Why does energy storage exist? What is the value of energy storage in the power grid? When energy storage creates value, how to calculate the income? What are the business models and costs of energy storage that can be used for reference?

On the scene of the 2018 international energy storage summit, with a series of questions from senior experts from the Institute of electrical engineering and new materials of the Chinese Academy of Electric Power Sciences, experts, scholars and entrepreneurs from the energy storage industry spoke one after another, and the atmosphere reached the peak.

Thoughts from power grid companies

As the two largest energy service enterprises in China, State Grid and China Southern Power Grid have done a lot of work in energy layout. On the above questions, representatives from the two enterprises gave their own answers.

Peng Xiaofeng, deputy director of the marketing center of the State Grid Electric Vehicle Service Co., Ltd., said that the development of the energy storage industry cannot completely rely on state subsidies. “The development of all projects in the energy storage industry depends on technology and policy, but the subsidy policy can not be used as the basis for the future development of the energy storage industry.” Peng Xiaofeng stressed that the development of the energy storage industry must rely on market-oriented operation, produce aggregation effect and form a business model, which is the future development direction of the energy storage industry.

In this regard, Zhao Wei, director of the energy storage technology research institute of Guangdong electric power grid academy, agreed. He introduced that in terms of energy storage application, China Southern Power Grid focused on exploring the application of energy storage in the field of power distribution.

“China Southern Power Grid attaches great importance to the energy storage industry. In September 2016, an energy storage research team was specially established.” Zhao Wei said that the energy storage Institute of Guangdong Power Grid Electric Power Research Institute where he works usually mainly provides technical support for the application of energy storage technology.

“The development of Guangdong power grid is very uneven. The problem of low voltage of distribution transformer in some areas is prominent, and the problem of user complaints is very serious. It is too late to expand and upgrade the temporary transformation line. Therefore, we discuss using energy storage to solve the problem.” He pointed out that this year, China Southern Power Grid will establish a pilot project to solve the problem of low voltage with energy storage in Zhanjiang and other places. According to the preliminary calculation, the cost will be more than twice that of expanding and upgrading transformers and lines. In addition, energy storage will be used to solve problems such as voltage rise.

Zhao Wei revealed that the simulation system of Guangdong power grid peak shaving and frequency modulation spot market bidding market has been debugged and operated for several months, and will be put into operation this year. The user side, including the power demand side response mechanism, is also under synchronous construction, which will play a positive role in promoting the development of the energy storage market.

There is huge space for the future development of energy storage

“Whether on the Internet side of large-scale application of new energy or on the user side with more distributed, there is indeed a demand for energy storage at the technical level.” According to Wang Jixue, deputy director of new energy of hydropower and water resources planning and Design Institute, at present, a large part of the market application of energy storage is concentrated in the power market and FM auxiliary service market.

He said that China’s energy storage market is very different from foreign countries in the following aspects. First of all, Wang Jixue said, “what we are talking about now is more about the power storage market. For many years, Chinese enterprises participating in the construction of the power market have been arranged through planning, that is to say, the number of thermal power, hydropower and pumped storage is not determined by the comparison of boundary costs, which is different from foreign markets such as Europe.”

Secondly, our business model is also based on policy and market. “The market price and value of energy storage is not the value brought by the services provided by energy storage itself, but the reaction in the pricing market.”

According to public data, China’s absolute power generation in 2017 was 6275.8 billion kwh. Among them, the national thermal power generation capacity is 4611.5 billion kwh, the hydropower generation capacity is 1081.9 billion kwh, the nuclear power generation capacity is 248.1 billion kwh, and the wind power and solar power generation capacity are 269.5 billion kWh and 64.8 billion kwh respectively.

“We are thinking when promoting new demonstration projects. For example, solar thermal power generation itself carries energy storage, but how to integrate it into the existing mechanism? China’s existing power installation is already high-level. In the process of structural adjustment of high-level installation, how to find the real development space of energy storage?”

“In March, during the bidding process of solar photovoltaic projects, some enterprises have quoted a price of 0.32 yuan per kWh. I believe that with the rapid decline of photovoltaic and wind power prices, it will create greater opportunities for energy storage.”

Finally, Wang Jixue stressed that in the future energy structure, new energy will be the main body of energy increment, and energy storage will be an important cornerstone for the formation of energy Internet in the future. “In the next three years, the price of new energy will drop significantly. Under the system of new technology and mode and new energy revolution, energy storage will face greater opportunities.”

Energy storage affects the operation mode of power system in the future

“When we talk about energy storage, the most direct effect or value we can see is to solve the problem of abandoning wind and light.” In this regard, Jiang Liping, vice president of State Grid Energy Research Institute, is more concerned about many unexpected changes that may be brought about after the popularization and application of energy storage technology.

She said that from the perspective of the traditional power system, the role of various subjects of power generation and consumption is very clear. Although energy storage itself is not a power generation resource to produce electricity, nor a pure energy consumption unit, Jiang Liping believes that “from the role of system operation, it is not only a power generation technology, but also a technology that consumes energy. It cannot be positioned with the identity of traditional power system.”

Moreover, the technical performance of energy storage is continuously improving and the cost is continuously decreasing. Its possible application scenarios can penetrate into all links of power generation, transmission and distribution. “After energy storage is widely used in the power system, the possible impact and changes on the system will not only play a role in auxiliary services and reducing abandoned wind, but also have the greatest impact on the operation mode of the power system in the future, including operation management mode and business mode, that is, the impact on the ecosystem.” Jiang Liping said that the development of new energy must be accompanied by energy storage technology.

In the future, how can we reflect the value of energy storage?

Jiang Liping also gave her own answer to this question. “We do not need to introduce special policies for energy storage, but to establish a new ecological system that can reflect the technical value of various subjects. With such a system, energy storage must have its living space, and it must be a very good living space.”

It can be seen that within the framework of the technology and operation management rules of the existing system, the value of providing electric energy and electric power are not measured separately. “The power supply in the traditional power system is controllable and schedulable. The traditional power station provides these two services at the same time.” Jiang Liping said that for wind and solar photovoltaic power generation, its advantage is to provide clean and zero marginal cost electric energy, but the function of flexible and controllable output can only be completed by other technologies such as energy storage. Therefore, Jiang Liping believes that “as long as our power market system or management rules can truly reflect the commodity attributes and form a reasonable power product segment market, the value space of energy storage will be very huge.”

Actively promote the implementation of energy storage technology

Qi Zhixin, director of the science and Technology Equipment Department of the national energy administration, who is responsible for organizing the drafting of the guiding opinions on promoting the development of energy storage industry (hereinafter referred to as the Guiding Opinions), sincerely regrets that the guiding opinions jointly issued by the five departments have not come easily. In his opinion, the functions of the guiding opinions are mainly “four clarifications”:

1、 The policy orientation of encouraging and supporting the development of energy storage is clarified. The guiding opinions fully affirmed the significance of energy storage, judged that energy storage has the foundation of industrialization, and clearly encouraged the acceleration of energy storage technology and industrial development. A package of relevant policies will include energy storage. At the same time, it also puts forward some policy directions to be further studied and improved.

2、 The main identity of energy storage is clarified. In the form of government documents, the guidance defines the subject identity of energy storage and supports energy storage access, which is equivalent to issuing a “temporary ID card” to energy storage.

3、 The investment management mechanism of energy storage is clarified. The guiding opinions implement and deepen the reform spirit of “release, management and service”, and make it clear that independent energy storage projects implement the filing system in principle and do not approve. The energy storage investment will be facilitated to the greatest extent through “release, management and service” to stimulate the vitality of the market.

4、 The task of energy storage demonstration is clarified. Focusing on innovation and development, the pilot demonstration proposed five tasks, which generally defined the development direction of energy storage.

“As for the next step, I feel that the task is heavy and the responsibility is great.” Qi Zhixin said that in the next step, from the height of paying close attention to the implementation of the energy revolution and promoting the green development of energy, we should make efforts from four aspects to promote the development of energy storage: first, improve policies, systems and mechanisms. Promote the implementation of the guiding opinions and strive to build a fair policy environment for the energy storage industry. Second, promote the progress of energy storage technology and reduce costs. Third, organize energy storage demonstration. Fourth, improve the energy storage standard system.

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