2023 Installed Capacity Nearly 10 Times Higher Than End of the 13th Five-Year Plan ---
Accelerated Development of the New Energy Storage Industry (Industrial Economics Insight: New Energy Storage Highlights Emerging Industry Strength)
The world’s first 300 MW compressed air energy storage plant has been connected to the grid in Yingcheng, Hubei Province. Photo by Yu Jianbing.
In Foshan, Guangdong, nine types of lithium battery technologies are being tested at Baotang Energy Storage Power Station. This one site accounts for about 20 percent of all new energy storage capacity in the Guangdong-Hong Kong-Macao Bay Area.
In Yingcheng, Hubei, the world’s first 300-megawatt compressed air energy storage station has started operating. It stores energy in underground salt caverns and can power a small or mid-sized city for five hours.
In Rudong, Jiangsu, China’s first 100 megawatt-hour gravity energy storage project is under construction. The facility will store and release energy by lifting and lowering massive blocks using a 148-meter tower.
These are just a few examples of how various energy storage technologies are being developed and deployed across China. Unlike traditional pumped storage systems, these newer technologies provide electricity and services to the grid in different ways. Examples include batteries, compressed air storage, and gravity-based storage. These systems work like giant rechargeable power banks, storing excess energy when renewable sources produce more than needed, and releasing it when demand is high or renewable supply is low. This helps improve the stability of the power grid and supports wider use of clean energy.
According to this year’s Government Work Report, new energy storage is a national priority. By the end of the first quarter of this year, total installed new energy storage capacity reached 35.3 million kilowatts or 77.68 million kilowatt-hours, more than double the amount from the same time last year. What trends are driving this rapid growth, and what challenges remain? Reporters went to find out.
Installed Capacity Growing Fast, Technologies Advancing, and Use Cases Expanding
In Yingcheng, Hubei, the 300-megawatt compressed air power station is built 500 meters underground. It uses more than 1.5 million cubic meters of abandoned salt caverns to store compressed air. These caverns, created from old salt mines, are airtight, durable, and require little surface land, making them ideal for storing energy underground.
Li Jun, deputy general manager at China Energy Construction Digital Group, explained that the current cost of building a compressed air energy storage plant is between 6,000 and 8,000 yuan per kilowatt. This is close to the cost of traditional pumped hydro power stations.
On May 11, the Guangxi Volin sodium-ion battery storage station began operations, sending out 10,000 kilowatt-hours of electricity. This marks the first large-scale use of sodium-ion batteries in China.
Tang Bin, a technical expert at the Guangxi Electric Power Research Institute, said sodium-ion batteries have several advantages over lithium-ion batteries. Sodium is more abundant, cheaper, and works in a wider temperature range from minus 40 to 80 degrees Celsius. The system’s energy efficiency exceeds 92 percent.
New energy sources like wind and solar power fluctuate throughout the day and cannot provide steady output without support. Traditional pumped storage faces challenges like site selection and long construction times. New energy storage options offer faster deployment and more flexible locations.
In 2023, China added 22.6 million kilowatts of new energy storage capacity, which is nearly 10 times more than at the end of the 13th Five-Year Plan. These projects are becoming larger and more centralized. By the first quarter of this year, projects with capacity over 100,000 kilowatts made up more than half of the total.
While lithium-ion batteries still dominate with over 95 percent market share, other technologies are emerging. New projects include 300 megawatt compressed air systems, 100 megawatt liquid battery systems, megawatt-scale flywheel systems, gravity-based systems, liquid air, and even carbon dioxide storage systems.
The ways in which these systems are used are also expanding. At Midea’s HVAC factory in Hefei, rooftop solar panels charge energy storage units during low electricity prices. The system then supplies power during peak hours, saving over one million yuan in electricity costs since last November. Hefei is also building nine more storage projects, expected to add 100,000 kilowatt-hours of backup power by the end of June to meet summer demand.
Energy storage improves efficiency across the grid. For users, it reduces electricity costs and improves energy reliability. For power plants, it allows smoother integration of renewables. For the grid, it helps balance electricity supply and demand, especially in areas with weaker infrastructure. This makes energy use cleaner and more efficient overall.
Ramping Up Research and Building Stronger Industry Connections
The energy storage industry includes three parts: upstream raw materials and equipment, midstream system integration, and downstream applications in the power grid. Since the 14th Five-Year Plan began, energy storage has attracted more than 100 billion yuan in investment and spurred growth across the supply chain.
At Vision Power’s battery base in Ordos, battery cells are produced using processes like coating, pressing, and cutting. These are then sent to assembly plants in Hebei and Gansu where they are built into large container systems capable of storing 5,000 kilowatt-hours each.
Tian Qingjun, senior vice president of Vision Group, said these new containers are more space-efficient and last longer than previous models. They reduce land use by 40 percent and cost 30 percent less over their full lifecycle. In the first quarter of this year, Vision shipped more than 1.2 gigawatt-hours of energy storage units, a 50 percent increase from the same period last year.
Tian noted that future energy storage systems will feature higher capacity, better safety, longer lifespan, and smarter controls. As technology improves, lithium battery storage could cost less than 0.1 yuan per kilowatt-hour. Combined with renewables, this could lower electricity costs below 0.3 yuan, making it competitive with coal power while also reducing emissions.
However, there are still technical challenges. Some materials and components require more research, and the supply chain needs to be more complete. Chinese companies, research labs, and universities are working together on new materials, technologies, and system designs to improve the overall industry.
One example is the expander, a key device in compressed air systems. It must function at high pressure and speed, and involves complex engineering. Li Jun said they are working with top institutions and companies to fully localize this technology and close gaps with international standards.
Other recent breakthroughs include large compressed air system components, fully localized liquid battery membranes, and single-megawatt flywheel systems. These developments are helping China reach world-class standards in energy storage.
In Guangzhou’s Baiyun District, a new 220 kilovolt substation is being built to test energy storage products in real-world conditions. Liu Shi, a senior technical expert at SouthGrid, said this will help research teams and companies bring new products to market more quickly.
The National New Energy Storage Innovation Center, backed by the Guangdong government and Southern Power Grid, brings together 13 companies in materials, chips, and batteries. It is focused on connecting laboratory research to manufacturing and market use.
Qi Hongxun, president of the Energy Storage Engineering Institute at China Energy Engineering, said this is a key time for the industry. More research is needed on materials, technology, and equipment, as well as better integration between researchers, companies, and users.
Improving Policies and Business Models to Guide Industry Growth
Jiangsu plans to add 4 million kilowatts of energy storage to the grid before this summer. Guangdong aims to grow the new energy storage industry to 600 billion yuan in annual revenue by 2025, with over 50 percent average yearly growth.
New energy storage is seen as a key technology to support China’s clean energy goals. According to Chen Haisheng, head of the Zhongguancun Energy Storage Alliance, this year new energy storage may exceed pumped storage in total installed capacity.
Still, there are obstacles to scaling up. Safety risks increase as battery systems grow larger and more complex. Chen Yongchong from Tsinghua’s Sichuan Energy Internet Research Institute said more work is needed to prevent accidents like overheating or fires. He also stressed the need for designs that make recycling easier to support green development throughout the product life cycle.
Business models also need to improve. Right now, energy storage systems face high costs and limited revenue opportunities. Lithium systems still cost more than pumped storage, sodium-ion batteries are still in early stages, and flywheel or gravity systems are not yet fully commercial.
At the same time, markets for energy storage are still developing. New systems are slowly being allowed to participate in electricity trading and earn returns. Chen Man from Southern Power Grid said that better pricing models are needed, including capacity payments and electricity tariffs. New business models such as shared or cloud energy storage and storage aggregation could also help.
Bian Guangqi from the National Energy Administration said that the agency will continue to improve policies, encourage innovation, support technology progress, and guide the safe and efficient use of all types of energy storage systems. This will support the building of a modern, cleaner power system.
Source: People's Daily
