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China’s Push For Energy Storage

Despite another banner year for renewables growth in China, the country’s grid is still struggling to bring clean electricity to consumers. The problem is so serious in China’s north and west that turbines were forced to sit idle for much of 2016.

In response, China’s policymakers are now turning to energy storage to boost the grid’s ability to accommodate wind and solar power.
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But significantly increasing the share of renewables will require big changes in how China operates the grid, raising questions about how much of a role energy storage will play in ensuring that renewable energy is not wasted through curtailment.

China’s energy storage push
Energy storage technologies – which include batteries, thermal storage, pumped hydro, and more – can help integrate wind and solar on to the grid by storing energy when power demand is low, and discharging power when demand is high.

Energy storage adds flexibility to the grid, allowing renewables to generate power when they would otherwise be curtailed.

Recognising this value, China’s policymakers are planning a rapid expansion of the country’s energy storage capacity. To start, policymakers are calling for new construction of pumped hydro storage facilities, which store energy by pumping water uphill into reservoirs where it can later flow down again through turbines to generate electricity.

The 13th Five-Year Hydropower Plan calls for an increase in pumped hydro storage from 23 gigawatts to 40 gigawatts by 2020 – about double the existing pumped hydro capacity of the United States.

Institutions to support transparency, monitoring, and enforcement are somewhat lacking in capacity, and state-owned enterprises currently dominate the industry.
Wang Xuan and Max Dupuy, power sector reform experts, Regulatory Assistance Project
The government is also promoting emerging energy storage technologies. In March 2016, the central government released a fifteen-year Energy Technology Innovation Action Plan calling for further research into advanced energy storage to support renewables integration, microgrid development, and electric vehicles.

One such demonstration project is already underway. In April 2016, the National Energy Administration approved the construction of a giant energy storage project in the northeast city of Dalian, where Chinese battery manufacturer Dalian Rongke is now building a 200-megawatt vanadium redox flow battery facility – a system so large that it will nearly triple China’s present grid-connected battery capacity when it is completed in 2018.

Government planners hope that the system will help address renewable energy curtailment in the region, in addition to providing back-up power and other services.

Private investment
The country is also piloting new mechanisms to encourage private investment in energy storage. Until recently, battery storage companies have had few avenues for commercial success. Nearly all deployments have been small-scale demonstration projects or installations in places where electricity is particularly expensive, such as remote areas and island grids.

But in June 2016, the National Energy Administration (NEA) unveiled an energy storage compensation scheme in northern China, where wind and solar curtailment is most severe. The programme pays energy storage providers for storing energy at night for use during the day.

The mechanism works by taking advantage of an existing paid service normally provided by coal plants, called peak regulation. In northern China, coal generation is used to provide electricity during the day and to provide essential heating through district heating networks.

Unfortunately, coal plants cannot be turned on or off easily and so must remain operating at night even when they’re unneeded. Although it’s less efficient, wind generators are asked to curtail power instead.

Currently, coal plants are compensated for having to ramp down power beyond a certain level. But instead of paying coal plants to not produce electricity, the new compensation mechanism pays energy storage to absorb excess power.

This means fewer coal plants in operation, more efficient coal-burning in those coal plants that remain operational, less wind curtailment, and a financial saving for the grid.

Because China’s power sector is in a transition state, it is still unclear how compensation for storage will change in the coming years. Nonetheless, this mechanism is a strong indicator that policymakers are ready to put advanced energy storage to work.

Adapting the grid
Energy storage can do a lot to help integrate renewables on to the grid. But at low levels of wind and solar penetration, it’s not strictly necessary to prevent curtailment. Instead, optimising grid operations is the key to integrating solar and wind power.

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