Storage crucial as China's wind, solar venture into grid parity
Energy storage is expected to exceed its 2025 capacity target of 30GW.
Energy storage will play a key role in supporting the expansion of China’s wind and power sectors as they enter grid parity for new projects, according to Moody’s Investors Service.
In a statement, Moody’s said that whilst it will take time for storage technology to become commercially viable, this will be critical in optimising renewable energy utilisation whilst ensuring the stability of the grid systems due to the intermittency of renewables.
"2022 marks the transition to grid parity, as newly approved onshore wind and solar projects will no longer be entitled to government subsidies,” said Moody’s Vice President and Senior Analyst Ralph Ng.
“Falling equipment costs and technology enhancements will accelerate the transition, as advancements such as larger wind blades and monocrystalline PV panels enhance power conversion efficiency and increase utilization hours and the total lifetime power generation of an asset," Ng added.
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Due to this, China’s energy storage is expected to exceed the 30-gigawatt (GW) capacity target by 2025. It is also seen to add at least 100G of wind and solar capacity annually from 2022 to 2025 to support emission reduction targets.
Moody’s said the grid parity is a credit positive for the sectors as it signals that energy sources are becoming more commercially viable and competitive against fuel sources.
It added that large plates in the sector which are generally state-owned enterprises will benefit from the grid parity because of their part in driving the country’s energy transition. They will also benefit from stronger support from the government when needed.
“However, their capital spending will remain high as they invest in renewable capacity and energy storage, leading to elevated debt leverage for at least the next 3-5 years,” it said.