Cognitive Classroom - Energy Storage

1. What is energy storage?

Energy storage, in simple terms, means storing the electricity generated and using it when needed.

The general process that electricity goes through from production to final use is:

Production electricity (power plants, power stations) - Transmission electricity (grid companies) - Consumption electricity (users)

In the above three stages, energy storage can be established, so energy storage can be divided according to the application scenario: energy storage on the power generation side; Grid side energy storage; User side energy storage.

The energy storage industry chain is relatively simple, with equipment manufacturers in the upstream, integration manufacturers in the midstream, and various application ends in the downstream. Among them, the upstream link is the focus of research.

In the cost of energy storage systems, batteries account for the highest proportion, reaching 60%, followed by PCS (inverter), EMS (energy management system), and BMS (battery management system), accounting for 20%, 10%, and 5%, respectively

1) Battery sector: The industry concentration is gradually increasing, and in the future, it will develop towards high safety, long lifespan, and low cost. Lithium iron phosphate will be the mainstream path, and it is expected to be led by leading manufacturers of power batteries;

2) PCS stage: Pay attention to the three core competencies (iterative cost reduction ability, brand power&financing ability, and channel ability), and determine the convergence of future competitive landscape with photovoltaic inverters;

3) EMS link: It is necessary to interact with the power grid. The current EMS companies are mainly State Grid, and the future core competitiveness of EMS depends on software development capabilities and energy optimization strategy design capabilities;

4) BMS segment: Currently, the technology maturity is relatively low, there is a lack of industry standards, and the competitive landscape is scattered. In the future, energy storage battery BMS is likely to continue the market pattern of power battery BMS;

5) System integration stage: There are many players from domestic system integrators, and companies with integration capabilities, operation and maintenance services, local channels, and brand power will win.

Why do we need energy storage?

From the current electricity consumption environment dominated by thermal power, hourly electricity generation and hourly electricity consumption are still mainstream. That is to say, when a power plant emits electricity, it is transmitted to the grid and then to users for use, without energy storage in between. A small number of power grid companies will use pumped storage to regulate peak frequency and fill valleys. That is to say, when there is a lot of electricity at night, electricity (using water pumps) is used to pump the water downstream of the hydropower station back to the upstream for power generation.

With the updating and upgrading of the energy system and the promotion of the dual carbon goal, renewable energy, led by solar and wind energy, has begun to be widely utilized. Due to the significant impact of weather on wind power and photovoltaics, energy storage technology plays a crucial role in their instability. Some argue that the combination of wind, solar, and energy storage is likely to become a future trend in the development of new energy.

From a global perspective, the energy storage market in the United States exploded in 2020, becoming the third largest energy storage market in the world. The concentrated implementation of public utility energy storage projects is an important increment from 2021 to 2024, while the unstable power supply stimulates household energy storage demand; Europe started its first year of energy storage in 2019 and reached a new high in 2020, leaping to become the world's largest cumulative energy storage market, with Germany and the UK leading the way. Germany is the world's largest household energy storage market, mainly due to high household electricity prices and subsidy policies shifting towards household energy storage. The UK is mainly driven by the deployment of large-scale energy storage projects to drive growth; The safety impact of energy storage batteries in South Korea has led to a decline in new installed capacity, but it remains the world's second largest energy storage market in 2020.

From the perspective of China's development, with the increase in the proportion of renewable energy generation, problems such as consumption, transmission and distribution, and fluctuations have emerged. The rigid demand for energy storage has gradually taken shape. In 2020, global electrochemical energy storage added 5.3GW/10.7GWh, a year-on-year increase of 57%. This is mainly due to the burst of energy storage markets in China and the United States, with China adding 1.2GW/2.3GWh, a year-on-year increase of 168%.

Some institutions believe that energy storage batteries will become a prosperous track with 20 times in 5 years and nearly 100 times in 10 years.

The following are 15 research summaries of the energy storage industry collected and organized by K50 think tank:

1. After more than a decade of development, electric energy storage has transitioned from laboratory to early commercialization, and now it is gradually transitioning from early commercialization to large-scale. There are several characteristics in this stage. Firstly, in terms of technological development, the cost-effectiveness of certain energy storage devices can already be promoted and applied. More than a decade ago, the power system required three elements of energy storage: long lifespan, low cost, and high safety. Nowadays, long lifespan and low cost are basically available. But there is still one last kilometer left for high safety. In terms of research and development, almost all energy storage technologies in our country are involved. In terms of application, we have tried various applications on the power supply, power grid, and user side. In terms of business models, there is indeed a shortcoming that needs to be explored for a long time, and the same problem exists in other countries around the world.

2. Pumped storage energy remains the main force. The development of new energy storage is very rapid, and its growth rate far exceeds that of pumped storage. Among the new energy storage technologies, lithium-ion batteries have the highest proportion of energy storage technology and the fastest growth rate. Of course, there is a unique condition of synchronous development with electric vehicles. However, energy storage technology is not limited to lithium-ion batteries. In the application stage, there are also lead carbon batteries, sodium sulfur batteries, and liquid sulfur batteries. In the demonstration stage, there are compressed air, sodium ion batteries, supercapacitors, and nano nickel batteries. In the laboratory stage, there are flywheels, superconductors, phase change hydrogen, non pumped gravity energy storage, and some new types of batteries. Energy storage can be stored in various forms, including physical energy storage, electromagnetic energy storage, electrochemical energy storage, thermal energy storage, and chemical fuel energy storage.

3. Lithium ion battery technology has made the fastest progress and its cost-effectiveness is close to the stage where it can be promoted and applied. It is mainly driven by the demand for electric vehicles, and the research and development team for lithium batteries is the largest, with the most investment and the most obvious effect. The performance of lithium batteries can almost cover all application scenarios in the power system, or in other words, they can be used in most application scenarios. Whether it's power testing, grid testing, user testing, peak shaving, frequency regulation, consumption, emergency construction, backup, or black start. But the major weakness is that the duration of consumption is not enough. The capacity is usually four hours, and it cannot handle it during the windless season. Safety issues, with so many fires in South Korea, people are sometimes a bit afraid of lithium batteries, and electric bicycles also catch fire from time to time. However, the whole world is working hard to tackle this issue, including solid-state batteries, which are the main focus. There are also some integrated technologies, management technologies, fire protection technologies, warning technologies, etc. that make it safer, and there is a possibility to solve this problem.

4. The breadth of application of lead carbon batteries ranks second. The industrial chain is very complete, and many lead-acid battery factories can quickly convert into producing lead-acid batteries. The safety is still limited to water systems, which are less prone to combustion and explosion. This has advantages and is a transitional technology.

5. The third one is liquid sulfur batteries, which have good safety, non combustion, long cycle life, and independent power and capacity. When configuring, if this scenario requires high power, unnecessary investment can be intentionally reduced. The power and hours of lithium-ion batteries are basically fixed and can be adjusted. The weakness lies in the relatively low efficiency, which leads to a lot of heat generation and auxiliary motor consumption. The energy density is relatively low, and the liquid sulfur battery energy storage station occupies a large area, making it difficult to reduce the price and determine the cost. It cannot be used in electric vehicles. But international research and development has not stopped, it has not been abandoned, and the United States even remains a major research and development direction. One reason for this phenomenon is that there are multiple materials to choose from in this system, and there is no ceiling in the research and development space. It has advantages over lithium-ion batteries in terms of long-term scale.

6. Other batteries are still in the laboratory stage, including liquid metal air and organic batteries, which may have low cost and high energy density. Some systems still have room for exploration and are still in the basic research stage. However, there is one battery that has made rapid progress now, which is the sodium ion battery. It took a few years from the laboratory to demonstration application. Because the mechanism of its system is basically the same as that of the redox reaction in lithium batteries. There are no major obstacles for teams working on lithium-ion batteries to switch to sodium ion batteries. With the constraints of lithium resources and the uncertainty of lithium carbonate prices, sodium ion resources are not subject to too many constraints. This prominent advantage may be evident, and it can be said that this is an important strategy for energy storage technology. A spare tire is necessary at the national level, but because the industry chain is not yet mature and the material system is not fully focused and standardized, theoretically it is safer than lithium-ion batteries. Therefore, its research direction is somewhat similar to lithium-ion batteries, and it needs to focus on solid and electrolyte materials. Therefore, this path may still have some time, but there is room for imagination. Moreover, if our resources are under control, he may come up with it.

7. Compressed air, with recent large-scale production including in Jiangsu, Shandong, and other regions. Unlike lithium-ion batteries, they can be used for various needs in our entire power system. The characteristic is that they rely on electromechanical speed because they use generators, compressors, etc., which have a relatively slow response speed. Only when they enter a balanced state can they fully play their role, and the time is in minutes. In addition, it has many rotating keys and some irreparable losses, so its efficiency is relatively low. Additionally, there is limited room for price reduction, as they are all made of metal parts. But it has a particularly big advantage, which is that using rock caves can achieve super large scale. If we need to consume a large proportion of energy on a large scale, electrochemical batteries will face difficulties. Although it has geographical limitations, it does not mean that it cannot be found due to geographical conditions. It is still easy to find, so this technology is still worth paying attention to.

8. The usage space of the flywheel is relatively limited, mainly due to the improvement of user's power quality and the support of some booth power. The energy density is indeed too low. In addition, the technical threshold for rotary keys is very high. Because the energy stored in it is defined by the speed and mass of this flywheel, achieving high energy density requires a very high rotational speed, and tens of thousands are already starting. Quality and safety are contradictory requirements, and there is a high technical threshold for whether the speed can be increased when the quality is high, and whether the safety is reliable when the speed is increased. In addition, the application space is also limited, and mainstream application scenarios cannot rely on it.

9. Supercapacitors are much better than flywheels, but they are still expensive. The problem is the same, with high power density and low energy density, there are high requirements for controlling everything. So the market space is also limited, but the technological progress is still relatively fast.

10. The other two technologies have great potential in the future. One is the hot soil, an international roadmap for energy storage development, noting its high proportion in 20, 30 years or later. Long term energy storage technology is indispensable, and the UK places particular emphasis on thermal energy storage as its offshore wind power is subject to seasonal changes. Our country's conditions are not the same. If photovoltaic is the main method, it is not suitable for seasonal energy storage during the day and night. So we don't attach much importance to him now, mainly in solar thermal power generation. In our energy consumption, such as air conditioning, which accounts for a relatively high proportion of heating, we can use heat storage technology to solve these problems. This space is still quite large, but due to the tight time gap between electricity and heat, the gap is too large. It seems that everyone has not yet seen a large market for this application space, so there are relatively few researchers. In a few years, there may gradually be a considerable number of R&D personnel investing in this part of the research. Another is hydrogen, which can be stored across seasons and replaced by liquid and gas fuels. Traditional gas engines and engines can be used, but the technological and financial barriers, as well as people's fear of its safety, will be obstacles in its development and research process. Our country's hydrogen industry must sort out the development technology roadmap, because hydrogen involves four major links of technology: generation, storage, transportation, and use. There may be hundreds of different routes, but which technology routes are worth focusing on in terms of our national conditions, the status of our infrastructure, and our needs should be well designed at the top level. Otherwise, the energy of hundreds of routes will be too scattered, and the investment return effect will not be good.

11. Overall, pumped storage is still the main force in various types of energy storage, but the development of new energy storage will increase. Battery is the most valuable energy storage technology for promotion, and long-term scale will also become a focus of research and application. In terms of the lithium battery industry, there are links such as mineral resources, materials, monomers, pack and system integration, application, and recycling, and the industrial chain is very long. However, our country has shown advantages in talent gathering, complete production chain, and strong expansion capacity in the Pearl River Delta, Yangtze River Delta, and Beijing Tianjin Hebei industrial circles. Our original production line equipment was outdated, and basically high-end production lines were imported from Japan or South Korea. Now we are gradually replacing them. This bottleneck is almost non-existent, and there may still be some areas that need attention in the next step, such as the recycling of retired batteries and the regeneration of materials. The current focus on this area is not enough, and the investment is still relatively small. There is still a lot of space in the future, and this is also necessary. During the 13th Five Year Plan period, our national key research and development plan focused on lithium-ion batteries, flow batteries, cascade utilization, and compressed air. We have made some layouts for forward-looking technologies such as ultra electric, solid-state, liquid, metal, flywheel, and offshore pumping, which have been basically achieved through the work of the 13th Five Year Plan. The goals we set at that time, such as the cycle life, cost, efficiency, and other indicators of lithium batteries, have all met expectations. However, there are still shortcomings in safety. During the 14th Five Year Plan period, the national key research and development plan mainly focuses on breakthrough progress in safety. In addition, the cycle life should be extended, and attention should also be paid to recycling.

12. In terms of hard technology for energy storage, there are several aspects, including ontology technology, integration technology, security technology, and operation management technology. We have room for improvement in these areas, including integrated topology, communication architecture, cooling system, security diagnosis, early warning, blocking, fire protection, digital twin of operation and maintenance management, cloud management, virtualization and aggregation, and multi scenario reuse. In this regard, especially internationally represented by the European Union, it is his research and development focus. In terms of application, we have different concerns on the power supply side, grid side, and user side. For example, on the power supply side, we focus more on the consumption of renewable energy, while on the grid side, we hope to ensure safety and play a role in energy storage, as well as peak shaving. When we want to integrate with multiple networks on the user side, it is an important buff. The transportation network and gas network are the links that transform each other on a spatiotemporal scale.

13. The main international hotspots are the long-term energy storage challenges faced by the United States, mainly with federal and advanced battery alliances. These are in the lithium-ion battery industry chain, which he feels is controlled by China. In fact, this major challenge is a challenge for China. The EU is mainly focused on supporting this technology, and now it is a latecomer. It hopes to first grasp all the elements that make up the research and development of battery technology, including calculation, design, preparation, and evaluation. Of course, equipment technology, machinery, and coal technology also need to keep up. There are several hot topics in energy storage, and with the proposal of 30 and 60, we may be hot topics in three aspects: large-scale, renewable energy consumption, flexible power grids, and multi scenario reuse. For a long time scale, the current definition is not accurate. Generally speaking, we can say that six to a thousand hours can be considered as a long time of use, because our ion electricity is usually within four hours. It is unclear what this technology itself is, except for hydrogen and heat storage, whether other technologies can achieve this goal is still unclear. This is a relatively basic and prospective study. Elastic power grid refers to the situation where high-frequency electromagnetic combustion, extreme weather, or network attacks can all cause large-scale power grid collapse. The previous thinking was that I had to shoulder it hard and the power grid system was very strong to cope, but the input-output was too high. The current idea is that if you come over, I may not be able to handle it, but my resilience and resistance to impact have dissipated and collapsed. However, my ability to quickly recover is also a technology, which is the elastic power grid technology. In these technologies, energy storage plays an important role. Multi scenario reuse refers to the reuse of energy storage systems that cannot be said to only be applied in one scenario, with only peak shaving and not frequency modulation. It is hoped that through configuration and management techniques, they can be reused.

14. The current dilemma for applications is still the business model, can we make money. Constraints on status, business model, and electricity price. The underlying issues are uncertain identity and status, as well as some lack of continuity in policies. In addition, the return mechanism needs to be determined, which is a common issue in the world. We certainly have a dynamic electricity system and electric and electricity market reform. Since 2017, our country has actually issued guidance on energy storage at the national level. Looking back at these documents, it can be seen that the judgment of the situation at that time was quite accurate, and it was an industry encouraged by the state. After so many years of continuous release, there have been ups and downs, and sometimes due to market behavior, the country has also issued some negative documents, but the overall trend is still upward. The recent document is the development goal of 30 million kilowatts set by the National Development and Reform Commission and the Energy Bureau, as well as capacity and electricity prices, which have a positive impact. It also clarifies the pain points of energy storage configuration for new energy, and specific measures may be taken in the future. In terms of safety, the public is concerned, so the country has also issued corresponding documents to emphasize, especially regarding the issue of lithium-ion battery ignition. Furthermore, the association with renewable energy has also been documented. These documents are for discussing these matters, and we cannot expect to say whether there is a national energy storage electricity price or a national financial subsidy policy. Due to the significant differences in the application and technological routes of energy storage, as well as the diverse application environments, it is difficult to achieve a unified national balance. There will definitely be people taking advantage of this and many potential risks. How is it done internationally? The federal government in the United States only focuses on rules and status, while the state government is responsible for implementing specific incentive policies and promoting them, gradually gaining momentum. Our country is a bit in this direction, which is to set various policies at the provincial level based on its application scenarios, power grid architecture, and needs, including economic incentives or mandatory allocation, which have been applied in the United States. There are also mandatory allocation, tax reductions, and market mechanisms in the United States, which are determined by each state according to its own situation. Our country may also need to follow this direction.

15. At the investment level, what can be clearly seen now are experienced track leaders, mainly in two aspects: first, leading manufacturers of power batteries that are already very mature, and second, manufacturers of photovoltaic inverters that are already very mature.

The energy storage market will undoubtedly greatly increase the demand for batteries, which is relatively certain, so the main focus can be on the already mature related tracks. On the one hand, battery providers with high certainty and low cost, such as CATL, BYD, Yiwei Lithium Energy, Paineng Technology (more focused on pure energy storage targets), and so on; On the other hand, inverter manufacturers who excel in current conversion management, such as Sunshine Power, Gudewei, Jinlang Technology, and so on.

At the same time, the energy storage market will also bring many incremental markets to other sectors. One is the relatively concentrated links in the energy storage industry chain, such as battery raw material companies Longpan Technology, German Nano, Fulin Precision, and other companies, as well as energy storage system integrators Yongfu Co., Ltd. and Kelu Electronics; Another aspect is the widening of the track brought about by energy storage, such as the energy storage thermal management companies Sanhua Intelligent Control, Yinlun Shares, and so on. Of course, it is difficult to grasp the incremental market, and the need for support from new technological paths also requires continuous verification with the industry chain.