On December 19th, the General Office of the People's Government of Shandong Province issued a notice titled "Several Measures to Improve the Mechanism for the Absorption of New Energy and Promote High-Quality Development of Energy."
It was pointed out that:Support is provided for the development of long-duration energy storage such as compressed air. Encouragement is given for the construction of long-duration energy storage projects like compressed air, renewable energy-based hydrogen production, and flow batteries. Projects that meet the criteria are given priority for inclusion in the provincial new energy storage project database and are granted priority access to the power grid upon completion. Support is also provided for long-duration energy storage projects to participate in the spot electricity market, with projects in the database calculated at twice the approved capacity for energy storage capacity.
Acceleration of the construction of electrochemical energy storage projects is promoted. There is encouragement for the development of centralized electrochemical energy storage and the establishment of a rental trading platform for energy storage capacity. New energy projects that rent centralized storage are given priority in the annual market-based grid connection project list. The minimum scale for energy storage projects built in conjunction is generally not less than 30,000 kilowatts, and there is encouragement for joint participation in the electricity market with new energy projects. The rules for energy storage participation in the electricity market are improved, establishing a "multi-use, time-sharing" trading model.
According to Shandong Province's policy documents and related interpretations, the calculation method for long-duration energy storage to participate in the spot electricity market at twice the capacity mainly reflects the capacity compensation for long-duration energy storage projects. Specifically:
Capacity compensation standard: For pilot long-duration energy storage projects, when participating in the spot electricity market, their compensation is temporarily executed at twice the daily available capacity compensation standard. This means that the capacity compensation revenue for long-duration energy storage projects in the spot electricity market is twice that of ordinary energy storage projects.
Capacity compensation calculation: In April 2024, the "Shandong Electricity Market Rules (Trial)" (hereinafter referred to as the "Rules") published by Shandong provided detailed regulations for the daily available capacity of new energy storage stations, with the calculation formula as follows:
The formula takes into account the discharge duration of new energy storage stations, meaning the longer the discharge time, the greater the H value, the higher the approved daily available capacity, which is beneficial for long-duration energy storage technology. Moreover, under the current policy, the calculation of the available capacity does not consider the actual operating duration of the energy storage station each day; as long as there is operation and discharge within the day, the full daily capacity compensation cost can be obtained.
Policy preferences: In 2023, the Shandong Energy Bureau issued a notice titled "Several Measures to Support the Pilot Application of Long-Duration Energy Storage," which refined the electricity transmission and distribution price policy. When long-duration energy storage pilot projects, as independent energy storage, deliver electricity to the grid, their corresponding charging electricity (including loss) does not bear the transmission and distribution price, government funds, and additional charges, further reducing the cost of long-duration energy storage projects and enhancing their market competitiveness.
Shandong is one of the first regions in China to participate in the pilot construction of the spot electricity market and the first province in China where independent energy storage stations participate in the spot electricity market. Shandong Province actively guides energy storage stations to participate in electricity market transactions, with a variety of revenue methods, resulting in significant economic benefits.
ZH Energy Storage, led by founder Dr. Xie Wei, began to lead the development of sulfur-based flow battery products in research projects funded by the U.S. Department of Energy in 2018. It has independently developed high-performance, low-cost iron-sulfur flow battery technology. As an innovative breakthrough in the field of long-duration energy storage technology, its electrolyte cost is only 1/10 of vanadium, significantly reducing costs by leveraging the economic advantages of iron and sulfur. Under the premise of inherent safety and low cost, it can achieve application scenarios for energy storage durations covering 6-12 hours.
As one of the earliest companies in the world to commercialize iron-sulfur battery technology, ZH Energy Storage is currently implementing and promoting an iron-sulfur battery demonstration project in collaboration with Central South University and the State Grid. The demonstration project is expected to be completed by 2024, with a trial operation and the launch of commercial products in 2025, providing a new solution for the development of long-duration energy storage technology worldwide.
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