In the context of rapidly advancing new power systems, China’s energy storage sector is shifting focus from scale expansion to prioritizing quality and efficiency during the 14th Five-Year Plan period. Under the guidance of the “dual carbon” goals, the new energy storage industry in China has experienced explosive growth, becoming a key support for the ongoing construction of new power systems.
According to incomplete statistics from the Energy Storage Application Branch of the China Chemical and Physical Power Industry Association, it is projected that in 2024, China’s new energy storage will add an installed capacity of 42.46 GW/109.58 GWh, marking year-on-year increases of 99.17% in power and 129.56% in capacity. This will be the first time that new energy storage surpasses pumped storage to become the second-largest flexible adjustment resource within the power system.
Industry experts attribute this achievement to a combination of policy-driven initiatives, technological innovation, and global strategic layouts. This reflects the transformation of China’s energy storage industry from “wild growth” to “rational prosperity.” As the construction of new power systems accelerates, the focus during the 14th Five-Year Plan period will shift towards prioritizing the quality and efficiency of energy storage.
The top-level design has clarified the strategic position of new energy storage as a vital support for China’s energy transition. In 2024, the Energy Law of the People’s Republic of China will officially incorporate new energy storage into the legal framework, establishing its legal status as a “key adjustment resource” within the power system. The National Development and Reform Commission’s development implementation plan for new energy storage during the 14th Five-Year Plan initially set a target of 30 GW for installed capacity by 2025, but the actual completion rate has exceeded 248%, reaching a cumulative installed capacity of 74.66 GW, far surpassing expectations.
The “Action Plan for Accelerating the Construction of New Power Systems,” released in 2024, explicitly encourages the participation of energy storage in electricity market transactions. The central government has allocated 20 billion yuan in special funds to support energy storage technology research, leveraging over 500 billion yuan in social investment to provide robust financial backing for the research and implementation of energy storage projects.
Wang Zesheng, Secretary-General of the China Chemical and Physical Power Industry Association, stated that driven by strong policy incentives, last year China achieved remarkable accomplishments in the energy storage field: new installed capacity accounted for over 60% of the global increase, total industry investment exceeded 1.2 trillion yuan, and the annual output growth rate reached 65%. Additionally, China’s share of the global lithium battery market has climbed to 93.3%.
Liu Jian, Deputy Director of the System Center at the Energy Research Institute of the Chinese Academy of Macroeconomic Research, highlighted that during the 14th Five-Year Plan period, the new energy storage market still has significant growth potential. If the growth rate remains above 40 GW for the next six years, the cumulative installed capacity will exceed 300 GW, significantly surpassing previous expectations.
In the future power system, the proportion of new energy in installed capacity and electricity generation will inevitably surpass that of traditional energy sources. To achieve this goal, it is essential to ensure that the grid-side characteristics of new energy power plants can match those of traditional energy sources. Fu Jinjian, General Manager of Guangzhou Zhiguang Energy Storage Technology Co., Ltd., explained that the intermittent, random, and volatile nature of new energy generation makes the demand for energy storage indispensable. Despite potential fluctuations during the development of the energy storage industry, the overall trend indicates a very promising future for energy storage.
Experts believe that by 2025, the policy direction for the new energy storage industry will shift from “building” to a more specific “utilization” focus. Local governments will continue to enhance measures to promote grid connection and operational dispatch, establishing a sound market trading and pricing mechanism to ensure the efficient and reasonable use of new energy storage, while fully expanding its revenue capabilities.
The application scenarios for energy storage technology are continually deepening. According to Shuyin Biao, an academician of the Chinese Academy of Engineering and Chairman of the China Electrical Engineering Society, the rapid evolution and development of new power systems primarily reflect the transformation of China’s energy system. By the end of last year, China’s power system had an installed capacity of 3.35 billion kW, with renewable energy sources accounting for over 55%. New energy installations have consistently led the world for several years, with investment levels accounting for one-third of global totals and utilization rates maintained above 95%, indicating significant advancements in the efficiency of new energy consumption.
In the past decade, China has achieved notable energy-saving and carbon reduction results, supporting an average GDP growth of 6.7% annually with an energy consumption growth rate of 3.1%. The energy consumption per unit of GDP has decreased by 27%, carbon intensity has reduced by 34%, and carbon emissions per unit of electricity generation have declined by 22%, illustrating a clear shift towards low-carbon and clean energy usage.
As new energy storage enters a stage of large-scale development, the grid-side applications have rapidly increased. By the end of last year, the installed capacity of new energy storage in China had exceeded 70 million kW, amounting to 1.68 trillion GWh, which is 20 times the scale at the end of the 13th Five-Year Plan.
Currently, new energy storage technology plays a crucial role across various aspects of the new power system, with applications continuously expanding. On the power generation side, integrating new energy storage with renewable energy sources helps to mitigate the fluctuations of wind and solar power, enhancing their dispatchability and stability. For instance, at large wind and solar power bases, energy storage systems can store excess electricity during peak generation periods and release it during low generation times, ensuring stable output from renewable sources and improving their utilization in the power system.
Data from the China Chemical and Physical Power Industry Association indicates that in 2024, new energy storage installations on the grid side could reach as high as 13.47 GW, accounting for 35% of the total capacity and becoming a significant force in power generation side storage.
On the grid side, new energy storage serves various functions including peak shaving, frequency regulation, and voltage support. New energy storage systems can quickly respond to grid dispatch commands, releasing electricity during peak load periods and storing it during low load periods, effectively alleviating peak-to-valley differences and improving grid operational efficiency and stability. Furthermore, new energy storage can enhance the quality of voltage in the grid and bolster dynamic voltage support capabilities.
According to statistics from the China Chemical and Physical Power Industry Association, in 2024, independent shared energy storage on the grid side will add 26.32 GW of installed capacity, accounting for 59.15% of the total capacity, with total investments exceeding 93.5 billion yuan, solidifying its status as a key player in grid-side energy storage.
On the load side, the applications of new energy storage are also expanding. With the growth of distributed energy and microgrids, the demand for storage solutions at the user level is increasing. Users can optimize the use of distributed energy by configuring energy storage systems, reducing electricity costs and enhancing supply reliability. For example, in some industrial parks and commercial users, installing energy storage devices alongside distributed photovoltaic systems allows users to charge storage devices with solar energy during the day and discharge it during nighttime or peak periods, achieving self-consumption and enhancing energy efficiency.
The potential of energy storage remains largely untapped, and its roles in the electricity market and grid security have significant room for improvement. Experts believe that the new energy storage sector is transitioning from being “policy-driven” to “market-driven.” The National Energy Administration predicts that cumulative installed capacity of new energy storage will exceed 100 GW by 2025 and reach 300 GW by 2030, becoming a core support for power system balance and security.
To continuously enhance the development level of China’s new energy storage technology industry, experts recommend strengthening planning guidance. It will be essential to leverage the advantages of electrochemical and physical energy storage, achieving complementarity while adapting storage resource layouts to local conditions. A comprehensive, structure-optimized, and cost-effective energy storage system should be constructed. Additionally, it is crucial to enhance the synergy and coordination between energy storage and the development plans of distribution networks, renewable energy, and electric vehicles.
Furthermore, it is important to improve operational mechanisms to address the low utilization rates of new energy storage, which averaged just 11.4% in 2024. Experts suggest developing collaborative utilization models such as new energy plus storage, aggregated storage, and integrated photovoltaic-storage charging to enhance coordination with the grid and accelerate the development of shared storage, thereby expanding diversified applications on the user side.
Liu Jian recommends incorporating new energy storage into overall energy planning, recognizing its role not only as a peak resource but also considering its valley-filling and other flexibility resources. There should be a detailed analysis of the functional positioning of new energy storage, exploring its connections with load-side demand response and virtual power plants, while considering changes in storage forms and potential future collaborations with independent storage and other resources.
Finally, on an operational level, accelerating the improvement of pricing and market mechanisms will be essential to ensure a smooth transition for the new energy storage industry during its market-driven transformation, promoting high returns and quality development in energy storage operations. Industry experts emphasize the need for ongoing improvements in energy storage market mechanisms, such as implementing peak electricity pricing, reasonably widening peak-to-valley pricing differentials, expanding the price range in the spot market, and enhancing compensation levels for ancillary services. With continued advancements in energy storage technology and the refinement of market mechanisms, energy storage will play an increasingly significant role in the new power system, becoming a cornerstone and a core force within it.
