According to a report from CLS, CATL (300750.SZ) revealed that Zeng Yuqun, a member of the 14th National Committee of the Chinese People's Political Consultative Conference and Chairman of CATL, will propose suggestions at this year's Two Sessions on further enhancing the market-oriented application of new-type ESS to promote high-quality development in the industry.
New-type ESS is a key technology and fundamental equipment supporting China's new-type power system and a strategic new field in international energy competition. During the "14th Five-Year Plan" period, the new-type ESS industry has flourished, with grid connection and operational scale, technology, and cost indicators leading globally. By the end of 2024, the cumulative installed capacity of new-type ESS is expected to surpass pumped storage for the first time, achieving large-scale development. Compared to other countries, China's market participation mechanism for ESS remains underdeveloped. ESS power stations face challenges such as infrequent dispatch, low utilization rates, and long payback periods, making it difficult to fully realize the value of ESS.
At the beginning of this year, the government explicitly proposed the full marketization of new energy power generation and stated that the configuration of ESS should not be a prerequisite for new energy projects. The industry generally expects that the policy orientation will drive the high-quality development of the new-type ESS industry. To implement these policies, it is suggested to further improve the market participation and guarantee mechanisms for ESS, enhance the market-oriented application of new-type ESS, and accelerate the transition of the ESS industry toward high-quality development.
Zeng Yuqun believes that while domestic new-type ESS has achieved large-scale development, the market mechanism for ESS has yet to take shape. During the "14th Five-Year Plan" period, China's new-type ESS industry has achieved large-scale development. According to statistics from the National Energy Administration, the cumulative installed capacity of new-type ESS nationwide with construction completed and operational has reached 73.8 GW, approximately 20 times that at the end of the "13th Five-Year Plan" period, already surpassing the installed capacity of pumped storage. Meanwhile, ESS is allowed to participate as an independent entity in various electricity markets, and reforms in the electricity spot market and ancillary services market are ongoing. Pilot provinces for the spot market have gradually transitioned to formal operations, and independent ESS capacity electricity prices on the power grid side have been incorporated into policies. However, compared to the supportive policies for pumped storage, the market mechanism to fully realize the value of new-type ESS and achieve high-level application has yet to be established.
Secondly, domestic new-type ESS faces issues such as infrequent dispatch, low utilization rates, and long payback periods. The government has successively issued the "Notice on Further Promoting the Participation of New-Type ESS in the Electricity Market and Dispatch Operations" and the "Notice on Promoting the Grid Connection and Dispatch Operations of New-Type ESS." Over the past two years, the average utilization rate of ESS power stations has improved. However, specific issues in the ESS market mechanism still constrain high-level application: first, the narrow fluctuation range of electricity prices in the electricity market fails to reflect actual market demand. Second, the cost-sharing mechanism for ancillary services has yet to be established and remains a "cost item" in a zero-sum game on the power supply side. Third, implementation details for new-type ESS capacity electricity prices have not been issued, making project compensation difficult to realize. Fourth, some ESS systems experience varying degrees of lifespan degradation and capacity reduction after grid connection, leading to quality and safety issues that severely impact dispatch operations.
In response, Zeng Yuqun proposed suggestions to further enhance the market-oriented application of new-type ESS. To improve the market-oriented application of new-type ESS, it is urgent for the government to further refine the market participation and guarantee mechanisms for ESS.
(1) Improve the Market Participation Mechanism for New-Type ESS
Improving the market participation mechanism for ESS mainly includes electricity pricing mechanisms, cost allocation mechanisms, and capacity compensation mechanisms. First, expand the peak-valley price spread to create reasonable profit margins for flexible adjustment resources such as ESS. Based on the current electricity pricing mechanism, broaden the fluctuation range of electricity prices in the electricity market to allow prices to effectively reflect the supply-demand relationship of electricity at specific times. Second, diversify ancillary service transaction types suitable for new-type ESS and promote the allocation of ancillary service costs to the user side, enabling reasonable cost allocation for ESS. Introduce services such as ramping and system inertia that fully leverage the technical characteristics of new-type ESS to provide the necessary adjustment capabilities for the safe and stable operation of the power system. Additionally, as a public good, ancillary services should follow the principle of "beneficiaries bear the cost," encouraging all beneficiaries to share the costs. Third, improve the capacity compensation mechanism by accelerating the issuance of standards and implementation details for new-type ESS capacity electricity pricing. In the short term, refer to pumped storage and coal power to refine the capacity electricity pricing mechanism for new-type ESS, achieving "equal pay for equal work" and eliminating unfair competition among flexible resources. In the long term, transition to a capacity market at an appropriate time, using market pricing mechanisms to effectively reflect the scarcity of capacity adequacy.
(2) Establish a Regular Safety Inspection System for New-Type ESS
The government should promptly establish a safety guarantee mechanism for new-type ESS. It is recommended to draw on the regular maintenance mechanism of the power industry to establish a regular safety inspection system suitable for new-type ESS. Referring to the "Guidelines for Equipment Maintenance of Power Generation Enterprises," specific detection plans for electrochemical ESS power stations should be developed, clarifying the inspection conditions, methods, and cycles for ESS systems and key components. The regular inspection mechanism will promptly eliminate "defective" ESS, ensuring the safety and reliability of ESS power stations throughout their life cycle and safeguarding the high-level application and high-quality development of the ESS industry.
