1、NEW ENERGY FOR A NEW ERATHE CHINA BATTERY ENERGY STORAGE SYSTEM(BESS)MARKETGREATER CHINA RESEARCHApril 20242 The China Battery Energy Storage System(BESS)MarketCONTENTSExecutive Summary IntroductionBESS The ConceptBESS Why is it Needed?BESS ApplicationBESS Benefits and AdvantagesBESS Policy in the C

2、hinese Mainland MarketBESS Sector Development,Industry Players and Market Outlook for the Chinese Mainland MarketBESS Development FinancingKey TakeawaysBusiness ContactsResearch Contacts0304060708122New Energy for a New Era 3A Battery Energy Storage System(BESS)secures electrical energy f

3、rom renewable and non-renewable sources and collects and saves it in rechargeable batteries for use at a later date.When energy is needed,it is released from the BESS to power demand to lessen any disparity between energy demand and energy generation.BESS types include those that use lead-acid batte

4、ries,lithium-ion batteries,flow batteries,high-temperature batteries and zinc batteries.China is committed to steadily developing a renewable-energy-based power system to reinforce the integration of demand-and supply-side management.An augmented focus on energy storage development will substantiall

5、y lower the curtailment rate of renewable energy and add tractability to peak shaving,contributing to coal use reduction in China.In terms of BESS infrastructure and its development timeline,Chinas BESS market really saw take off only recently,in 2022,when according to the National Energy Administra

6、tion(China)and China Energy Storage Alliance(CNESA)data,new energy storage capacity reached 13.1GW,more than double the amount reached in 2021.Ahead and heading into a new era for new energy,it is expected that Chinas energy storage capacity and its BESS capacity in particular will grow at a CAGR ra

7、te of 44%between 2023 and 2027.Finally,BESS development financing globally thus far has stemmed from various sources:funds,corporate funds,institutional investors,or bank financing.In China,some of these funding means have also been utilised.Looking to the future,two possible funding means which cou

8、ld be brought into play/further brought into play could be green financing and real estate investment trusts(REITs).EXECUTIVE SUMMARY4 The China Battery Energy Storage System(BESS)MarketINTRODUCTIONOver the last few years,Chinas renewable energy push has stirred the countrys domestic energy storage

9、market.Today,there are generally five means used to store energy:Mechanical energy storage systems;Battery energy storage systems(BESS);Thermal energy storage systems;Figure 1:Energy storage system technologies Source:ETN,Cushman&Wakefield Research Electrical energy storage systems,and;Hydrogen ener

10、gy storage systems(Figure 1).MechanicalThermalElectricalHydrogenElectrochemicalPumped Hydro Energy Storage(PHES)Lead Acid,Advanced Lead AcidSensible-Molten Salt,Chilled WaterSuper CapacitorsSuperconducting Magnetic Energy Storage(SMES)Power-to-Power(Fuel Cells,etc)Power-to-GasLatent-ice Storage,Phas

11、e Change Materials(PCM)Thermochemical StorageLithium ion(LCO,LMO,LFP,NMC,NCA)Flow Batteries(Zine Bromine,Vanadium)Zinc Batteries-Zn-Air,ZnMnOHigh Temperature(NaS,NaNicl)Gravity StorageTechnologiesCompressed Air Energy StorageFlywheelsNew Energy for a New Era 5This push has largely been propelled by

12、a necessity to address the intermittency and variability of renewable energy sources such as wind and solar.In terms of BESS infrastructure in particular and its development timeline,Chinas BESS market really saw take off only recently,in 2022,when according to the National Energy Administration(Chi

13、na)and China Energy Storage Alliance(CNESA)data,new energy storage capacity reached 13.1GW,more than double the amount reached in 2021(Figure 2 and Figure 3).In this report we will first begin by taking a look at the general BESS concept,why it is needed and its application before outlining some of

14、its benefits and advantages.Next,in this report we will examine related BESS policy,sector development,industry players,market outlook for the Chinese mainland market and BESS development financing,before finishing up with some key takeaways.Figure 2:Proportion of new energy storage Projects install

15、ed in China(2022)Figure 3:China energy storage Estimated installed capacity(2021/2022)Source:The National Energy Administration(China),CNESA,Cushman&Wakefield ResearchSource:The National Energy Administration(China),CNESA,Cushman&Wakefield Research95%5%Battery Energy Storage System(BESS)Others202120

16、225.7GW13.1GW6 The China Battery Energy Storage System(BESS)MarketBESS The ConceptA BESS secures electrical energy from renewable and non-renewable sources and collects and saves it in rechargeable batteries for use at a later date.When energy is needed,it is released from the BESS to power demand t

17、o lessen any disparity between energy demand and energy generation(Figure 4).The growth in renewable energy sources in China and the countrys target to achieve carbon neutrality by 2060 make BESS infrastructure a critical technology for public and commercial organisations in China.By embracing and i

18、mplementing BESS infrastructure,China can further map out a central pathway in its passage towards net zero.Figure 4:BESS and principal componentsSource:TROES,Cushman&Wakefield ResearchStorageDeviceMonitors&ControlAC BreakerAC TransformerACDCPower Conversion SystemTemperatureControlDC SwitchNew Ener

19、gy for a New Era 7BESS Why is it Needed?Many energy delivery systems around the globe are subject to constraints and fluctuations in energy supply and energy demand.A BESS is able to assist in these situations by:Storing energy during low power usage times and releasing energy when power demand peak

20、s(peak shaving/grid balancing);Providing power in critical times of need,such as power outages(by supplying backup power or by offering power in the event of a black start),and;By adjusting their active power output in response to a power frequency or voltage deviations thus keeping efficient,reliab

21、le and resilient energy delivery on more of an even keel throughout time(Figure 5).Figure 5:BESS power Sources and usersSource:Integra Sources,Cushman&Wakefield ResearchBESS infrastructure also offers capabilities for and efficiencies to provide low-cost energy for the electric grid and abets in mol

22、lifying climate change.Renewable energy generation,for instance,is sporadic in nature.BESS infrastructure can store energy when the sun is out,when there is wind,when there is heat or when water is flowing,for example,and release energy when these conditions are not in play.Energy SourcesBESS UsersB

23、ESS8 The China Battery Energy Storage System(BESS)MarketBESS ApplicationBESS types include those that use lead-acid batteries,lithium-ion batteries,flow batteries,high-temperature batteries and zinc batteries.Lead-acid batteries are typically cheaper than,say,lithium-ion batteries but are not as eff

24、icient and have a shorter lifecycle.Lithium-ion batteries are one of the most popular types used by BESS infrastructure in China.They are lightweight and provide a high energy density.A sodium-sulphur battery is an example of a high-temperature battery.They provide high energy and power density,a lo

25、ng lifecycle,and are reliable while operating at high temperatures.Flow batteries are a newer type of BESS that provide a longer lifecycle than conventional lead-acid or lithium-ion batteries.Zinc-bromine batteries were developed as an alternative to lithium-ion batteries for stationary power applic

26、ations from grid-scale to domestic scale.The battery system is generally less disposed to overheating than lithium-ion batteries.Lead-acid Batteries Lithium-ion Batteries High-temperature Batteries Flow Batteries Zinc BatteriesNew Energy for a New Era 9Besides batteries,a BESS needs further systems

27、and components to operate and be connected to the electrical grid.A power conversion system(PCS)is the central apparatus that transforms power between the DC battery terminals and the AC line voltage and allows for power to flow in a bi-directional way to charge and discharge the battery.The other p

28、rimary device within a BESS is an energy management system(EMS)to synchronise the control and operation of all the mechanisms in the system,including the battery management system(BMS)and the environmental control system(ECS)(Figure 6).Figure 6:BESS Systems and components Source:Advantech,Cushman&Wa

29、kefield ResearchEMSBMSBatteryPacksBatteryCellsECSPCS10 The China Battery Energy Storage System(BESS)MarketBESS Benefits and AdvantagesApart from the already mentioned:Energy demand management(peak shaving/grid balancing)(Figure 7);Energy resilience,and;Power frequency/voltage deviation mitigation ad

30、vantages a BESS has,here are four further selected advantages:Figure 7:BESS Peak shavingSource:Exro,Cushman&Wakefield ResearchBattery Discharging PeriodBattery Charging PeriodNew Energy for a New Era 11A BESS can be hooked up to renewable energy sources or non-renewable energy sources alike to form

31、a hybrid power solution.A BESS also does not require a large footprint and is not generally hampered by location.Utilising a BESS that uses renewable energy supports a reduction in carbon emissions from fossil fuels and contributes to net zero or even climate positive goals.Energy arbitrage lets use

32、rs who adopt a BESS solution to store their bought power during off-peak times to use on-site when the imported power price is high.At the same time,users can sell their stored power via the market for revenue generation.Hybrid Power Solution Small Site Footprint Environmental Energy Arbitrage and R

33、evenue Generation12 The China Battery Energy Storage System(BESS)MarketBESS Policy in the Chinese Mainland MarketChina is committed to steadily developing a renewable-energy-based power system to reinforce the integration of demand-and supply-side management.An augmented focus on energy storage deve

34、lopment will substantially lower the curtailment rate of renewable energy and add tractability to peak shaving,contributing to coal use reduction in China.The 12th Five-Year PlanThe 14th Five-Year PlanThe first time energy storage is mentioned.China released mid-and long-term policy targets for new

35、energy storage development.For BESS infrastructure,by 2030,market-oriented development will be reached.A cost-reduction objective was initiated to reduce the system cost per unit of electrochemical energy storage by at least 30%by 2025.New Energy for a New Era 13BESS Sector Development,Industry Play

36、ers and Market Outlook for the Chinese Mainland MarketWith Chinas BESS market development really taking off in 2022,a good number of China-based industry players,such as Sungrow and Hyperstrong,are becoming top system integrators globally.2023 alone saw further BESS projects come/expected to come to

37、 market including:Ningxia Chinas largest BESS(200 MW/400 MWh),equipped with Hithiums lithium iron-phosphate cells has been built for system integrator ROBESTEC.Lingwu,Ningxia Kehua Digital Energy has provided the countrys first 100 MW liquid-cooled battery energy storage application with a capacity

38、of 100 MW/200 MWh.Tong Liao,Inner Mongolia Ming Yang Smart Energy-Tong Liao Hybrid project came online this year,a 320 MW lithium-ion BESS.Shanghai Tesla started the construction of its new gigafactory in Shanghai for manufacturing its large-scale BESS called Megapacks for domestic and global market

39、s.Henan BYD has secured a RMB498 million contract from state-owned Yuneng Holdings to construct battery storage facilities in Henan.Meizhou City,Guangdong China Southern Power Grid Companys 40 MWh BESS has come online.It features immersion liquid-cooling technology,the first of its kind in the world

40、,developed by Hithium.Various locations BYD has signed a framework agreement with the China Electricity Council to jointly develop research projects,industry standards,and service networks for battery storage systems.14 The China Battery Energy Storage System(BESS)MarketAt present China does have so

41、me market advantages when it comes to the development of BESS infrastructure,including the supply chain related to global lithium-ion battery production,with China dominating the rankings in 2022(Table 1).Table 1:Global lithium-ion battery supply chain ranking(2022)Source:Bloomberg NEF,Cushman&Wakef

42、ield ResearchChinaCanadaUSFinlandNorwayGermanySouth KoreaSwedenJapanAustraliaFranceUKCzechiaPolandHungaryChileTurkeyIndiaVietnamSouth AfricaBrazilIndonesiaArgentinaSlovakiaThailandPhilippinesMexicoMoroccoDRCBoliviaCountryRaw MaterialsBatteryManufacturingIndustry,Innovation andInfrastructureDownstrea

43、mDemend529292882457502642582524268228242883028New Energy for a New Era 15Along with this advantage and others,including a strong genera

44、l energy storage infrastructure policy framework,ahead and heading into a new era for new energy,it is expected that Chinas energy storage capacity and its BESS capacity in particular will grow at a CAGR rate of 44%between 2023 and 2027(Figure 8).Figure 8:China energy storage Estimated installed cap

45、acity(2023F-2027F)Source:The National Energy Administration(China),CNESA,Cushman&Wakefield Research23.538.758.175.4101.90204060801001202023F2024F2025F2026F2027FCAGR=44%(GW)16 The China Battery Energy Storage System(BESS)MarketBESS Development Financing BESS development financing globally thus far ha

46、s stemmed from various sources:funds,corporate funds,institutional investors,or bank financing.In China,some of these funding means have also been utilised.Looking ahead,two possible funding means which could be brought into play/further brought into play in China,could be green financing and real e

47、state investment trusts(REITs).Since 2019,the green loan balance with Chinese banks has seen exponential growth,from RMB9.3 trillion(USD1.4 trillion)in Q1 2019 to RMB22 trillion(USD3.3 trillion)by the end of 2022(Figure 9).Given BESS infrastructure and its environmental sustainability credentials,we

48、 expect more green financing funding to be channelled into this sector in China in the future.Green FinancingFigure 9:Green loans in China(Q1 2019-Q4 2022)Source:TAB Insights,Cushman&Wakefield Research00.511.522.533.540%35%30%25%20%15%10%5%0 Green Loan Balance Growth Rate of Green Loan Bal(%)Growth

49、Rate of Total Loan Bal(%)($Trillion)New Energy for a New Era 5060708090202302520151050To date,China has 29 listed infrastructure REITs,including some related to power generation infrastructure.Given BESS infrastructure and its strong relationship with power infrastructure,in th

50、is case power storage infrastructure,it could be the case that future power infrastructure financing in China could further tap into this financial funding vehicle(Figure 10).REITsFigure 10:China infrastructure REITs market volume and number(2021-2023)Note:*China infrastructure REITs contain industr

51、ial parks,affordable housing,port warehousing,turnpikes,power generation infrastructure and municipal engineering infrastructure.*The data was published on 31 December in 2021,2022 and 2023.Source:Wind,Cushman&Wakefield Research Market Volume(RMB Billion)Number of Infrastructure REITs18 The China Ba

52、ttery Energy Storage System(BESS)MarketA BESS can improve the reliability,availability,and efficiency of the power supply.There are many types of BESS infrastructure available including lead-acid batteries,lithium-ion batteries,flow batteries,high-temperature batteries and zinc batteries.China is co

53、mmitted to steadily developing a renewable-energy-based power system to reinforce the integration of demand-and supply-side management.NEW ENERGY FOR A NEW ERATHE CHINA BATTERY ENERGY STORAGE SYSTEM(BESS)MARKETKEY TAKEAWAYSNew Energy for a New Era 19In terms of BESS infrastructure and its developmen

54、t timeline,Chinas BESS market really saw take off only recently,in 2022,when according to the National Energy Administration(China)and China Energy Storage Alliance(CNESA)data,new energy storage capacity reached 13.1GW,more than double the amount reached in 2021.Ahead and heading into a new era for

55、new energy,it is expected that Chinas energy storage capacity and its BESS capacity in particular will grow at a CAGR rate of 44%between 2023 and 2027.Looking to the future,two possible funding means which could be brought into play/further brought into play in China,could be green financing and rea

56、l estate investment trusts(REITs).20 The China Battery Energy Storage System(BESS)MarketNew Energy for a New Era 21Alva ToVice President,Greater China,Head of Consulting,Greater CTony SuManaging Director,Head of Industrial&Logistics Property Services,CDavid ShiManaging Director,Head of Project&Devel

57、opment Services,ChinaCo-Head of Sustainability Services,Greater CAndrew ChanManaging Director,Head of Valuation&Advisory Services,Greater CFrancis Li International Director,Vice President,Greater China,Head of Capital Markets,Greater CAlton WongExecutive Director Head of Sustainability Advisory Serv

58、ices,APAC Head of Advisory Services Valuation and Advisory Services,Greater CBusiness Contacts22 The China Battery Energy Storage System(BESS)MarketRESEARCH CONTACTSShaun BrodieHead of Research Content Greater CXiaoDuan ZhangSouth&Central CThis report was authored by Shaun Brodie,Head of Content,Gre

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