IEEE Power & Energy Magazine - September/October 2017 - 57

role of the EES system is to shift the loads during peak
hours to valley hours.
The total planned capacity of the EES system is 20 MW/
40 MWh, and the designed equipment life is more than
25 years. Currently, the EES system is in the first phase,
with 4 MW/16 MWh of lithium/iron-phosphate batteries, and
it has been operated for more than five years. The total investment will be approximately 148 million RMB.
During the first year and a half of operations, the EES
system reduced peak loads 4,980 times and increased valley
loads 3,120 times, for a total of 5,060 MWh of load shifting.
The overall efficiency of the EES system is approximately
85.5%. In addition, the EES system played an important role
in frequency regulation and securing power supply for significant events in Shenzhen.
BESS Project in the Shijingshan, China,
Thermal Power Plant

This project is representative of EES in providing ancillary
services (Figure 6). It was put into operation in September
2013 and used mainly for frequency regulation. After running
for only a year and a half, it stopped service on 19 March 2015,
with the retirement of the Shijingshan t- hermal power plant.
The EES system consisted of 2 MW/0.5 MWh of lithium/
iron-phosphate batteries. Its output could reach from −2 to
2 MW within 2.5 s (approximately 2 s of which were attributable to the time delay in system communications), and the
conversion time from charge to discharge status was fewer
than 300 ms. This project cost 22.6 million RMB.
The EES system was designed to support frequency regulation of unit 3 in the power plant. With the EES system put
into operation, the frequency regulation performance of unit 3
increased by 28%, and it became the best in the North China
power grid. The overall efficiency of the EES system was 85%,
of which the battery charge and discharge efficiency was 94%;
the losses of the transformers, inverters, and lines were approximately 10%. According to the compensation rules for ancillary
services in North China, both the EES system and unit 3 received
compensation, and the revenue was shared by the investors of
both the generator and the EES system.

Challenges and Barriers to
Large-Scale Deployment of EES
First, widespread deployment of EES in both China and the
United States is hindered by the high capital cost and uncertain
or unattractive economic returns. EES deployment also faces
a series of regulatory challenges. The discrepancies in market
rules for EES among U.S. regions also present a challenge to
developers of EES, who must understand the regional differences in the wholesale market rules. In non-RTO regions in the
United States (i.e., those with vertically integrated utilities) and
in China, the utilities can use an EES for any kind of services.
But an EES does not always fit squarely into the existing utility
cost-recovery structure and is not always valued well in capacity
planning. In non-RTO regions in the United States and China,
september/october 2017

figure 6. A wide-angle view of the BESS project in the Shijingshan
thermal power plant. (Source: Baidu, map.baidu.com.)

the price signal for the value of services an EES provides is
established by the regulator. The utilities limit EES deployment
consistently with their regulatory construct; without a true market price signal, it may be difficult for regulators to determine
whether the utility investment is prudent.
A common market barrier in both countries is the cost
competitiveness of the EES. The barrier could result from
market structures that are inadequate to value and compensate EES for the range of services it can provide or be due
to the high capital and operating costs of EES compared
with alternative technologies. At the moment, the main value
stream for EES demonstration projects in China is diurnal
arbitrage between peak and valley prices. The experience of
restructured electricity markets in the United States shows
that the economics of EES can be significantly improved by
allowing EES to participate in the electricity markets.
Proper valuation and compensation for the different services EES can provide are important to capital formation.
While vertically integrated utilities can receive a relatively
risk-free rate of return for their "prudently incurred" investments, EES developers in restructured markets bear the full
risk of these capital-intensive investments. As China develops its electricity power market and as the United States continues to improve its market design, it is important to note
that EES will need to compete against alternative solutions,
such as other types of generation and demand response.

Summary
BESSs have increasingly appeared in bulk system applications
in electric power grids in both the United States and China. Various use cases have proven the effectiveness of BESSs in certain applications. Market and operation practices in the United
States have begun to encourage BESSs to participate in grid
services. In China, systematic planning is still needed to facilitate the large-scale adoption of BESSs. The experiences of EES
development in both countries are summarized in Table 1.
In the United States, developments in three major areas will
continue the trend of large-scale energy storage integration.
✔✔ First, markets (or regulatory structures) are more appropriately designed to compensate different types
of required grid services, especially the services that
become critical in variable-generation-rich grids.
Cost-competitive applications of various technologies,
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http://map.baidu.com

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