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Comparison of the energy storage industry in China and the United States: Different development models and strategies highlight the diversified paths of global energy transition

published: 2024-04-29 15:40

Recently, Wood Mackenzie's latest report shows the continued trend of rapid growth in electrochemical energy storage capacity in the United States and released data as of the first quarter of 2024. In March this year, the Energy Storage Application Branch of the China Chemical and Physical Power Industry Association also released the statistical analysis data of China's energy storage commissioning projects from January to February 2024. According to the released data, the development of the energy storage industry in China and the United States has accelerated, and each has a unique market environment and industrial development strategy, vividly interpreting the diversified practice paths in the global energy transition process.

As far as China's energy storage market is concerned, according to incomplete statistics, during January-February 2024, China put into operation 99 new energy storage projects, with a total scale of nearly 3GW, totaling 2.912GW/7.743GWh, of which due to reasons such as some of the projects were not completed at the end of 2023, the scale of the projects connected to the grid in January was 2.457GW/6.574GWh, which accounted for a high proportion of 84.38%, and a high proportion of the January 2023 year-on-year growth of 186.8%. And the scale of new energy storage in February 2024 fell back to the normal level in the same period, with a scale of 45MW/1169MWh, a year-on-year growth of 12.5%. Among them, grid-side energy storage dominates, accounting for more than half of the total, especially the booming shared energy storage projects, the scale of which accounts for up to more than half of the grid-side energy storage.

From January to February 2024, a total of 17 new energy storage projects on the power supply side were put into operation, with a scale of 1GW and 1.003GW/3.316GWh. The project has been put into operation in Xinjiang, Inner Mongolia and other places. Among them, the energy storage time of Xinjiang projects is mostly 4 hours, and those in Inner Mongolia are 2 hours.

On the grid side, large-scale independent shared energy storage projects have developed into a major trend. From January to February 2024, a total of 17 new grid-side energy storage projects will be added, with a total scale of 1.613GW/3.426GWh. The projects are mainly distributed in Guangxi, Guangdong, Gansu, Hunan and Jiangsu. Among them, Guangxi is particularly concentrated, with a total of 6 grid-side energy storage projects in operation, with a total scale of 740.86MW/1481.72MWh.

On the user side, new energy storage has increased significantly. According to incomplete statistics, from January to February 2024, 65 new user-side energy storage projects will be added, mainly micro and small industrial and commercial projects, with a total scale of 297MW/1001MWh, accounting for as much as 10%. Among them, Jiangsu and Zhejiang provinces have become bright spots, industrial and commercial energy storage projects are distributed everywhere, and affected by the adjustment of electricity price policies, the widening of the peak-to-valley electricity price gap has further stimulated energy storage investment and project development.

As far as the U.S. energy storage market is concerned, the data for the fourth quarter of 2023 shows that the installed capacity of energy storage in the United States has exploded, with an installed capacity of 3,983MW/11,769MWh and an average energy storage duration of 2.95 hours, breaking the previous installation record, especially in California and Texas, where the growth is most significant, accounting for 77% of the new installations.

At the same time, the residential energy storage market also made a breakthrough, with about 218.5MW of new installed capacity, surpassing the record of 210.9MW set in the third quarter. Wood Mackenzie said 33.9MW was deployed in the Communities, Commercial and Industrial (CCI) segment, with the majority installed in California, Massachusetts, and New York.

Vanessa Witte, senior analyst at Wood Mackenzie, said: "The U.S. energy storage market performed very strongly in the fourth quarter of 2023, thanks to the easing of supply chain constraints and the decline in system prices.”

The sharp decline in battery prices is a key factor driving the growth of the market. In the fourth quarter, lower-than-expected demand for electric vehicles in the U.S. and the European Union and an oversupply of battery-grade lithium raw materials led to a sharp drop in battery costs, which in turn contributed to the overall boom in the energy storage industry.

While the grid side is up 98% year-on-year in terms of installed capacity, Wood Mackenzie warns that this growth curve is unlikely to last.

"Growth in 2025 and 2026 will be flattened in 2025 and 2026 due to difficulties in the early stages of development, such as permit approvals, site selection difficulties and grid connection queues, which will lead to delays in many projects," the report states.”

Meanwhile, Wood Mackenzie expects the residential market to grow to 2.1GW by 2024 and CCI to 1.2GW. The company said the emergence of energy storage incentive programs and California's transition to NEM 3.0 (Net Metering Framework) will support the growth of distributed storage in the coming years.

In a comprehensive comparison, there are significant differences in the development models and strategies of the energy storage industry between China and the United States. China's energy storage market focuses more on the construction of large-scale energy storage projects on the grid side, as well as the distribution and storage application of new energy sources, and policy guidance and electricity price mechanism reform play a decisive role in the promotion of user-side energy storage. In the U.S. market, driven by technological innovation and cost reduction, the overall energy storage market has developed in an all-round way, with outstanding performance on the grid side, residential and industrial and commercial energy storage, and high market flexibility and technological maturity.

Whether it is the promotion of large-scale energy storage projects in China or the comprehensive development of the diversification of the energy storage market in the United States, it shows the core role of the energy storage industry in the global energy transition, indicating that the global energy storage market will be more diversified in the future.


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