China’s government plans to cut the cost of energy storage systems by 2025 to help local industries leapfrog the world as the vanguard of novel energy storage technology five years later. The production cost of large chemicals-based systems will be cut by 30% by 2025, while compressed air energy-storage technology would be used in engineering applications in units with 100 megawatts of capacity, according to a five-year plan drafted by the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA). The document has been sent to local government and central government-administered enterprises for implementation. “By 2030, China’s new energy storage should see well-rounded market-based development, with proprietary technology, world leading innovation and manufacturing capabilities,” said the industry development plan for 2021-25.
Energy storage is a key part of the Chinese government strategy to decarbonise the energy system and put the world’s second-largest economy on the path to achieve carbon neutrality by 2060. Affordable energy storage is vital in turning solar and wind energy into commercially viable substitutes of fossil-fuel energy, helping to compensate for the industry’s volatility and reliance on weather patterns. China is forecast to install 83 to 99 gigawatts of solar power capacity annually through 2025, according to China Photovoltaic Industry Association Chairman Wang Bohua. The energy generated by solar farms rose 14% last year to 54.9 gigawatts (GW), according to the National Energy Administration (NEA). Still, high costs have been a barrier to the large-scale deployment of energy storage systems thus far. Those costs should fall drastically, starting in 2025.
Other emerging battery technologies that will be supported by the government include sodium-ion, novel lithium-ion, lead-carbon, redox flow and compressed air, said the plan. Key demonstration projects will be rolled out in Hebei, Fujian, Guangdong, Jiangsu, and Qinghai provinces, while spot and futures trading of the power stored will be launched to support the nascent industry’s growth. The five-year plan has set the tone for the support of all types of battery energy storage systems, said Daiwa Capital Market’s analysts. “We expect the clearer policy visibility to support a growth in energy storage demand, averaging 46% between 2021 and 2025, versus the 20% growth in global solar farms installations and 7% for wind farms,” they wrote. “We are more bullish on the lithium iron phosphate battery, given its cost and longevity advantages over lithium nickel manganese cobalt (NMC),” the South China Morning Post reports.
More than 20 provinces have already announced plans to install energy storage systems over the past year, with a combined capacity of over 40 gigawatts, Daiwa said. Installed capacity may expand to 42.5GW in 2025, soaring to 128GW in 2030, they said.
