Similar to what happens in other parts of the world, China has installed too much renewable energy that now faces the need for storage systems to provide flexibility to the grid and prevent wastage of electricity. Surprisingly, the country has ended up producing an excess of batteries.
Untameable growth. The growth of China’s energy storage capacity has surged by 40% this year, reaching 44 gigawatts by the end of June.
This rapid expansion has already surpassed the country’s 2025 targets, showcasing the efficiency of the Chinese industry in dominating the large-scale storage battery sector.
Too many batteries. Despite this apparent success, the issue lies in the fact that the country isn’t using a significant portion of the batteries.
According to Bloomberg, these storage systems are only utilized once every two days on average, remaining idle 91% of the time.
Lack of incentives. The issue isn’t with the technology itself, but with the lack of incentives in the electricity market for companies to use it more actively. Electricity is already inexpensive, and therefore, selling stored energy isn’t profitable.
How did this situation arise? Chinese provincial regulators enforce the inclusion of energy storage in wind and solar farms in order for them to operate. While these regulations have successfully increased the production of storage systems, companies often install batteries only to comply with the law, without any incentive to profit from them.
Why China is mandating the installation of batteries. Although renewable energy sources exceed other forms of energy in terms of installed capacity in China, wind and solar energies don’t produce power continuously.
To address this intermittency without relying on thermal power plants, energy storage is necessary to store energy during production peaks and release it when demand requires it.
What can China do to increase the use of these batteries? Companies in China have access to the batteries, but they aren’t utilizing them effectively. To stabilize the power grid, further reforms are needed in the electricity market, such as implementing variable prices that change based on the time of day.
This would create opportunities for companies to profit from storing energy and selling it during times of peak demand, ultimately stabilizing the power grid.
This article was written by Matías S. Zavia and originally published in Spanish on Xataka.
Image | China Shoto Group
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