The development of battery storage co-located with renewable energy in China: A policy-driven system dynamics approach

Abstract

Battery storage is widely regarded as an indispensable solution to the large-scale integration of intermittent renewable energy into the power grid. Being still too expensive by itself, battery storage is currently promoted in China for utility-scale grid-parity wind/solar projects with compulsive technical standards or voluntary allocation requirements for those additional renewable projects beyond grid integration capacity. Under mandatory policies, part of the revenue from renewable energy is used to pay for battery storage. Without a mature electricity market, the development of battery storage co-located with renewable energy would be largely dependent on policy design. This paper conducts a policy-driven system dynamics simulation on the development mechanism of battery storage co-located with renewable energy in China. The results show that the installed capacity growth of battery storage will mainly be driven by mandatory policies before 2024 and mandatory policies will become almost ineffective after 2028. However, mandatory policies may still dominate the development of battery storage after 2030 if the cost reduction is restrained. The conclusions provide theoretical support for the development of battery storage co-located with renewable energy in China. To minimize the adverse effect of mandatory policy, policymakers should keep close eyes on the advance in technology and power market and adjust the policy accordingly.