China passed its first energy law on 8 November in a move designed to achieve carbon neutrality and replacement of fossil fuels with renewable energy in a market-based system.
The Chinese government said the law was passed at the standing committee of the 14th National People’s Congress (NPC) and is set to take effect from 1 January.
Chinese state media Xinhua said the law consists of nine chapters covering energy planning, energy development and utilisation, the energy market system, energy reserves and emergency response, energy technology innovation, supervision and management, and legal responsibilities.
Jingtai Lun, regional managing editor at pricing agency Fastmarkets, said the new law “clearly encourages long-term development in the energy storage industry for a longer term.”
Lun added: “This year, the industry has already seen significant growth, which has driven demand for LFP batteries. Major Chinese battery producers, including CATL and EVE, reported stronger growth in energy storage battery deliveries compared to EV batteries in the third quarter of 2024.”
Zelin Chen, research project leader at Aurora Energy Research, told BEST the energy law marks a “significant milestone” in China’s energy transition. “It clearly outlines the direction for the development of the power system, with particular emphasis on supporting renewable energy, driving the green transformation of the energy sector and reforming the electricity market.
“As China’s renewable energy installations grow at a rapid pace, the challenges of grid connection and the consumption of green energy have become increasingly apparent. This law addresses these issues by setting clear guidelines to facilitate renewable consumption and reduce curtailment, while also promoting the development and application of energy storage technologies.
“The law emphasises the need for energy storage in the power system, suggesting that energy storage will play an increasingly important role in China’s energy future. Not only lithium-ion and pumped storage, but also other new storage technologies may have significant growth and application potential.”
Analysts said the law aims to secure peak carbon emissions by 2030. They note China is the world’s biggest emitter of greenhouse gases while at the same time builds more wind and solar capacity than other countries. At end-2023, China had 86GW of energy storage in place, according to China Energy Storage Alliance data. Energy from pumped hydro power accounted for more than 59% and battery storage nearly 40%.
But industry insiders and experts have been calling for pricing reforms and technology improvements as the rapid growth has been plagued by low utilisation and losses for operators.
Sitong Ge, analyst at Rho Motion said the distribution of renewable resources is uneven across the country. Wind and solar resources are mainly concentrated in northern regions, while energy demand is highest in eastern provinces such as Shanghai and Jiangsu. “Consequently, the grid integration of renewables places significant demand on the energy storage sector. This is one of the reasons why many provinces in China have imposed mandatory storage requirements of 10%–30% for new renewable energy projects. As the prioritised development of renewables continues, the demand for energy storage is expected to grow further,” Ge told us.
Dr Alistair Davidson, director of the Consortium for Battery Innovation, told BEST: “As a global consortium, we’re seeing efforts to deliver sustainable energy storage solutions in a bid to achieve a smooth transition to carbon neutrality and this announcement signals China’s determination to be part of that, coming as it does ahead of COP29.”
Photo: The 100MW/400MWh Dalian flow battery energy storage peak-shaving power station connected to the electricity grid in Dalian. Rongke
