Smart Energy International spoke with George Dudley of the China Energy Storage Alliance to understand how storage is fundamentally going to change the energy sector in China.
A t present, the scale at which energy storage applications are used in China’s energy system is one of the top three in the world. We have begun to see large-scale development and application trends appear, and power generators, grid companies, and power customers have all been active participants in energy storage. However, the growth of large-scale development has also made gaps in policy and market support more apparent.
The rapid development of energy storage technology and its ever-expanding scale of applications has created new questions for the country’s energy management bureaus.
On one hand, energy storage technologies and applications still need to be properly defined and formal approval methods for system construction and operations must be established, tasks both of which require careful planning from energy regulators.
On the other hand, energy storage requires policy guidance that will help drive more demonstration projects, create subsidies, adjust power pricing, and increase marketisation.
Such policies should help highlight the value of energy storage while also considering its role in the ongoing power market reforms. China has also begun focusing attention on energy storage system safety.
Standardisation groups, the government, and grid companies must all work together further to ensure the safe operations of storage systems, and must do so in a way that does not restrict the future development and continued application of systems.
What regulatory, legislative or technical specifications need to change or be updated to encompass the addition of storage on the grid?
For current large-scale grid applications in particular, one need is to create a clear definition for energy storage capital, particularly in management and market areas, to ensure that markets are fair and competitive.
Second is the need for unified management regulations for the construction of energy storage systems. Both regional and national levels of government should have a clear work procedure for project development (addressing land, environment, fire safety, etc) to make sure that project construction can occur uninhibited.
Third is a need for market rule adjustments. These include the creation or adjustment of rules related to compensation methods for ancillary services, demand response, and other services.
Such adjustments will help new entities and technologies to enter the market. In addition, research and policy designs must be initiated that will ensure that the interests of China’s grid companies do not conflict with an open energy storage market; that necessary projects which do not have private investment and must instead be taken on by grid entities have a system for proper regulation; and that clear revenue models for grid-side storage investment are established.
How widespread is the adoption of DERs in China and is there a common need for home based or local storage for grid management and balancing?
Distributed energy storage resources have begun to appear only recently in China, and most energy still comes from concentrated resources. Amongst the distributed energy resources that are available, the majority are natural gas. Distributed solar PV, bioenergy, and wind resources are still relatively few.
As of the end of September 2018, China’s solar PV capacity totalled 164.74GW. Of this, 117.94GW of capacity came from solar PV stations, while 46.8GW came from distributed PV.
The Chinese government predicts that by 2020, distributed solar capacity will surpass 60GW.Industrial-commercial customers largely derive benefits from energy storage through energy arbitrage, but because the investment return period is long, many suppliers and customers are actively looking for ways that these storage resources can provide services to the grid – such as frequency regulation, peak shaving, and others.
Currently, only Jiangsu, Shandong, and Henan have mechanisms in place for demand response. Energy storage can provide peak shaving in the hot summer season, though payback for such a service is small. So overall the additional earning potential for energy storage is not high.
ABOUT THE INTERVIEWEE: George Dudley manages international engagements at the China Energy Storage Alliance (CNESA), China’s first non-profit association dedicated to promoting the energy storage industry.
This article was originally published in Smart Energy International 2-2019.