Energy security is an overall and strategic issue related to the country's economic and social development. On June 13, 2014, General Secretary Xi Jinping proposed a new energy security strategy of "four revolutions and one cooperation", which promoted the development process of energy revolution in the new era. The mainland's energy transition is centered on ensuring energy security and practicing green development, among which the supply and consumption of a high proportion of new energy is the main task of the construction of a new power system and the key to achieving the "dual carbon" goal. By the end of 2023, the total installed capacity of grid-connected wind and solar power generation in China reached 1.05 billion kilowatts, accounting for 36% of the total installed power capacity and more than 15% of the total installed power generation capacity in the mainland. Due to the randomness, volatility and intermittency of new energy power generation, the demand for system regulation resources is large, which brings new challenges to the safe and efficient operation of the power system. Energy storage can provide a variety of services such as peak regulation, frequency regulation, voltage regulation, backup, and black start for power grid operation, which is an important means to improve the flexibility, stability and safety of traditional power systems. By the end of 2023, 50.6 GW of pumped storage and 31.39 GW of new energy storage have been put into operation across the country, of which lithium-ion batteries account for the absolute dominance of new energy storage, and other types of new energy storage technologies are also emerging, showing an overall trend of diversified development. New energy storage leads industrial development through scientific and technological innovation, provides assistance for the construction of a safe, reliable, clean, low-carbon, and cost-effective new energy system, and becomes an important part of the development of new energy productivity.
Energy Storage Positioning:
The "Regulator" of the New Power System
In recent years, the mainland government has issued a series of favorable policies to support the development of the energy storage industry. As early as 2014, the State Council issued the "Energy Development Strategic Action Plan (2014~2020)", pointing out that energy storage is one of the key innovation areas in the future. In 2017, the first guiding policy for the development of large-scale energy storage technology and application in mainland China, "Guiding Opinions on Promoting the Development of Energy Storage Industry and Technology" (Fagai Energy [2017] No. 1701), was officially released. In 2021, during the "14th Five-Year Plan" period, the first national-level comprehensive energy storage policy, the "Guiding Opinions on Accelerating the Development of New Energy Storage" (Fagai Energy Gui [2021] No. 1051), was promulgated, planning the overall development goals of new energy storage in the next decade. In 2024, "the development of new energy storage" will be included in the government work report for the first time. Relevant policies have vigorously promoted the development of the new energy storage industry: in 2018, the cumulative installed capacity of new energy storage exceeded the "GW" mark for the first time, in 2022 the cumulative installed capacity exceeded 10 GW, and in 2023 the cumulative installed capacity exceeded 30 GW, and the new energy storage industry entered a period of accelerated development.
Thermal power is the "ballast stone" of the traditional power system, and energy storage is the "ballast stone" of the new power system. Although thermal power also has the function of flexible regulation, if new energy is developed on a large scale, it is far from enough to rely on the regulation of thermal power, and energy storage technology with "power storage" and "discharge" functions must participate in the regulation. In addition, thermal power and new energy power generation are in direct competition for the proportion of power generation. Therefore, with the rapid decline in the cost of energy storage, the orderly withdrawal (but not complete withdrawal) of thermal power is an inevitable requirement and result of the large-scale development of new energy.
Energy storage can be applied to the power supply side, the grid side and the user side respectively, with different functional positioning. On the power supply side, energy storage can smooth the fluctuation of power output, store peak power, reduce its impact on the power system, improve the ability of new energy stations to track the planned output, and provide backup energy for the construction and operation of new energy stations. On the grid side, energy storage can reduce the loss of traditional frequency modulation power supply caused by frequent switching in terms of improving the frequency modulation capacity of the power grid. In terms of improving the peak regulation capacity of the power grid, it can respond to dispatching instructions in a timely and reliable manner according to power supply and load changes, and change its output level according to the instructions. On the user side, energy storage can provide users with reliable emergency power supply and improve power quality; Or take advantage of the difference between peak and valley electricity prices to save users money.
Despite the above important roles, there are still problems of cost diversion and grid-connected scheduling of new energy storage, the profitability of energy storage power stations is generally lower than expected, and the performance level of new energy storage needs to be further improved.
Technological innovation:
Safety is the foundation, economy is the core, and green is the guarantee
A safety solution for new energy storage
Safety is the foundation of energy storage applications. As an energy-bearing carrier, it is impossible to achieve absolute safety of energy storage equipment, but it is possible to achieve intrinsic safety, that is, thermal runaway will not occur under normal working conditions or under specified abuse conditions. Non-intrinsic safety is: when the thermal runaway of the energy storage carrier occurs, the safety measures such as external fire extinguishing and cooling are used to prevent further thermal spread or explosion.
The intrinsic safety of energy storage carriers includes three different levels of intrinsic safety: system, module and cell. Among them, the intrinsic safety at the system level is the easiest to achieve, which only requires that the thermal runaway of the battery module in the energy storage system cannot spread to the entire system. The intrinsic safety requirements at the module level are even higher: if a battery cell in the module has thermal runaway, measures must be taken to ensure that the thermal runaway does not spread to other cells in the module; The intrinsic safety of the battery cell level is the most difficult to achieve: the cell cell is required to be free of thermal runaway under normal working conditions and certain abuse conditions.
At present, there are three main directions of intrinsic safety technology at the cell level: aqueous electrolyte technology, solid electrolyte technology and safety agent injection technology into the cell. The first two are to modify the flammable electrolyte to be non-flammable, thereby greatly increasing the critical temperature of the battery's thermal runaway; The latter is to cut off the internal reaction of the battery at an early stage of battery failure without changing the properties of the organic electrolyte by injecting a safety agent into the battery to prevent thermal runaway. Only by achieving the intrinsic safety of the battery cell level can the new electrochemical energy storage have the "qualifications" to support the large-scale development of new energy.
The cost of new energy storage is declining
Cost is at the heart of energy storage applications. If the LCOE of energy storage is too high, then it is better to choose to abandon wind and solar power than to use energy storage equipment to store electricity.
In 2023, affected by factors such as the decline in the cost of upstream raw materials and the expansion of industrial scale, the price of lithium-ion batteries will continue to decline, and the current domestic battery cell price has been lower than 0.4 yuan/watt-hour, taking into account factors such as system efficiency and operation and maintenance costs, the LCOE of lithium battery energy storage has dropped to the level of 0.40~0.45 yuan.
In 2023, the sharp decline in the price of energy storage batteries has caused certain competitive pressure on upstream and midstream enterprises, but it also provides a basis for battery energy storage to further reduce costs and increase efficiency. In addition to reducing the cost of battery manufacturing, the use of innovative technology to improve the cycle life of batteries is another important direction to reduce the LCOE of energy storage. In the future, with the development and application of battery lithium supplementation and repair and regeneration technologies, the energy storage life of new lithium-ion batteries for energy storage is expected to reach more than 15 years, and the LCOE of energy storage can be reduced to 0.30 yuan in 2026 and 0.20 yuan before 2030, which is lower than the LCOE of pumped storage.
In 2023, the average LCOE of photovoltaic and wind power generation will be less than 0.3 yuan. In a type of sunlight area, the LCOE of photovoltaic power generation is even less than 0.2 yuan. Therefore, before 2030, the average LCOE of "distributed photovoltaic + energy storage" in a type of sunlight area will have a great probability of falling to the comprehensive utilization level of 0.3 yuan. With the support of new energy storage, the development of distributed energy resources will be unstoppable.
The green development path of new energy storage
Green is the guarantee for the sustainable development of energy storage. In August 2023, the European Union's Battery and Waste Battery Regulation came into effect, proposing mandatory requirements for battery companies, such as battery passports, battery recycling, and carbon footprint. Therefore, the management of carbon emissions throughout the life cycle is a necessary way for enterprises to deal with green trade barriers and enhance product competitiveness. The development of green energy storage products should consider the influencing factors of carbon emissions in the whole life cycle from the battery design process, use green materials and renewable materials as much as possible, shorten the production process, extend the service life of the battery, and adopt a battery structure that is easy to disassemble and recycle. The upgrading of manufacturing technology is an important part of the green development of new energy storage, and the improvement of production efficiency and management level, and the increase of the proportion of green electricity use will help reduce carbon emissions in the battery production process. In addition, the establishment of a green energy storage standard system will help promote the energy storage industry to strengthen the concept of green development, build a sound market evaluation and selection basis, and better integrate with the international market.
The development of the lithium-ion battery industry has intensified the competition for lithium resources in countries around the world, and China, Japan, the United States, Europe and Australia have successively listed lithium as a strategic metal. The global lithium resources are abundant, but unevenly distributed, and can meet the global demand for power and energy storage lithium-ion battery production in terms of reserves, but the mainland is the world's largest producer and exporter of lithium-ion batteries, and the supply of lithium resources is greatly affected by the global situation. Therefore, it is of great significance to ensure the safe and stable supply of lithium resources, in addition to strengthening the mining and layout of lithium resources, we must attach great importance to the recycling and utilization rate of lithium-ion battery materials, and develop easy-to-recycle energy storage batteries. At present, the mainland lithium-ion battery recycling market as a whole is still in the initial stage of development, the battery recovery rate and material recycling rate is not high, and the green recycling industry technology needs to be broken through.
Institutional Innovation:
The new quality of productive forces determines the development of new production relations
The changing trend of the new energy system
Driven by the rapid decline in the LCOE of "new energy power generation + energy storage", the following changes are taking place in the energy and power system:
Power generation side: The existing thermal power units are gradually transitioning from the main power supply to the peak power supply, and more photovoltaic and wind power generation units will pour into the power generation link. At the same time, the new energy storage system represented by electrochemical energy storage, as well as the new quality productivity industries (such as computing power centers, new manufacturing, renewable energy hydrogen production, etc.) with the main purpose of local consumption of new energy, will be laid out around the new energy power generation side, forming a multi-energy complementary situation, and the traditional power generation side will gradually be replaced by distributed energy represented by virtual power plants.
Transmission side: the mainland is vast, energy production and consumption are geospatially dislocated, the domestic new energy rich areas are basically in the west and north of the "Hu Huanyong line", and energy consumption is dominated by the southeast region, there is a huge difference in resource endowment and energy consumption demand between the east and west, so the large power grid architecture will always exist, and will continue to promote the development of flexible grid technology, including the intelligent control technology transformation of ultra-high voltage and ultra-high voltage transmission networks, as well as the grid-side pumped storage power stations and large-scale, Construction and deployment of independent new energy storage power stations.
Power consumption side: The traditional power consumption side will also introduce distributed power generation and energy storage facilities according to local conditions, develop distributed energy systems represented by industrial and commercial microgrids on the basis of the distribution network, and carry out two-way interaction with the transmission grid. By implementing demand response through price signals such as peak-to-valley price differentials, power users of microgrids can respond to electricity price signals and related incentive mechanisms, as well as the grid's demand for load adjustment, and electric vehicles and industrial and commercial energy storage systems can also participate in the system's peak shaving and valley filling as needed.
The above-mentioned development trend of energy and power system is the trend of the future energy revolution, reflecting the rise and development of new energy productivity. "The productive forces determine the relations of production", and in order to meet the requirements of the development of the new quality of productive forces, the relations of production must also change accordingly.
"Hold the middle and let go of the two ends"
The "middle" is the transmission grid including grid-side energy storage, and the "two ends" refer to the power generation side and the user side in the traditional sense, and in the new power system, there are also distributed energy systems (virtual power plants and industrial and commercial microgrids) including new energy and energy storage.
The purpose of "controlling the middle" is to break the monopoly of the power grid, ensure that power grid enterprises do not participate in market competitive business, and ensure the fairness and transparency of power grid operation. The grid-connected dispatch of new energy power and the deployment of new energy storage power stations are important challenges for the construction of new power systems. The increase in the proportion of new energy power generation has increased the difficulty of power grid dispatching, and the rapid development of distributed power generation and new energy storage has brought about the access demand of a large number of decentralized control objects, while the terminal electricity load has shown a new trend of rapid growth, large change and diversification, which makes it more difficult to predict and coordinate power load. In addition, in terms of power system, power grid enterprises, as the main body of transmission and distribution, lack the underlying power to actively mobilize new energy power and new energy storage, and the degree of electricity marketization needs to be improved. In order to meet the needs of future energy development, on the basis of the national unified power market system, we should continue to promote the construction of regional power grids and the reform of the transmission and distribution separation system, change the centralized dispatching mode of traditional large power grids, and establish a transmission, distribution and sales mechanism that adapts to the distributed energy system. Through the complete separation of monopoly business (transmission grid) and competitive business (distribution and sales companies), encourage market-oriented competition in the investment, construction and operation of distribution networks, based on the demand response price mechanism of distribution networks, guide distributed energy and virtual power plants to penetrate into the power grid, reflect the real supply and demand relationship through market prices, and create conditions for new energy market transactions.
"Liberalizing the two ends" is to introduce a market competition mechanism, form a diversified main structure of power supply and sales, and enhance the vitality and efficiency of the electricity market. On the new energy power generation side, it is necessary to revise the Renewable Energy Law as soon as possible, and issue guidelines for the grid-connected power generation of new energy power generation, including energy storage. Combined with the development of distributed energy in combination with the construction of the land "Belt and Road", we will promote the transfer of manufacturing and energy-consuming industries to energy-rich areas such as the west and north, break through the "Hu Huanyong line" of energy, and actively introduce new productivity industries (such as computing power centers and new manufacturing industries) in areas rich in new energy. Therefore, it is necessary to break the barriers to power sales through partitions, promote the separation of transmission and distribution, develop the distributed energy system represented by industrial and commercial microgrids according to local conditions and time conditions, and increase the construction of typical subdivided application scenarios such as "distributed photovoltaic + energy storage", station area distribution and storage, off-grid distribution and storage, island multi-energy complementation, park microgrid, optical storage and charging, communication base stations, and data centers.
"Commodity Attributes of Restored Energy"
Thanks to the continuous improvement of the mainland's energy supply guarantee capacity and strong macro-control capabilities, the mainland's electricity prices have been stable for a long time, providing users with a relatively stable energy supply environment. However, at the same time, administrative intervention has not been completely eliminated, resulting in a lack of full competition in the market, non-public capital is in a state of unfair competition in the energy market, and the phenomenon of high market concentration and monopoly in the energy industry still exists. In the future, the proportion of new energy power generation will increase significantly, and flexible adjustment resources, including new energy storage, will become an important support for the new power system, and the construction of distributed energy systems will also accelerate development.
In order to accelerate the participation of new energy and new energy storage in the power market transactions, it is necessary to accelerate the formation of a trading mechanism determined by the market to determine energy prices, improve the construction of the electricity spot market and ancillary service market, promote diversified competition among market players, and give full play to the role of the market-based price mechanism in the allocation of power resources. The construction of distributed energy resources should consider the characteristics of small single capacity, large number and scattered distribution, actively explore innovative business models and diversified profit models, effectively aggregate and centralize energy in the form of virtual power plants, industrial and commercial microgrids, etc., and provide flexible and diverse supply and demand resource matching services.
In a market-led trading system, energy prices fully reflect their own scarcity and supply and demand, while also meeting the needs of green development. At present, the green value of new energy has not been fully reflected, the incentive mechanism for voluntary subscription of green certificates is insufficient, and the environmental premium effect of green power consumption has not been reflected, so it is necessary to establish and improve the policy system that reflects the green value of new energy as soon as possible to achieve the coordinated development of the power market and the carbon market.
Looking Ahead:
"New energy power generation + energy storage", spring is coming
According to the data released by the National Energy Administration, in 2023, China's thermal power generation will still be the absolute main force, accounting for 69.95% of the country's power generation, with a power generation of 6,231.8 billion kilowatt hours, rising instead of falling, a year-on-year increase of 6.10%. The output of solar power generation was 293.968 billion kWh, an increase of 17.17% year-on-year, but the total power generation accounted for only 3.3%. The development of new energy has a long way to go. Therefore, in the context of the rapid decline in the cost of photovoltaic and energy storage, as well as the sharp rise in the risk of extreme weather and geopolitical conflicts in recent years, it is hoped that the orderly withdrawal of thermal power can become a strategic energy development direction, and promote the development of distributed energy resources, including energy storage and local consumption factors, from the policy direction.
In the past three years, the construction of pumped storage power stations in various places has been in full bloom, and the construction cost of power stations has also risen from 50~6.5 billion yuan/GW in the early stage to 70~8 billion yuan/GW, which is close to 0.30 yuan when converted into the cost of electricity in the whole life cycle. Considering the rapid decline in the LCOE of new energy storage (about 0.30 yuan in 2026 and about 0.20 yuan in 2030), as well as the improvement of the safety and greenness of new energy storage, it is expected that before the carbon peak in 2030, the advantages of new energy storage will surpass that of pumped hydro and become a supporting technology for the large-scale development of new energy, especially the development of distributed energy. Therefore, we need to consider the construction scale and rational layout of pumped storage in a forward-looking manner to avoid structural overcapacity of pumped storage capacity after 2030.
With regard to the energy revolution, we must have confidence that we must not use "energy security" as an excuse to refuse to adjust production relations and hinder the development of new quality productive forces. The food industry, which is as important as the energy industry, completed market reform in the 90s of the last century, and has continued to improve and improve in the past 30 years, which well supports the process of Chinese-style modernization. With the support of energy storage, especially new energy storage, the large-scale development of new energy is an inevitable trend, which requires us to be prepared from both technological innovation and institutional innovation to promote the coordinated development of new quality productivity and new production relations in the energy field, and successfully achieve the "double carbon" goal. (This article only represents the author's personal views and does not represent the position of this journal)
Editor: Deng Zhuokun, Wang Xinyao
Review: Li Liping
This article was published in the 2024 Issue 05 of China Electric Power Enterprise Management, and the authors Chen Yongchong, Feng Caimei, and He Yingyuan work for the Green Energy Storage Research Institute of Tsinghua Sichuan Energy Internet Research Institute, and Liu Yong works for the Energy Storage Application Branch of China Chemical and Physical Power Industry Association.
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