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From "price" to "value", the energy storage industry urgently needs a market shift
The frequent energy storage fire accidents around the world have not only caused significant casualties and property losses but also triggered a deep reflection on the safety management and supervision of energy storage power stations.
The Electric Power Research Institute of the United States has established a relevant database through the study of multiple energy storage power station fire incidents publicly disclosed from 2018 to 2023. After classifying and comparing fire accidents with the Pacific Northwest National Laboratory (PNNL) of the US Department of Energy and Twaice of Germany, it was found that in addition to the risks of the battery cells and control systems themselves, the integration and operation of energy storage power stations are also important factors leading to accidents.
What is worrying is that in China, while the scale of energy storage installed capacity has increased significantly, technology has been diversified, capital has poured in intensively, and industrial clusters have risen. Behind the frenzy of growth, there are concerns about building but not using, and disorderly expansion of production capacity. The "price war" is full of smoke, and corporate profitability and product quality are facing double tests.
The essence of energy storage is "adjustment" rather than "storage". In the future, as a supporting industry for the new power system, energy storage will be involved in power system transactions and return to commercial applications to achieve high-quality development and give full play to the long-term value of energy storage. At present, this market shift is gradually happening.
Driven by multiple factors, the long-term value of energy storage is gradually returning
In the past year, under the influence of multiple factors such as policy support, corporate efforts, and market favour, China has become the largest wind, solar, and energy storage market in the world. According to the "Energy Storage Industry Research White Paper 2024", China's new energy storage installed capacity will increase by 21.5GW in 2023, a record high.
In contrast, under the superposition of multiple factors such as raw material price cuts, vicious competition, and technological homogeneity, the market price of energy storage systems has been declining. Liu Manping, a senior economist at the Price Monitoring Center of the National Development and Reform Commission, said: "At present, the capacity of the energy storage industry is expanding rapidly, and structural problems are prominent; some projects are "built but not used"; the actual utilization rate of energy storage built with new energy is not high; the operation model and market mechanism are not yet perfect, which has become a bottleneck restricting the development of the industry." "Involution" or "idle"? How can the energy storage industry breakthrough? The industry value logic oriented by the market and commercial application needs to be rebuilt urgently.
Energy storage itself is an important supporting system in the new power system. At present, the power systems in China and even in developed countries in Europe and the United States are undergoing a transformation, "clean and lowcarbon, safe and controllable, flexible and efficient, intelligent and friendly, open and interactive." The development direction of energy storage is closely related to multiple factors such as policy, market and technology.
From the perspective of policy, as early as 2015, the "Opinions of the CPC Central Committee and the State Council on Further Deepening the Reform of the Electricity System" (referred to as "Electricity Reform Document No. 9") proposed the goals of orderly promoting electricity price reform, rationalizing the electricity price formation mechanism, promoting the reform of the electricity trading system, and improving the market-oriented trading mechanism, which kicked off the opening of the electricity market. After the "dual carbon" goal was proposed, the National Development and Reform Commission proposed a 1+N policy system, which further established a new power system with new energy as the main body from the top level around energy storage demonstration application, standardized management, electricity price reform and diversified and intelligent application.
By 2023, the National Development and Reform Commission and the National Energy Administration issued the "Basic Rules of the Electricity Spot Market (Trial)", which implemented specific incentive plans at the power system level. It is expected that by 2025, the power market will be gradually liberalized to form an open and interactive power system. The rise of the energy storage industry is fundamentally an important supporting factor in building an open and market-oriented power system.
From the perspective of the market, the operation time of domestic energy storage systems is long and the system utilization rate is also constantly improving. The "Statistical Data on Safety Information of Electrochemical Energy Storage Power Stations in 2023" shows that in the first quarter of 2024, the average daily operating time of domestic energy storage power stations has increased from 3.12 hours to 4.16 hours, and the average utilization index has increased from 27% to 41%.
With the issuance of the "Notice on Promoting the Grid Connection and Dispatching of New Energy Storage" by the National Energy Administration, the functional positioning of new energy storage has been further clarified, and the promotion of the dispatching and utilization of new energy storage has been accelerated. Energy storage projects are no longer just an appendage to meet the "strong allocation" policy of new energy, but an asset that can bring real long-term sustainable benefits to owners
From a technical point of view, the reliability of energy storage power stations depends to a large extent on the performance of energy storage batteries. The battery system is closely related to the battery management and integration capabilities. Taking battery consistency management as an example, during the use of energy storage cells, due to production differences, ageing, temperature changes or different load conditions, the voltage and capacity between cells will be different, and this difference will increase with the increase in the number of charge and discharge cycles, thereby making the system economic benefits worse.
Therefore, more and more battery-balancing technologies are being applied to commercial and mature markets. According to a research report by Wood Mackenzie, an internationally renowned consulting firm, due to the overseas market, the power market is more open, and energy storage owners are more concerned about the economic efficiency of the project throughout its life cycle. The advantages of active balancing technology in reducing the cost of the energy storage system throughout its life cycle have been widely recognized, and its application in overseas energy storage projects has reached 74%.
Industry insiders said that driven by multiple factors, the energy storage industry is moving towards a stage of highquality development. In early 2024, policies were intensively introduced around power market transactions, which will accelerate the new changes in the development of China's power marketization and will also become an important driving force for the value transformation of the energy storage industry.
From price to value, to achieve the long-term goal of energy storage, industry manufacturers have conducted research and development and exploration from multiple dimensions, including: Energy storage battery optimization: select positive electrode, negative electrode, and diaphragm materials with better thermal stability; select a lamination process with thinner thickness and larger surface area; shorten the length of the pole ear to reduce resistance and other optimizations.
Advanced temperature control technology: From traditional air cooling solutions to liquid cooling solutions with higher heat transfer coefficients and better cooling effects, to meet the growing market demand for thermal management systems.
Digital technology operation and maintenance: Use digital technologies such as BMS, EMS, and AI to monitor the operation status of power stations, conduct visual analysis of the battery life cycle operation status, identify early signs of failure, and provide safety warning design.
Firefighting technical support: The industry's mainstream products have realized a three-layer firefighting system at the cell level, pack level, and system level to achieve a more detailed and precise firefighting effect.
Efficient battery management: The battery management system (BMS) uses advanced algorithms to monitor the voltage of each cell during discharge and evaluate the battery's state of charge (SOC), state of health (SOH), state of power (SOP), etc. Since the life of the battery pack also depends on the cell with the shortest life, when the lowest single-cell voltage reaches the discharge cut-off voltage, the entire battery pack will stop discharging. Balancing the state parameters of energy storage cells has become the only way to maximize the battery cycle life and improve the cycle efficiency of the energy storage system, especially in high-power and large-capacity application scenarios such as large storage and industrial and commercial storage.
Based on the demand for battery pack consistency optimization and improvement, energy storage BMS balancing technology emerged at the times required. Among them, there are two main methods of battery balancing in the battery management system: passive balancing and active balancing.
Passive balancing balances the battery by releasing electricity through resistance heating during the discharge process of the battery pack. This method does not require complex controllers and circuits, but the equalization speed is slow and wastes power. It also generates heat during the process, increasing the risk of thermal runaway.
Active balancing realizes the direct transfer of electric energy between cells through a DC-DC converter, which can control the voltage difference between cells in the battery pack within a certain range, significantly reducing the loss of cycle efficiency caused by imbalance. This technology usually requires the use of specialized equalization controllers and extremely demanding circuit design, ultimately achieving full-link equalization from the PACK level to the cluster level, to the system level, and even to the station level.
Compared with traditional passive balancing technology, active balancing not only avoids energy waste but also improves the overall performance of the energy storage system by redistributing energy, reducing operating costs and improving system safety.
At present, due to factors such as cost and price, according to EESA's 2023 annual data statistics, domestic energy storage projects are almost all passive balancing projects (98.4%). In overseas markets, about 70% of projects use "active balancing". Taking the Texas TX10 project served by Clou Electronics as an example, according to Modo Energy statistics, the revenue of 9 sites are all among the top 30 Texas power station revenues.
John Smith, an analyst from Wood Mackenzie, pointed out: "In the current context of intensified market competition, advanced battery management technology can not only improve system safety and reliability but also significantly reduce operating costs, thus improving the economic benefits of the project." In the future, as the degree of domestic electricity marketization increases, the economic advantages of active balancing technology in the long-term operation of power stations will gradually emerge. As the commercial application of domestic energy storage accelerates, active balancing technology will be increasingly used.
The frequent energy storage fire accidents around the world have not only caused significant casualties and property losses but also triggered a deep reflection on the safety management and supervision of energy storage power stations.
The Electric Power Research Institute of the United States has established a relevant database through the study of multiple energy storage power station fire incidents publicly disclosed from 2018 to 2023. After classifying and comparing fire accidents with the Pacific Northwest National Laboratory (PNNL) of the US Department of Energy and Twaice of Germany, it was found that in addition to the risks of the battery cells and control systems themselves, the integration and operation of energy storage power stations are also important factors leading to accidents.
What is worrying is that in China, while the scale of energy storage installed capacity has increased significantly, technology has been diversified, capital has poured in intensively, and industrial clusters have risen. Behind the frenzy of growth, there are concerns about building but not using, and disorderly expansion of production capacity. The "price war" is full of smoke, and corporate profitability and product quality are facing double tests.
The essence of energy storage is "adjustment" rather than "storage". In the future, as a supporting industry for the new power system, energy storage will be involved in power system transactions and return to commercial applications to achieve high-quality development and give full play to the long-term value of energy storage. At present, this market shift is gradually happening.
Driven by multiple factors, the long-term value of energy storage is gradually returning
In the past year, under the influence of multiple factors such as policy support, corporate efforts, and market favour, China has become the largest wind, solar, and energy storage market in the world. According to the "Energy Storage Industry Research White Paper 2024", China's new energy storage installed capacity will increase by 21.5GW in 2023, a record high.
In contrast, under the superposition of multiple factors such as raw material price cuts, vicious competition, and technological homogeneity, the market price of energy storage systems has been declining. Liu Manping, a senior economist at the Price Monitoring Center of the National Development and Reform Commission, said: "At present, the capacity of the energy storage industry is expanding rapidly, and structural problems are prominent; some projects are "built but not used"; the actual utilization rate of energy storage built with new energy is not high; the operation model and market mechanism are not yet perfect, which has become a bottleneck restricting the development of the industry." "Involution" or "idle"? How can the energy storage industry breakthrough? The industry value logic oriented by the market and commercial application needs to be rebuilt urgently.
Energy storage itself is an important supporting system in the new power system. At present, the power systems in China and even in developed countries in Europe and the United States are undergoing a transformation, "clean and lowcarbon, safe and controllable, flexible and efficient, intelligent and friendly, open and interactive." The development direction of energy storage is closely related to multiple factors such as policy, market and technology.
From the perspective of policy, as early as 2015, the "Opinions of the CPC Central Committee and the State Council on Further Deepening the Reform of the Electricity System" (referred to as "Electricity Reform Document No. 9") proposed the goals of orderly promoting electricity price reform, rationalizing the electricity price formation mechanism, promoting the reform of the electricity trading system, and improving the market-oriented trading mechanism, which kicked off the opening of the electricity market. After the "dual carbon" goal was proposed, the National Development and Reform Commission proposed a 1+N policy system, which further established a new power system with new energy as the main body from the top level around energy storage demonstration application, standardized management, electricity price reform and diversified and intelligent application.
By 2023, the National Development and Reform Commission and the National Energy Administration issued the "Basic Rules of the Electricity Spot Market (Trial)", which implemented specific incentive plans at the power system level. It is expected that by 2025, the power market will be gradually liberalized to form an open and interactive power system. The rise of the energy storage industry is fundamentally an important supporting factor in building an open and market-oriented power system.
From the perspective of the market, the operation time of domestic energy storage systems is long and the system utilization rate is also constantly improving. The "Statistical Data on Safety Information of Electrochemical Energy Storage Power Stations in 2023" shows that in the first quarter of 2024, the average daily operating time of domestic energy storage power stations has increased from 3.12 hours to 4.16 hours, and the average utilization index has increased from 27% to 41%.
With the issuance of the "Notice on Promoting the Grid Connection and Dispatching of New Energy Storage" by the National Energy Administration, the functional positioning of new energy storage has been further clarified, and the promotion of the dispatching and utilization of new energy storage has been accelerated. Energy storage projects are no longer just an appendage to meet the "strong allocation" policy of new energy, but an asset that can bring real long-term sustainable benefits to owners
From a technical point of view, the reliability of energy storage power stations depends to a large extent on the performance of energy storage batteries. The battery system is closely related to the battery management and integration capabilities. Taking battery consistency management as an example, during the use of energy storage cells, due to production differences, ageing, temperature changes or different load conditions, the voltage and capacity between cells will be different, and this difference will increase with the increase in the number of charge and discharge cycles, thereby making the system economic benefits worse.
Therefore, more and more battery-balancing technologies are being applied to commercial and mature markets. According to a research report by Wood Mackenzie, an internationally renowned consulting firm, due to the overseas market, the power market is more open, and energy storage owners are more concerned about the economic efficiency of the project throughout its life cycle. The advantages of active balancing technology in reducing the cost of the energy storage system throughout its life cycle have been widely recognized, and its application in overseas energy storage projects has reached 74%.
Industry insiders said that driven by multiple factors, the energy storage industry is moving towards a stage of highquality development. In early 2024, policies were intensively introduced around power market transactions, which will accelerate the new changes in the development of China's power marketization and will also become an important driving force for the value transformation of the energy storage industry.
From price to value, to achieve the long-term goal of energy storage, industry manufacturers have conducted research and development and exploration from multiple dimensions, including: Energy storage battery optimization: select positive electrode, negative electrode, and diaphragm materials with better thermal stability; select a lamination process with thinner thickness and larger surface area; shorten the length of the pole ear to reduce resistance and other optimizations.
Advanced temperature control technology: From traditional air cooling solutions to liquid cooling solutions with higher heat transfer coefficients and better cooling effects, to meet the growing market demand for thermal management systems.
Digital technology operation and maintenance: Use digital technologies such as BMS, EMS, and AI to monitor the operation status of power stations, conduct visual analysis of the battery life cycle operation status, identify early signs of failure, and provide safety warning design.
Firefighting technical support: The industry's mainstream products have realized a three-layer firefighting system at the cell level, pack level, and system level to achieve a more detailed and precise firefighting effect.
Efficient battery management: The battery management system (BMS) uses advanced algorithms to monitor the voltage of each cell during discharge and evaluate the battery's state of charge (SOC), state of health (SOH), state of power (SOP), etc. Since the life of the battery pack also depends on the cell with the shortest life, when the lowest single-cell voltage reaches the discharge cut-off voltage, the entire battery pack will stop discharging. Balancing the state parameters of energy storage cells has become the only way to maximize the battery cycle life and improve the cycle efficiency of the energy storage system, especially in high-power and large-capacity application scenarios such as large storage and industrial and commercial storage.
Based on the demand for battery pack consistency optimization and improvement, energy storage BMS balancing technology emerged at the times required. Among them, there are two main methods of battery balancing in the battery management system: passive balancing and active balancing.
Passive balancing balances the battery by releasing electricity through resistance heating during the discharge process of the battery pack. This method does not require complex controllers and circuits, but the equalization speed is slow and wastes power. It also generates heat during the process, increasing the risk of thermal runaway.
Active balancing realizes the direct transfer of electric energy between cells through a DC-DC converter, which can control the voltage difference between cells in the battery pack within a certain range, significantly reducing the loss of cycle efficiency caused by imbalance. This technology usually requires the use of specialized equalization controllers and extremely demanding circuit design, ultimately achieving full-link equalization from the PACK level to the cluster level, to the system level, and even to the station level.
Compared with traditional passive balancing technology, active balancing not only avoids energy waste but also improves the overall performance of the energy storage system by redistributing energy, reducing operating costs and improving system safety.
At present, due to factors such as cost and price, according to EESA's 2023 annual data statistics, domestic energy storage projects are almost all passive balancing projects (98.4%). In overseas markets, about 70% of projects use "active balancing". Taking the Texas TX10 project served by Clou Electronics as an example, according to Modo Energy statistics, the revenue of 9 sites are all among the top 30 Texas power station revenues.
John Smith, an analyst from Wood Mackenzie, pointed out: "In the current context of intensified market competition, advanced battery management technology can not only improve system safety and reliability but also significantly reduce operating costs, thus improving the economic benefits of the project." In the future, as the degree of domestic electricity marketization increases, the economic advantages of active balancing technology in the long-term operation of power stations will gradually emerge. As the commercial application of domestic energy storage accelerates, active balancing technology will be increasingly used.
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