Welcome to today's sharing of "Energy Storage Industry Analysis Report". After understanding the development background of China's energy storage industry and the background of energy storage technology, in today's sharing, China exportsemi net will focus on explaining two issues for you: The first is the scale and forecast of the energy storage industry; the second is the comparison of the development of new energy storage at home and abroad.
Energy storage industry scale and forecast
The increase in renewable energy power generation will bring about rapid growth in the scale of the global energy storage market.
With the continued development of the global economy and population growth in the future, as well as the improvement of electrification level, the demand for electricity will continue to grow rapidly. According to the U.S. Energy Information Administration (EIA), global power generation will increase by about 70% in the next 30 years, reaching 42,000 TWh by 2050. Among them, renewable energy is expected to become the world's most important source of electricity in the future, accounting for approximately 56% of total power generation by 2050, more than tripling on the basis of 2020. Traditional energy, represented by coal and natural gas, is still the main power generation energy, accounting for nearly 60% in 2020, but its proportion is expected to gradually decline in the next few decades. By 2050, the proportion of traditional energy will dropped to 39% (Figure 6).
Figure 6: Global power generation forecast by
different energy types, 1000TWh 15
From the perspective of the distribution of different types of renewable energy power generation, the rapid development of wind energy and solar energy will become the main driving force in the future. According to EIA forecasts, wind and solar power generation will account for 72% of renewable energy power generation by 2050, nearly doubling the proportion in 2020. The development of traditional hydropower will stabilize in the next few decades, with its proportion declining from 58% in 2020 to 24% in 2050 (Figure 7). The unique intermittency and instability of new energy sources such as wind and solar energy will drive the rapid development of the global energy storage market.
Figure 7 : Global renewable energy power generation forecast, 1000TWh
As a representative of new energy storage methods, electrochemical energy storage has particularly broad prospects for future development. According to CNESA, the installed capacity of the global electrochemical energy storage industry will reach 1,138.9GWh by 2027, with a compound growth rate of 61% from 2021 to 2027 (Figure 8), which is approximately 31% of the total installed capacity of energy storage in the future. A compoundannual growth rate of 16 double the growth rate.
Figure 8
:
Global
electrochemical energy storage installed capacity, GWh
China's electrochemical energy storage installed capacity will double year-on-year in 2022, and the installed capacity is expected to account for more than 1/5 of the world's total in 2026
According to CNESA data, the proportion of different types of energy storage methods in China's energy storage market in 2021 will be basically consistent with that of the world. Among them, pumped hydropower storage is still the most important energy storage method, accounting for 86.3%, which is the same as the global share of 86.2%; new energy storage methods account for 12.5%, which is 0.3 percentage points higher than the global share. Electrochemical energy storage is the most important new energy storage method, accounting for 96.7%, slightly lower than the global share by one percentage point, with lithium-ion batteries taking the mainstream (Figure 9).
Figure 9 : Cumulative installed capacity share of
different energy storage types in China in 2021
As of the end of 2022, 19
corporate member units of the National Electric Power Safety Commission have put into operation a total of 472
electrochemical energy storage power stations with a total energy of 14.1GWh, a year-on-year increase of 127%;
in 2022, 194 new electrochemical energy storage power stations will be put into operation, The total energy is
7.9GWh, accounting for 60.2% of the total energy of power stations in operation, a year-on-year increase of 176%
(Figure 10). 
Figure 10
:
China’s
electrochemical energy storage installed capacity, MWh
From an international comparison, according to the International Energy Agency's forecast, by 2026, China's total installed electrochemical energy storage capacity will rank first among countries, accounting for 22%, an increase of 2 percentage points from 2020, almost the same as that of all of Europe. The total installed capacity of China is the same, 7 percentage points higher than that of the United States. In addition to China, India also performs particularly well. Its electrochemical energy storage installed capacity will soar from negligibility in 2020 to accounting for 20% of the global share in 2026 (Figure 11).
Figure 11 : Forecast of the total installed capacity of
electrochemical energy storage in various countries and regions
Judging from the
traditional energy storage method of pumped hydro, China's total proportion in 2026 will be the same as in
2020, at 11%, and the total newly installed capacity between 2020 and 2026 is expected to reach 381GWh.
India's installed capacity share is expected to double from 15% in 2020 to 33% in 2026, with newly installed
capacity expected to reach 2,587GWh in 7 years (Figure 12). 
Figure 12 : Forecast of the total installed capacity of
pumped hydro energy storage in various countries and regions
Comparison of new energy storage development at home and abroad
China actively promotes the scale of new energy storage, and the adjustment of market mechanism is related to long-term development
In the context of the "double carbon" goal and energy transformation, new energy storage based on electrochemical energy storage is an important grid flexibility adjustment resource and will usher in large-scale commercial application opportunities. In addition to the need to continuously promote technological progress In addition to improving cost competitiveness, a favorable policy environment and market mechanisms are also essential. Based on the industrial policies issued by the country since the "14th Five-Year Plan" (Table 5), the country is actively promoting the transformation of new energy storage from the early stage of commercialization to large-scale development by 2025, and achieving comprehensive market-oriented development by 2030. In addition, the policy side has always emphasized deepening the reform of the power system and promoting the participation of energy storage in power market transactions. The reason is that policy support is one of the important initial driving forces. However, in the medium and long term, China's energy storage industry needs to rely on a robust and efficient market mechanism to establish a reliable A sustainable profit model to achieve high-quality development.
Table 5 : During the “14th Five-Year Plan” period,
the country issued a number of new energy storage industry support policies
At this stage, the United States, Europe, Australia, etc. have more mature energy storage market mechanisms. The common feature is to deregulate electricity prices and establish some kind of bidding mechanism, allowing energy storage entities to obtain business from electricity price fluctuations (that is, the price difference between charging and discharging). In contrast, China's electricity marketization and new energy storage market participation methods still have room for optimization (Table 6).
Table 6 : Comparison of energy storage industry
market mechanisms in China, the United States, Europe and Australia
In terms of power marketization, there is currently an applicable capacity price mechanism for domestic pumped hydro energy storage, but whether the capacity price covers new energy storage is still under discussion. The capacity price is an economic incentive mechanism that enables units to access the power energy market and ancillary services. Stable income outside the market is conducive to improving the certainty of return on energy storage investment. In April 2021, the "Opinions of the National Development and Reform Commission on Further Improving the Price Formation Mechanism for Pumped Storage Power Stations" clarified that pumped storage power stations implement a two-part electricity price system, proposed to form electricity prices in a competitive manner, and include capacity electricity prices into transmission and distribution price recovery. Zhejiang Tianhuangping, Hubei Tiantang, and Jiangsu Shahe pumped storage power stations all adopt the two-part electricity price system18 . Although the "Guiding Opinions on Accelerating the Development of New Energy Storage" in July of the same year pointed out that the capacity price mechanism of independent energy storage power stations on the grid side should be established, and energy storage power stations should be gradually promoted to participate in the power market. Included in transmission and distribution price recovery. However, in the proposal for the National Two Sessions in 2022, Chairman of Ningde Times mentioned that “currently new energy storage cannot enjoy the same capacity price policy (as pumped hydro storage), and faces unfair competition, and the development speed and quality are seriously limited” 19 . In addition, in the medium and long-term power market, power spot market and ancillary service market, the scope and depth of competition that new energy storage can currently participate in are also relatively limited. Only by participating extensively and deeply in the power market can new energy storage fully exert its diversified value. Therefore, various regions are still actively exploring the types and mechanisms of electricity market transactions that new energy storage can participate in.
In terms of new energy storage market participation methods, energy storage can not only provide highly market-oriented services such as peak shaving, capacity resources, and frequency modulation backup, but also provide services that are still under control, such as delaying transmission investment and improving grid stability. Reflected in multiple links, the cost is often borne by a single link (mainly the power generation side), making its market positioning unclear, resulting in problems such as poor cost management and weak social investment willingness. Therefore, it is necessary to clarify the role of new energy storage Market positioning is crucial to its market development. Since the "Guiding Opinions on Accelerating the Development of New Energy Storage" in July 2021 proposed to clarify the independent market subject status of new energy storage, in June 2022, the "Notice on Further Promoting the Participation of New Energy Storage in the Power Market and Dispatch Application" has clarified Defining the status of independent energy storage, there are basically no policy obstacles for eligible new energy storage projects to participate fairly in the power market competition. Subsequently, the addition of energy storage, a new independent market entity, will also stimulate various power markets to make corresponding adjustments in terms of access conditions, trading mechanisms, technical standards, etc. The general direction of adjustment is "market leadership and orderly development." 20. Give full play to the decisive role of the market in resource allocation and promote the orderly development of new energy storage.
Overall, China's new energy storage industry is still in the early stages of commercialization and large-scale development. The industry needs to continue to overcome technical and cost bottlenecks, and the government needs to further improve the details of energy storage's participation in electricity market competition. In this process, energy storage entities will begin to explore business models in many application areas.
15. 1TWh (terawatt hour) = 1,000GWh (gigawatt hour) = 1 billion kWh (kilowatt hour)
16. Global energy storage capacity to grow at CAGR of 31% to 2030, Wood Mackenzie, September 30
17. The installed capacity target was rarely mentioned in subsequent policy documents .
19. Is it feasible to implement capacity pricing for new energy storage ? China Energy News, April 6, 2022
20. " 14th Five-Year Plan" New Energy Storage Development Implementation Plan, National Development and Reform Commission, National Energy Administration, March 21, 2022
Report source: KPMG analysis
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