April 4, 2022 [OilPrice.com] – China recently unveiled a new plan to drastically expand its energy storage capacity.
Now, some 62 million people in the Shanghai area are back in lockdown following an outbreak of COVID-19.
Beijing’s ambitious clean energy plans are being bogged down by the country’s “Zero-COVID” approach to the pandemic.
In such uncertain times, there are few economic sectors that are a 100% sure bet for investors – but energy storage certainly seems to be one of them. As the world leans more earnestly toward decarbonization and the United Nations and the Intergovernmental Panel on Climate Change sound a “code red for humanity” as the window of opportunity to avoid the worst impacts of global warming rapidly closes, energy storage has become one of the fastest-growing industries as demand for clean energy heats up. The global energy storage market is on track to hit one terawatt hour by 2030, a quantity that would mark a more-than 20-fold increase over the already groundbreaking 17 gigawatts/34 gigawatt-hours that were online at the end of 2020. “Overall investment in battery storage increased by almost 40% in 2020, to USD 5.5 billion,” the International Energy Agency (IEA) reported at the end of last year.
“The global storage market is growing at an unprecedented pace. Falling battery costs and surging renewables penetration make energy storage a compelling flexible resource in many power systems,” says Yiyi Zhou, a clean power specialist at Bloomberg BNEF. “Energy storage projects are growing in scale, increasing in dispatch duration, and are increasingly paired with renewables.”
The breakneck increase in storage capacity is largely being driven by China and the United States, which are currently embroiled in a quietly simmering energy storage war. Each of these countries added gigawatt-scale additions of energy storage capacity in 2020. Together, China and the U.S. represent more than half of the global energy storage market projections for 2030. China is currently winning the race, having more than doubled its energy storage capacity additions in 2020. What’s more, in July of last year, Beijing announced that it is planning to install 10 times more capacity than its 2020 levels by just 2025.
Now, a new plan released this year shows that China aims to achieve this breakneck pace for energy storage addition by butting the cost of electrochemical energy storage systems by 30% by 2025. The 5-year plan released by the National Development and Reform Commission and the National Energy Administration also outlines the complete commercialization of non-hydro energy storage systems by 2030. “The country will seek breakthroughs in long-duration storage technologies such as compressed air, hydrogen, and thermal energy, and aim for self-reliance in key fields,” Bloomberg reports. “It will conduct pilot programs using various technologies to meet different storage duration requirements, lasting from minutes to months.”
The ramping up of non-hydro energy storage capacity installation will take place in tandem with the expansion of wind and solar capacity development, which is to be built out at a massive scale in China’s desert regions. This will help China achieve its goal of weaning itself off of foreign energy imports and shore up Beijing’s energy security and energy independence. Long-term energy storage will allow energy produced in China’s sparsely populated deserts to be piped into the country’s massive and energy-hungry urban areas. “The country will also explore storage technologies for power produced by offshore wind farms, so as to reduce transmission capacity needs and improve the utilization rate of the electricity generated,” says Bloomberg.
As straightforward and promising as these plans may be, Beijing’s ambitious plans for clean energy development and increased investment in energy storage are coming at a time when China’s economy is in trouble. Current Covid lockdowns in the affluent economic hub of Shanghai are costing the country a stunning $4.6 billion USD a month, amounting to about 3% of the nation’s GDP. The country’s “zero-Covid” approach is being derided as a “fiasco” as 62 million Shanghai-area residents (a group larger than the population of Italy) are being locked into their homes and locked out of the economy. If President Xi Jinping continues to try to outgun the novel coronavirus instead of adapting to mitigate and coexist with Covid, many of China’s most ambitious plans may prove to be out of reach.
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