VINACHEM

Rows of what look like thin, white shipping containers are lined up on a barren dirt field in China's Shandong province.

Filled with batteries, they form a 795 megawatt (MW) plant that can hold up to 1 million kilowatt-hours of electricity - enough to power 150,000 households for a day, making it China's largest such storage facility when it was connected to the grid last Saturday.

Built by Lijin County Jinhui New Energy Co, the project is part of an explosion in development of energy storage in China, which has called for even more investment in the sector to boost renewable electricity and ease grid bottlenecks.

While the state-led drive has provided a welcome spark for home-grown battery giants such as CATL (300750.SZ), opens new tab and BYD, some industry insiders and experts say pricing reforms and technology improvements are needed for a storage sector whose rapid growth has been plagued by low utilisation and losses for operators.

"Most of the players in this sector are trying to figure out how to make money," said Rystad Energy senior analyst Simeng Deng.

Investment in grid-connected batteries in China surged 364% last year to 75 billion yuan ($11 billion), according to Carbon Brief, creating by far the world's largest storage fleet at 35.3 GW as of March.
In May, China set a new target of at least 40GW of battery storage installed by the end of 2025, up 33% from the previous goal under a wider plan to reduce carbon emissions.

Storage is critical to help balance supply and demand when wind and solar farms produce more renewable electricity than the grid's distribution system can handle, or when a lack of sun or wind means they are generating too little power.

To meet Beijing's targets, local governments have required renewable energy plants to build storage, driving rapid capacity growth.

However, highly regulated power markets have struggled to incentivise usage, particularly at solar and wind facilities, leading China's cabinet to call for research into improving price mechanisms.

Energy storage at renewables plants operated just 2.18 hours a day last year, while independent facilities operated only 2.61 hours per day, according to the China Electricity Council. By comparison, storage at industrial and commercial plants operated 14.25 hours per day.  – Reuters –