Chen Haisheng: Toward the 300 GW Goal — How Can New-Type Storage Walk Steadily and Far During the 15th Five-Year Plan Period

In July this year, the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) jointly issued the 15th Five-Year Plan for Building the New Power System, setting a clear coordinate for storage development over the next five years — national new-type storage capacity reaching 300 GW during the 15th Five-Year Plan period. At present, China’s installed new-type storage capacity exceeds 150 GW, up 61% year-on-year, and new-type storage has surpassed pumped hydro to become the largest regulation resource in the power system.

Behind the rapid growth in installed capacity is a switch in the development logic. As the new power system enters the stage of substantive implementation, can new-type storage fully deliver its actual effectiveness and shed the label of “built but unused”? Amid homogenized competition and low-price battles, how can new-type storage be guided toward “value competition”? How can long-duration storage break through on the eve of industrialization? How should grid-forming storage develop in a standardized way?

With these questions, the reporter interviewed Chen Haisheng, director of the Institute of Engineering Thermophysics of the Chinese Academy of Sciences and chairman of the China Energy Storage Alliance (CNESA). As a long-time pioneer of new large-scale storage technologies and promoter of the world’s first 300MW advanced compressed air energy storage demonstration plant, he brings a front-line judgment on the direction of new-type storage.

Three Types of Market Demand Drive New-Type Storage Growth

China Electric Power Enterprise Management: Recently, the NDRC and the NEA issued the 15th Five-Year Plan for Building the New Energy System, proposing that new-type storage installations reach 300 GW by 2030. How do you view this target?

Chen Haisheng: The 15th Five-Year Plan for Building the New Energy System clearly proposes that by 2030, China’s installed new-type storage capacity will reach 300 GW and source-storage regulation capacity will improve by more than 40%, establishing a dual control system of “storage scale + system regulation capacity” — a core rigid arrangement adapted to the transformation toward a high-share renewable power system. According to CNESA statistics, as of June 2026, cumulative domestic new-type storage installations reached 168 GW, leaving clear incremental room during the 15th Five-Year Plan period. The plan defines the structural layout: grid-side standalone storage will add 80 GW to reach 140 GW in total, satisfying the equivalent of 4 hours of peak supply support, with the remainder filled by renewables-coupled storage and user-side storage. This target rests on three types of market demand.

First, demand from high-share renewable integration and consumption. By the end of 2025, national wind and solar installations accounted for nearly half of total capacity, with serious wind and solar curtailment in some areas. Wind and solar installations are expected to exceed 2.8 billion kW by 2030, further intensifying output volatility and intermittency. The industry’s assessment focus is shifting from installed scale to credible output and peak supply capability. Storage can effectively smooth renewable output fluctuations, raise generation confidence, and solve the consumption problem.

Second, power supply gaps force the expansion of system regulation resources. Urban and rural electricity loads are growing steadily, and winter-summer evening peak supply gaps keep widening, while the regulation potential of thermal retrofits and hydropower is nearing saturation. With fast response and flexible deployment, new-type storage can provide diversified power services such as peak shaving, frequency regulation, and black start, filling the system’s flexible regulation shortfalls.

Third, emerging business formats create incremental storage space. Scenarios such as AI computing hubs, zero-carbon parks, and direct green power connections are landing quickly, requiring storage both to stabilize power loads and meet rigid green power assessment targets, and to solve green power timing mismatch through integrated source-grid-load-storage models.

Overall, the target is a systematic strategic arrangement that balances renewable consumption, grid security and supply, and adaptation to new loads.

China Electric Power Enterprise Management: Previously, new-type storage faced the prominent problem of “built but unused” — storage was even a pure cost item “built only for grid connection.” With the full market entry of new energy and the deepening of power market development, how do you see the investment logic and business models of storage being transformed and reconstructed? How can the “built but unused” label be removed?

Chen Haisheng: 2026 is the opening year of the 15th Five-Year Plan and a key node in the full market-oriented transformation of new-type storage. The industry has officially bid farewell to the mandatory storage allocation model and entered a new stage driven by the market — a historic reshaping of the industry’s development logic.

Before the implementation of the Notice on Deepening the Market-Oriented Reform of On-Grid Electricity Prices for New Energy to Promote High-Quality Development of New Energy (NDRC Price Document No. 136 [2025], hereinafter “Document 136”), domestic storage development relied on policy drivers, with storage allocation a precondition for new energy project approval and grid connection. But in that stage, market-based revenue mechanisms for storage were missing, and profit channels were single and unstable. For new energy investors, storage was merely a cost item to meet access requirements; the industry only pursued low-cost compliance, without valuing storage performance and actual operational value — ultimately forming the problem of “built for grid connection, built but unused.”

With the implementation of Document 136 and the Notice on Improving the Generation-Side Capacity Price Mechanism (NDRC Price Document No. 114 [2026], hereinafter “Document 114”), industry development began to change.

Document 136 stipulates that storage allocation is no longer a precondition for the approval, grid connection, or on-grid delivery of new new energy projects; existing new energy projects continue to follow the original local policies. This pushes storage away from policy dependence and back to being an independent market entity.

Document 114, for the first time at the national institutional level, clarifies the capacity value of new-type storage. With “equal pay for equal work” as the core principle, it formally includes grid-side standalone new-type storage in the generation-side capacity price mechanism, providing storage with a baseline guaranteed revenue. The introduction of Document 114 also marks the completion of the full revenue landscape for standalone new-type storage — energy revenue, ancillary service revenue, and capacity compensation revenue working in concert, laying a solid revenue foundation for the sustainable development of the new-type storage industry and igniting industry confidence. For investors and builders, having a capacity price mechanism does not mean they can “rest on their laurels”; it raises higher requirements for the technical performance and construction and operation capabilities of storage stations.

The two policies form a powerful combination, reconstructing storage’s investment decision logic from policy-driven to market-driven.

New-Type Storage Enters a Stage of Coordinated Short- and Long-Duration Development

China Electric Power Enterprise Management: The plan proposes “intensifying the development of long-duration storage.” What key bottlenecks must be overcome for China’s long-duration storage to reach scale-up application? During the 15th Five-Year Plan period, how should China achieve differentiated deployment and scenario-based adaptation of different storage types?

Chen Haisheng: The plan’s call to “intensify the development of long-duration storage” is an inevitable requirement of the new power system. To reach scale-up application, China’s long-duration storage must overcome three bottlenecks: first, the storage pricing mechanism must reflect long-duration value, so that long-duration storage is reflected in capacity prices, energy prices, and ancillary service prices; second, long-duration technologies themselves — such as all-vanadium flow batteries and compressed air energy storage — must further improve performance and reduce costs so their techno-economics meet capital investment return requirements; third, strengthen policy support for long-duration storage, increase investment in technology R&D, engineering demonstration, and the industry chain, and promote the scale mass-production capability of key core equipment such as separators and high-power compressors, driving cost reduction and efficiency gains at scale.

Storage’s differentiated deployment and coordinated short- and long-duration configuration must be optimized. Storage has now entered a stage of coordinated short- and long-duration development. During the 15th Five-Year Plan period, scenario-based and differentiated deployment should be implemented according to the technical characteristics, costs, and maturity of various storage technologies. For example, regions with high renewable penetration can focus on a combined “short-duration + long-duration” configuration model: short-duration lithium storage provides rapid power support and short-term backup, while long-duration storage handles long-period energy consumption, with the ratio of short- to long-duration storage determined by renewable output characteristics. Load-center regions should prioritize short-duration storage, addressing grid congestion relief and rapid voltage and frequency regulation, and configuring short-duration power and long-duration capacity support resources according to grid congestion, peak-shaving gaps, and supply reliability needs.

China Electric Power Enterprise Management: In building the new power system, how should grid-forming storage develop in a standardized way to better meet system needs?

Chen Haisheng: Grid-forming storage can actively support grid voltage and frequency, providing inertia and voltage support for high-renewable-share and weak grids, and is an important regulation resource of the new power system. However, existing technical standards, grid-connection rules, dispatch mechanisms, and performance assessments remain incomplete. During the 15th Five-Year Plan period, its standardized development must be promoted across standards, grid connection, dispatch, and markets:

First, improve the dedicated standards system. In the future, standards for grid-forming control, fault ride-through, inertia emulation, multi-unit parallel stability, safety boundaries, and testing must be completed; technical indicators and entry thresholds must be clarified; differentiated requirements for short- and long-duration grid-forming storage must be distinguished; the current practice of copying grid-following storage standards must be abandoned; and testing and certification norms must be unified.

Second, optimize grid-connection access and dispatch mechanisms. Priority deployment is suggested in high-renewable-share regions, weak grids, and large renewable bases; grid-connection conditions should be refined; the logic of switching between grid-forming and grid-following modes should be standardized; and the risk of oscillation instability in multi-unit parallel operation should be prevented and controlled. Inertia and voltage support should be included in dispatchable regulation resources, making grid-forming functions monitorable, adjustable, and controllable.

Third, establish a value compensation mechanism. Existing ancillary service markets focus on frequency regulation and peak shaving by grid-following storage, while the security value of grid-forming storage — virtual inertia, voltage support — is not reasonably rewarded. During the 15th Five-Year Plan period, regions with demand can pilot inertia and voltage compensation rules, incorporate grid-forming capability into capacity compensation or ancillary service assessments, eliminate fake grid-forming, and incentivize the real delivery of grid-forming capability.

Fourth, advance technology R&D and demonstration applications. Relying on large renewable bases and standalone storage, carry out scale demonstrations, collect real operating data, verify actual grid-forming effectiveness, and ensure it serves grid security.

From “Price Competition” to “Value Competition”

China Electric Power Enterprise Management: In recent years, “involution” in the storage industry has intensified, with price wars continuing. The national level has repeatedly emphasized “anti-involution” to guide healthy competition. Where should forces be combined to move the storage industry from “price competition” to “value competition”?

Chen Haisheng: In recent years, China has carried out governance of “involution-style” competition through policy management, market guidance, and industry self-discipline.

At the policy management level, in 2025, eight departments jointly issued the Action Plan for High-Quality Development of the New-Type Storage Manufacturing Industry, clarifying development goals and requirements. The NDRC and the State Administration for Market Regulation jointly issued the Announcement on Curbing Disorderly Price Competition and Maintaining Good Market Price Order, launching top-level guidance for industry governance. The Anti-Unfair Competition Law, the Price Law, and the Bidding Law were subsequently revised in succession, gradually building the macro-control bottom line to curb irrational competitive behavior.

At the market guidance level, the state has set the new-type storage installation target of 300 GW during the 15th Five-Year Plan period, opening up expectation space for scale development. Meanwhile, the construction of the national unified power market has entered a new stage. With the implementation of Document 114, storage’s revenue landscape of “energy + ancillary services + capacity price” has taken shape, and the profit space of downstream projects is gradually improving, playing a key role in easing upstream market competition.

At the industry self-discipline level, under the guidance and supervision of competent government authorities, industry organizations have proactively initiated self-discipline documents such as the Self-Discipline Practice Guide for Containerized Lithium Battery Storage, the Industry Self-Discipline Convention on Promoting High-Quality Development of the Storage Industry in the New Era, and the Initiative on Payment Norms for Suppliers of Power and Storage Battery Enterprises, promoting endogenous cohesion in the industry and improving the competitive environment through overall self-discipline.

At present, with the explosion of overseas storage demand, leading new-type storage enterprises face short-term supply shortages, and small, medium, and second- and third-tier enterprises also maintain certain capacity utilization. Under the constraint of high-quality development, low-end capacity across the industry is gradually exiting. Overall, the governance of storage industry involution has achieved certain results: market price levels have risen, and corporate profitability is slowly improving.

To move the new-type storage industry from “price competition” to “value competition” during the 15th Five-Year Plan period: first, continuously strengthen market regulation, with the government conducting dynamic assessment of market supply and demand and rationally planning capacity layout. Second, maintain a good market environment, promote enterprises’ professional bidding capability, and make technology, safety, service, and full-lifecycle benefits the core yardstick of bidding competition, achieving the matching of price and value. Third, promote enterprise technological innovation and strengthen comprehensive service capabilities, reasonably reducing technology costs while ensuring service quality. Fourth, deepen the implementation of industry self-discipline, support industry organizations in playing a bridging role, guide the continuous optimization of the competitive environment, and pool industry strength to jointly promote high-quality industry development.

China Electric Power Enterprise Management: Facing the 15th Five-Year Plan period, how should the new-type storage industry grasp new opportunities under the new situation? At the same time, what risks need to be guarded against?

Chen Haisheng: Facing the 15th Five-Year Plan period, as power market reform and the “dual carbon” strategy continue to deepen, the new-type storage industry will gradually move from a high-speed development stage dominated by scale expansion to a high-quality development stage dominated by quality and efficiency improvement. The new-type storage industry faces unprecedented development opportunities.

First, the new policy on new energy credibility will raise storage demand and value. The 15th Five-Year Plan specifies that by 2030, total wind and solar installations will reach more than 2.8 billion kW, with a share exceeding 50%, and requires new wind and solar projects to have credible output of no less than 10% of capacity, with 20% encouraged. Storage can effectively smooth generation fluctuations and improve station credible capacity and grid-connection confidence, helping consolidate project market-based returns.

Second, green power assessment for high-energy-load and computing loads expands storage application scenarios. Under renewable consumption weight assessment requirements, the state sets rigid indicators for key industries: new AI computing centers at national hub nodes must have a green power ratio of no less than 80%, and energy-intensive industries such as steel and electrolytic aluminum face green power consumption assessment ratios of 25%–70%. Through direct green power connection models, storage can smooth renewable output fluctuations and stabilize direct supply loads, helping enterprises meet green power assessment targets and effectively reduce the cost of supporting grid construction.

Third, demand charge reform will highlight the value of capacity regulation. In July 2026, the NDRC issued the Notice on Provincial Grid Transmission and Distribution Prices and Regional Grid Transmission Prices for the Fourth Regulatory Period and Related Matters (NDRC Price Document No. 1077 [2026]), implementing transmission and distribution price reform for the fourth regulatory period. Prices show a mixed pattern: industrial energy prices are generally reduced, but capacity (demand) charges are rising in many provinces. As peak demand management for commercial and industrial users continues to tighten, the value of user-side storage in peak shaving, demand management, and capacity regulation in these regions has risen significantly — effectively reducing enterprise electricity costs, and, combined with demand response and ancillary service revenues, promoting the scale deployment of distributed storage. While opportunities are clear, the following risks and challenges still require attention:

First, the market-based price system remains incomplete. Power market development progress is uneven across regions; spot price spreads diverge significantly by region; arbitrage space is narrowing in some areas; some projects are not economical; and a universally replicable commercial closed loop has not yet formed.

Second, comprehensive operating costs may rise. Document 114 unifies national rules for storage charging costs — storage must bear system operation fees and line loss costs based on its charging volume. Combined with external factors such as new energy price-difference settlement and rising thermal capacity prices, storage’s comprehensive operating costs are rising rather than falling, forming a two-way squeeze of “improved revenues, offsetting costs.”

Third, overseas trade barriers carry escalation risks. Recently, the United States and Europe have continued to tighten both tariffs and technical access restrictions: from January 2026, the United States raised the Section 301 additional tariff on storage batteries from 7.5% to 25%, bringing the current combined tax rate to 28.4%; during periods with temporary tariffs, the peak rate once reached 48.4%. In the EU, the Batteries and Waste Batteries Regulation has mandated carbon footprint assessment for industrial storage batteries above 2 kWh since February 2026; in March 2026, the EU further proposed “localization” requirements for net-zero technologies, and foreign trade risks for the domestic storage industry chain are likely to escalate. In summary, during the 15th Five-Year Plan period, the new-type storage industry will move from high-speed development to high-quality development. At the enterprise level, the focus should shift from scale expansion to technological iteration and refined operation; at the mechanism level, spot market reform should accelerate, storage pricing mechanisms should be improved, and cost pass-through mechanisms should be optimized; at the export level, diversified layout should be emphasized, emerging markets cultivated, and regional trade risks diversified to achieve steady and long-term industry development.