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Independent power plants will become the main force!

Wind Energy

The core of the development of energy storage is to have a corresponding market mechanism so that it can be included in the price. In the past ten years, because there is no market mechanism, energy storage cannot be included in the price, so it has been hidden behind the table and attached to thermal power plants, new energy power plants and users.

Electricity reform began in 2015. In 2019, 8 provincial power spot markets were launched for pilot operation. Currently, 7 provinces have started uninterrupted operation, creating a market environment for the independence of energy storage.

The electricity spot market has a clearing period of 15 minutes and changes around the clock, and the price reflects the market supply and demand relationship.

At present, the operation effect of the new model is good. Due to the international advanced level, the scale of Shandong’s 100MWh independent energy storage power station is rare in Europe and the United States, and the function of market arbitrage is not common in foreign countries.

Electricity price arbitrage refers to buying electricity to charge when the price of electricity is low, and selling it to discharge it when the price of electricity is high.

Wind Energy

The price change is determined by supply and demand. The demand side is the load, and the supply side is wind power and thermal power (the variable cost is determined by the coal price).

For example, Shandong has a large installed capacity of photovoltaics, and the electricity price is low at noon. In the evening, when the sun sets, the load rises again, and the electricity price rises.

In addition, large base applications, namely new energy distribution and storage, also provide new sources of income for energy storage.

Based on the demand for new energy consumption, it is expected that independent energy storage power stations will be the main force of new energy storage in the next 5-6 years, but at the same time, they will also face competition from pumped storage and virtual power plants.

(The International Energy Agency plans to build pumped storage of 110-120 million in 2030)

Independent power plants

Q: Revenue splitting and cost sharing of independent energy storage?
A:In terms of income, the first part of spread arbitrage depends on the influence of supply and demand, time and space.

For example, in Shandong, the average historical price difference from January to March in winter is more than 600-800, but in summer, the load at noon increases, which leads to a slightly higher price and a smaller price difference. Another example is Zhejiang, where there is no new energy source, and the price difference is very low, with an average annual average of 200. The future spot market price of electricity can be predicted based on historical data.

Assuming that the annual average price difference is 500, the energy storage investment is 1600/kwh (not counting epc), one charge and one discharge a day, one month maintenance throughout the year, and the static investment is recovered in 11 years (the price difference is 800, and the cost is paid back in 7 years).

At the same time, the National Energy Administration issued a document this year, charging and discharging energy storage does not need to pay the load and additional electricity charges (one cent per hour), but the loss has to be paid, which is ultimately borne by the user.

The second part is the income from frequency regulation. There is no backup market in China at present, and energy storage cannot get compensation for black start.

At the same time, energy storage power stations can only choose 1 between electricity arbitrage and frequency regulation.

At present, only Shandong Energy Storage can participate in frequency regulation and frequency regulation compensation.

= Thermal power frequency regulation * 10%, its income is too low and many independent energy storages do not participate, but from the perspective of marketization, energy storage is a good frequency regulation power source, and its cost is lower than thermal power.

Considering that arbitrage only accounts for 4 hours, and energy storage is idle for 20 hours, policy support for energy storage frequency regulation can give energy storage power stations an extra income, and the economy will change by 180 degrees.

In the past ten years, frequency regulation revenue has been shared by all generator groups. This year, the National Energy Administration issued an auxiliary service management method that clarifies that service fees should be channeled to market-oriented users. At present, it has not been completely lost, but the trend has been determined.

The third part of capacity revenue, Shandong is relatively advanced. The government designed a capacity cost recovery mechanism, requiring users to pay 9 points and 9 points per kWh to thermal power companies.

Because energy storage cannot continue to generate electricity, the capacity subsidy is 1/12 of thermal power. Encourage the development of energy storage and x2 on the original basis.

A 100mwh energy storage power station can compensate about 6 million capacity a year. The uncertainty of the capacity lease fee of the third part of the forced allocation of new energy depends on the specific customer.

The fourth part of the traffic rental fee is about 200-300 yuan/kw/year, depending on how much can be rented out.

Q: Peak-valley spread income, scale, can it support the volume of energy storage?
A: In June 2019, 8 provinces and 6 provinces + 3 districts in 2021 were planned to open power spot markets. Other provinces are also actively promoting the construction of in-store spot markets.

Xinjiang, Hunan, and Ningxia submitted a power spot market plan to the National Development and Reform Commission. It is a national consensus to build a spot market for electricity.

Except for the special areas of Hainan and Tibet, where the power generation is small and the units are small, most provinces will engage in spot electricity.

After the catalogue electricity price is cancelled, 70-80% of the industrial and commercial sectors will be in the spot market for coal machines, new energy sources, and electricity consumption.

Except for agriculture, residents, and protective industries, fixed electricity prices will still be implemented.

The profit point of energy storage is mainly the price difference, which has nothing to do with the absolute price reduction.


Q: Judgment of expansion time node?
A: The eight provinces in 2019 are in operation except for Zhejiang, and the goal is to operate all of them by the end of this year. The second batch will enter the settlement trial run at the end of this year.

In addition, there will be 5-10 provinces for simulation or settlement trial operation before the end of this year, but they will not run continuously.

Before the end of next year, at least 20 provinces across the country will be able to run continuously. At present, the conditions in all aspects are relatively mature.

Q: What is the irr, revenue split, and proportional breakdown of energy storage power stations in the Shandong spot market?
A: The electricity arbitrage is 60-70%, about 25 million, the arbitrage is not fixed; the capacity income is 6 million, the capacity leasing is uncertain, and the 6-8 million is conservative.

IRR is not public. The strong allocation and storage of new energy is based on the incremental market, and the demand is about an increment * 20%, depending on the supply and demand, a rough calculation of 2-3 gross.

Q: Requirements for capacity leasing
A: Pure financial contracts, but must be absorbed within the province.

Q: Who are the participants of independent energy storage?
A: At present, they are all state-owned power generation enterprises, the five largest Huaneng, Huadian, and Three Gorges State Power Investment. In theory, any subject who can meet the technical requirements can enter.

Q: What are the advantages of different subjects?
A: Can you accurately predict peak and valley electricity prices, buy low and sell high?

Q: Non-spot ratio?
Power generation side: On the power generation side, coal power is advanced, and gas power has also entered. New energy will enter at a faster rate according to the documents in the associated plan, which is no longer protective.

Nuclear power and large hydropower are also required to enter the spot market. Residential agriculture, the vast majority of industrial and commercial into the spot.

Q: The mechanism of grid dispatching?
A: Under the planning system, fixed on-grid scheduling determines the power generation of the generator set.

In the spot market, the dispatching agency dispatches according to the quotation given by the generator set a few days ago. Generally, the lower price is preferred.

The electricity trading market is divided into spot and medium and long-term transactions.

The medium and long-term transaction is the agreement between the user and the power generation buyer and seller to form a financial contract, and then settle according to the price difference of the spot market transaction.

Q: What is the attitude of the grid towards electrochemical energy storage?
A: Electrochemical energy storage is required for new energy consumption. At present, the curtailment rate is 5%, which is consumed by thermal power. Over 5% of the power grid will be assessed, and more flexible resources are needed to help consume it.

Lithium battery energy storage is faster than pumped storage, with 100mw being built in half a year. There will be no subsidies for energy storage. It is necessary to help energy storage find suitable application scenarios through government market design.


Q: How many flexible resources are needed to consume resources in 2025, and what is the proportion of electrochemistry and pumped storage?
A: Flexible resources depend on the situation of each province. The biggest competition comes from pumped storage. The official document is that 1.1-1.2kw pumped storage will be put into operation in 2030, but the pumped storage is planned and constructed for at least 5 years, and 6-8 years are possible.

The core is still the market mechanism and the price difference space caused by the power supply structure and supply and demand relationship.

Q: The range of thermal power up and down adjustment?
A: 40-50%.

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