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China’s energy storage industry

by CBBC Staff
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Charging into the future by Jake Mendrik

In 2017 a number of countries have actively promoted innovation within the energy storage industry in order to take advantage of new technologies and ensure the maximum potential of their energy-producing capabilities. Britain has taken a lead in this aspect with the UK government, in collaboration with the Office of Gas and Electricity Markets (OFGEM), launching a plan in July to introduce a ‘smart energy system’ in response to developing technology and demands in the sector.

The UK has ambitions to not only develop its own energy storage industry but to export its expertise to the global market. The Secretary of State for Business, Energy and Industrial Strategy, Greg Clark MP, has further outlined the plan by stating that a smarter energy system will “put UK businesses in a leading position to export smart energy technology and services to the rest of the world.”

As a destination for British enterprises wishing to establish themselves abroad, China offers a number of unique opportunities.

China’s energy storage industry

China is putting large amounts of capital into developing its energy storage industry. The government has actively promoted ‘green technology’ as integral to its development process and backed up its plans with expenditure of over USD $400 billion per year on R&D. It is therefore no surprise the country now boasts some of the world’s most impressive new energy projects. Shandong Sacred Sun’s Huadian Tibet Nima renewable energy project is just one example, with the facility now standing alone as the world’s largest solar and diesel micro-grid consisting of a 22MWp photovoltaic power station system and 12MWh lithium ion battery pack. By comparison, Solar Philippines’ self-proclaimed ‘largest solar, diesel, battery micro-grid’ will only possess an 8MWh energy storage pack.

While hydro-power remains the overwhelming majority contributor to Chinese energy storage, Chinese investment into lithium, both domestically and abroad, has led to further development of the Li-Ion battery, used in devices ranging from laptop computers to smartphones, as the fastest growing form of energy storage with a year-on-year increase in usage of around 70 percent since 2015.

Some of the country’s major tech and automation companies, including Huawei and BYD are also fully invested into finding new energy storage solutions, adding to a market loaded with potential.

In addition a very complimentary set of policies and regulations have been put in place to encourage both domestic and foreign tech companies to thrive in the Chinese market.

2015’s Thirteenth Five-Year Planisted energy storage as one of the top 100 national strategic projects, marking the first time it has been included.

Liberal Chinese Policy

The government is actively promotig ‘green technology’ and spending USD $400 billion per year on R&D

2015’s Thirteenth Five-Year Planisted energy storage as one of the top 100 national strategic projects, marking the first time it has been included. This coincided with the publishing of the ‘Energy Development Thirteenth Five-Year Plan’, promoting the implementation of high-efficiency, high-capacity and fully-integrated systems. This development indicates the energy storage industry’s official inclusion into the central national planning scheme.

In addition, two national policies central to the sector’s future are the Energy Technology Revolution Innovation Plan (2016-2030) and Made In China (MIC) 2025 (see CBBC’s report on MIC 2025 here). Both have reiterated the need to focus on ‘greener’ energy solutions in the form of hydroelectricity, compressed air energy storage and Li-Ion batteries to name a few. Hydro-power has been the biggest contributor to China’s operational energy storage capacity, although it is electrochemical energy storage, and in particular Li-Ion batteries that have seen the biggest growth in 2016.

Opportunities for British enterprises

The message broadcast to the world through MIC 2025 and Xi Jinping’s ‘China Dream’ is that China is transitioning away from the shanzhaiism or ‘borrowing’ culture it has followed since ‘opening up’, and is ready to establish itself as the principal innovator on the world stage. However, while there is no doubt that China has the scale and resources to make this leap, it lacks the services and market mechanisms present in the UK needed to fulfil its potential. And it is in this that a clear opportunity for British companies to aid China’s technological and innovative development is to be found.

Chinese enterprises have a relative lack of experience in areas such as network installation and management, and, echoing Mr Clark’s call for progress in the UK, the Chinese government has highlighted the need for effective and efficient ‘smart’ energy storage systems. It should be expected that opportunities for cooperation in this area will arise both in the UK and China.

China will focus on operational energy storage capacity using electrochemical energy storage and Li-Ion batteries

Furthermore, in line with government plans to modernise the country, a number of innovation centres have already been established with more planned both domestically and abroad. Catering for both Chinese and foreign enterprises, these centres hope to stimulate increased cooperation, chances to exchange ideas, and possible investment opportunities.

Shenzhen, China’s answer to Silicon Valley and home to some of the country’s biggest tech giants, has emerged as a hotbed for innovation, developing a number of these centres as incubators and technology parks in order to establish a network of ambitious companies with access to world-class facilities, in exchange for affordable membership and rental fees.

The strong local supply chain for advanced energy storage systems, in addition to the city’s free-trade zone, marks it out as a prime destination for British companies wishing to enter the Chinese energy storage market.

Finally, new energy solutions related to battery life, efficiency and charging capabilities are additional areas in which British companies wishing to enter the market should find success as they address China’s growing energy capacity concerns.

China’s policy focus on ‘green technology’ especially applies to the recycling and reuse of batteries. The aforementioned Li-Ion batteries, key to the future of many markets, retain 80 percent charge even after they are deemed too worn out for usage in electronic vehicles (EVs) and may be used to prop up grids relying on unstable energy sources such as wind and solar power. British companies that provide battery recycling solutions will not only find liberalising regulations in China, but high demand for this kind of technology.

Multi-sector application is also highly attractive to Chinese investors due to the liberal policies now in place in both the electronic vehicle and smart city technology markets. However, companies wishing to enter the Chinese market via a joint venture should ensure that their intellectual property interests are first secure.

All across China efforts are being made either in the form of policy changes or government targets to help the country adopt cleaner and new energy solutions in the coming years. Factor in a national operational energy storage capacity that is experiencing a year-on-year growth of five percent, reaching 24.4 Gwh in 2016, enterprises providing clean and efficient energy storage solutions are needed more than ever. Britain could be the country that provides them.

CBBC continues to monitor trends and developments in the energy storage industry and will update members of the latest information available.

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