China sets eye wateringly large energy storage targets

Insights — May 2022

China has set eye wateringly large targets for stationary energy storage

The group of major Chinese industry and government bodies (including the National Development and Reform Commission, the National Energy Administration, and the State Grid Corporation of China) announced increased targets for energy storage aimed at increasing renewable power consumption and ensuring grid stability.

China is targeting non-hydro energy storage installed capacity of 30GWh by 2025 and 100GW by 2030 from 3GW today. This will include a range of technologies including electrochemical (e.g. lithium-ion batteries) as well as compressed air, flywheel and supercapacitor systems.

Enabling this is rapidly expanding battery manufacturing capacity. China’s Ministry of Industry and Information Technology estimates that the country’s output of lithium-ion batteries for energy storage (as opposed to other applications such as electric vehicles) reached 32GWh in 2021, up 146% year-over-year. This is only c.10% of total lithium-ion battery production, which was 324GWh in 2021, up 106% year-over-year (this industry is worth c.US$95 billion per annum).

Increasing manufacturing scale is expected drive considerable efficiencies and China has a stated goal for decreasing the per unit cost of energy storage capacity by 30% by 2025.

Pumped hydro not to be left out

Most of the energy storage in China presently is pumped hydro which consistent with the remainder of the world where pumped hydro accounts for c.95% of energy storage capacity. China is targeting 120GWh of pumped hydro capacity by 2030 relative to 26GWh today.

All of these targets are materially above recent industry estimates. One recent forecast had only 74GWh of installed energy storage capacity in the entire Asia-Pacific region by 2030.