With the issuance of the "Action Plan for Carbon Peak before 2030" by the State Council on October 24th and the signing of a 1.3Gwh energy storage order by Huawei from Saudi Arabia, the stock prices of listed lithium battery energy storage companies have surged.



But here, we have a viewpoint: in the capacity based energy storage scenario on the power generation side, lithium batteries cannot meet the requirements. We will try to explain why such a viewpoint exists from the following perspectives, for reference only



1. From a security perspective



Firstly, let's take a look at several safety accidents:

On April 16th, an explosion occurred at the energy storage station of Beijing Guoxuan Fuweisi Light Storage and Charging Technology Co., Ltd. located in Dahongmen, Beijing, resulting in the sacrifice of two firefighters and the disappearance of one employee.



On the morning of July 30th, Tesla's newly constructed Victoria Battery project in Moorabool, near Geelong, Australia caught fire during testing, and the fire burned continuously for several days before extinguishing.



On September 4th, the world's largest battery energy storage system, the California Moss Landing energy storage project with a first phase capacity of 1.2 GWh, was suspended due to thermal runaway of the battery.



According to incomplete statistics, there have been as many as 26 large-scale accidents involving explosions and fires in energy storage projects worldwide in the past three years. There are many reasons that can cause fires in lithium-ion battery storage power stations, but there is currently no comprehensive prevention and fire prevention strategy.



After the Beijing Dahongmen accident, on September 24th, the National Energy Administration issued the "Interim Management Regulations for New Energy Storage Projects".

Article 15 stipulates that in the construction of new power battery cascading utilization and energy storage projects, the concept of the entire life cycle must be followed, and a battery consistency management and traceability system must be established. The cascading utilization of batteries must obtain a safety assessment report issued by the corresponding qualified institution. Existing and newly built power battery cascading utilization energy storage projects must establish an online monitoring platform to monitor battery performance parameters in real time, conduct regular maintenance and safety assessments, and prepare emergency plans.



Whether it is cascading utilization or a brand new lithium battery system, the current safety hazards make it difficult for power generation owners to use lithium batteries for energy storage with peace of mind.





2. From the perspective of the cost structure of lithium battery energy storage systems



The EPC price for the bidding of lithium-ion energy storage systems in the first half of this year was basically 1650 yuan/Kwh, as shown in the following figure.









Let's take a look at the cost structure of lithium battery energy storage systems again:





From the perspective of cost structure, although the proportion of battery cells is close to 50%, many industry professionals who promote lithium battery energy storage still firmly believe that the cost of battery cells will continue to decline rapidly.

However, with the surge in demand for power batteries this year, raw material prices have continued to rise: positive electrode materials have risen by over 200%, electrolyte prices have risen by over 150%, and ultimately prices have also been transmitted to the battery cells. On October 25th, BYD issued a contact letter for an increase in battery prices, stating that battery prices will increase by no less than 20%. According to this cost composition structure, the price of battery cells will increase to at least 780 yuan/KWh or above.

So the expectation of continuous reduction in battery cell costs in the short term has been dashed.







3. From the calculation of the total life cycle electricity cost

This is the most important point.

If the energy storage on the user side has a guarantee attribute, then the most essential attribute of energy storage on the generation side is trading.

The stored electricity ultimately needs to be connected to the grid for transmission, and if the price of grid connection is lower than the cost of energy storage, then every kilowatt hour of stored electricity will incur a loss. In this situation, without policy subsidies, which company would store them?

At present, the domestic energy storage industry lacks a scientific method and standard for calculating the full life cycle cost of energy storage systems. By introducing the standardized full life cycle cost accounting method published by the US Department of Energy, ZH Energy Storage has developed a ZH Energy Storage Cost Calculator: NeLCOSTM, which is free for everyone to use.





According to the calculation of this calculator, a lithium-ion energy storage system with a storage time of 2 hours and a lifespan of 10 years, excluding the purchase price, has an energy storage cost of over 0.6 yuan/kWh before the price of battery cells increases. This price far exceeds the grid connection price of power generation enterprises (0.3-0.5 yuan/kWh). Therefore, in the application scenario of capacity based energy storage on the power generation side, lithium batteries do not yet have economic feasibility.



By splitting and standardizing the cost structure of energy storage systems, ZH Energy Storage has launched a free energy storage system kWh cost calculator: NeLCOSTM can calculate the kWh cost of various energy storage systems under different configuration parameters. Interested users can access it through the following link or scan the code:

http://nelcos.z-henergy.com/



For the introduction and calculation reliability of the NeLCOSTM Energy Cost Calculator for Neutralization Energy Storage, please refer to the following link:

How to scientifically calculate the electricity cost of energy storage systems?



By calculating the system costs of various new energy storage technologies, we have found

The energy storage technology with the lowest lifetime electricity cost can be close to or even lower than 0.2 yuan/kWh. With this energy storage cost combined with the cost of wind and solar power generation, it can compete with the current cost of thermal power generation, thus solving the economic barriers of wind and solar power replacing thermal power generation in the future.



Please continue to follow our official account article, which will introduce more low-cost energy storage technologies to you.



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Introduction to ZH Energy Storage Company:

Shenzhen ZH Energy Storage Technology Co., Ltd. is committed to the research and development, promotion, and application of energy storage technology, aiming to help achieve China's goal of "carbon neutrality" through the application of electrochemical energy storage technology. In the early stages of development, the company focused on providing technical support and consulting services to the Chinese energy storage market by leveraging its accumulated industry experience and outstanding research and development capabilities in the field of energy storage. At the same time, the company focuses on investigating and analyzing the Chinese energy storage market, developing or introducing the most advanced and effective energy storage technologies for the Chinese market, including but not limited to: liquid flow battery systems, lithium-ion battery materials, fuel cells, and ion exchange membranes.