BEIJING (Reuters) - China is expected to raise its power storage capacity by ten-fold to 14.5 gigawatts by 2020, as the world’s second-biggest economy tries to cut massive waste from renewable energy projects, an industry association said.

People walk past the solar panels at a wind and solar energy storage and transmission power station of State Grid Corporation of China, in Zhangjiakou of Hebei province, China, in this March 18, 2016 file picture. REUTERS/Jason Lee/Files

China is the world largest wind and solar power producer, but some regions are estimated to be losing more than 40 percent of their power because of technical restraints and bottlenecks in the grid, alongside weak power demand growth.

Storage technologies, such as pumped storage hydropower or lithium ion batteries, are expected to play a critical role in improving the China’s capacity to make better use of renewables.

International companies involved in providing storage technology to China include ABB and TUV Rheinland, while domestic players include Soaring Electric, Sifang Automation and joint ventures such as Sungrow-Samsung SDI Energy Storage Power Supply company.

China currently has 105 megawatts of storage capacity after a 110 percent increase over the previous five years, but that represented just 1.7 percent of total generation capacity by 2015, according to a report released this week by the China Energy Storage Alliance, an industry body.

“We didn’t count pumped hydropower, and we project growth to rise to 14.5 GW by 2020 based on manufacturers’ orders,” said Tina Zhang, managing director of the alliance.

The government said in its latest 2016-2020 “five-year plan” that it would seek breakthroughs in the commercialisation of energy storage, but it did not set a target.

“China is heading an energy revolution led by the transformation to low-carbon energy and the opening up of its wholesale power market, and storage will be important to bolster the changes,” said Jiang Liping, vice president of the State Grid Energy Research Institute.

Most storage projects are not yet financially viable and investors want more government support.

Xu Honghua, president of Beijing Corona Science and Technology, which designs renewable technology, said China needed to bring in a mechanism for different prices for peak and off peak power to provide incentives to use energy from storage, and the return on investment needed to be 12 percent to support the new technology.