China’s power grid has been overwhelmed by the rise of renewable energy

China is building twice as much wind and solar power generation capacity, like the rest of the world combined. While this explosive expansion is great news for the country’s decarbonisation goals, it is putting pressure on power grids and energy markets, even leading to occasional negative energy prices in some areas. Chinese network officials are reported decreasing exiting turbines and solar panels this year to avoid overwhelming power lines.

“With annual wind and solar installations booming and potentially enabling an early peak in emissions at the world’s biggest polluter, the focus has shifted from generating clean energy to making sure it can be used,” Bloomberg. recently reported. To more effectively support these massive additions of renewable energy, China is getting serious about energy storage, which is heating up to become a major market in the coming months and years.

Solar and wind energy are variable energy sources, meaning their energy production levels fluctuate with the weather, time of day, and seasons in ways that are not always predictable. This presents challenges for balancing energy inputs and outputs to the grid, as wind and solar output cannot be manipulated to match energy demand, unlike energy derived from fossil fuels.

This is where energy storage comes in. Storage technologies capture and store excess energy when renewable energy supply exceeds demand, and later feed that energy back into the grid when demand exceeds supply. This stabilizes inputs and outputs to the network, also dampening market volatility through a process known as arbitration. Due to these essential energy security services, it has been argued that energy storage is the backbone of the renewable revolution.

From July 2024 analysis from Global Energy Monitor, China is developing 180 gigawatts of large solar projects and 159 gigawatts of large wind projects. Together, these developments account for nearly two-thirds of the world’s wind and solar capacity. But while the country’s combined wind and solar capacity exceeded 1,200 gigawattsthe installed storage capacity of the battery has only reached 44 gigawatts.

While battery storage capacity has lagged behind renewable energy capacity additions, China’s energy storage is on a massive growth trajectory. Installed capacity has already grown by 40% in the first half of 2024 and is expected to reach 300 gigawatts of battery storage by 2030, according to Qian Zhimin, former chairman of Chinese mega-utility State Power Investment Corp.

Energy storage is a developing sector and many energy storage technologies are still in the research and development phase. The batteries are just one optionand have some distinct disadvantages in that they are only able to maintain power for short periods of time. However, the market is currently dominated by lithium-ion battery storage because it is a proven technology with plenty of existing infrastructure, well-established supply chains, relatively low-cost installation and, with luck, a current manufacturing surplus. Bloomberg reports that “battery makers have overinvested in factories in recent years, leaving the industry with massive overcapacity.”

The explosive growth of the energy storage sector is therefore great news for the battery industry. To achieve zero emission goals, it is estimated that worldwide installed battery storage capacity must increase to more than one terawatt (TW) by 2030 and nearly 5TW by 2050. For context, total capacity totaled less than 200 gigawatts (GW) in 2023.

China isn’t the only place where energy storage is taking off. Markets for energy storage are growing rapidly in United States and Europe also. On a global scale, energy storage is heating up to “the next trillion dollar clean energy business.” But nowhere is this construction more important than in China, where warp-speed additions of wind and solar power generation threaten to overwhelm power grids, undermine national energy security, and potentially even render all these additions unnecessary.

By Haley Zaremba for Oilprice.com

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