Research Report | China Electricity Union: The installed capacity of energy storage is 6.27GW, and the equivalent utilization coefficient of new energy distribution and storage is only 6.1%

Keywords: New energy distribution and storage
On November 8th, the 2022 Annual Meeting and Temporary Member Representative Conference of the China Electricity Council was held in Haikou. At the meeting, the China Electricity Council released the "Research Report on the Operation of New Energy Distribution and Storage" (hereinafter referred to as the "Report").
The report provides a detailed analysis of the application and configuration of energy storage in different scenarios in China, elaborates on the problems faced by new energy distribution and storage, and proposes relevant improvement suggestions. The key information of the report is as follows.
The total scale of energy storage planning in each province has exceeded twice the scale of the 14th Five Year Plan
The report points out that as of the end of 2021, the installed capacity of energy storage in China has reached 42.66 million kilowatts, including 6.268 million kilowatts of new energy storage installed capacity, a year-on-year increase of 56.4%; 90% of the new energy storage is electrochemical energy storage.
As of the end of 2021, the installed percentages of energy storage on the power side, user side, and grid side were 49.7%, 27.4%, and 22.9%, respectively, with energy storage on the power side accounting for nearly half of the installed capacity.
The total planned development target for new energy storage in each province exceeds 60 million kilowatts, which is twice the target of reaching 30 million kilowatts by 2025 proposed in the document "Guiding Opinions on Accelerating the Development of New Energy Storage" issued by the National Energy Administration.
Power side energy distribution and storage is a key support direction for various provinces, with a focus on researching new energy distribution and storage projects
As of now, nearly 30 provinces across the country have issued the "14th Five Year Plan" for new energy storage plans or new energy configuration energy storage documents, vigorously developing "new energy+energy storage".
China Electricity Union conducted a total of 208 electrochemical energy storage projects, with a total capacity of 2.15 million kilowatts, accounting for nearly 40% of the country's installed capacity of electrochemical energy storage. Among them, the new energy distribution and storage capacity investigated is 1.05 million kilowatts, accounting for two-thirds of the national new energy distribution and storage capacity, which is representative. The research results show that:
01 From the perspective of the configuration duration of energy storage projects in different application scenarios
The average energy storage time of the research unit is 2 hours, the new energy storage configuration time is 1.6 hours, the energy distribution and storage time of the thermal power plant is 0.6 hours, the energy storage time of the power grid is 2.3 hours, and the energy storage time of the user is 5.3 hours, which basically reflects the technical requirements and characteristics of each application scenario.
02 From the distribution of energy storage application scenarios in various regions
The North China and Northwest regions mainly focus on new energy distribution and storage, while the East China region has a relatively balanced distribution of new energy distribution and storage, grid side energy storage, and user side energy storage. The South region mainly focuses on thermal power plant energy distribution and storage.
03 From the perspective of energy storage operation strategy
The new energy distribution and storage system operates on a daily basis, with only a portion of the energy storage units being utilized or even not being utilized, at most during the period of power abandonment.
04 From the perspective of equivalent utilization coefficient of energy storage
The average equivalent utilization coefficient of electrochemical energy storage projects surveyed is 12.2%, the new energy distribution and storage coefficient is only 6.1%, the thermal power plant distribution and storage coefficient is 15.3%, the power grid storage coefficient is 14.8%, and the user storage coefficient is 28.3%. Relatively speaking, the equivalent utilization coefficient of new energy distribution and storage in North China and Northwest China is higher than that in other regions.
05 From the perspective of energy storage project cost and business model
The cost of energy storage projects mostly ranges from 1500 to 3000 yuan/kWh, and there are significant differences in cost between projects due to different boundary conditions. New energy configuration energy storage has the functions of suppressing fluctuations in new energy output power, increasing new energy consumption, reducing power generation plan deviations, improving the safety and stability of power grid operation, and alleviating transmission congestion. It has multiple values in the energy market, auxiliary service market, and capacity market, with different business models and significant regional differences. However, in reality, the profitability level of most energy storage projects is not high.
Existing problems: low utilization rate of new energy distribution and storage, lack of scientific demonstration of distribution and storage scale, lack of cost guidance mechanism, and lack of business model
There are still many problems in the allocation and storage of new energy, mainly reflected in:
01 Low utilization rate of new energy distribution and storage
The frequency, equivalent utilization coefficient, and utilization rate of new energy distribution and storage are lower than those of thermal power plants, power grids, and users.
02. The scale and type of new energy distribution and storage have not been scientifically demonstrated
There are various types and functions of new energy storage, and there are significant differences in technology maturity and economy. Multiple regions adopt a "one size fits all" configuration standard, and some regions use energy distribution and storage as a prerequisite for new energy construction. There are significant differences in the utilization of energy storage and the resolution of wind and solar energy waste between wind power distribution and photovoltaic distribution, and the requirement for homogeneous configuration of energy storage lacks scientific validity. The decentralized configuration method cannot reflect economies of scale, and there are common problems such as high operating costs and low efficiency, making it difficult to fully utilize the energy storage function.
03 New energy storage has high costs and lacks channels for diversion
The cost of new energy storage is higher than that of technologies such as thermal power flexibility renovation and pumped storage. The current investment cost of new energy distribution and storage is mainly absorbed by new energy enterprises internally, coupled with the rising cost of lithium-ion batteries, which has brought significant operational pressure to new energy enterprises.
04 New energy storage business model and electricity pricing mechanism need to be further improved
The income from new energy distribution and storage mainly comes from electric energy conversion and auxiliary services, and many market and price rules for energy storage still need to be implemented; The energy storage business model is unstable, the return mechanism is unclear, and policy changes have a significant impact on returns. For example, the capacity compensation standards for energy storage in Shandong have significantly decreased recently, which has greatly affected corporate profits and is not conducive to investment decisions.
05 New energy storage safety management still needs to be strengthened
Foreign and domestic energy storage fire accidents indicate that safety issues are a key influencing factor for the healthy and stable development of new energy storage scale. Under high cost pressure, some projects have chosen energy storage products with poor performance and low investment costs, increasing safety hazards. According to statistics, from January to August 2022, the unplanned shutdown of electrochemical energy storage projects in China reached 329 times. The safety standards and management norms for electrochemical energy storage need to be further improved.
06 New Energy Storage Operation and Maintenance Difficulty
The number of electrochemical cells is huge, and the scale of the number of individual cells in energy storage projects has reached tens of thousands or even hundreds of thousands, making maintenance difficult; The operation and maintenance of energy storage power stations involve multiple disciplines such as electrical, chemical, and control. Currently, the operation and maintenance are extensive, and the professionalism of operation and maintenance personnel needs to be improved.
Optimize configuration and operation, improve safety level, improve market mechanism, and promote the development of energy storage
Based on the actual results of the research, the report proposes suggestions for promoting the development of energy storage:
01 Optimize energy storage configuration and transportation methods to improve energy storage utilization level
Configure energy storage scale and type according to local conditions. Based on factors such as local new energy consumption, resource characteristics, grid structure, load characteristics, power grid safety, and power supply structure, a specific analysis is conducted on the frequency regulation and peak shaving needs of various systems in different regions. Taking into account the actual situation of coal power flexibility transformation, pumped storage construction, and power grid regulation capacity improvement, the scale and type of new energy configuration and storage are reasonably determined to avoid resource waste. Gradually expand the proportion of independent energy storage/shared energy storage. Coordinate the requirements for the safe operation of new energy projects and power grids within the region, and build independent or shared energy storage power stations in a centralized manner. For new energy base projects and new energy distributed projects, it is advisable to build energy storage power stations in a centralized manner. New energy projects share energy storage capacity and share energy storage costs. Improve the operational mechanism of energy storage facilities. Establish a coordinated operation mechanism of "unified scheduling and shared use", optimize the control strategy for grid connected operation of energy storage power stations, and improve the efficiency of energy storage utilization.
02 Increase technological innovation and operation and maintenance management to improve energy storage safety level
Increase technological innovation. Improve the safety control technology and safety structure of energy storage cells, improve the control strategy for grid connected operation of energy storage power plants, and enhance the intrinsic safety level; Strengthen the intelligent construction of safety prevention, build a digital energy storage power station data processing and operation maintenance platform, and reduce safety issues caused by control errors. Optimize the security management system. Strengthen the management of electrochemical energy storage fire protection, develop procedures for fire protection review, acceptance, and filing of energy storage power stations; Establish a battery selection and testing system. Newly put into operation energy storage projects must conduct random inspections of battery cells, battery modules, and battery management systems upon arrival, as well as grid connection testing of energy storage stations. If the testing does not meet the requirements, it will not be connected to the grid; Online operational performance monitoring and evaluation should be carried out in energy storage projects, and regular spot checks and supervision inspections should be conducted; Strengthen safety training for operation and maintenance personnel. Improve the technical standard system. Enhance the coupling of energy storage standards with technological innovation and management innovation, accelerate the formulation and revision of standards in the design of energy storage power stations, equipment technical requirements, construction and acceptance, operation and maintenance, equipment maintenance, safety and risk prevention and control, and achieve standard leadership.
03 Improve market mechanism and promote the development of energy storage industry
Improve the rules for new energy storage power stations to participate in the electricity market. According to the requirements of the Notice on Further Promoting the Participation of New Energy Storage in the Electricity Market and Dispatching Application, various regions will accelerate the improvement of supporting policies and implementation rules for energy storage power stations to participate in the electricity market, ensuring that new energy storage can better integrate into the electricity market; Improve the mechanisms for new energy storage to participate in the electricity energy market and auxiliary service market. Encourage market entities to spontaneously allocate energy storage resources through price signals, and guide social capital to participate in the construction of new energy storage. Introduce new energy storage capacity electricity pricing policies. Rationalize the pricing mechanisms for various flexible power sources, introduce capacity pricing policies, and quickly improve the new energy storage business model to promote reasonable competition for various flexible resources such as new energy storage, flexible coal-fired power, and pumped storage.