Energy Storage System | 20 Questions about Energy Storage (Part 1)

Since 2024, with the maturation of energy storage technology, the gradual reduction in costs, and the continuous introduction of electricity pricing incentive policies, the number of small and medium-sized user-side energy storage projects has been increasing. The market demand for user-side energy storage projects has also significantly increased. Recently, several user-side energy storage projects have been commissioned across the country, but many people are still not very familiar with user-side energy storage.

User-side energy storage that we often refer to mainly refers to electrochemical energy storage applied to a broad range of commercial customers. Energy storage devices can be simply understood as a large power bank. They charge when electricity prices are low and discharge when prices are high for enterprise production, thereby reducing enterprise electricity costs.

From the perspective of the entire power system, the application scenarios of energy storage can be divided into three major scenarios: generation-side energy storage, transmission and distribution-side energy storage, and user-side energy storage.

1. What is User-side Energy Storage?

The user-side energy storage we often refer to mainly refers to the electrochemical energy storage applied to a wide range of commercial customers. Energy storage devices can be simply understood as a large power bank. They charge when electricity prices are low and discharge when prices are high, used for enterprise production, thereby reducing enterprise electricity costs.

2. What are the benefits of installing an energy storage system?

• Peak Shaving and Valley Filling: Utilize the difference in peak and valley electricity prices to charge during off-peak and flat periods, and discharge during peak and valley periods to reduce enterprise electricity costs.
• Balance Demand Charges: The energy storage system can perform peak shaving and valley filling, eliminate peak loads, smooth the electricity curve, and reduce demand charges.
• Dynamic Capacity Expansion: The capacity of a user’s transformer is fixed. Generally, when a user needs the transformer to operate beyond its capacity at a certain time, they need to expand the transformer capacity. With a matched energy storage system, it can discharge during that period to reduce transformer load, thereby reducing the cost of transformer capacity expansion and modification.
• Demand Response: After installing an energy storage system, if the power grid issues a demand response, the customer can avoid power cuts and high electricity costs for that period. Instead, they may participate in demand response transactions through the energy storage system to obtain additional compensation.

3. Main Application Scenarios for User-side Energy Storage

User-side energy storage is mainly applied to objects with regular electricity usage such as charging stations, industrial parks, data centers, and communication base stations.

4. Investment, Construction, and Operation Revenue Models for User-side Energy Storage

• Invested, constructed, and operated by an integrated operator, with no cost to the customer, who only needs to provide the site for the construction and use of the energy storage system, sharing the benefits obtained with the integrated operator.
• Shared benefits, with specific revenue sharing based on the customer’s electricity usage and the size of the energy storage scale, negotiated accordingly.
• The customer invests and constructs the energy storage system, with the integrated operator responsible for operation and promising customer benefits.

5. Cooperation Duration for User-side Energy Storage Projects

The recommended cooperation period is generally 15 years.

6. How Long Does It Take from Contract Signing to Project Implementation?

From contract signing to the official operation of the project, it generally takes 3 to 6 months, depending on the specific situation and complexity.

7. What Electricity Usage Standards Are Required for Enterprises to Install Energy Storage Stations?

At present, national and local governments have not set conditions for the construction of user-side energy storage. In Guangdong, it is generally not less than 5 million kWh/year, and in Zhejiang, it is generally not less than 3 million kWh/year. Generally, the larger the electricity usage, the greater the energy storage capacity that can be configured for the project.

8. Land Area Required for Energy Storage Stations

The land area required for a 1MWh energy storage station is about 10 square meters, and if considering safety distances, it is 20-30 square meters.

9. Is the Owner’s Assistance Required for Procedures for Installing Energy Storage Stations?

Installing an energy storage station requires registration on the local development and reform bureau’s website. These procedures are all the responsibility of the integrated operator, with the owner only needing to provide necessary documentation.

10. What Are the Site Requirements for Installing Energy Storage Stations?

• The site should be outdoors and within 20 meters, there should be no hazardous chemical warehouses.
• As close as possible to the distribution room, with the maximum distance from the distribution room not exceeding 100 meters.