Solar boom in China brings urgent need for energy storage solutions
China is currently installing twice as many wind and solar energy solutions as the rest of the world combined. But the solar boom is overloading the renewable energy grid and leading to negative electricity prices. The fact is that China is lagging behind in the expansion of storage systems – the same is true for Europe.
China’s dominance in renewable energy
China has definitely taken a leading role in the global renewable energy market, with a total capacity of 758 gigawatts for wind and solar power being added in the first quarter of 2024. This represents 64% of the world’s renewable energy capacity currently under construction, according to Infra Structure Global.
According to the Renewables 2023 report, China plans to expand its renewable energy capacity by 2,060 gigawatts by 2028. This is expected to account for 56 percent of total global capacity expansions during this period. China would therefore be responsible for a larger share of renewable energy than the rest of the world combined – which is expected to amount to 1,574 gigawatts.
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Reduce energy production
If only there weren’t major challenges that need to be solved: In parts of China, electricity prices have slipped into negative territory because renewable energies are overwhelming the grid. This means that some energy producers are forced to pay negative prices for the electricity they feed into the grid. Some grid managers are therefore reducing the output, i.e. the amount of energy fed into the grid. Meanwhile, the industry is trying to develop battery storage, according to the US news platform “OilPrice”. This is intended to stabilize the flow of energy.
The Chinese solar “overcapacity” brings with it another problem: According to “The Economist”, China has produced so much solar capacity that there is now more supply than demand. This has caused prices to fall and many companies in the industry are barely making any profits because they have to sell solar panels and other materials well below cost. Some of these companies can no longer operate profitably and are therefore receiving financial support from the state.
Impact on the Global Green Transition
The overcapacity in China’s solar production could also impact the global energy transition. Many countries rely on solar exports from China. This means that if Chinese companies are not profitable, this could have an impact on the innovation capacity and global availability of solar products.
What is particularly interesting is that although China is one of the dominant players in the solar industry, it does not lead the world in terms of solar capacity per capita, which is the amount of solar energy used in a country relative to its population. The Netherlands, Australia, Germany, and Austria all have higher solar capacity per capita.
Solar energy in combination with storage
According to industry experts, China sees the development of energy storage as a solution to its solar problem. These are a key technology for exploiting the full potential of renewable energies. Why? Because they enable flexible energy generation from renewable energies around the clock.
According to Bloomberg, the global energy storage market has almost tripled in the past year and is expected to reach a capacity of more than 100 gigawatt-hours by 2024. The forecast upturn is mainly attributed to the growth of the Chinese solar market. In the future, we will therefore increasingly rely on energy storage globally and look for sensible solutions.
However, “Smart Energy International” reports that the industry is lagging behind, especially in Europe. The problem lies with the lithium-ion batteries in the energy storage solutions, which are said to be associated with high insurance premiums due to their high fire risk.
