The rapid development of China's solar and wind energy sectors has spurred the market potential for energy storage batteries to ensure a stable supply of power.

Energy storage batteries are meant to store and discharge electricity generated by renewable energies such as wind and solar energy, both on-grid and off-grid.

The sales of energy storage batteries were 600 to 700 million yuan ($87.8 to $102 million) in 2008. Currently about 95 percent of the batteries are used for off-grid energy storage and only 5 percent for on-grid applications.

Even if the percentage doesn't change, the sales are likely to grow to 15 to 20 billion yuan ($2.2 to $2.9 billion) by 2015, Chen Zhenye, senior consultant of energy and power systems at the business consulting firm Frost & Sullivan, told the Global Times.

But Chen added that the trend is from off-grid to on-grid applications.

He estimated that if 10 to 12 percent of the batteries were used on-grid, the market would be as much as 100 billion yuan ($14.6 billion) by 2015.

Their alternative energy applications also give energy storage batteries huge potential, Zhao Yuling, Marketing Manager for North Asia at Exide Technologies, told the Global Times. US-based Exide, one of the world's largest lead-acid energy storage batteries producers, has about 40 percent of its products for energy storage, Zhao said.

Riding the wind

With 2.57 gW newly installed capacity in the first seven months of this year, China's accumulative wind power installed capacity is now at 14.74 gW. The total capacity is expected to further expand to 30 gW by the end of 2010, the deputy director of New Energy Department, State Energy Bureau, told Xinhua News Agency in June.

But insufficient grid connections currently hamper the country's wind power capabilities, Chen said.

"Grid infrastructure construction lags behind in the mid and western regions including wind bases in Inner Mongolia, Gansu, Qinghai, and Xinjiang," Chen said.

"In some places, about one third of the generated power cannot be transmitted. Consequently, one third of the generators are idled."

Without energy storage batteries, even if the power is generated by wind, without a sufficient grid, the power would be wasted, said Chen.

In addition, due to natural conditions, photovoltaic solar energy and wind power are interval and fluctuating energy sources respectively and thus unless there is a energy storage system, the grid's stability is uncertain, Jiang Qian, chief analyst for new energy industry at Shenzhen Zhongzhe Investment Consulting Ltd, told the Global Times.

Energy storage batteries are a major solution to the problem of storing surplus power and generating electricity back onto the grid when power is in short supply, said Jiang.

Wind power so far accounts for less than 2 percent of China's total power generation so the impact is not obvious. "However, if the wind and solar power account for about 10 percent of the total generated electricity, the interval energy transmission will affect the overall stability of the grid," said Chen at Frost & Sullivan.

Wind power's total installed capacity in China is currently estimated to be about 8.3 percent, and solar power's proportion will also rise to about 1.6 percent by 2020, according to Jiang.

China's plan to develop a smart grid is another plus for the growth of energy storage batteries. By the end of this year, the government is expected to unveil new plans for boosting renewable energies such as solar and wind power, and set industry standards for electric devices for a smart grid in 2010 or 2011. By then, solar and wind power will be integrated into the grid transmission system, giving another boost to the energy storage batteries industry, Chen said.

Battery types

Lead-acid batteries accounted for 90 percent of the storage battery market in 2008, while lithium-ion (Li-ion) batteries and nickel-metal hydride (NiMH) batteries take the remaining portion of the market share. Lead-acid batteries are low in cost and dominate the market. Currently about 10 percent of the lead-acid batteries have improved power capacity and follow higher environmental standards, noted Chen.

NiMH batteries are the midrange battery between lead-acid and Li-ion in terms of performance, but they are not convenient to discharge and recharge. Li-ion batteries perform better than lead-acid and NiMH batteries and are less polluting. However, the cost is about three times higher than lead-acid. In addition, there is a Li-ion technology bottleneck that Chen predicted will take at least five to six years to resolve in order to reduce the cost.

Domestic market

Because of low manufacturing costs, China is the world's largest energy storage producer and exporter and the output volume of China's energy storage batteries will grow significantly in the next 10 years, according to Zhao at Exide Technologies.

But small-scale production, disorderly competition and underdeveloped technologies are the major problems and challenges facing the development of the energy storage sector in China, said Zhao.

There are about 20 domestic producers of energy storage batteries. However, no single domestic producer has more than 10 percent of the market share, Chen at Frost & Sullivan said.

The off-grid market is government oriented, Chen noted, and predictably government recommended brands such as Zhejiang Tianneng and Jiangsu Shuangdeng have a greater advantage over others.