China’s ambitious plans for expanding battery storage capacity may encounter a significant slowdown in 2024, according to a white paper released by the China Energy Storage Alliance (CNESA).
China will witness an addition of 30.1 gigawatts (GW) of new energy storage capacity, predominantly comprising lithium-ion battery storage, in 2024. This marks a decline from the 34.5 GW of new capacity added in 2023, Reuters news report said.
However, under a more optimistic scenario, the association anticipates a 19 percent increase in new energy storage installations, reaching 41.2 GW. Despite this potential growth, it falls short of the anticipated surge in global energy storage product sales, expected to rise by 35 percent, according to the white paper’s findings.
Energy storage infrastructure, particularly grid-connected battery farms, plays a vital role in backing up renewable energy sources during periods of intermittency, ensuring smoother integration into power grids. This is particularly crucial for China, given its limited natural gas capacity, rendering flexible energy sources like natural gas crucial in contrast to slower-ramping coal plants.
CNESA’s projections hint at potential improvements in the economic viability of battery energy storage projects in China, although specific details were not provided. However, industry insiders have pointed out that many energy storage ventures struggle to turn profits due to high initial costs and challenges in securing grid connections and selling electricity into China’s power markets, primarily reliant on long-term contracts.
During the Energy Storage International Conference and Expo, Wu Jiamao, senior deputy general manager of Sungrow Power, China’s leading energy storage systems provider, highlighted issues such as prolonged waiting periods of over six months for grid connections and battery degradation over time. He emphasized the need for further technological advancements to address these challenges effectively.
On a global scale, geopolitical shifts and Europe’s carbon regulations are expected to pose additional hurdles to China’s international battery shipments. CNESA underscored the impact of evolving supply chain dynamics and highlighted the emergence of new challenges in global geopolitics.
Shu Yinbiao, a researcher with the Chinese Academy of Engineering, echoed concerns about “green trade barriers,” particularly emphasizing Europe’s carbon border adjustment mechanism, which tends to overestimate the carbon footprint of Chinese products. These developments reflect a broader reconfiguration of global supply chains amidst evolving geopolitical landscapes and increasing environmental regulations, signaling potential headwinds for China’s battery industry in the coming year.
GreentechLead.com News Desk