【Securities Times】Independent Energy Storage Becomes the Main Growth Driver of New Energy Storage, While Business Models Face Challenges and Need Further Improvement
In the first half of this year, China’s newly added installed capacity of new energy storage reached 21.81GW, down 18% year-on-year. However, during the same period, newly commissioned independent energy storage projects reached 15.1GW, accounting for 69.3% of the total new installations, an increase of 13.9 percentage points year-on-year, making independent energy storage the dominant form of new energy storage deployment.
Recently, Securities Times reporters visited the Inner Mongolia Taiyaoxinchu Energy Storage Power Station (hereinafter referred to as the “Dengkou Project”) located in Dengkou County, Bayannur City. They found that the construction of independent energy storage projects has become increasingly mature, with grid connection speed continuing to improve.
Currently, energy storage is transitioning from mandatory renewable energy-plus-storage configurations toward market-oriented operations. With the implementation of capacity compensation mechanisms, the value of energy storage capacity has gradually emerged. At present, many regions have introduced detailed capacity electricity price compensation policies, but business models still require further improvement. Industry insiders believe that in the future, the value of energy storage projects will increasingly depend on market trading capabilities, operational strategies, and full lifecycle operation and maintenance capabilities.
Expansion of Independent Energy Storage Scale
The Dengkou Project has a capacity of 500MW/2000MWh and is regarded as a key project for promoting local renewable energy consumption, enhancing grid stability, and supporting regional economic development.
JDEnergy is the core energy storage equipment supplier for the Dengkou Project. The entire Dengkou energy storage power station is equipped with 400 string-type prefabricated cabins and 100 integrated collector and step-up units. In addition, a new 220kV booster station and one transmission line have been constructed to connect to the Xiangtai Substation.
Wang Yangjun, General Manager of the Engineering Center at JDEnergy, told reporters that the project is the company’s first GWh-level project delivery. It took only 90 days from construction commencement to grid connection, setting a new benchmark for GWh-scale energy storage power station construction efficiency. By comparison, most projects of similar scale typically require a complete delivery cycle of 6–9 months.
According to Wang Yangjun, the rapid delivery and grid connection of the Dengkou Project benefited from shifting a large amount of traditional on-site work to the factory, achieving “productized engineering”. Each unit completed comprehensive charge-discharge testing and system commissioning before leaving the factory, leaving only lifting, wiring, and simple communication alignment work on site.
Energy storage can generally be categorized into three types: power generation-side, grid-side, and user-side storage. Among them, grid-side storage mainly refers to independent energy storage power stations, and the Dengkou Project is a representative example of grid-side energy storage. The project is located in the western Inner Mongolia region, a major renewable energy base where wind and solar curtailment has occurred due to insufficient local consumption capacity. Cross-provincial electricity transmission has therefore become a major solution, creating strong demand for independent energy storage projects in the region.
According to data recently released by the China Energy Storage Alliance, in the first half of this year, China’s newly commissioned new energy storage capacity reached 21.81GW/58.60GWh, with power capacity and energy capacity decreasing by 18% and 16% year-on-year respectively. During the same period, newly added independent energy storage capacity reached 15.1GW, accounting for 69.3% of new installations, with its share increasing by 13.9 percentage points and becoming the main form of new energy storage deployment.
In fact, the completion and grid connection of the Dengkou Project is also a reflection of the rapid expansion of new energy storage development in Inner Mongolia.
In 2026, Inner Mongolia released three batches of independent energy storage construction plans: the first batch in March included 31 projects totaling 8.15 million kW, the second batch in May included 22 projects totaling 5.55 million kW, and the third batch in August included 27 projects totaling 7.3 million kW. The three batches include a total of 80 projects, with planned construction capacity exceeding the existing cumulative installed capacity, representing an exceptionally high project concentration nationwide.
Return Rates Far Exceed Conventional Power Stations
The rapid expansion of independent energy storage is driven by both practical demand and policy support. Taking Inner Mongolia, where the Dengkou Project is located, as an example, the region issued the “Notice on Accelerating the Construction of New Energy Storage” in early 2025 and established a 10-year discharge subsidy mechanism. The subsidy standard is RMB 0.35/kWh, calculated based on discharge volume and shared by power generation units. Specifically, the discharge subsidy is RMB 0.35/kWh in 2025 and RMB 0.28/kWh in 2026.
The Dengkou Project was connected to the grid and began operation at the end of 2025. Data provided by JDEnergy shows that during more than six months of operation, the comprehensive efficiency at the project’s 220kV grid connection point exceeded 88.5%. This is higher than the average comprehensive efficiency of 82.21% for domestic grid-side energy storage projects, and above the industry benchmark value of approximately 85%, placing the Dengkou Project among the industry-leading performers. Based on one calculation scenario of 1.4 cycles per day, 88.5% comprehensive efficiency, 100% depth of discharge, and 330 operating days per year, the project is expected to generate approximately RMB 60 million in additional annual discharge subsidy revenue.
“Compared with other regions, the western Inner Mongolia power grid is relatively independent, has taken the lead in market-oriented reforms, and its subsidy policy strength ranks among the top 20% nationwide in terms of favorable conditions,” said Wang Suitao, Deputy General Manager of Xi’an JDEnergy Cloud Carbon Technology Co., Ltd. Currently, the Dengkou energy storage power station ranks among the first tier in regional project returns, and its comprehensive operational capability in the western Inner Mongolia market is among the top 10% in the industry.
According to reporters, under the current policy environment, the return rate of independent energy storage power stations can exceed 10%, while well-operated projects can achieve comprehensive returns exceeding 20%, significantly higher than the guaranteed return levels of conventional power generation projects. This has driven the independent energy storage boom across multiple regions, attracting numerous investors.
For example, Qinghai, another major renewable energy base, released the first batch of competitive allocation announcements for 2026 grid-side independent new energy storage projects on September 3. The bidding was divided into five sections, with a total scale of 2GW, requiring storage durations of no less than four hours and total capacity of no less than 8GWh. The announcement stated that Qinghai was the first region in China to achieve a “dual leading position” in renewable energy installed capacity and power generation. Meanwhile, as renewable energy installations continue to expand, insufficient power system flexibility has become increasingly prominent.
Regarding investment entities, data disclosed by listed company China Energy Conservation Solar Technology Co., Ltd. under China Energy Conservation Group shows that the company obtained 18 independent energy storage filing projects in the first half of this year. Project development will strictly follow regional selection strategies, prioritizing projects with strong policy certainty and clear revenue models.
Challenges Remain in Market-Oriented Transformation
Experts from China Electric Power Construction Jiangxi Electric Power Design Institute (hereinafter referred to as “Jiangxi Institute”) told reporters that for grid-side energy storage projects, spot market arbitrage mainly refers to operations in regions where electricity spot markets are continuously operating. Taking a 2-hour energy storage system as an example, some provinces have developed peak-valley price differences exceeding RMB 0.4/kWh in spot markets. However, profitability requires electricity spot trading capabilities, and earnings depend on the ability to forecast electricity price trends.
Revenue sources for grid-side energy storage also include ancillary services and capacity compensation. The “Notice on Improving the Capacity Electricity Price Mechanism on the Generation Side” (Document No. 114) clarifies that after continuous operation of electricity spot markets, a reliable capacity compensation mechanism on the generation side will be gradually established. Currently, provinces including Gansu, Jilin, and Shaanxi have introduced capacity electricity price compensation policies. However, compensation standards vary significantly among regions, and the conversion of storage duration into capacity value also has a major impact on project returns. Therefore, business models still require further improvement.
As mentioned above, while the scale of independent energy storage is rapidly expanding, Inner Mongolia’s discharge compensation for independent energy storage has decreased from RMB 0.35/kWh to RMB 0.28/kWh, and full-capacity daily utilization has been limited to 1.5 cycles. An electricity trading company representative told reporters that the simultaneous expansion of independent energy storage scale and subsidy reductions represents the first major test for China’s independent energy storage business model.
In fact, after the implementation of the “Notice on Deepening Market-Oriented Reform of Renewable Energy On-grid Electricity Prices to Promote High-quality Development of Renewable Energy” (Document No. 136), mandatory energy storage requirements have been removed, capacity leasing demand has declined, and independent energy storage revenues increasingly rely on the two pillars of “compensation + spot market trading”.
Taking the western Inner Mongolia market as an example, the aforementioned electricity trading company representative said that with rule adjustments and the entry of more integrated thermal power and energy storage projects, the marginal benefits of energy storage are being rapidly diluted. Meanwhile, in the spot market, energy storage, as a new type of market participant, not only faces electricity costs during charging periods but also needs to share renewable energy forecasting deviation costs, significantly reducing the arbitrage space of “charging at low prices and discharging at high prices”.
As Wang Suitao noted, the three major revenue sources of spot trading, frequency regulation, and capacity compensation will continue to evolve with market rules, making long-term revenue trends difficult to predict linearly. This creates uncertainty in energy storage power station revenues. Meanwhile, significant price differences exist between different grid nodes within the same province, and evaluation errors can directly translate into revenue deviations. In addition, fluctuations in equipment availability and differences in operational capabilities during independent energy storage project operations require further attention.
According to Chen Haisheng, Chairman of the China Energy Storage Alliance, during the first half of this year, peak-valley price differences in some regions narrowed while system operating costs increased, further raising charging costs for energy storage and compressing project returns. In the future, the value of energy storage projects will depend not only on equipment investment costs, but also on market trading capabilities, operational strategies, and full lifecycle operation and maintenance performance.
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