Report Summary



The world is not moving forward on the path of controlling warming to no more than 1.5 degrees Celsius as planned. To achieve the goals set by the Paris Agreement, humanity needs to reduce emissions in all industries as much as possible. The power industry, which accounts for one-third of global carbon emissions, will undoubtedly be the dominant force in this global carbon reduction campaign and needs to achieve net zero emissions by 2040. To achieve this goal, the power industry needs to leverage innovative technologies to address three key issues: 1 Triple the existing power generation to meet future global electricity demand; 2. The transformation of power generation technology from fossil fuels to renewable energy has been completed; 3. Maintain social and economic costs within an acceptable range.



After analyzing over 10000 cost-performance data, this report proposes that in order to ensure the smoothness and stability of the power system in which renewable energy dominates power generation in the future, in addition to existing lithium battery and hydrogen gas turbine technologies, long-term energy storage technology will be an essential solution.



Long term energy storage technology includes various forms of energy storage and is expected to achieve low-cost and large-scale production of long-term energy storage. On the basis of existing short-term energy storage lithium battery technology, these technologies can achieve energy storage needs for several hours, days, or even weeks to ensure the stability of the power system. However, different long-term energy storage technologies are still at different levels of technological maturity. This report will mainly explore new energy storage technologies: mechanical energy storage, thermal energy storage, chemical energy storage, and electrochemical energy storage. Technologies such as lithium batteries, distributed hydrogen gas turbines, and pumped storage will not be discussed.







The rapidly growing installed capacity of renewable energy generation has begun to have an impact and challenge on the power system, including the mismatch between generation and consumption, changes in the flow of electricity in the grid, and a gradual decrease in the proportion of fossil fuel power generation that can be artificially regulated. These challenges urgently call for innovative solutions to address the stability of the power grid at different time scales, including daytime, several days to several weeks, and seasonal.



Long term energy storage is one of the most suitable solutions, as they can achieve extremely low electricity costs: 1 They decouple the capacity of energy storage and the power of charge and discharge; 2. They can be used on a large scale in various terrains or environments; Compared to upgrading the power transmission and distribution network, their installation speed is very fast. Based on the above reasons, more and more capital is entering this field, and so far, long-term energy storage projects with a total installed capacity of over 5GW/65GWh are in operation or construction worldwide.



And this is just the beginning, because our model analysis shows that long-term energy storage technology is expected to reach a total installed capacity of 1.5-2.5TW by 2040, which is 8-15 times the current total installed capacity of energy storage. Correspondingly, by 2040, the energy storage capacity will reach 85-150 TWh, which will be able to store 10% of global electricity consumption. The required investment amount for these installed capacities will reach a total of $1.5-3 trillion, generating an investment return of approximately $1.3 trillion by 2040.







The scale of these numbers reflects the widespread use of long-term energy storage technologies and their core role in balancing power systems and improving efficiency. This includes maintaining the stability of the power system, assisting enterprises in signing power purchase agreements, and optimizing energy structure for enterprises using remote or unstable power grids. Similarly, the use of long-term energy storage in off grid systems also has great potential, as off grid systems have lower flexibility and currently heavily rely on fossil fuels. But so far, it is expected that most long-term energy storage deployments will still be related to core tasks such as peak shaving, frequency regulation, and optimization of transmission and distribution network efficiency in the power system.



In summary, long-term energy storage provides low-cost flexibility solutions in many (but not all) situations. In order to achieve the lowest cost decarbonization of the power grid by 2040, diversified solutions need to be deployed, as the return on large-scale deployment of long-term energy storage is enormous. According to estimates, by 2040, the deployment of long-term energy storage can reduce annual carbon dioxide emissions by 1.5-23 billion tons, which is 10% to 15% of the current total power system emissions. In the United States alone, by 2040, long-term energy storage can save $35 billion annually in complete decarbonization of the power system.







Realizing this deployment scale requires a significant reduction in the cost of long-term energy storage technology. The predictions provided by member companies of the Long Term Energy Storage Council indicate that these are achievable, as the development of other emerging energy technologies (including solar photovoltaics and wind energy) prior to this has provided a path for reference. In short, cost reduction will depend on improvements in research and development, production volume, and scale production efficiency. Similarly, the deployment progress of long-term energy storage will also be closely related to the decarbonization rate of the power system and the installed capacity of renewable energy generation.



Although long-term energy storage technology is still in its early stages, its installed capacity will rapidly increase in the coming years. At the most ideal decarbonization progress, the model predicts that the installed capacity of long-term energy storage will reach 30-40GW/1TWh by 2025. When renewable energy accounts for 60% -70% of the market share in the electricity generation of the power system, long-term energy storage will usher in an important milestone. This is also a scenario that countries with aggressive goals will achieve between 2025 and 2035, which will promote the widespread application of long-term energy storage technology as the lowest cost flexible solution.







However, before achieving these goals, the government needs to take action to help reduce costs, guide investment direction, and send market signals, so that investors can obtain attractive returns from long-term energy storage investments. A favorable government environment should introduce the following measures: 1 Long term system planning; 2. Early compensation mechanisms to reduce investor risk when the market is in its early stages; 3. Design supportive policies, regulations, and market mechanisms.



Long term system planning, including clear goals for the proportion of renewable energy, is crucial for building investor confidence. The support policies for early deployment and large-scale production will help launch the market and quickly reduce the cost curve. Finally, effective market mechanism design, such as installation policies and market trading mechanisms that can fully leverage the value of long-term energy storage, will enable investors to profit from it. In short, these measures will ultimately encourage us to achieve energy transformation at the lowest socio-economic cost.



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Reference:

one https://www.ldescouncil.com/



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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.