One month after the suspension of 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 regarding the deepening of market-oriented reforms for renewable energy pricing, aimed at promoting high-quality development of renewable energy. This document (referred to as “Document No. 136”) clearly stated that “the configuration of energy storage should not be a prerequisite for the approval, grid connection, and online access of new renewable energy projects.” The announcement of this policy sparked significant concern within the energy storage industry about a potential decline in storage demand.
However, more than a month since the release of the policy, Hua Xia Energy Network and Hua Xia Storage (WeChat ID: hxcn3060) have observed a markedly different situation. Local governments have been actively introducing policies to encourage energy storage configuration, and projects integrating generation, grid, load, and storage have gained increased attention. Additionally, the demand for energy storage in distributed photovoltaic systems is on the rise. Overall, the energy storage industry is rapidly transitioning from a policy-driven model to a market-driven one, entering a new phase characterized by substantial growth following some initial adjustments.
Local willingness to invest in energy storage has increased rather than decreased
In the wake of the halt to mandatory energy storage requirements, provinces such as Yunnan and Guizhou quickly rolled out new energy storage policies. Just one day after Document No. 136 was released, the Guizhou Provincial Energy Administration issued the Guizhou Province Wind and Solar Energy Project Management Measures (Draft for Comments). This document stated that projects included in the annual construction plan for wind and solar energy in the province must ensure grid connectivity and must configure energy storage equal to at least 10% of the project’s installed capacity (fulfilling a two-hour operational requirement). Furthermore, any projects not completed within the stipulated timeline of over a year will not be allowed to connect to the grid.
Additionally, the document encourages the orderly planning of new energy storage projects based on local renewable energy development, power load levels, and grid demands. Projects in areas with grid restrictions should be launched simultaneously with renewable energy projects. It also encourages project investors to voluntarily increase the proportion of energy storage configuration and purchase energy storage services for wind and solar power projects.
In early March, the Yunnan Provincial Energy Bureau released the Yunnan Province Management Measures for Energy Storage Project Construction and Operation (Draft for Comments), stating that 175 projects are part of the first batch of renewable energy projects to be developed in Yunnan by 2025, with an installed capacity of 14.48905 million kilowatts. These projects are also required to configure energy storage resources equal to 10% of the installed capacity, which can be achieved through purchasing shared energy storage services.
Within less than a month of the release of Document No. 136, two provinces have issued policies encouraging energy storage configuration for renewable energy. The industry is watching to see if other provinces will follow suit. The central government halted mandatory energy storage requirements to allow the energy storage sector to return to its market essence, enabling genuine demand to dictate the market. However, for local governments, energy storage remains a crucial tool for enhancing the consumption of renewable energy and ensuring energy security. By implementing more flexible energy storage policies, local governments are attempting to strike a new balance between policy guidance and market-driven approaches.
It is noteworthy that previous energy storage requirements largely applied to centralized renewable energy projects. Now, policies encouraging energy storage for distributed renewable generation projects are gradually increasing. On the same day as the release of the Guizhou Wind and Solar Energy Project Management Measures, supporting policies were also introduced, allowing county-level energy authorities to guide investment entities in voluntarily constructing or leasing distributed energy storage facilities based on local development conditions.
On March 17, the Ningxia Development and Reform Commission released the Ningxia Autonomous Region Distributed Photovoltaic Development Management Implementation Rules (Draft for Comments), which supports collaboration among localities, photovoltaic upstream and downstream developers, and financial institutions to promote diversified application scenarios integrating “photovoltaics + energy storage.”
Leveraging “Integration of Generation, Grid, Load, and Storage”
Since the announcement of Document No. 136, the concept of “Integration of Generation, Grid, Load, and Storage” has been increasingly reflected in the work documents of both central energy enterprises and local governments. For example, in March alone, Shandong issued a notification on implementing pilot measures for this integration to promote the consumption of renewable energy and assist in building a new power system. On March 7, China Energy Engineering announced its integration of the entire energy and computing industry chain through this model. By March 12, Luoyang, Henan, reported plans to implement 40 integration projects by 2025. Furthermore, the Lingbao municipal government in Henan announced plans for a project with a total investment of 1 billion yuan, aiming to launch the Baoxin Electronics and Huaxin Copper Foil integration project by the end of the year.
Integration of Generation, Grid, Load, and Storage is a new operational model that plans and operates power sources, grids, loads, and storage as a cohesive unit. This model provides multiple benefits: for local governments, it effectively reduces carbon emissions and opens new pathways for renewable energy consumption, supporting sustainable development goals; for power generation companies, it presents a new approach to adapt to the market-oriented pricing of renewable energy; and for electricity consumers, it functions similarly to a newly established renewable energy self-supply plant, significantly lowering electricity costs and enhancing market competitiveness.
Financial institutions are also eyeing the potential of integration projects. Recently, the Weifang branch of the Bank of China provided the first loan for a pilot integration project in Shandong Province. The high costs and lengthy construction timelines associated with this integration require substantial financial backing. The involvement of financial institutions alleviates funding pressures for project developers while allowing banks to optimize their credit structures and enhance their capacity to serve the real economy.
In summary, the active promotion of integration projects, which provide benefits across multiple sectors, is a natural outcome.
The fusion of photovoltaics and energy storage is unstoppable
Document No. 136 stipulates that all renewable energy projects launched after June 1, 2025, must participate in market competition. In response, Liu Yafang, a part-time professor at Zhejiang University, has noted at various forums that renewable energy companies must consider system adjustment costs and energy quality control costs to secure favorable returns in future electricity market competitions. Energy storage is set to become a strategic partner in promoting high-quality renewable energy development.
On March 23, Xiexin Energy (SZ: 002015) indicated in a research update that green power generation companies would transition from relying on subsidies to competing in the market, emphasizing the growing importance of technological innovations such as wind and solar power forecasting and energy storage integration. Given the fluctuating nature of solar energy during the day, combined with energy storage for daytime adjustment, the integration of photovoltaics and energy storage is gaining increasing attention within the industry.
During the China Jinan Solar Energy Integrated Exhibition, the first large-scale renewable energy exhibition following the release of Document No. 136, it was observed that both photovoltaic and energy storage companies showcased integrated products and solutions as their primary offerings. For instance, Sungrow Power Supply (SZ: 300274) introduced integrated solutions for “Zero Carbon Parks, Zero Carbon Homes, and Zero Carbon Industries,” covering all aspects from products to scenarios, data, and services. JA Solar (SZ: 002459) unveiled a comprehensive solar module solution suitable for extreme environments, accompanied by compatible energy storage systems. Energy storage companies also launched products tailored specifically for photovoltaic applications.
For example, Pylon Technologies (SH: 688063), a leading domestic energy storage company, launched solutions aimed at small commercial parks and low-voltage distribution areas, providing a 113 kWh air-cooled energy storage unit. For larger commercial photovoltaic applications, they introduced a 417 kWh direct current storage cabinet. Sig Energy, which is preparing for an IPO in Hong Kong, has developed commercial photovoltaic storage systems that support “real-time charging and discharging” based on fluctuations in onsite solar generation and power load.
Additionally, numerous new products targeting the electricity spot market have emerged recently from photovoltaic and energy storage companies. For instance, Greeway’s NEXA 2000 balcony integrated energy storage product includes inverter functionality and expandable storage capabilities. The NEXA 2000 features an optimized usage time function, allowing charging from the grid during low-price periods and discharging stored electricity during peak pricing, significantly lowering electricity costs.
The mutual efforts of photovoltaic and energy storage companies reflect a shared understanding that integrating energy storage is essential for photovoltaics to achieve greater revenues in the electricity spot market. This fusion opens vast new market opportunities for both industries.
