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Energy Storage Insights: Tracking Industry Hotspots!

Release time:

2025-09-22

Source:

The action plan outlines that by 2027, the nationwide installed capacity of new energy storage systems will reach over 180 million kilowatts, driving direct project investments of approximately 250 billion yuan. Currently, lithium-ion battery-based energy storage remains the dominant technology pathway, though a wider range of technological approaches and application scenarios will continue to expand. The plan also calls for piloting several demonstration projects and developing a number of exemplary application cases. New energy storage systems are encouraged to fully participate in the electricity market. Specifically, "new energy + energy storage" facilities will be promoted as unified bidding entities, enabling them to integrate seamlessly into electricity market transactions. Additionally, orderly initiatives will be launched to facilitate the participation of advanced energy storage technologies in medium- and long-term market mechanisms.

National Policies and Headlines

01 The National Development and Reform Commission and the National Energy Administration have jointly issued the "Special Action Plan for Large-Scale Deployment of New Energy Storage (2025–2027)."

The action plan primarily covers aspects such as overall objectives, application scenarios, utilization levels, innovative integration, the standardization system, and market mechanisms.

The action plan indicates that by 2027, the nationwide installed capacity of new energy storage will reach over 180 million kilowatts, driving direct project investments of approximately 250 billion yuan. Currently, lithium-ion battery-based energy storage remains the dominant technology route, though various other technological approaches and application scenarios are set to expand further. The plan also aims to cultivate a batch of pilot demonstration projects and establish several exemplary application scenarios.

Encourage new energy storage systems to fully participate in the electricity market. Promote "new energy + energy storage" as a joint bidding entity, enabling integrated participation in electricity market transactions. Gradually facilitate the involvement of advanced energy storage technologies in medium- and long-term markets.

Guide new energy storage systems to participate in the ancillary services market. In line with the progress of electricity market development, systematically encourage new energy storage technologies to engage in ancillary service markets such as frequency regulation and reserve power. Additionally, regions are encouraged to tailor their approaches by exploring and piloting innovative ancillary services like ramp-up capabilities and rotational inertia, gradually expanding the scope of new energy storage systems' involvement in these critical markets.

Accelerate the development of a new pricing mechanism for energy storage. Promote the refinement of capacity-price mechanisms for flexible resources such as advanced energy storage, and systematically establish a reliable capacity compensation framework that provides fair incentives for ensuring power system reliability. All regions should expedite the construction of medium- and long-term electricity markets as well as spot markets, enhance market price formation mechanisms, and foster the rational determination of charging and discharging prices for advanced energy storage technologies.

02 The National Development and Reform Commission and the National Energy Administration have issued the "Guidelines for Building Markets in Regions with Continuous Operation of Electricity Spot Markets."

On September 12, the National Development and Reform Commission and the National Energy Administration jointly issued the "Guidelines for Building Electricity Spot Markets in Regions with Continuous Operation," which clearly states: Virtual power plants, smart microgrids, advanced energy storage systems, and other new types of market participants—as well as demand-side entities—are encouraged to participate in spot market competition by submitting both quantity and price bids, while also exploring node- or zone-based pricing for bid submissions and settlement. Additionally, "power source + energy storage" combinations are supported as joint bidding entities entering the spot market.

The study aims to establish a capacity compensation mechanism tailored to various types of power sources. Based on the maturity levels of local electricity markets, a robust capacity compensation framework will be developed to provide fair incentives for ensuring reliable capacity in the power system. Provincial price authorities, in collaboration with relevant departments, will adhere to the principle of fundamentally recovering the fixed costs of marginal units in the market. They will also consider market revenues from electricity trading and ancillary services, while factoring in energy and power planning, supply-demand dynamics, and users' affordability. On this basis, they will rationally determine unit-specific reliable capacity compensation standards and adjust them dynamically as needed. In regions where conditions permit, efforts will be made to explore capacity pricing mechanisms through competitive bidding, thereby leveraging market-based approaches to ensure long-term system capacity sufficiency. Once market conditions are fully mature, the establishment of a dedicated capacity market will follow.

Additionally, the document proposes tailoring measures to local conditions to improve and refine the ancillary services market system. Specifically, in the frequency regulation market, a market mechanism will be established—guided by regulatory effectiveness—based on detailed performance metrics such as response rate, adjustment accuracy, and response time. This initiative aims to promote joint clearing between the frequency regulation market and the electricity energy market, ultimately achieving optimal overall costs.

Local Policies and Headlines

01 The Shanghai Municipal Development and Reform Commission has issued the "Notice on Submitting Applications for the Second Batch of Independent Energy Storage Power Station Projects in 2025."

On September 17, the Shanghai Municipal Development and Reform Commission issued a notice regarding the submission of applications for the second batch of independent energy storage power station projects in 2025. Projects applying to be included in the second batch of independent energy storage projects for 2025 must complete their filing by June 30, 2026, after being reviewed by relevant professional management departments and meeting the necessary conditions for construction commencement.

The analysis and justification will focus on the project's construction conditions—including site selection, grid connection, occupation of basic farmland (including reserve areas), ecological redlines, urban development boundaries, and natural reserves—as well as restrictive factors. It will also cover the construction plan, construction model, operational model, fire protection strategy, safety design, construction organization, environmental impact assessment, and social benefits.

Project entity performance and creditworthiness certificates are required. The project entity should possess relevant construction and operational experience, as well as the technical, financial, and management capabilities necessary for project development and construction. Additionally, none of the equity-related enterprises should have engaged in acts such as dishonesty, non-compliant construction, or failure to promptly update and file significant project changes.

02 The Heilongjiang Provincial Development and Reform Commission has issued a notice announcing the release of the "Implementation Plan for Deepening Market-Oriented Reform of New Energy On-grid Electricity Prices in Heilongjiang Province and Promoting High-Quality Development of New Energy."

On September 15, the notice on issuing the "Heilongjiang Province Implementation Plan for Deepening Market-Oriented Reform of New Energy On-grid Electricity Prices and Promoting High-Quality Development of New Energy" was released.

New energy projects can submit bids and participate in market transactions, or they can accept prices formed by the market. Distributed photovoltaic projects are supported to participate directly—or through aggregation—in market trading. Depending on the progress of electricity market development, various power sources such as biomass will gradually be allowed to enter the market and engage in trading.

New energy projects must not be subjected to unreasonable cost-sharing, and requiring energy storage systems as a prerequisite for approving, connecting, or enabling new renewable energy projects is prohibited. Instead, co-located energy storage facilities are encouraged to transition into standalone energy storage systems.

Existing projects:

Project Scope: New energy projects that have completed full approval (filing) for grid connection by June 1, 2025, and are entitled to priority grid-connected power generation under Heilongjiang’s 2025 Power Purchase and Generation Priority Plan.

Mechanism Electricity: Properly align with existing electricity policies that provide guaranteed support, ensuring the scale does not exceed the current level of guaranteed procurement volume. New energy projects within this cap may independently determine the annual proportion of electricity allocated to their implementation mechanism, but this proportion must not surpass the previous year's figure.

Mechanism-based electricity pricing: Remains consistent with the current guaranteed pricing policy (Heilongjiang Province's benchmark coal-fired price is 0.374 yuan/kWh).

Implementation period: Determined by the earlier of either the remaining lifecycle-based utilization hours corresponding to existing projects or the 20-year mark since commercial operation began.

Incremental projects:

Project Scope: New energy projects commissioned starting June 1, 2025 (inclusive), excluding supporting power sources for transmission.

Mechanism Electricity Allocation: For incremental projects, the mechanism electricity allocated in the first year will align with the existing proportion of non-market-based new energy sources. Starting from the second year onward, the allocation will be determined based on factors such as the annual non-hydro renewable energy power consumption targets set by the national authorities and the affordability of end-users. The amount of electricity applied for inclusion under the mechanism by each individual project should be appropriately lower than its total grid-connected output. To encourage industry competition, a minimum threshold for the bid coverage ratio will be established during the bidding process.

Mechanism-based electricity pricing is determined through a voluntary bidding process, organized annually in October. This process involves projects that are already operational or scheduled to come online within the next 12 months—but have not yet been included in the mechanism’s scope of implementation. Bidding is conducted separately for wind power and solar power projects. However, if competition becomes concentrated within a single category or if the overall scale is too small to ensure effective competition, the two categories will no longer be bid separately and will instead be combined into a unified auction. During the bidding process, eligible projects are selected based on their bids, ranked from lowest to highest. The mechanism-based electricity price is then set at the highest winning bid among all selected projects—provided that this price does not exceed the pre-determined bidding cap. The bidding cap is carefully calibrated to balance factors such as reasonable cost returns, green energy value, electricity market supply-and-demand dynamics, and users’ affordability. Importantly, the cap will never surpass the benchmark price for coal-fired power generation. Meanwhile, the initial bidding floor may be set by converting the cost-per-kilowatt-hour derived from advanced power plant construction costs. Projects that fail to secure a spot in the current year’s auction can still participate in future years’ mechanism-based pricing bids.

Implementation period: The estimated time to recoup the initial investment is tentatively set at 12 years.

This plan will take effect from December 31, 2025. Any provisions in the current policies that conflict with this plan shall be superseded by the terms of this plan.

03 Chongqing Electricity Trading Center forwards the Chongqing Municipal Commission of Economy and Information Technology's "Work Plan for the Trial Operation of Continuous Settlement in Chongqing's Electricity Spot Market (Draft for Comments)."

On September 15, the Chongqing Electricity Trading Center forwarded the "Chongqing Electricity Spot Market Continuous Settlement Trial Operation Plan (Draft for Comments)" issued by the Chongqing Municipal Commission of Economy and Information Technology.

Appendix 3, "Chongqing Electricity Spot Trading Implementation Rules (V2.0) (Draft for Comments)," states that directly dispatched conventional coal-fired generating units, new energy plants, and independent energy storage facilities will participate in the electricity spot market by submitting both quantity and price bids.

Independent energy storage capacity leasing does not affect its ability to participate fully in the electricity spot market as a whole. New energy projects paired with energy storage facilities, when operated jointly and equipped with independent metering, control, and other technical capabilities, can transition to standalone energy storage operations—and once doing so, will participate in the electricity spot market as independent storage entities.

The frequency modulation ancillary services market operates independently from the spot market, yet remains coordinated for efficient clearing. It is organized through a mechanism of "centralized bidding, pre-clearing conducted the day before, rolling clearing within the day, and real-time activation." Furthermore, efforts are being made to enhance the integration of peak-shaving ancillary services with the spot market—meaning that during spot market operations, the peak-shaving ancillary services market will no longer run as a separate entity.

In terms of electricity price offers, independent energy storage systems provide marginal electricity prices corresponding to different output levels (discharge is positive, while charging is negative)—in other words, for each additional unit of power generated at a specific output point, operators can freely choose between 2 and 10 distinct pricing points to submit their bids.

Appendix 5, the "Chongqing Electricity Market Settlement Implementation Rules (V2.0) (Draft for Comments)," states that new energy plants and virtual power plants will conduct settlement based on settlement units. In principle, the dispatch unit, trading unit, and settlement unit should remain consistent. Virtual power plants will carry out settlement by dividing aggregated resources into two distinct trading and settlement units: a load-type trading unit and a generation-type trading unit.

The electricity portion of green power transactions for new energy generation (including distributed new energy) is treated as a medium- to long-term contract. Meanwhile, the mechanism-based electricity generated from new energy sources (including distributed new energy) is only included in real-time market settlements and does not participate in medium- to long-term or day-ahead market settlements. The electricity charges for this mechanism-based output are settled based on the price difference between the mechanism tariff and the average market transaction price.

In distributed new-energy projects aggregated by a virtual power plant—particularly those involving full-market mechanism-based electricity—the virtual power plant will participate solely in real-time market settlement, without engaging in medium- to long-term or day-ahead market settlements.

Virtual power plants that aggregate distributed new energy resources for market participation, as well as independently operating distributed new energy resources, will be settled based on the generation-side entities in the wholesale market. For now, a unified settlement-point electricity price will serve as the spot-market settlement price. Once conditions are ripe, node-level electricity prices will gradually be adopted as the spot-market settlement price.

Announcement Released by the Development and Reform Commission of Ningxia Hui Autonomous Region Seeking Public Input on the Draft Notice on Establishing a Capacity Pricing Mechanism on the Generation Side

On September 12, the Development and Reform Commission of Ningxia Hui Autonomous Region released an announcement seeking public input on the "Notice on Establishing a Capacity-Based Electricity Pricing Mechanism (Draft for Comments)."

The implementation scope currently includes compliant, operating utility coal-fired generating units and grid-side new energy storage systems—both excluding any accompanying DC power sources.

Coal-fired power units implementing the capacity-based electricity pricing mechanism and the list of new energy storage systems on the grid side are compiled and summarized by State Grid Ningxia Electric Power Company, submitted in writing to the Autonomous Region Development and Reform Commission for review, and then officially released. The list will be dynamically adjusted based on actual conditions.

Capacity Electricity Tariff Determined

The electricity charges for coal-fired power units and new energy storage capacity on the grid side are determined by multiplying three factors: effective capacity, the capacity price standard, and the capacity supply-demand coefficient.

(1) Effective Capacity: The effective capacity of coal-fired generating units is determined by subtracting plant auxiliary power consumption from the unit’s nameplate capacity. For new energy storage systems on the grid side, the effective capacity is calculated as full-power discharge duration divided by 6, multiplied by the rated power, and then adjusted to account for plant auxiliary power consumption. The total effective capacity is the sum of the effective capacities of coal-fired units, grid-side new energy storage systems, wind power, photovoltaic systems, and other flexible resources.

(II) Capacity Electricity Pricing Standards. For coal-fired power units and new grid-side energy storage facilities, the capacity electricity pricing standard will be set at 100 yuan/kilowatt-year from October to December 2025, and will increase to 165 yuan/kilowatt-year starting from January 2026.

(III) Capacity Supply-Demand Ratio. The capacity supply-demand ratio is the ratio of capacity demand to total effective capacity. Capacity demand is calculated as the sum of the system’s peak net load—specifically, the hourly electricity load within the region corresponding to the maximum point on last year’s system net load curve—plus the external transmission capacity requirement (excluding power delivered by DC-compatible sources), and reserve capacity, minus the interruptible load capacity. If the capacity supply-demand ratio exceeds 1, it is capped at 1.

The capacity electricity charge is allocated proportionally among all industrial and commercial users in the region based on their monthly electricity consumption, as well as the monthly power delivered by generation companies (excluding coal-fired power plants paired with DC transmission lines; the same applies hereafter).

05 The Gansu Energy Regulatory Office has released the "Gansu Province Electricity Ancillary Services Market Operation Rules (Draft for Comments)."

On September 8, the Gansu Energy Regulatory Office released the "Gansu Province Electricity Ancillary Services Market Operation Rules (Draft for Comments)." The document clarifies that grid-side energy storage systems can participate in ancillary services market transactions as independent entities, while power-source-side energy storage systems may be treated as part of the overall generating unit when engaging in such market activities. Meanwhile, user-side energy storage systems are currently not permitted to deliver electricity back to the grid.

Energy storage facilities on the grid side must have a charging capacity of 10,000 kilowatts or more and be capable of continuous charging for at least 2 hours. They should also feature independent metering and Automatic Generation Control (AGC) functionality, operating as an independent entity under unified grid dispatch to provide ancillary services to the power grid. Meanwhile, energy storage systems located on the power generation side, when integrated with their respective generating units, are considered a single unit that collectively delivers ancillary services to the grid.

Each market participant, using the AGC control unit as the unit of measurement, can submit daily frequency regulation capacity bids for each of the upcoming week’s 96 time intervals on the electricity trading platform (price unit: RMB/MW). The current upper limit for bids is set at 15 RMB/MW, and the minimum increment for bid prices is 0.1 RMB/MW.

The compensation costs for the frequency modulation ancillary services market are jointly shared by electricity consumers based on their usage, grid-side energy storage systems supplying power to the grid, and electricity generated from sources that do not participate in energy market trading.

During the commissioning phase, costs associated with generator sets and grid-side energy storage systems—both those still operational after exiting commercial operation but capable of generating electricity for grid integration (excluding coal-fired emergency backup power sources)—as well as grid-side energy storage, shall not exceed 10% of the month’s electricity revenue generated during the commissioning period. Any portion of these costs that surpasses 10% of the monthly commissioning revenue will be allocated among electricity consumers based on their respective usage, grid-side energy storage systems according to their amount of power delivered to the grid, non-market-traded generation volumes fed into the grid, and remaining renewable energy enterprises contributing to the province’s overall power balance—including direct-current renewable energy output linked to projects not operating under independent control zones.

06 The Hainan Provincial Development and Reform Commission has issued the "Implementation Rules for Electricity Demand Response in Hainan Province (Trial)."

On September 12, the Hainan Provincial Development and Reform Commission issued the "Implementation Rules for Electricity Demand Response in Hainan Province (Trial)." The document specifies that the scheduled peak-shaving response will adopt a compensation model combining energy-based and capacity-based payments, while both the day-ahead invitation response and the intraday emergency response will be compensated solely based on energy consumption. The energy compensation is measured in yuan per kilowatt-hour, and the capacity compensation is calculated in yuan per kilowatt.

Aggregated Peak-Shaving Response: Following the principles of "single declaration, rolling cycle, and on-demand activation," a fixed compensation price of RMB 1.0 per kWh was announced for day-ahead activation, while a higher fixed compensation rate of RMB 1.5 per kWh was set for intraday activation. Compensation will be based on the actual electricity dispatched. For the month in which demand response is executed, any unutilized portion will still qualify for backup capacity compensation at a rate of RMB 0.3 per kilowatt-month.

Recently announced peak-shaving response program: Compensation will be provided based on the clearing price and the amount of electricity responded to per instance, with a cap of 1.5 yuan per kilowatt-hour for the compensation unit price.

The emergency (interruptible load) peak-shaving response conducted on a daily basis will be compensated based on the clearing price and the amount of power responded to per individual event, with a compensation cap of 2 yuan per kilowatt-hour.

Recently, participants in the valley response program were invited to receive compensation based on the clearing price and the amount of electricity they responded with—on a per-response basis—with a cap of 0.3 yuan per kilowatt-hour for the compensation rate.

The emergency valley-filling response conducted on a daily basis will be compensated based on the clearing price and response volume for each individual event, with a compensation cap of 0.4 yuan per kilowatt-hour.

Revenue settlement is conducted on a daily-cash, monthly-settlement basis, with demand response revenue calculated hourly.

Agreed-response revenue = ∑ Effective response capacity × Fixed unit price × Response time assessment fee.

Reserve capacity revenue = (clearing capacity - effective response capacity) × fixed unit price.

Recent appointment or same-day emergency response revenue = ∑ Effective Response Capacity × Winning Bid Response Price × Response Time – Assessment Fees.

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Energy Storage Insights: Tracking Industry Hotspots!

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Energy Storage Insights: Tracking Industry Hotspots!