China: Banking on renewable energy storage

China’s State Grid Corporation has built the world’s biggest battery for wind and PV storage in a bid to manage an increasing number of energy sources.

By Paul French in Shanghai

China recently announced the launch of its first commercial battery storage station for renewable energies - the world's largest to date.

The project, a joint venture between China's leading battery manufacturer BYD and the State Grid Corporation of China (SGCC), has completed construction of the utility-scale project, located in Zhangbei, in central China's Hebei Province.

The project combines 140MW of renewable energy generation (comprised of both wind and solar), 36MW-hours (MWh) of energy storage and a smart power transmission system. While there are renewable generation systems of this scale in service today, there are no battery systems of a comparable size.

China is in dire need of stable solutions to enable smooth transfer of electric power from renewable sources to the national grid, without interruption or surges. China's State Grid System (technically the world's largest utility company) has consequently invested significant sums into upgrading to a smart grid, in a bid to handle the PRC's increasingly mixed energy base (coal/gas-fired as well as nuclear, hydro, solar and wind).

While the total cost of the battery project has not been announced, first phase investment with 100MW of wind, 40MW of solar and 36MWh of battery is worth over US$500mn, according to Xiu Binglin, Deputy Director of China's National Energy Administration. While difficult to estimate return on investment (ROI) at this stage, Beijing clearly believes the project worthwhile as it attempts to wind-down its over-reliance on coal-fuelled power stations.

Market Alternative

BYD (Build Your Dreams) began as a Chinese battery and car manufacturer in the southern boomtown of Shenzhen before shifting its focus to electric and environmentally friendly vehicles.

To this end, Hong Kong-listed BYD, which came under the media spotlight when Warren Buffet took a 10% stake in the company, became China's major research centre into battery technologies (the major stumbling block for acceptance of electric autos in China).

The company has since become a major innovator and producer of rechargeable batteries for cars, electric bikes and mobile phones. BYD also manufactures solar panels - approximately 1GW annually.

BYD has been seeking to diversify away from autos for some time - the company's Q4 2010 results revealed a plunge of 94% in demand for electric cars, marking 2011 as a year of continued stagnation in that sector. Alternative uses for BYD's battery technology, such as storage stations are therefore pivotal in the company's forward strategy.

More efficient, more stable

Cost effectiveness is the major argument for building commercial battery storage stations such as Zhangbei. He Long, the Vice President of BYD claims that BYD’s battery energy storage system improves renewable energy efficiency within a smart grid system by 5%-10%.

A spokesperson for the China State Grid Corporation commented to the Chinese media that BYD was chosen as a partner for the project because of their battery's superior service life – which is claimed to be in excess of 20 years.

There are still question marks over whether energy storage technologies, such as the Zhangbei project, can be truly cost-effective on a utility scale over the long-term. Xiu Binglin’s response it that the cost-effectiveness will be enhanced by serious commitment to building a truly smart national grid in China, coupled with heavy investment in alternative energies that can fuel the grid.

China has earmarked US$364bn for grid investment between now and 2015. So far, it has remained on track. Even following recent problems with nuclear energy in Asia post-Fukushima, the energy guzzling behemoth has remained on track to comfortably provide 9.5% of its electricity needs via renewable energy sources by 2015 as per the PRC's current state-mandated Five Year Plan.

But Mr Xiu warns that much of China's investment in alternatives such as solar and wind will be wasted if a suitable smart grid and infrastructure such as battery storage stations are not also put in place.

Those globally working on storage stations will be closely watching Zhangbei as it is by far the largest constructed renewable energy storage facility constructed to date. Others in America are really only test stations on a much smaller scale, for instance AES’ Laurel Mountain project, West Virginia and a Duke Energy project in Texas.

For larger projects Zhangbei will be most instructive - indeed BYD is currently reported to be developing a grid scale 5-10MW battery storage station for the Los Angeles Department of Water and Power (LADWP) in California.


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