Exploring the Future of Global Lithium Batteries: An Industry Player's Perspective on the Trends and Opportunities in Energy Storage Market

As a global lithium battery industry player, I am excited to see the accelerated release of lithium mining capacity worldwide and the implementation of various plans, such as the "Lithium Mining Rebate" program by Ningde Times. As a result, the price of lithium carbonate has dropped significantly, falling below CNY 300,000 per tonne on March 20 and continuing to decline to CNY 274,000 per tonne by March 27. This trend towards reasonable lithium prices is significant for the development of the energy storage market. In this article, I will showcase five trends in energy storage development from the perspectives of the market, technology, and applications to provide reference for industry decision-making.

On March 21, China Mobile announced the shortlisted candidates for its centralized purchase of communication-use lithium iron phosphate batteries for the period 2022-2024. The average inclusive price was CNY 1.07/Wh, indicating a significant increase in the average price of energy storage batteries for communication use compared to previous years.

In the past, energy storage revenue sources were relatively single, and the construction of the domestic power market was still in its initial stages, with related policies and rules not yet fully developed. Long-term trading, spot trading, ancillary service markets, inter-provincial and intra-provincial market connection mechanisms are still immature, and the multiple value assessments and recognition of energy storage systems are still difficult.

Recently, the Guangdong Energy Bureau issued the "Implementation Plan for the Participation of New Energy Storage in the Power Market Transaction in Guangdong Province (Draft for Soliciting Opinions)." It stipulates the ways, types, and other aspects of energy storage participation on the source, grid, and load sides of the power market. Independent energy storage can participate in the power market transaction as an independent entity. Independent energy storage refers to new energy storage projects that meet the access conditions and are connected to the public power grid (including those outside the measuring gate of power generation enterprises and power users). Power-side energy storage projects can participate in power market transactions jointly with power generation enterprises as a whole. Power-side energy storage projects refer to energy storage projects that are connected to the grid at the measuring gate of power generation enterprises. User-side energy storage projects can participate in market transactions jointly with power users as a whole.

Currently, various provincial spot markets, including Guangdong, Shandong, and Shanxi, are accelerating their development, and the pace of new energy entry into the market is driving various applications. Based on millisecond-level applications such as power source-side smoothing of wind and solar output and virtual inertia support, second-level applications such as primary and secondary frequency regulation, and minute-level applications such as tracking plan output, providing climbing services, and peak shaving. The grid-side has millisecond-level applications such as dynamic reactive power and inertia, second-level applications such as primary and secondary frequency regulation, and minute-level applications such as peak shaving and black start. The demand for flexible resources such as user-side demand response, secondary frequency regulation, and power supply reliability at minute-level applications is gradually becoming prominent.

According to related statistics, more than 20 cities in China have set up energy storage subsidies to date. Different regions focus on different aspects according to their characteristics, and most have set a subsidy ceiling. Currently, the successful implementation of actual energy storage projects still depends on local power market policies and other factors.

Since July 2021, the National Development and Reform Commission and the National Energy Administration have jointly issued a document clarifying the encouragement of exploring the construction of shared energy storage. The energy departments of more than 20 regions, including Shandong, Hunan, Zhejiang, Qinghai, Henan, and Inner Mongolia, have successively introduced supporting policies, making shared energy storage an important direction.

With the development of the energy storage industry, there are five key trends that are currently being observed. These trends include the growing interest in energy storage within the market, advancements in technology, changes in application, the development of the policy environment, and the emergence of new business models.

One area of focus is the development of the energy storage market. While revenue streams have historically been limited, the creation of new policies and rules in the domestic electricity market, as well as the development of trading markets, has changed this. As a result, there has been a growing interest in the benefits of energy storage systems, including their value in assisting with renewable energy integration and balancing energy supply and demand.

Advancements in technology are also a driving force in the energy storage industry. These include improvements in battery technology, as well as the development of new materials and new production methods. As technology continues to advance, we can expect to see an even wider range of applications for energy storage, including more sophisticated methods of integrating energy into the grid.

The application of energy storage is also changing, with a growing focus on new markets and new opportunities. This includes the development of new business models, such as shared energy storage, as well as the increasing use of energy storage in the transportation sector.

Changes in the policy environment are also driving the development of the energy storage industry. Governments at both the national and regional levels are introducing new policies and regulations that are designed to promote the development of energy storage. This includes the creation of new policies that allow energy storage systems to participate in electricity markets, as well as incentives for the development of energy storage infrastructure.

Finally, new business models are emerging that are designed to capitalize on the growing demand for energy storage. These include models that focus on shared energy storage, as well as those that focus on leasing and other forms of financing.

As an industry player promoting global lithium batteries, I believe that the energy storage industry is entering a period of rapid growth. With the cost of lithium batteries continuing to fall, and with the development of new technologies and business models, we can expect to see a significant increase in the deployment of energy storage systems in the coming years.

In particular, I see shared energy storage as a key trend that will help to drive the growth of the industry. Shared energy storage models can help to make energy storage more accessible to a wider range of customers, while also providing new revenue streams for energy storage providers.

Another area of focus for the industry is the development of new policies and regulations that are designed to promote the development of energy storage. These policies can help to create a more stable and predictable market environment for energy storage providers, while also ensuring that energy storage is integrated effectively into the wider energy system.

Overall, I believe that the energy storage industry is entering a period of rapid growth and development. With the right policies and regulations in place, and with continued advancements in technology and business models, we can expect to see energy storage become an increasingly important part of the global energy system in the years to come.

The implementation of subsidy policies in Guangdong, Shandong, Shanxi and other provinces, the acceleration of the construction of provincial-level spot markets, and the promotion of the entry of new energy into the market are all driving factors for the development of the energy storage industry. As the rules of the electricity market are gradually becoming more mature, the profit model of energy storage is constantly improving.

The development of the energy storage industry can be seen from multiple perspectives, such as market trends, technology advancements, and application innovations. According to the China Mobile’s announcement on March 21, the average price of lithium iron phosphate batteries used in communication fields has increased significantly in comparison to previous years.

Previously, energy storage revenue sources were relatively simple, and the construction of the domestic power market was still in its early stages. Related policies and regulations are still not perfect, and the evaluation and recognition of the multiple value of energy storage systems is still relatively difficult.

Recently, the Guangdong Provincial Energy Bureau released the "Implementation Plan for the Participation of New Energy Storage in the Electricity Market Trading in Guangdong Province (Consultation Draft)." The plan stipulates the methods and varieties of energy storage participation in the power market on the source, grid, and load sides. Independent energy storage can participate in power market transactions as an independent entity. Independent energy storage refers to a new energy storage project that meets the access conditions and is connected to the public power grid (including grid connection outside the metering gate of power generation enterprises and power users). Energy storage projects on the power source side can participate in power market transactions jointly with power generation companies as a whole. Power source-side energy storage projects refer to energy storage projects that are connected to the grid at the metering gate of the power generation enterprise. Energy storage projects on the user side can participate in market transactions jointly with power users as a whole.

At present, various provincial-level spot markets, including Guangdong, Shandong, and Shanxi, are accelerating their development, and the entry of new energy into the market is being promoted. Based on applications such as smoothing wind power output on the power source side and providing virtual inertial support, as well as second-level applications such as primary and secondary frequency modulation, tracking planned output, providing climbing services, and peak shaving on the minute level or above, the demand for flexible resources such as demand-side response, secondary frequency modulation, and power supply reliability on the user side is gradually becoming prominent.

According to related statistics, more than 20 cities in China have set energy storage subsidies. Different regions have different focuses based on their own characteristics, with most having a subsidy ceiling for energy storage stations. From the current situation, whether actual energy storage projects can be successfully carried out still depends on local power market policies, etc.

Since the National Development and Reform Commission and the National Energy Administration issued the "Encouraging the Exploration and Construction of Shared Energy Storage" in July 2021, energy authorities in more than 20 regions including Shandong, Hunan, Zhejiang, Qinghai, Henan, and Inner Mongolia have successively introduced supporting policies, making shared energy storage an important direction for developing and constructing energy storage stations. In 2022, the number of reported shared energy storage projects in China has skyrocketed. According to incomplete statistics, ten provinces and cities including Shaanxi, Shandong, Zhejiang, Hebei, Chengdu, Anhui, Guangxi, Hunan, Qinghai, and Henan have successively announced 216 new energy storage demonstration projects with a total capacity of 22.2GW/53.8GWh. Among them, the newly added shared energy storage projects have reached 38GWh.

Additionally, the demand for energy storage is set to grow as the cost of lithium-ion batteries continues to decrease. When the cost of solar power generation and energy storage both reach 0.15 yuan/Wh, the demand for energy storage will be infinite.

China has already become a global leader in energy storage installations, and with the rationalization of upstream raw materials such as lithium carbonate, the new energy storage market will continue to develop in 2023. The China New Energy Storage Development Report 2023, released by the China Electric Power Planning and Design Institute, predicts that the demand for new energy storage in the future will mainly focus on supporting the large-scale development of new energy bases, alleviating power supply pressures, and ensuring the consumption of new energy. By the end of the 14th Five-Year Plan period (2025), China's new energy storage installed capacity is expected to exceed 50 million kilowatts, with a focus on the northern and northwestern regions.

In March 2023, the National Energy Administration issued the 25 Key Requirements for Preventing Power Production Accidents (2023 Edition), which includes nine requirements for preventing fires in electrochemical energy storage power stations. It was suggested that large and medium-sized energy storage power stations should use batteries with mature technology and high safety performance, and that the use of second-life power batteries should be carefully considered.

In February 2023, the State Administration for Market Regulation and the National Energy Administration issued the Guiding Principles for the Construction of a New Energy Storage Standard System, which proposed gradually establishing a new energy storage standard system that is adapted to China's national conditions and international standards. The report also suggested that more than 100 key new energy storage standards should be formulated or revised in 2023, with research conducted on safety standards for energy storage power stations, emergency management, and fire prevention, in order to establish a complete safety standard system as soon as possible.

Ningde Times, a leading battery manufacturer, has suggested that safety is a critical aspect that should be taken into consideration when designing, selecting, constructing, operating, and recycling energy storage systems. By adopting a safety grading evaluation system based on failure probability, similar to that used for nuclear power, the company aims to raise the safety standards of battery energy storage systems and incorporate them into major project bidding requirements, thereby promoting high-quality development of the industry.

In conclusion, the global energy storage market is undergoing rapid development, and as an industry player, I am actively promoting the growth of this market. I believe that the market will continue to grow and mature as the cost of lithium-ion batteries decreases and policies and regulations are refined. The development of new energy storage applications and the establishment of relevant standards and regulations will also play a critical role in promoting the safe and sustainable development of the industry. As an industry player, I believe that by developing innovative products and solutions, enhancing supply chain management, and building a strong brand, companies can gain a competitive edge in this rapidly growing market.