Looking back on the past year, from the stable production and supply of traditional energy sources such as coal and oil and gas, to the vigorous development of new energy sources such as wind power and photovoltaics, China's energy sector has made new progress and achievements, injecting strong impetus into the "dual" and "dual new" aspects.

   From a supply perspective, since 2024, the national energy system has been guided by the new energy security strategy, promoting energy reform and development in a coordinated manner, adhering to the principle of securing energy employment, and providing solid support for economic recovery and improvement.

   Structurally speaking, in recent years, China has vigorously promoted the replacement of renewable energy and accelerated the development of wind and solar power. This has not only driven the continuous growth of related industries such as photovoltaic modules and wind power equipment manufacturing, attracting a large amount of capital investment, but also effectively promoted the coordinated development between different industries and regions.

   At the same time, in 2024, the role and positioning of new energy storage have undergone fundamental changes. At the policy level, the new type of energy storage has been included for the first time in the Government Work Report, and its importance and value positioning have been significantly enhanced. In terms of scale, the cumulative installed capacity of new energy storage has surpassed pumped storage for the first time, becoming the second largest flexible regulation resource in the power system after thermal power. In terms of utility, the power supply and consumption value of the new energy storage has been verified in the centralized transfer test of several provincial power grids.

  Entering 2025, under the background of accelerating the construction of new energy systems and new power systems, China's new energy storage industry will continue to develop rapidly. According to the Government Work Report, a new batch of national level advanced manufacturing clusters have been cultivated, and emerging industries such as commercial aerospace, Beidou applications, and new energy storage have developed rapidly.

  Chen Wenkai, vice president of the Chinese Academy of Sciences Science and Technology Strategic Consulting and Research Institute, said that the development prospect of new energy storage is broad, and the continuous iterative progress of energy storage technology will effectively promote the open sharing of energy production and consumption, achieve the synergy of multiple energy sources, and make greater contributions to the overall green transformation and sustainable development of society.

  The rise of new energy storage models reshapes the energy landscape

According to data from the National Energy Administration, as of the end of 2024, the cumulative installed capacity of new energy storage projects completed and put into operation in China has reached 73.76 million kilowatts/168 billion kilowatt hours, a 20 fold increase compared to the end of the 13th Five Year Plan period. If pumped storage projects are included in the statistics, the total installed capacity of energy storage will reach 140 million kilowatts, reshaping the energy landscape at a compound annual growth rate of 40%.

  "In the past, energy storage was only a 'minor supporting role' of the power system, but now it is the first time to stand in the center of the energy green transformation stage at the gigawatt scale," said Liu Yafang, an adjunct professor at Zhejiang University. Among them, the new energy storage technology route has evolved from the past dominance of lithium-ion batteries to a series of diverse symbiotic families such as compressed air energy storage, flow batteries, solid-state and semi-solid batteries, and sodium ion energy storage.

  Especially the installed capacity of electrochemical energy storage has increased from less than 4 gigawatt hours in 2021 to over 100 gigawatt hours for the first time in 2024, which is a rare growth rate in any field. "Chu Pan, an expert member of the Energy Storage Application Branch of the China Chemical and Physical Power Industry Association, told Securities Daily reporters that the significant increase in energy storage scale has made it play a more critical role in the new power system.

  The transformation of the role of energy storage is driven by both policy empowerment and technological breakthroughs. Since the release of the "Guiding Opinions on Promoting the Development of Energy Storage Technology and Industry" in 2017, China has issued more than 2200 special policies for energy storage, with nearly 500 new policies added in 2024 alone, establishing a complete policy system covering technology research and development, market mechanisms, and safety standards.

  In addition, with the basic establishment of the unified national electricity market system in 2024, energy storage is allowed to participate as an independent entity in various electricity markets, and the pricing of independent energy storage capacity on the grid side is included in policies, promoting a key breakthrough in energy storage business models.

  According to a report from the Southern Power Grid Energy Development Research Institute, energy storage power stations in Guangdong, Shandong and other regions have increased their internal rate of return to 12% through a combination of profit models such as peak valley arbitrage, capacity leasing, and auxiliary services; State Grid Jiangsu Electric Power piloted the "shared energy storage" model, aggregating distributed energy storage resources to participate in demand response, and increasing the annual revenue of a single project by 3 million yuan.

  The improvement in economic efficiency has further promoted the sustained increase in installed capacity. According to data from the China Chemical and Physical Power Industry Association, the newly installed capacity of electrochemical energy storage exceeded 100 gigawatt hours for the first time in 2024, an increase of 25 times compared to 2021.

  Thanks to the dual promotion of policy support and market demand, the number of investment and financing events of primary market energy storage enterprises reached 107 in 2024, with a disclosed amount of 17.6 billion yuan. Among them, 45 financing deals are aimed at system integration, charging and swapping, lithium batteries, and materials. In the field of non lithium battery technology, sodium batteries and solid-state batteries have also received high attention.

  The diversified breakthroughs in technological routes have provided a solid foundation for industrial expansion. For example, the 300MW advanced compressed air energy storage system developed by the Institute of Engineering Thermophysics of the Chinese Academy of Sciences is the best in the world with 72% conversion efficiency; The third-generation sodium ion battery released by Ningde Times New Energy Technology Co., Ltd. (hereinafter referred to as   "Ningde Times") has an energy density of 165 watt hours/kilogram and a 200% improvement in low-temperature performance compared to lithium batteries... This greatly promotes the commercialization and large-scale application of energy storage.

  Recently, the Ministry of Industry and Information Technology and eight other departments jointly issued and implemented the "Action Plan for High Quality Development of New Energy Storage Manufacturing Industry" (hereinafter referred to as the "Action Plan"), aiming to build a new generation of growth engines such as information technology and new energy, and promote the high-quality development of new energy storage manufacturing industry. The Action Plan requires accelerating the diversified development of new energy storage technologies, improving technological levels, enriching product supply systems, and accelerating the application and promotion of new products and models to meet the needs of multiple time scales and application scenarios.

  Regarding this, Jiang Liping, former vice president of State Grid Energy Research Institute, believes that the role of energy storage technology in the power system is mainly reflected in five performance aspects: flexibility, flexibility, stability, reliability, and economy. It is widely believed in the industry that with the popularization of new models such as virtual power plants and vehicle network interaction, energy storage will deeply participate in multiple value realization such as electricity spot trading and green certificate carbon markets, truly becoming a strategic pivot for the energy revolution.

There are still pain points to be solved in the fiercely competitive industry

  Although the new energy storage track has long slopes and thick snow, its development still faces many challenges. Wang Jianxin, Vice Chairman and Executive Secretary General of the China Battery Industry Association, believes that the disorderly expansion of the energy storage industry has led to overcapacity at the low-end, unreasonable resource allocation, serious product homogenization, and low profitability. In addition, there are also problems to be solved in terms of safety and standard system construction.

  In fact, 'involution' can be said to be a true portrayal of the domestic energy storage industry in 2024. Intense competition has led to a continuous decline in prices across the entire industry chain. Data shows that the average bid price for energy storage systems in 2024 is 628.07 yuan/kWh, a year-on-year decrease of 43%.

  Those who make battery cells are the ones who 'roll' the hardest, and can be said to be under pressure before and after. Party A is the owner, Party B is the general contractor of the project, Party C is the system integrator, and finally the battery cells. Moreover, the battery cells also need to be recognized by all three parties, which is very difficult and 'rolled', "Yi Huiqiong, Vice President of Ruipu Lanjun Energy Co., Ltd., told Securities Daily reporters.

  Almost every link in the energy storage industry chain is facing the problem of 'involution' caused by supply-demand imbalance, which is a structural problem. Chu Pan mentioned that the fundamental reason for the supply-demand imbalance lies in the high expectations of enterprises for the development of the energy storage industry. Due to the rapid growth in energy storage demand over the past four years, companies in the energy storage industry chain have had to expand their production capacity along with their competitors. However, the increase in production capacity at each stage is uneven, and the initiators of market competition are often low-quality, low-priced suppliers who lack experience and accumulation.

  Liu Wei, Secretary General of Zhongguancun Energy Storage Industry Technology Alliance, shared a set of data with Securities Daily reporters. In 2024, the number of newly registered energy storage related enterprises in China reached 89100, a year-on-year increase of 17.90%; 16000 new enterprises with abnormal status were added, a year-on-year increase of 123.51%.

  Energy storage power stations are not profitable, which leads to fierce competition at low prices in the equipment procurement process. The payment cycle of equipment suppliers is prolonged, and most domestic enterprises' energy storage business sectors will face losses in 2024. Liu Wei believes that while energy storage enterprises are reducing supply chain costs, they are also reducing their own cost expenditures and research and development investment, greatly reducing their innovation drive and capabilities.

  In addition, the low utilization rate of new energy storage has always been a pain point in the industry. According to the "2023 Statistical Data of Electrochemical Energy Storage Power Station Industry", the daily average operation time of industrial and commercial distribution storage is 14.25 hours, with an average equivalent charge and discharge frequency of 317 times; The daily average operation time of new energy distribution and storage is only 2.18 hours, with an average equivalent charge and discharge frequency of 104 times.

  Regarding the unsatisfactory utilization hours of energy storage, Zhang Jinbin, Deputy Chief Engineer of the Electric Power Planning and Design Institute, believes that firstly, the energy storage mobilization mechanism needs to be improved. Taking new energy distribution and storage as an example, the scheduling method is mainly based on grid integration scheduling, and charging cannot be carried out using the grid. Moreover, discharging must be calculated based on new energy generation, resulting in energy efficiency losses for each charge and discharge, which leads to low enthusiasm among new energy distribution and storage owners.

  Secondly, the pricing mechanism needs to be improved. Independent energy storage power stations may experience a phenomenon of inverted charging and discharging electricity prices in some areas, resulting in distorted indicators and losses for operators. If it is difficult to guarantee the reasonable returns of new energy storage solely based on the original electricity market, it is necessary to accelerate the establishment of a capacity pricing mechanism for new energy storage and improve the cost recovery mechanism for energy storage construction. We should do a good job in the next management and incentive work of new energy storage from the market mechanism and call mechanism, "said Zhang Jinbin.

  Finally, the safety issue of electrochemical energy storage is also a necessary hurdle for the high-quality development of the energy storage industry. Lin Jiubiao, Chief Engineer of Ningde Times Energy Storage Division, stated that safety accidents in energy storage power stations are mainly caused by factors such as batteries and energy storage inverters. Technically speaking, the safety issues of electrochemical energy storage are manageable and controllable. Only by rejecting irrational price competition and continuously improving quality management can we ensure the stability and reliability of product quality.

  Taking multiple approaches to promote high-quality development of the industry

  In the face of severe competition in the energy storage industry, prominent safety and reliability risks, and low investment returns, industry experts generally believe that efforts can be made through policy coordination, technological breakthroughs, and product "going global" to promote the high-quality development of the energy storage industry. In addition, the energy storage industry needs to accelerate the development of segmented energy storage markets, deeply tap into their value, and match them with corresponding pricing policies to promote the overall progress of the industry.

  Han Xiaoqi, Safety Director of the Electric Power Planning and Design Institute and Deputy Secretary General of the China New Energy Storage Industry Innovation Alliance, stated that the new energy storage industry is in a critical stage of growth, and timely adjustment of the pricing mechanism that matches the industry's development stage is crucial to enhancing industry confidence.

  At the beginning of this year, the government explicitly proposed the comprehensive marketization of new energy generation and prohibited the use of energy storage as a prerequisite for new energy projects. The energy storage industry generally expects that policy guidance is the key to achieving high-quality development of the new energy storage industry.

In the process of transitioning from policy orientation to market orientation, Han Xiaoqi believes that special attention should be paid to the cost recovery of new energy storage. In recent years, the cost of new energy storage has significantly decreased, but in the electricity and ancillary service markets, the benefits are often insufficient to fully cover the costs.   Therefore, it is necessary to adopt tailored policies, such as implementing a 'two-step' electricity price system according to local conditions

  Wang Peng, Executive Dean of the National Energy Development Strategy Research Institute at North China Electric Power University, believes that industry practitioners need to understand the profound meaning, accelerate deployment, and actively respond. The implementation of local policies is crucial. In terms of operation, market-oriented operation and maintenance are needed, and the expansion of new business models requires research on virtual power plants based on individual strategies. The allocation and storage system will also shift from 'I need to allocate' to 'I need to allocate'

  The reporter noticed that during this year's Two Sessions, Zeng Yuqun, a member of the National Committee of the Chinese People's Political Consultative Conference and chairman of CATL, paid attention to the topic of further improving the market-oriented application level of new energy storage and promoting high-quality development of the industry. When it comes to specific measures, Zeng Yuqun believes that one is to widen the price difference between peaks and valleys, creating a reasonable profit space for flexible adjustment of resources such as energy storage; The second is to enrich the trading varieties of auxiliary services suitable for new energy storage, and promote the sharing of auxiliary service fees among electricity users, so as to reasonably guide the cost of energy storage; The third is to improve the capacity compensation mechanism and accelerate the introduction of new energy storage capacity electricity pricing standards and implementation details.

  Liu Yafang stated that in the future, it is necessary to accelerate the construction of a production relationship system that adapts to the new productivity characteristics of energy storage. By establishing a fair and reasonable pricing system, fiscal and tax policies, and financial policies, improving the grid connection and utilization mechanism of energy storage, continuously optimizing the electricity market, enriching the trading varieties and mechanisms of energy storage participating in the electricity market, in order to promote the diversification and maximization of the value of new energy storage.

  At present, there is a consensus in the industry that solving the development dilemma of energy storage cannot rely solely on the power industry. Liu Yafang believes that the application of energy storage should not be limited to electrical energy storage, but should also vigorously develop composite coupling energy storage such as solar thermal power generation, "thermal power+green power coupling", and grid type energy storage. Actively explore new technologies and models such as virtual power plants and wind solar hydrogen ammonia storage, and accelerate the release of new energy storage to expand the multi-faceted potential of new energy development and consumption.

  Chu Pan stated that the development of energy storage and new energy is highly coupled. With the further development of the new energy industry and the increasing penetration rate of green electricity, on-site consumption of wind and solar power generation will be an inevitable choice.

  The participation of energy storage in the electricity spot market is still in its infancy and far from perfect. The role of energy storage is multifaceted, as it can not only provide electricity to obtain peak valley spreads, but also provide benefits for power auxiliary services. Electricity is a high-grade energy source, and it is unfair for energy storage to only rely on its' electricity 'attribute. Especially for electrochemical energy storage, its' electricity' role should also be fully utilized, that is, the ability of energy storage systems to quickly and accurately adjust power. This depends on the continuous construction of the electricity auxiliary service market, "said Chu Pan.

  Overall, energy storage can fully utilize the role of stabilizers and regulators, collaborate with large-scale wind and solar power bases to build an off grid stable power supply system, provide green electricity for the preparation of "hydrogen ammonia alcohol", and construct a green petrochemical system that does not rely on fossil fuels, providing new ideas and attempts for national energy security.

  Liu Wei told a reporter from Securities Daily that by 2025, how to advance the energy storage industry towards high-quality development has become a major challenge for all energy storage practitioners. The energy storage industry, with its strong vitality, continues to develop and grow, but it must also withstand the baptism of wind and rain and the test of the market. We firmly believe that the Chinese energy storage industry, which has undergone trials and tribulations, will become more resilient and dynamic, contributing energy storage capabilities to the global energy landscape