In the context of accelerating the construction of a new power system, during the 14th Five-Year Plan period, China will shift its energy storage focus from scale expansion to prioritizing quality and efficiency. Driven by the dual carbon goals, China’s new energy storage industry is experiencing explosive growth. The construction of the new power system is well underway, with energy storage technology serving as a key support, leveraging its unique advantages and rapid development to assist in the steady progress of the new power system.
According to incomplete statistics from the Energy Storage Application Branch of the China Chemical and Physical Power Industry Association, in 2024, China’s new energy storage installed capacity is expected to reach 42.46 GW/ 109.58 GWh, marking a year-on-year increase of 99.17% (in power) and 129.56% (in capacity). This will surpass pumped storage for the first time, making it the second-largest flexible adjustment resource in the power system. Industry insiders believe that this achievement reflects a synergy of policy drivers, technological innovation, and global strategies, encapsulating the transformation of China’s energy storage industry from “wild growth” to “rational prosperity.”
The top-level design has clarified the strategic position of new energy storage as a crucial support for China’s energy transition. In 2024, the Energy Law of the People’s Republic of China will formally incorporate new energy storage into the legal framework, establishing its statutory status as a “key adjustment resource” within the power system. The National Development and Reform Commission’s development plan for new energy storage during the 14th Five-Year Plan originally set a target of 30 GW for installed capacity by 2025, but the actual completion rate has exceeded 248%, with cumulative installed capacity reaching 74.66 GW, far exceeding expectations. The Action Plan for Accelerating the Construction of a New Power System, released in 2024, explicitly proposes promoting energy storage participation 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 technological research and project implementation in the energy storage industry. Wang Zesheng, Secretary-General of the China Chemical and Physical Power Industry Association, stated that the policy toolbox has been further enriched. The Ministry of Industry and Information Technology and the National Energy Administration, along with eight other departments, jointly released the Action Plan for High-Quality Development of the New Energy Storage Manufacturing Industry, aiming for high-end, intelligent, and green development of the industry by 2027. This marks the first implementation of pilot demonstration projects for new energy storage by the National Energy Administration, with 32 projects receiving funding support.
Wang noted that, driven by strong policy incentives, China achieved remarkable results in the energy storage field last year: Firstly, the newly installed energy storage capacity accounted for over 60% of the global increment; secondly, total industry investment exceeded 1.2 trillion yuan; and thirdly, the annual output growth rate reached 65%. Additionally, China’s lithium battery market share surged to 93.3% globally. Liu Jian, Deputy Director of the Systems Center at the Energy Research Institute of the Chinese Academy of Macroeconomic Research, pointed out that there remains significant growth potential in the new energy storage market during the 14th Five-Year Plan period. If the current growth rate of over 40 GW per year continues for the next six years, the total installed capacity could exceed 300 GW, far surpassing expectations.
Looking ahead, the proportion of new energy in installed capacity and electricity generation will inevitably surpass traditional energy sources. To achieve this goal, we must ensure that the grid-side characteristics of new energy power stations can match those of traditional energy sources. Fu Jinjian, General Manager of Guangzhou Zhiguang Energy Storage Technology Co., Ltd., stated that the intermittent, random, and fluctuating characteristics of new energy generation make the future demand for energy storage indispensable. Despite potential fluctuations in the development of the energy storage industry, the overall trend suggests a bright future for its advancement. We have conducted extensive on-site empirical tests, successfully achieving black start capabilities for new energy stations, stable operation under islanding conditions, and coordinated control to stabilize multi-machine oscillations, thereby helping new energy sources become the main power supply in the new power system.
Industry experts predict that by 2025, the policy orientation of the new energy storage industry will shift from “construction” to a more specific focus on “utilization.” Efforts to strengthen grid integration and operational adjustments will continue, establishing robust market trading and pricing mechanisms to ensure reasonable and efficient use of new energy storage, thereby expanding its revenue-generating capacity.
Academician Shu Yinbiao of the Chinese Academy of Engineering and President of the China Electrotechnical Society stated at the 15th International Energy Storage Conference that the rapid evolution and development of the new power system are primarily reflected in 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 accounting for over 55%. The continuous lead in new energy installation, which represents one-third of global investment, along with a utilization rate exceeding 95%, showcases China’s technological progress in new energy consumption and efficiency.
Over the past decade, China has supported an average GDP growth of 6.7% per year with an average energy consumption growth of 3.1%, achieving significant energy-saving and carbon reduction results. Energy consumption per unit of GDP has dropped by 27%, carbon emission intensity has decreased by 34%, and carbon emissions per unit of electricity generation have fallen by 22%, indicating that China is progressing toward a low-carbon and clean energy direction. “In this process, new energy storage has become an important force and has recently entered a phase of large-scale development,” Shu said. By the end of last year, the grid-connected capacity of new energy storage exceeded 70 million kW and 1.68 trillion GWh, a figure 20 times larger than at the end of the 13th Five-Year Plan.
Today, new energy storage technology plays a crucial role on both the generation and grid sides of the new power system, with deepening application scenarios. On the generation side, new energy storage combined with renewable energy effectively mitigates the fluctuations in wind and solar power generation, enhancing the dispatchability and stability of new energy sources. For instance, at large wind and solar power bases, configuring energy storage systems can store excess electricity during peak generation periods and release it during low generation periods, achieving load shifting and ensuring stable output from new energy sources. Data from the Energy Storage Application Branch of the China Chemical and Physical Power Industry Association indicates that in 2024, new energy storage on the grid side is projected to add 13.47 GW of installed capacity, accounting for 35% of the total, becoming a significant force in energy storage on the generation side.
On the grid side, new energy storage performs various functions such as peak shaving, frequency modulation, and voltage regulation. New energy storage systems can quickly respond to grid dispatch commands, releasing energy during peak load periods and storing energy during low load periods, effectively alleviating the peak-to-valley difference in the grid, improving operational efficiency and stability. Additionally, new energy storage can enhance the voltage quality of the grid and strengthen its dynamic voltage support capabilities. According to statistics from the Energy Storage Application Branch, in 2024, independent shared energy storage on the grid side is expected to add 26.32 GW of installed capacity, accounting for 59.15%, with total investment exceeding 93.5 billion yuan, making it the mainstay of energy storage on the grid side. Jiangsu province leads the nation with a 52% share in new installations on the grid and customer sides, showcasing the broad application prospects for grid-side energy storage.
On the load side, the application of new energy storage is also expanding. As distributed energy and microgrids develop, the demand for storage on the user side 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 in conjunction with distributed solar power systems allows users to charge storage equipment during the day using solar energy and discharge during the night or peak electricity periods, achieving self-consumption and reducing reliance on the main grid, thereby improving energy utilization efficiency.
However, the potential of energy storage has not yet been fully realized, and its role in the electricity market and grid security has significant room for enhancement. Industry insiders believe that new energy storage is transitioning from being “policy-driven” to “market-driven.” The National Energy Administration predicts that by 2025, cumulative installed energy storage will exceed 100 GW, reaching 300 GW by 2030, becoming a core support for balancing and securing the power system.
To continuously enhance the development level of China’s new energy storage technology industry, experts suggest several measures. First, strengthen the role of planning. It is essential to leverage both electrochemical and physical storage advantages to achieve complementary strengths and localized resource deployment. A storage system characterized by ample total capacity, reasonable structure, and optimal costs should be established. Moreover, coordination between storage and the development plans of distribution networks, renewable energy, and electric vehicles should be reinforced. The government should lead grid enterprises in adjusting demand, grid structure, and load characteristics based on the characteristics of renewable resources, forecast storage configuration needs, and periodically release this information to the public through market-oriented measures to guide investment from various stakeholders.
Second, improve operational mechanisms. Addressing the low utilization rate of new energy storage, which was only 11.4% on average in 2024, experts advise developing integrated models such as new energy plus storage, aggregated storage, and solar-storage-charging integration to enhance coordination with the grid and accelerate the development of shared storage while diversifying user-side applications. Liu Jian suggests incorporating new energy storage into overall energy planning, considering not only its peak resource status but also its valley-filling and other flexibility roles, forming a more diverse planning dimension. Additionally, it is crucial to analyze and clarify the functional positioning of new energy storage, exploring its intrinsic connections with load-side demand response and virtual power plants, while considering changes in storage forms.
Lastly, on the operational level, it is vital to accelerate the improvement of pricing and market mechanisms to ensure a smooth transition for the new energy storage industry during the marketization process, promoting high-yield and high-quality development of energy storage operations. Industry insiders call for a continuous refinement of the energy storage market mechanism through measures such as implementing peak electricity pricing, reasonably expanding the peak-valley price difference, broadening the price range in the spot market, and enhancing compensation levels for ancillary services to increase the profit margins for energy storage. With the ongoing development of storage technology and the continuous improvement of market mechanisms, energy storage will play an increasingly important role in the new power system, becoming the cornerstone and core force of this system.
