Rystad Energy - Energy Knowledge House
Rystad Energy - Energy Knowledge House

Commentary

The fundamental storage mechanism to support China's carbon-neutral plan

As China pivots from a thermal energy dominated power grid to clean energy, a storage mechanism needs to be established to manage the more variable supply of renewable energy. In this commentary, Rystad Energy analyzes the current and future role of pumped storage in China’s energy grid. Pumped storage is by far the most mature method of energy storage, and plays a significant shifting and balancing role, not only for intraday load shifting but also seasonality. China currently has nearly 32 gigawatts (GW) of pumped storage in operation, but a lot more is needed in order to reach the goal of carbon-neutrality by 2060. Taking into account all existing feasibility study plans, site selection plans, and projects under construction in each province, Rystad Energy estimates that China will have 130 GW of pumped storage in 2050.

As China pivots from a thermal energy dominated power grid to clean energy, a storage mechanism needs to be established to manage the more variable supply of renewable energy. In this commentary, Rystad Energy analyzes the current and future role of pumped storage in China’s energy grid. Pumped storage is by far the most mature method of energy storage, and plays a significant shifting and balancing role, not only for intraday load shifting but also seasonality. China currently has nearly 32 gigawatts (GW) of pumped storage in operation, but a lot more is needed in order to reach the goal of carbon-neutrality by 2060. Taking into account all existing feasibility study plans, site selection plans, and projects under construction in each province, Rystad Energy estimates that China will have 130 GW of pumped storage in 2050.

Pumped storage is the most cost-effective solution due to its long life cycle, high energy conversion efficiency (80-90%), and low storage cost. The first pumped storage power station in China was opened in 1968, with a capacity of 11 megawatts (MW). More construction of pumped storage power stations in China began in the late 1980s. At the end of 2020, China had 31.53 GW pumped storage in operation, which occupies 93.7% of the Chinese operating storage market.

20210104_Renewables_China Pumped Storage_Fig1.jpg

By the end of 2020, 31 pumped storage power stations were operating in China, and 41 stations, with an expected capacity of 56.23 GW, are under construction. The operating and under-construction pumped storage power stations in China are mainly distributed in South China, Central China, North China, and East China to solve balancing issues in the power grid. More subsequent projects are in the application and research stage. Taking into account all existing feasibility study plans, site selection plans, and projects under construction in each province, Rystad Energy estimates that China will have 130 GW of pumped storage in 2050.  

20210104_Renewables_China Pumped Storage_Fig2.jpg

In 2050, three provinces – Zhejiang, Hebei, and Guangdong – will dominate pumped storage capacity in China. The total capacity of Zhejiang is estimated to reach 14.2 GW, with 8.4 GW of pumped storage already under construction, and 1.2 GW has entered the developmental approval (DA) stage. Hebei is a latecomer and only has an existing pumped storage total capacity of 1.3 GW, but up to 6.6 GW of capacity is under construction, and projects in the feasibility study stage total 5.4 GW. By 2050, Rystad Energy estimates Hebei will boast 13.3 GW of pumped storage.

As the first province in China to have large-scale pumped storage, Guangzhou has experienced widespread development in the past few years, becoming the top operating pumped storage province.  However, the capacity of construction in progress is only half that of Zhejiang, at 3.6 GW. There is only one feasibility research project, with a total of 1.2 GW. If this trend continues, Anhui, Hubei, Shandong, and other provinces are likely to catch up within the pumped storage space. 

20210104_Renewables_China Pumped Storage_Fig3v2.jpg

Guangdong Huizhou (2.4 GW), Zhejiang Tianhuangping Phase I (1.8 GW), Jiangsu Liyang Wuyuanshan (1.5 GW), Zhejiang Xianju (1.5GW), and Anhui Jixi (1.5 GW) are the five existing large-scale pumped storage power stations in China. There are also three pumped storage power stations under construction that each have a capacity of over 2 GW: Zhejiang Wulongshan (2.4 GW), Guangdong Yangjiang (2.4 GW), and Zhejiang Tianhuangping Phase II – Changlongshan (2.1 GW).

20210104_Renewables_China Pumped Storage_Fig4.jpg

20210104_Renewables_China Pumped Storage_Fig5v2.jpg

The construction of the 3.6 GW Hebei Fengning pumped storage facility – which will be the biggest in the world – comes at a price of CNY 18.73 billion ($2.86 billion) and has been underway since June 2013. Phase I is expected to commence operation by 2021, and Phase II is scheduled for commissioning in 2023. This station will operate as a peak power plant to ensure a stable electricity flow to the Beijing-Tianjin-North Hebei grid while balancing the intermittent power supply from large wind and solar parks in the northern Hebei and Inner Mongolia regions.

20210104_Renewables_China Pumped Storage_Fig6.jpg

With the development of lithium batteries, Rystad Energy expects battery storage to eventually eclipse pumped storage. But for the time being, pumped storage is still the first choice. The average cost of pumped storage in China ranges from $458.49 per kilowatt (CNY 3,000 per KW) to $1,146.23 per KW (CNY 7,500 per KW) in the next five years, based on exchange rates at the time of writing. The average generation at a pumped storage station is 1667.18 gigawatts per hour (GWh).

20210104_Renewables_China Pumped Storage_Fig7.jpg

Given the current technical conditions, energy storage systems used in conjunction with wind and solar power are limited to pumped storage, sodium-sulfur batteries, and flow batteries. The unit kilowatt investment of sodium-sulfur batteries and flow batteries for energy storage is 4.8 to 7.6 times higher than that of pumped storage power stations. To date, no private ownership of pumped storage is allowed in China. All pumped storage power stations in China are owned by the State Grid Corporation of China (SGCC), a government-owned electric utility corporation – the largest utility company in the world. The state-owned structure is beneficial given the lengthy construction timelines and environmental policy hurdles of pumped storage projects.

The current high costs of batteries and the state-controlled model mean that pumped storage is currently king in China. However, given the geographical limitations and lengthy construction periods of pumped storage, it is hard to satisfy commercial and residential utilization. As batteries become cheaper and offer more storage flexibility, pumped storage could face heightened competition in the commercial storage market. But in large-scale load shifting storage stations, pumped storage is still the core storage technique for energy, especially clean sources such as solar and wind, to help China achieve its carbon-neutral ambitions.

;