One Month After Halting Mandatory Energy Storage Requirements, the Energy Storage Market is Thriving!
On February 9, the National Development and Reform Commission and the National Energy Administration jointly issued a notice on deepening the market-oriented reform of electricity prices for new energy and promoting high-quality development in the sector. This notice (referred to as “Document 136”) clearly stated that mandatory energy storage configurations could not be a precondition for the approval, grid connection, or operation of new energy projects.
The announcement triggered significant concern within the energy storage industry about a potential decline in demand. However, more than a month later, observations by Huaxia Energy Network indicate a markedly different reality. Local governments have started to introduce policies encouraging energy storage solutions, with increased focus on integrated projects involving generation, grid, load, and storage. Demand for energy storage in distributed photovoltaic (PV) systems is also on the rise. Overall, the energy storage sector is rapidly shifting from being policy-driven to market-driven, entering a robust new phase following a brief period of adjustment.
Local Governments’ Commitment to Energy Storage is on the Rise
Following the halt of mandatory energy storage requirements, provinces like Yunnan and Guizhou quickly rolled out updated energy storage policies. On February 10, just a day after the release of Document 136, the Guizhou Provincial Energy Bureau published a draft management method for wind and solar power projects. This draft stated that projects included in the province’s annual construction plan must ensure grid connectivity and provide at least 10% of the project’s installed capacity as energy storage or purchase energy storage services to meet a minimum operational requirement of two hours. Projects not completed within one year of the scheduled timeline will be denied grid access.
The document also encourages the orderly planning of new energy storage projects based on regional development scales and grid demands, suggesting that innovative energy storage projects should coincide with new energy projects, particularly in areas with grid limitations. Additionally, it promotes voluntary increases in energy storage configurations by project investors.
In early March, the Yunnan Provincial Energy Bureau released a draft management method for energy storage project construction and operation, which includes 175 new energy projects with a total capacity of 14.48905 million kilowatts. These projects will also be required to provide 10% of installed capacity as energy storage resources, which can be achieved through purchasing shared energy storage services.
The rapid response from these provinces indicates a potential trend for others to follow, and the local governments view energy storage as a crucial tool for enhancing new energy consumption and ensuring energy security. More flexible energy storage policies are being introduced to strike a balance between policy guidance and market incentives.
Notably, previous mandates primarily targeted centralized new energy projects, but there is now a growing trend to support distributed energy generation projects with energy storage capabilities. For example, the draft implementation rules for distributed solar PV development in Guizhou allow local energy authorities to guide investors in voluntarily constructing or leasing distributed energy storage facilities.
On March 17, the Ningxia Development and Reform Commission released draft regulations that encourage local partnerships with PV developers and financial institutions to promote various application scenarios, including “PV + storage” and integrated energy solutions.
Integrated Energy Solutions Gaining Traction
Since the release of Document 136, the concept of “integrated generation, grid, load, and storage” has gained prominence in the working documents of state-owned electricity companies and local governments. For example, on March 5, Shandong issued a notice on implementing pilot projects for this integration to enhance new energy consumption. On March 7, China Energy Construction announced plans to integrate the whole energy and computing power supply chain through this approach.
On March 12, the government of Luoyang, Henan Province, mentioned plans to implement 40 integrated projects in 2025, while Lingbao City announced intentions to invest significantly in integrated projects by year-end.
The integration of generation, grid, load, and storage represents a new operational model that aligns these components into a cohesive framework, benefiting all stakeholders. For local governments, these projects can significantly reduce carbon emissions and pave the way for sustainable development. For power generation companies, it presents a fresh approach to adapt to the market-oriented reforms in electricity pricing. For consumers, it resembles establishing self-sufficient renewable energy power plants, significantly lowering electricity costs.
Financial institutions are also recognizing the potential of integrated energy projects. Recently, the Bank of China in Weihai issued the first loan for a pilot project in Shandong, supporting the high costs and long construction periods typical of these initiatives. This financial backing alleviates funding pressure on project developers while enhancing banks’ abilities to support the real economy.
The Irresistible Trend of PV and Storage Integration
Document 136 specifies that all new energy projects commencing operations after June 1, 2025, must participate in market competition. Experts, including a part-time professor from Zhejiang University, emphasize that new energy enterprises must consider system regulation and energy quality control costs to succeed in future electricity markets. Energy storage will be a critical strategic partner in this high-quality development journey.
On March 23, GCL-Poly Energy (SZ:002015) acknowledged in a recent report that green energy companies will shift from reliance on subsidies to market competition, highlighting the need for technological innovations like energy storage integration. The characteristics of solar energy, which experiences daily fluctuations, align well with energy storage, making the integration of these two sectors increasingly crucial.
During the first major renewable energy exhibition following Document 136’s release, both solar and energy storage companies showcased integrated solutions. For example, Sungrow Power Supply (SZ:300274) introduced solutions for various applications including “zero-carbon parks” and large industrial sites, utilizing comprehensive technologies to cover all aspects of product and service delivery. JA Solar (SZ:002459) unveiled a full-scenario PV component solution adaptable to extreme environments, coupled with dedicated storage systems.
Energy storage firms have also launched products tailored to the needs of photovoltaic applications. For instance, Pylontech (SH:688063), a leader in residential energy storage, developed products specifically for PV needs in small commercial zones and industrial parks.
Moreover, recent products targeting the electricity spot market, like the NEXA 2000 from Goodwe, integrate inverter and expandable storage functions, optimizing usage to reduce electricity costs effectively.
The mutual engagement between solar and energy storage companies highlights the necessity of energy storage for maximizing profits in electricity spot markets, opening up significant opportunities for both sectors.
