Grid-Side Demand: Increase Grid Flexibility, Absorb Intermittent Power Source Impacts

Mismatched Benefits of Investment Entities Lead to Development Lag

• The core role of grid-side energy storage projects is to increase grid flexibility and provide "electricity auxiliary services" to support grid stability, such as grid peak shaving, frequency regulation, or standby power supply.

• The essence of auxiliary services lies in "backup" rather than usage; however, apart from grid self-construction, the grid-side energy storage stations built by other entities are charged based on "usage," greatly hindering the investment and construction of grid-side energy storage stations.

Independent Energy Storage Station Model Gradually Becomes the Direction of Source-Grid-Side Energy Storage Development

• At the policy level, the market status of independent energy storage stations has been clarified; in May 2022, the NDRC and NEA issued a notice "Further Promoting the Participation of New Types of Energy Storage in the Power Market and Dispatching Use," pointing out that "new energy storage projects with legal person qualifications that meet relevant standards and requirements of power market operation entities can be transformed into independent energy storage and participate in the power market as independent entities." The reform of electricity auxiliary services and marketization continues to advance.

• At the local level, policies have been successively introduced to clarify the market status of independent energy storage stations and the detailed rules for participating in power market services.

Independent Energy Storage Station Revenue Models Gradually Clarified

• Participate in spot market trading to obtain price difference arbitrage; the core role of energy projects is to increase grid flexibility and provide "electricity auxiliary services" to support grid stability, such as grid peak shaving, frequency regulation, or standby power supply.

• Capacity compensation and capacity leasing income; various regions have successively introduced capacity compensation rules. Capacity leasing leases a certain capacity of independent energy storage stations to new energy generation projects for a long term.

• Electricity auxiliary service income: Various regions are gradually clarifying policies and providing independent energy storage stations with peak shaving compensation fees ranging from 0.15 to 0.8 yuan per kWh based on peak shaving electricity.

Independent Energy Storage Station

Independent energy storage stations are an innovative application to solve the problem of non-profitability of grid-side energy storage and the "useless but allocated" situation of generation-side storage.

Solving the Storage Problem through "Capacity Leasing"

• Usually fulfill the "storage allocations obligation" through "capacity leasing" to make the storage obligation of wind and solar power a reality; as an independent market entity, independent energy storage stations can obtain additional operational income through grid auxiliary services, participating in marketized transactions, and other means, thus innovating the system.

Independent Energy Storage Stations Focus on the Levelized Cost of Storage and Real Operating Life of Storage Projects

• Compared with the pure cost expenditure nature of new energy storage projects, the owners of independent energy storage stations are genuinely concerned about the economic indicators such as the levelized cost of storage and cycle life of storage projects, rather than simply focusing on the initial construction investment.

Application Advantages

• The levelized cost of storage is the lowest, and the economic and technical indicators are far ahead of other technology routes (including lithium batteries), making it most suitable for independent energy storage station projects.

• Xingyuan energy storage products possess inherent safety characteristics, fundamentally solving the safety issues of energy storage stations.