China’s Trillion-Yuan Energy-Storage Market: A Boom or Bust Amid Overcapacity and Underutilization?

Is China's emerging energy-storage market, worth trillions of yuan, already facing chaos?

Huge investments have resulted in new machinery remaining underutilised or even unused, despite the grid's pressing need for it to optimally harness renewable energy.

In the eastern region of China, specifically in Shandong province, enormous subterranean caves found in old salt formations will shortly contribute to the country's carbon-free future. These caves will be used to store the energy produced from solar and wind power installations.

The government-run China Energy Construction Corp (CEEC) is investing over 20 billion yuan (equivalent to US$2.8 billion) into a project that, when finished, will be the largest of its kind globally. The facility will employ electricity to pressurize air within underground chambers, which will then be used to power turbines for electricity production as required.

The facility, boasting a capability of 3,060 megawatts, is projected to generate 4 billion kilowatt-hours of electricity annually. This is sufficient to supply over 600,000 homes, as stated by CEEC during the project's launch in July.

This ambitious strategy is merely a single instance of the surge in energy storage in China. The electrical network requires this kind of storage to enhance the utilization of the country's top-notch renewable energy facilities and increase energy safety. Consequently, corporations and local authorities are quickly capitalizing on what they perceive as the upcoming trillion-yuan prospect fueled by China's transition to clean energy. Despite this, the market is currently suffering from excess capacity and low utilization rates, issues that are being intensified by government regulations and flaws in the energy system.

Guo Shiyu, a campaigner for the environmental organization Greenpeace based in Beijing, expressed that the ongoing progression of energy-storage systems does not align with the actual requirements of China's power system.

A rapidly expanding market