The recent policies announced by the National Energy Administration (NEA) present new opportunities for energy storage! On March 21, the NEA’s Comprehensive Department issued a notice regarding the implementation of the “Thousand Households and Ten Thousand Households Solar Action.” This notice emphasizes the need for a scientific layout of distributed photovoltaic (PV) systems in rural areas based on the capacity of the power grid, promoting orderly development, nearby connections, and on-site consumption.
The notice instructs energy authorities in provinces (autonomous regions and municipalities) to align with the “Thousand Households and Ten Thousand Households Solar Action” and effectively implement the relevant regulations of the “Management Measures for the Development and Construction of Distributed Photovoltaic Power Generation.” It calls for tailored regulations for the filing, construction, and grid connection processes of rural distributed PV projects and encourages local energy authorities to ensure that the implementation of this action is integrated with energy and power development planning.
Furthermore, the NEA has tasked power grid companies and relevant parties with strengthening the necessary upgrades to the power grid to enhance its capacity for accommodating distributed PV systems, ensuring the healthy and sustainable development of distributed PV in rural areas. Grid companies are also encouraged to optimize their internal processes, establish green channels, and provide “one-stop” services to enhance rural grid investment, construction, and upgrades, increasing the grid’s capacity to accept and manage distributed PV generation.
Moreover, the notice highlights the importance of leveraging market forces and respecting farmer preferences during the implementation of the “Thousand Households and Ten Thousand Households Solar Action.” It prohibits the designation of operating entities, mandatory requirements for associated industries, monopolistic practices, and violations of farmers’ rights, all to foster a healthy and orderly development of distributed PV.
As part of the initiative, the NEA will collaborate with local energy authorities and power grid companies to monitor the implementation of the “Thousand Households and Ten Thousand Households Solar Action,” promptly addressing complaints and safeguarding the rights of all parties involved. Additionally, there is a strong emphasis on the operational and maintenance aspects of rural distributed PV projects, encouraging the establishment of multi-level energy service stations in villages and towns, providing specialized services for household PV systems.
The core of the policy emphasizes the capacity of the power grid to accept and manage energy, promoting nearby development. The NEA’s “Management Measures for the Development and Construction of Distributed Photovoltaic Power Generation” and the “Thousand Households and Ten Thousand Households Solar Action” both highlight the principles of scientific layout, nearby connection, and on-site consumption for rural distributed PV installations, while requiring grid companies to strengthen upgrades to enhance their acceptance capabilities.
For example, the grid adaptation upgrades mandate that grid companies optimize their work processes and build green channels, thereby enhancing rural grid investments and upgrades to improve the management and coordination capabilities for distributed PV generation. To mitigate acceptance challenges, particularly in rural areas with high concentrations of distributed PV (such as in the central and eastern regions), the policy encourages exploration of interactive models involving generation, grid, load, and storage. In the western regions, planning should be aligned with the capacity of the power grid.
While the policy does not explicitly mandate energy storage, it lays the groundwork for future storage solutions by reinforcing the synergy between the grid and PV projects. Enhancements to the grid’s observability, measurability, controllability, and flexibility requirements will position energy storage as a potential option for optimization and regulation.
Currently, rural PV generation faces two critical challenges: insufficient grid acceptance leads to risks of power reversal during peak generation times, and transformer capacity limits can result in overloads when multiple households are connected. Energy storage can effectively address both of these bottlenecks.
Potential pathways for indirectly promoting energy storage through the new policy include:
- Participation in the electricity spot market: The new policy allows large commercial and industrial distributed PV systems in continuous operation areas to adopt a “self-consumption surplus electricity fed into the grid” model, requiring fair sharing of transmission and distribution costs between generators and consumers. This mechanism enables energy storage to enhance project economics through arbitraging price differences between peak and off-peak periods, thereby potentially becoming a necessary complement for market operations.
- Classification management and technical thresholds for distributed PV: The management measures categorize distributed PV into four types, imposing higher technical requirements on large commercial and industrial projects. As project scales increase, the grid’s need for managing variable power sources grows, which may result in energy storage being incorporated into technical standards or local implementation guidelines to ensure grid safety.
- Sustainability requirements for rural distributed PV: The “Thousand Households and Ten Thousand Households Solar Action” calls for rural projects to align with energy and power planning, preventing disorderly development. In areas facing challenges with power acceptance, local governments may guide investors to proactively incorporate energy storage through flexible policies such as “encouraging storage” or “priority grid connection” in exchange for incentives.
The industry faces several challenges, including cost pressures and balancing revenue: currently, rural distributed PV has a low investment threshold, and mandatory energy storage requirements would significantly increase initial costs. If the policy is to be effectively implemented, it will require supportive pricing mechanisms (such as time-of-use tariffs) or financial subsidies to encourage farmer participation.
Additionally, there are issues related to technical compatibility, as the foundational infrastructure of rural grids poses challenges to the safety and operational complexity of energy storage systems for small projects. It is essential to promote standardized solutions and third-party service models. Furthermore, regional policy disparities may arise as provincial energy authorities are empowered to formulate guidelines, potentially leading to inconsistent storage requirements across different areas and complicating cross-regional development efforts for enterprises.
Looking ahead, although there is currently no mandatory energy storage requirement, the NEA’s push for the “14th Five-Year Plan” on renewable energy and the new power system’s demand for flexible adjustment resources indicates that future energy storage policies may be deepened through the following approaches:
- Pilot programs: Implementing “integrated solar and storage” demonstration projects in areas with high penetration of distributed PV (such as Zhejiang and Shandong) to explore technological and economic models.
- Market incentives: Encouraging the coordinated development of user-side storage and PV through mechanisms such as green certificate trading and ancillary service compensation.
- Standardization: Incorporating energy storage into the technical specifications for grid connection of distributed PV, defining configuration ratios and performance requirements.
In conclusion, the new policy leans toward guiding energy storage integration through grid upgrades and market mechanisms rather than enforcing mandatory storage requirements. The large-scale development of energy storage for rural distributed PV will depend on decreasing technology costs, policy coordination, and innovative business models. Given the current nationwide resources of 30,000 household PV stations and millions of rural rooftop opportunities, the NEA’s new policy will undoubtedly create substantial market growth for the energy storage industry in the coming years, signaling a transformative wave in rural energy dynamics. Investors should focus on local grid capacity assessments and electricity market reform trends to strategically position themselves in anticipation of evolving policies.
