China’s role in scaling up energy storage investments

Abstract

Accelerating the planning and development of a new power system that is more renewable energy-based is a strategic priority of achieving “dual carbon” goals (peaking carbon emissions before 2030 and becoming carbon neutral before 2060) in China. The large-scale development of energy storage technologies will address China’s flexibility challenge in the power grid, enabling the high penetration of renewable sources. This article intends to fill the existing research gap in energy storage technologies through the lens of policy and finance. Results indicate that policy uncertainties in renewable energy might undermine domestic investor confidence in energy storage technologies, while insufficient economic incentives may crowd out private sector participation. Drawing on international best practices, blended concessional finance, supported by development partners, can play a significant role in closing energy storage financing gaps in China and in countries of the Belt and Road Initiative (BRI). To deliver on China’s domestic and international climate commitments, this article makes three policy recommendations: (1) moving forward with a carbon pricing agenda that incentivizes energy storage investments in China; (2) tapping the potential of the domestic capital market to close financing gaps for novel energy storage technologies; (3) scaling up energy storage supply chains in BRI countries through multilateral cooperation.