Country will account for 14% of €62bn of cumulative global energy storage capex over next five years

China’s cumulative energy storage capacity is projected to rise from 489MW in 2017 to over 12GW in 2024, according to a new report published by Wood Mackenzie.

By then China will become the largest energy storage market in Asia-Pacific, states the analyst, beating South Korea which is in top place for annual additions, according to the analyst.

By 2024, global cumulative capex investment in energy storage sector could grow to $71bn (€62bn), Wood Mackenzie found, with China accounting for just over $10bn, or 14%, of this amount.

Policy incentives have been the main drivers behind China’s rapid growth in storage deployments in 2018 with the market deploying 580MW (1.14 gigawatt hours), reaching a cumulative market size of 1.07GW last year.

Front-of-meter storage led the growth, up five-fold in terms of installed power capacity compared to 2017, according to Wood Mackenzie.

State Grid Corporation of China, a state-owned utility company, has deployed 452 megawatt hours of research grant supported front-of-meter pilot projects, which accounted for 83% of this segment’s growth in China in 2018.

Wood Mackenzie senior analyst Le Xu said: “Based on current project economics and without policy support, utilities have limited incentive to scale-up investment in front-of-meter storage as part of grid infrastructure.”

He added that this will change from 2020, when according to plans by China’s National Energy Administration, the ancillary services market will transition from a basic compensation mechanism to a market integrated with spot energy prices.

“That, along with maturity in technology and subsequent cost reduction, are key factors that will contribute to the exponential growth in the nation’s energy storage market through to 2024,” according to Wood Mackenzie.

Of storage projects deployed to participate in ancillary services in 2018, 60% were deployed as stand-alone, 14% paired with coal plants, and 19% were renewables-plus-storage.

Utilities led the renewable-plus-storage market growth, deploying 105MWh storage in the province of Qinghai to reduce curtailments.

Xu said there is no business case for solar developers to invest in utility solar-plus-storage as solar subsidies are being phased out.

He added: “Although China’s energy storage market is still in its infancy, we can expect to see continued strong growth driven by battery cost reduction, policy incentives and power market reform.