The country accounts for 91% of investment in battery manufacturing facilities in 2022.
China’s battery energy storage business is booming as the country continues to rapidly add new wind and solar power generation installations, surpassing previous records it set as the world’s leading investor in renewable energy sources (RES), Oilprice reports.
China is ready to spend trillions of dollars to adapt its energy system to a growing share of renewable sources, and energy storage through large stationary batteries will be key to integrating ever-increasing clean energy production into energy systems.
So, battery energy storage is at the center of focus in China’s energy market, where the number of companies registered as energy storage firms has already reached 109,000.
Batteries and other forms of energy storage will be critical for the Chinese — and the world — to move toward more electricity generation from renewables as advanced economies seek to move away from coal.
Meanwhile, China predicts a peak in its carbon dioxide emissions from energy by 2030, with the country aiming to achieve climate neutrality by 2060.
But as domestic investment in renewables grows and now accounts for nearly half of global clean energy investment, China cannot advance further without sustainable energy storage to provide back-ups amid fluctuating weather-dependent wind and solar output conditions.
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China is unmatched in renewable energy spending
Investors and analysts are aware that China is the leader in global clean energy spending.
Last year, when global investments in the energy transition reached 1.1 trillion. dollar, equaling investments in the extraction and supply of fossil fuels, for the first time in history China emerged as the leading country to attract investment in green energy, accounting for 546 billion dollars, or almost half of the global financing of such projects, BloombergNEF (BNEF) estimates.
The USA ranks second with 141 billion dollars of attracted investments. For comparison, investments in energy transition in the European Union (EU) for 2022 reach 180 billion dollars.
China also dominates the green energy production supply chain.
Investments in battery manufacturing facilities and related components formed the largest share ($45.4 billion) of the total $78.7 billion global investment in manufacturing capacity for clean energy technologies. China alone accounts for 91% of manufacturing investment in 2022, BNEF points out.
Energy storage boom
In China, investments in energy storage are growing alongside those in solar and wind power. Even companies from other completely unrelated businesses, such as the food industry, are investing in stationary batteries.
At the end of 2022, China’s total installed energy storage capacity, excluding pumped-storage hydroelectric power plants, will reach 13.1 gigawatts (GW), representing a 128% year-on-year increase, the China Energy Storage Alliance estimates ( CNESA).
To support growing but erratic renewable energy installations, China will need about 520 GW of storage capacity by 2030, Goldman Sachs Research said in a report published in March.
China has the manufacturing capabilities and control over supply chains to achieve self-sufficiency in lithium – a key element in batteries – by 2024, which will drive down battery costs, Goldman Sachs said.
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Still, China’s accelerating pace of stationary battery construction may go through boom and bust cycles as various companies with no experience in power and energy storage enter the industry in recent years.
Ultimately, the long-term winners would be a much smaller group than the hundred thousand firms currently described as “energy storage companies” because scale and technology will weed out the weaker players, the analyst believes. Bernstein Neil Beveridge.
Another big concern for investors in China’s clean energy market is the US’s drive to reduce its reliance on China in the clean energy supply chain, with the risk of China’s eventual isolation, Beveridge added.
2023-07-05 18:10:00
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