Since the 14th Five-Year Plan, the scale of new energy storage put into operation has grown by leaps and bounds. At the end of 2020, approximately 3 million kW of new energy storage was connected to the grid. By the end of September this year, according to data recently released by the National Energy Administration, the country has built and put into operation 58.52 million kW of new energy storage, with the scale of operation increasing nearly 20-fold in less than four years.

With the peak of grid connections approaching at the end of the year, industry estimates predict that the scale of new energy storage grid connections will exceed 70 million kW by year-end. Reviewing the development of new energy storage over the past four years, this sector has progressed rapidly, advancing by leaps and bounds.

Before 2020, domestic new energy storage projects were mainly small-scale initiatives in local areas. Grid-side energy storage was concentrated in Jiangsu, Henan, Hunan, and other provinces, where grid companies led the construction of various grid-side energy storage projects. User-side energy storage was primarily built on a small scale in Jiangsu, Beijing, and other regions, while power supply-side projects were focused in Guangdong, Shanxi, and Inner Mongolia, collaborating with thermal power units to provide frequency regulation services. Overall, the industry’s scale was relatively small, still in the early stages of commercial development. New energy storage had not yet been recognized as a key supporting technology for the new power system across the industry.

In September 2020, China proposed the "dual carbon" goal for the first time. Energy became the main arena, and electricity the primary driver, in achieving this goal. The rapid development of new energy sources like wind and solar power laid the foundation for new energy storage, marking the official start of its rapid development.

Starting in 2021, energy storage for renewable energy transitioned from a background role to a prominent one. The 2021 "Notice on Matters Related to the Development and Construction of Wind Power and Photovoltaic Power Generation" issued by the National Energy Administration stated that projects willing to connect to the grid beyond the guaranteed scope could be connected by grid companies through market-oriented methods, such as self-construction, joint construction and sharing, or service purchasing. New energy storage, primarily lithium iron phosphate battery storage, became essential for meeting new energy grid connection needs due to its short construction period, flexible layout, relatively low construction costs, and multifunctional capabilities. Many regions began large-scale energy storage construction projects, with Ningxia, Inner Mongolia, and Shandong among the first to require energy storage for new energy grid connections.

At the same time, shared energy storage attracted attention for its advantages in intensive construction, efficient operation and maintenance, and flexible dispatching. In 2021, the National Development and Reform Commission and the National Energy Administration issued the "Notice on Encouraging Renewable Energy Power Generation Enterprises to Build or Purchase Peak-Shaving Capacity to Increase Grid Connection Scale." This encouraged power generation enterprises to expand renewable energy generation capacity and grid connection by building or purchasing peak-shaving energy storage. Shared energy storage could be achieved through self-construction, joint construction, or service purchasing, with Shandong, Hunan, and other areas leading the charge.

In the second half of 2021, a sharp discrepancy between coal prices and power generation costs made it difficult for traditional thermal power plants to transfer costs to consumers, leading to large-scale losses for coal-fired power plants. This provided an opportunity to accelerate power market reforms. The National Development and Reform Commission issued the "Notice on Further Deepening the Market-Oriented Reform of Coal-Fired Power Generation On-Grid Electricity Prices" and the "Notice on Organizing the Implementation of Power Grid Enterprises' Agency Power Purchase Work," which aimed to liberalize coal-fired power prices, expand the floating range of market transaction electricity prices, and encourage industrial and commercial users to participate in the market. These changes, along with a widening difference in peak-valley electricity prices, provided a foundation for user-side energy storage development, especially in Zhejiang, Guangdong, and Jiangsu.

The "binding" of new energy with new energy storage in 2021 paved the way for its rapid development, while accelerated electricity market reforms supported market-oriented growth in new energy storage.

Starting in 2022, various regions issued detailed policies for the development of new energy and storage. As policies continued to promote this trend, new energy storage construction became more prominent, particularly on the new energy and shared grid sides. Shandong, Ningxia, Guangdong, Hunan, Inner Mongolia, and other areas became focal points for new energy storage construction. However, despite exponential growth, high prices for battery raw materials, such as lithium carbonate, constrained further expansion. At one point, the price of battery-grade lithium carbonate reached 600,000 yuan per ton, which slowed development and delayed some projects.

From 2023, favorable conditions, including policy support, a sharp decrease in energy storage equipment prices, advancements in storage technology, and continuous improvements in the electricity market mechanism, have driven the proliferation of new energy storage. Projects appeared across the country, setting new highs in scale. The capacity of new energy storage construction that year increased by over 260% year-on-year, with Inner Mongolia, Shandong, Xinjiang, Gansu, and Hunan as key regions for development.

Since 2024, energy storage equipment prices have continued to decline, and market and pricing mechanisms have improved, supporting diversified technological advancements and better grid-supporting technology. The scale of grid-connected projects has grown rapidly, with Jiangsu, Zhejiang, and Xinjiang emerging as new focal areas for energy storage construction. As operational projects expand, the industry is increasingly focusing on metrics like lifecycle electricity costs, revenue levels, and grid support capabilities.

While the industry has made significant advances in policies, standard systems, application models, construction costs, technological innovations, and market and pricing mechanisms, challenges remain. Issues include unregulated industrial development, significant price fluctuations, insufficiently tested equipment performance, safety concerns, and underdeveloped market and pricing mechanisms.

New energy storage is still an "emerging industry." Its high-quality, sustainable development will require ongoing dedication and collaborative efforts. The industry must prioritize technological innovation, refine various mechanisms, address market disparities, strengthen operational management, and enhance its capacity to support and regulate the power system.