China is set to become the leading energy storage market in the
Asia Pacific region by 2024. That’s according to new research from
Wood Mackenzie Power & Renewables.
China’s cumulative energy storage capacity is projected to
skyrocket from 489 megawatts or 843 megawatt-hours in 2017 to 12.5
gigawatts or 32.1 gigawatt-hours in 2024. This represents a 25x
increase in the installed base.
Policy incentives have been the main drivers behind China’s
rapid growth in storage deployments in 2018, already pushing China
to become the second largest market behind South Korea in terms of
annual deployment. The market deployed 580 megawatts (1.14
gigawatt-hours), reaching a cumulative market size of 1.07
gigawatts (1.98 gigawatt-hours) last year. Front-of-the-meter (FTM)
storage led growth, up five-fold in terms of installed power
capacity compared to 2017.
State Grid Corporation of China, a state-owned utility company,
has deployed 452MWh of grid-connected FTM pilot projects, which
accounted for 83 percent of FTM market growth nationwide last year.
These pilot projects were supported by government research
“Based on current project economics and without policy
support, utilities have limited incentive to scale-up investment in
FTM storage as part of grid infrastructure,” said Dr. Le Xu,
senior analyst at Wood Mackenzie.
This is set to change next year. According to China’s National
Energy Administration, the ancillary services market will be
transitioning from a basic compensation mechanism to a market
integrated with spot energy prices by 2020. That, along with
maturity in technology and subsequent cost reduction, are key
factors that will contribute to the exponential growth in the
nation’s energy storage market through to 2024.
Of storage projects deployed to participate in ancillary
services in 2018, 60 percent were deployed as stand-alone, 14
percent paired with coal plants, and 19 percent were
renewables-plus-storage. Utilities led the renewable-plus-storage
market growth, deploying 105 megawatt-hours of storage – either
paired with solar projects or hybrid solar and wind plants – in
Qinghai province to reduce curtailments. There is no business case
for solar developers to invest in utility solar-plus-storage as
solar subsidies are being phased out.
Another promising spot in the energy storage market is the
behind-the-meter commercial and industrial (C&I) sector which
reached 513 megawatt-hours last year, up 2.8 times from 2017.
C&I projects were developed to save on electricity bills for
industrial users in manufacturing-intensive provinces such as
Jiangsu and small commercial users in urban centres such as
Beijing. However, these industrial users face revenue pressure due
to the uncertainty of retail power prices, especially for peak
“Although China’s energy storage market is still in its
infancy, we can expect to see continued strong growth driven by
battery cost reduction, policy incentives and power market reform,”
said Dr. Xu.
According to Wood Mackenzie, by 2024, global cumulative capex
investment in the energy storage sector could grow to $71 billion.
Of that, China will account for about 14 percent, or just over $10
Source: FS – GreenTech Media
Analysts: China’s Energy Storage Market To “Skyrocket” by 2024