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China’s state grid sets $4.5b for renewable storage
State Grid Corp. of China, which supplies power to more than 80% of the country, will spend 31 billion yuan (US$4.5 billion) on pumped hydro storage this year.
It works to raise operating capacity from 45 gigawatts to 78 gigawatts by 2030 to support China’s expanding renewable power output.
China’s five-year plan calls for 100 gigawatts of additional pumped hydro capacity by 2030.
The State Grid said it plans to add more than 30 gigawatts by then, while another 30 gigawatts is under construction.
Pumped hydro stores energy by moving water uphill and releasing it to generate electricity, and it is becoming more important in China as renewables curtailment rises because of grid bottlenecks.
🔗 Source: Bloomberg
🧠 Food for thought
Implications, context, and why it matters.
This US$4.5 billion is an early step in a multi-hundred-billion-dollar grid buildout
- The yearly outlay is small next to State Grid’s plan to invest up to 4 trillion yuan (US$574.43 billion) in fixed assets from 2026 to 2030 1.
- That five-year budget is 40% higher than the prior planning window 1.
- Funding goes beyond storage to ultra-high voltage (UHV) transmission lines, which move large amounts of electricity over long distances, to move renewable power from western China to eastern demand hubs 2.
- The buildout aims to back an average yearly rise of about 200 gigawatts of installed wind and solar capacity across the State Grid service area 2.
Pumped hydro stays central for grid storage, while batteries struggle to earn steady returns
- State Grid is leaning on pumped hydro since it is proven for large-scale, long-duration storage, and it supports grid stability services such as frequency control that intermittent renewables cannot supply alone 3.
- China’s newer battery storage has often sat idle, averaging 3.74 hours of operation per day by June 2024 4.
- Low usage has squeezed margins, with some independent battery storage firms in Guangdong losing 21.4 million yuan (US$3.14 million) in 2024 as price gaps stayed too thin for power-trading arbitrage, or buying low and selling high 4.
- Tougher conditions at home have pushed exports, while price wars drove about one third of energy storage retailers to sell below cost and the same price pressure carried into overseas markets 4.
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