Renewables can produce an almost limitless supply of energy—but only sometimes. The result is that, even if 40% of your installed capacity is renewable, on a cloudy, windless day the majority of your power could come from coal.

To combat this problem, energy needs to be put in the bank when you have too much, so that it can be used when there is too little renewable power being generated. 

By the end of 2020, China had installed 500 million megawatts of solar and wind capacity—the equivalent to 15 billion solar panels or 206,000 utility-scale wind turbines. In the next decade, the country wants to double that figure.


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This renewable drive forms part of China’s goals of reaching carbon neutrality by 2060. The country aims for renewable power to account for 50% of its total installed electrical capacity by 2025, up from 42% this year (in Chinese). 

But just 0.7% of all the solar and wind power China creates can currently be stored. As the country moves to increase its share of renewable energy, the government is taking action to allow energy storage to keep up. 

The National Energy Administration this year mandated that new renewable projects need to include energy storage capacity. Regional governments including those in Hunan, Qinghai, Inner Mongolia, and Guizhou have created similar mandates. New renewable projects need to be able to store at least 5% of the energy they produce in these areas. 

For China, deploying energy storage systems is crucial for renewables to compete with fossil fuels. China’s energy administration set the country’s first national target for new energy storage earlier this year, aiming to increase the country’s current capacity nearly eightfold to 30GW in 2025 from 3.8GW last year. 

There’s no golden ratio of renewables to energy storage. Experts are mostly talking about how much energy storage will have to cost in order for countries to go 100% renewable.

In this week’s newsletter we take a look at how energy storage works, and how it forms an important piece of China’s carbon neutrality puzzle. 

The major types

The government is leading the charge in rolling out energy storage facilities, with state-owned utility companies building out the majority of capacity. The private sector, including battery makers like BYD and CATL, are involved in smaller, localized facilities. 

In China, the most widespread form of energy storage is pumped hydro, making up more than 90% of all storage capacity. But other forms of energy storage, such as batteries, flywheel, and compressed air storage, are catching up as the country’s wind and solar installations grow.

Storage methods like pumped hydro are not as efficient as batteries, but that might not matter as energy from these sources could become abundant at peak production times. 

The power of water: Pumped hydro is a form of storage that allows power to be saved by pumping water from a low-lying reservoir to an elevated one when electricity demand is low. The water can then be released to generate electricity when demand is high.

  • In 2019, China installed more than two-thirds of the world’s new pumped hydro capacity. During the same year, the country’s total pumped hydro capacity reached 30GW, according to the International Hydropower Association.
  • Pumped hydro’s use is slowly declining as the use of batteries for energy storage increases, the China Energy Storage Alliance (CNESA) said in a report last year.

Electrochemical storage: Of the numerous ways to store energy, batteries are one of the most important for storing energy from wind and solar farms. The batteries are much like the ones you find in electric vehicles, your phone or your computer, only much larger in scale.

Some of the world’s biggest battery makers are Chinese. Growing off the back of the county’s electric vehicle (EV) push, BYD and CATL, which predominantly make batteries for EVs, have started making major inroads into energy storage.

Earlier this month CATL signed a deal with gas utility Towngas to set up a joint venture to install energy storage systems in industrial parks. BYD and CATL provide commercial and grid-scale energy storage systems for renewable sources.

  • Battery storage makes up 6.8% of the county’s storage capacity. 
  • There are various forms of batteries, which largely vary based on what they’re made of and how they’re used. For instance lithium-ion batteries are used in electronic devices and electric vehicles, while larger flow batteries are used in heavy industries.
  • Batteries are the most efficient store of energy but they’re also the dirtiest, requiring huge mining operations for raw materials and recycling programs at the end of their life cycles. 
  • They’re also expensive, but costs are falling. Since 2012, the cost of lithium-ion storage systems have fallen by 75%, according to CNESA. 
  • These sorts of batteries are produced on EV battery manufacturing lines.
  • According to IHS Markit, lithium-ion batteries are “best positioned to scale up” out of all others, given China’s EV push. 

Emerging contenders 

Pumped hydro and batteries make up the majority of energy storage capacity in China, but there are other technologies state planners have earmarked that haven’t yet taken off.

Motion batteries: While still limited in their use, flywheels have been highlighted by China’s government as an effective way to store energy. These devices store rotational energy by spinning heavy wheels at high speeds.

  • In most cases, electricity is used to speed up the wheel. Energy is removed from the system by engaging a turbine-like device, which slows the wheel down. 
  • On July 23, China’s state planner, the National Development and Reform Commission, laid out plans to nearly double new energy storage capacity, which includes batteries, compressed air, and flywheels, among others.
  • In 2016, Tsinghua University and Sinopec developed a flywheel energy storage prototype whose capacity was more than 1 megawatt.
  • Last year, a flywheel energy storage system was connected to the grid in the northern Chinese city of Shenyang. 
  • Currently experimental, these “mechanical batteries” make up less than 0.01% of China’s storage capacity.

Compressed air: Using compressed air to store energy goes back decades, but it is still seen as an effective way to stockpile energy. Electricity is used to compress air, often in large underground chambers. When energy is needed, air is released to drive a turbine that creates electricity. 

  • Compressed air makes up 0.03% of China’s storage capacity. 
  • The storage medium is clean when renewable sources are used to compress the gas that is later released. 
  • “Compressed air energy storage technology holds many advantages such as high capacity, low cost, high efficiency, and environmental friendliness. For these reasons, it is one of the most promising large-scale energy storage technologies,” CNESA said in 2020. 

As locations for pumped hydro become more difficult to find, China is likely to deploy a lot more batteries to store energy over the next five years. But batteries present a problem in the long term: they’re dirty and battery recycling has yet to really take off. It will be worth keeping an eye on flywheels and compressed air as China pushes toward carbon neutrality. 

Christopher Udemans is TechNode's former Shanghai-based data and graphics reporter. He covered Chinese artificial intelligence, mobility, cleantech, and cybersecurity.