers Welcome Address

The INESA foundation ceremony was hosted by CNESA Chief Supervisor Zhang Jing. INESA Secretary General and Chinese Academy of Sciences Institute of Thermophysics Vice Director Chen Haisheng provided the initial welcome remarks, speaking on the alliance’s background, goals, and development plan.  The Chinese Academy of Sciences International Cooperation Department International Organizations Office Director Feng Kai delivered heartfelt congratulations to the INESA on its founding and praising the Chinese Academy of Sciences for its efforts.  Her speech also emphasized the Chinese Academy of Sciences' pledge to increase support for energy storage technology research and industry development, foster the growth of the INESA, contribute to the global spread of green energy, lessening of air pollution, and battling of climate change.

China Energy Research Society General Secretary  Zheng Yuping Delivers a Speech

Chinese Academy of Sciences International Cooperation Department International Organizations Office Director Feng Kai Delivers a Speech

China Energy Research Society General Secretary Zheng Yuping delivered a speech on the industrialization of energy storage technologies and research, highlighting the use of energy storage for reduction of emissions and adding renewable energy to the grid.  As China's energy think tank, the China Energy Research Society will continue to support the energy storage industry, and provide as many resources as possible to support the International Energy Storage Alliance.

Chinese Academy of Sciences Institute of Thermophysics Director Zhu Junqiang followed with a speech on behalf of the Institute of Thermophysics welcoming the experts and leaders in attendance and expressing gratitude to the new organizations and experts joining the alliance.  The speech emphasized cooperative activities between INESA members, including collaborative strategies for creating breakthrough technologies around the world, establishment of energy storage demonstration projects, and promoting continued energy storage and renewable energy growth globally.

INESA Representative Professor Ding Yulong of Birmingham University Delivers a Speech

INESA Representative Gary Yang, Founder and CEO of UET Technologies, Delivers an Address

The Official Founding of the International Energy Storage Alliance

Birmingham University Energy Storage Center Director Ding Yulong, UET Technologies Founder and CEO Gary Yang, and DNV GL Chief Consultant George Garbandic also delivered speeches congratulating the foundation of the INESA and expressing support for continued progress towards its goals.