Under the new power system, the demand for compressed air energy storage construction is gradually increasing

1.1. The installed capacity of new energy is gradually increasing, and the demand for large-scale long-duration energy storage development is strong

Energy storage is the key to ensuring the large-scale development of clean energy and the safe and economic operation of power grids. Energy storage technology can make up for the missing "storage and release" function in the power system, making the real-time balanced "rigid" power system more "flexible". It can smooth out the volatility brought by the large-scale clean energy generation being connected to the power grid, and improve the safety, economy and flexibility of the power grid operation.

The application scenarios of energy storage can be divided into three major scenarios: energy storage on the power generation side, energy storage on the transmission and distribution side, and energy storage on the power consumption side. There are many scenarios for power demand on the power generation side, including peak shaving and valley filling, auxiliary services for the power market, and grid connection of renewable energy, etc. 2) Energy storage on the transmission and distribution side is mainly used to alleviate grid congestion and delay the expansion and upgrading of transmission and distribution equipment, etc. 3) User-side energy storage is mainly used for self-generation and self-consumption of electricity, peak-valley price difference arbitrage, capacity charge management, and enhancing power supply reliability, etc.

Among various types of energy storage, pumped storage accounts for the largest proportion, while the growth rate of new energy storage is relatively high. The proportion of compressed air energy storage is only 3.2%. According to the "White Paper on Energy Storage Industry Research 2022 (Abstract Edition)" released by CNESA, by the end of 2021, the cumulative installed capacity of operational power energy storage projects in China was 46.1GW, among which the cumulative installed capacity of pumped storage was 39.8GW, accounting for 86.3%. Pumped storage still holds the largest position. The cumulative installed capacity of new energy storage reached 5,729.7 MW, increasing by 75% year-on-year. The market increment mainly came from new energy storage. Among new types of energy storage, lithium-ion batteries hold a dominant position, accounting for 89.7%, while compressed air energy storage accounts for a relatively small proportion, only 3.2%.

The mismatch between time and space in new energy power generation poses challenges to the stability of the power grid. With the continuous increase in the installed capacity of wind and solar power, the intermittency of power generation has an increasingly significant impact on the power grid, posing challenges to its stability. This is specifically reflected in two aspects: 1) Time mismatch: The generation time of wind and solar power does not match the peak consumption time. Wind power generates less output during the day and more at night, while the output of photovoltaic power drops sharply on cloudy days and at night. 2) Spatial mismatch: China's nine major clean energy bases are all concentrated in the three northern regions, while the areas with higher electricity loads are mostly in the central and eastern regions. Spatial mismatch leads to greater pressure on cross-regional grid regulation and increases the risk to grid stability. The installed capacity of wind and solar power is growing rapidly, and the demand for long-term and large-scale energy storage is considerable. Long-duration energy storage, with its characteristics of long cycles and large capacity, can regulate the fluctuations in new energy power generation over a longer time dimension, ensure power supply, and reduce the overall electricity cost of society. In 2021, the U.S. Department of Energy defined long-duration energy storage as energy storage that operates continuously (discharges) for at least 10 hours and has a lifespan of 15 to 20 years. Generally speaking, in China, energy storage systems with a charge and discharge cycle duration of more than 4 hours or several days or months are all referred to as long-duration energy storage.

Among long-duration energy storage, pumped storage is the most mature in development, but it has a long construction period and is affected by geographical location. Compressed air energy storage can be used as an alternative. According to the differences in energy storage types, energy storage can be classified into mechanical energy storage, electrochemical energy storage, chemical energy storage and thermal energy storage. Among them, long-duration and large-capacity storage mainly includes pumped storage and compressed air energy storage. However, pumped storage is restricted by geographical conditions, has a relatively low energy density, a high total investment, and the construction period generally requires 6 to 8 years. In comparison, although the efficiency of compressed air energy storage is relatively low, its construction period is relatively short, usually 12 to 18 months. In addition, the site restrictions for compressed air energy storage are fewer. Although storing compressed air in suitable underground mines or caves under lava is the most economical way, the modern solution for compressed air storage is to replace caves with ground air storage tanks.

1.2. Non-combustion compressed air energy storage has high efficiency and meets the requirements of cleanliness, and the technology is constantly breaking through

The basic principle of compressed air energy storage: During off-peak hours, electrical energy is used to compress air to high pressure and store it in caves or pressure vessels, converting electrical energy into the internal energy of the air for storage. During peak electricity consumption periods, high-pressure air is released from the gas storage chamber. After being heated and raised by fuel combustion, it drives the turbine to generate electricity.

The main equipment: The compressed air system consists of a compressor, a cooler, a pressure vessel, a regenerator, a turbine (expander), and a generator, among which the compressor and the turbine (expander) are the core equipment of the system.

As early as around 1950, the United States proposed patents related to compressed air energy storage. In 1978, Germany built its first compressed air energy storage power station (Huntorf Power Station), with an energy storage capacity of 60MW and an energy release capacity of 290MW. It was stored in an abandoned underground mine shaft, with an energy storage efficiency of 42%. In 1991, the United States built its second compressed air energy storage power station, the McIntosh Power Station, with a storage capacity of 50MW and an energy release capacity of 110MW. It was also stored in a mine shaft, and the energy storage system efficiency was 54%. Both of the above two power stations are supplementary combustion type compressed air energy storage power stations.

The supplementary combustion type compressed air energy storage power station has technical flaws. That is, after the high-pressure air in the salt caze is released, it needs to be heated and expanded to generate greater thrust and maintain the system's circulating operation. Therefore, coal or natural gas needs to be burned to heat the air, and this process is called "supplementary combustion". Therefore, traditional supplementary combustion compressed air energy storage has inherent technical bottlenecks, including providing heat sources such as natural gas and other fossil energy sources, and the system efficiency is relatively low, generally only around 40% to 55%. Non-supplementary combustion compressed air energy storage power stations conform to the characteristics of cleanliness and environmental protection and have broad prospects. The non-combustion type compressed air system utilizes its own "internal circulation" to store the large amount of heat energy generated during the compressed air process. When electricity is generated, the stored heat energy is released, acting as a natural "booster". The entire process involves no combustion or emissions, thus being more in line with the characteristics of clean and low-carbon, and having a higher efficiency. The power conversion efficiency can be increased to over 60%.

New types of compressed air energy storage mainly include adiabatic, thermal storage, isothermal, liquid and supercritical compressed air energy storage. With the advancement of technology, the reliance of compressed air energy storage on large storage chambers is constantly being addressed, and the system efficiency is further improved.

2. The combination of policy catalysis and large-scale effects has enhanced the economic viability of compressed air energy storage

2.1. Under the catalysis of policies, the development of the compressed air energy storage industry has accelerated

The state has introduced a number of policies to support the development of the compressed air energy storage industry. In July 2021, the National Development and Reform Commission and the National Energy Administration issued the "Guiding Opinions on Accelerating the Development of New Energy Storage", clearly stating that long-duration energy storage technologies such as compressed air and flow batteries should enter the initial stage of commercial development. In March 2022, the National Development and Reform Commission and the National Energy Administration issued the "Implementation Plan for the Development of New Energy Storage during the 14th Five-Year Plan Period", requiring the promotion of the engineering application of 100-megawatt-level compressed air energy storage technology. In August 2022, five departments including the Ministry of Industry and Information Technology jointly issued the "Action Plan for Accelerating the Green and Low-Carbon Innovative Development of Power Equipment", requiring the accelerated research and development of compressed air energy storage equipment. A series of policies issued at the national level have laid the foundation for the industrial development of compressed air energy storage.

The industrialization process of compressed air energy storage in China is accelerating, advancing from the megawatt level to the 100-megawatt level. In 2013, the 1.5MW supercritical compressed air energy storage demonstration project in Langfang was put into operation, marking the first officially invested compressed air energy storage project in China. In 2021, China's compressed air energy storage demonstration projects achieved several milestone progress. The 10MW project in Feicheng, Shandong Province and the 10MW project in Jiemai, Guizhou Province were both completed and connected to the grid for power generation, officially put into operation. In 2022, the 60MW salt cavern compressed air energy storage project in Jintan, Jiangsu Province and the 100MW advanced compressed air energy storage national demonstration project in Zhangjiakou were put into operation, accelerating the industrialization process of compressed air energy storage. Overall, the scale of the operational projects is approximately 182.5MW.

Milestone: The 100-megawatt compressed air energy storage project has been successfully put into operation. In August 2021, the first phase of the underground gas storage device project of the world's first 100-megawatt advanced compressed air energy storage demonstration power station, which was constructed by the Fourth Engineering Bureau of PowerChina and originated from the Institute of Engineering Thermophysics of the Chinese Academy of Sciences, officially started construction. It was successfully connected to the grid and began generating electricity in Zhangjiakou, Hebei Province at the end of September 2022. It is currently the new type of compressed air energy storage power station with the largest single-unit scale and the highest efficiency in the world. The total scale of this project is 100 megawatts /400 megawatt-hours. The core equipment has a 100% autonomy rate. It can generate over 132 million kilowatt-hours of electricity annually and provide power guarantee for approximately 50,000 households during peak electricity consumption periods.

The scale of the filed projects far exceeds that of the projects that have been put into operation. According to data from Energy and Power Talk, as of November 2022, a total of 35 compressed air energy storage projects have been filed, signed, under construction or put into operation in 12 provinces including Shandong, Henan, Hebei, Jiangsu, Zhejiang and Guangdong. Among them, 25 projects have made their scale data public, totaling 8.2GW. Excluding the projects that have been put into operation, The scale of the filed projects far exceeds that of the projects that have been put into operation. Gigawatt-hour registered projects have emerged in Shandong Province, such as the 5×300MW/1800MWh salt cavern compressed air energy storage project of China Power Construction Corporation in Feicheng and the 1000MW/5000MWh compressed air energy storage project in Yicheng District.

2.2. Under the effect of scale, the efficiency of compressed air energy storage is improved and the cost is reduced

The construction cost of compressed air energy storage is gradually decreasing. According to "Compressed Air Energy Storage Technology and Development" written by Wang Fuqiang et al., the unit capacity of compressed air energy storage power stations is gradually increasing with the iteration and update of technology, while the investment per kilowatt is gradually decreasing.

Take the demonstration projects built domestically as an example. In 2014, the Wuhu Power Station, a non-fuel-fired compressed air demonstration project put into operation domestically, had an installed capacity of 500kw, and the investment cost per kilowatt was as high as 60,000 yuan. In 2021, the installed capacity of the first phase of Feicheng Power Station, which was put into operation in China, reached 10MW, and the investment cost per kilowatt dropped to 10,000 yuan. In terms of the construction cost of 100-megawatt projects, the investment cost per kilowatt of the completed 100MW project in Zhangjiakou is 8,400 yuan. In addition, the estimated investment per kilowatt of some 100-megawatt-level compressed air energy storage projects in the feasibility study and planning stages is 5,000 to 6,000 yuan, which is already comparable to that of large-scale pumped storage power stations.

The large-scale development of compressed air energy storage has gradually improved the efficiency level. The installed efficiency of compressed air energy storage has a significant impact on the economic viability of the project and the development of the industry. From the perspective of the installed capacity efficiency of domestic projects that have been put into operation, as the installed capacity increases, the system efficiency also improves. Among them, the efficiency of megawatt-level systems is approximately 52.1%, that of 10MW-level systems is about 60%, and that of 100MW-level projects is about 70%, gradually approaching 75%.

2.3. With the capacity electricity price policy and the scale effect, the economic viability of compressed air energy storage is expected to steadily improve

At present, the research and development and demonstration of 10MW non-combustion compressed air systems are a hot topic that many scholars and institutions in China are focusing on. It is also a key technology for the transition from kw or MW-level small-power units to 100-megawatt-level large-power units. Therefore, in this report, We selected a 10MW/80MW·h non-fuel-fired compressed air energy storage system power station as an example to analyze the economy of the non-fuel-fired compressed air energy storage power station under the peak-valley price difference arbitrage model.

The initial investment cost of non-fuel-fired compressed air energy storage power stations is slightly higher than that of traditional compressed air energy storage power stations, mainly due to the increased investment cost of heat exchange and heat storage devices. According to Zhou Qian's "Research on Heat Storage Technology and Its Economy in Compressed Air Energy Storage", the initial investment for a 10MW non-fuel-fired compressed air energy storage power station is 66.78 million yuan, slightly higher than that of a compressed air energy storage power station.

Peak-valley price difference arbitrage is one of the main profit models for compressed air energy storage. The main function of compressed air energy storage is to alleviate the curtailment of wind and solar power, as well as to balance peak and valley loads and regulate the peak-valley difference. Therefore, it is considered that the compressed air energy storage system can store electricity during off-peak hours and supply it to the power grid during peak hours.

Taking into account the operating costs of the two types of compressed air energy storage power stations comprehensively, including the cost of purchasing electricity for energy storage, natural gas costs, self-paid expenses for personnel and employees, depreciation of fixed assets, and repair costs, we have calculated that the cost per kilowatt-hour of non-fuel-fired/traditional compressed air energy storage power stations is 0.686/1.629 yuan per kilowatt-hour respectively. The cost per kilowatt-hour of non-fuel-fired compressed air energy storage power stations is 57.90% lower than that of traditional compressed air energy storage power stations.

Assuming the project construction period is one year, the operation period is 25 years, and the discount rate is 3.52% (the five-year Treasury bond interest rate in 2022), the internal rate of return of the non-fuel-fired compressed air energy storage power station project is 9.37%, the static investment payback period is 10.54 years, and the dynamic investment payback period is 12.83 years.

As China has not yet issued a specific subsidy policy for compressed air energy storage systems, the latest subsidy policy for pumped storage power stations is referred to for economic calculation under the condition of capacity subsidy. In May 2021, the National Development and Reform Commission issued the "Opinions on Further Improving the Price Formation Mechanism of Pumped Storage", stipulating the two-part tariff policy for pumped storage, which will be implemented starting from 2023.

Referring to the above two-part tariff policy for pumped storage and taking into account the actual operation time of the compressed air energy storage power station, we assume that the operation period of the 10MW non-fuel-fired compressed air energy storage power station is 25 years, and the internal rate of return on capital during the operation period is determined at 6.5%. The energy storage electricity price is equal to the off-peak electricity price for industrial use at 0.27 yuan per kilowatt-hour. The energy release price is 0.81 yuan per kilowatt-hour for peak industrial electricity consumption. 20% of the revenue generated from the electricity price is retained for the compressed air energy storage power station. The calculation method of capacity electricity price is based on the principle of covering costs and reasonable returns. The annual net cash flow during the operation period of the power station is discounted according to the internal rate of return on capital. With the goal of achieving a balance of cash flow income and expenditure throughout the operation period, the capacity electricity price of the power station is determined. The calculated capacity electricity price is 794.35 yuan per kilowatt, and the internal rate of return is 10.02%. Therefore, the yield level under the capacity electricity price subsidy model is higher than that without the capacity subsidy.

We selected the cycle efficiency of 10MW non-fuel-fired compressed air energy storage, the energy release electricity price and the initial total investment cost as the uncertain factors affecting the economic efficiency of the project for sensitivity analysis. The efficiency of energy storage systems: The efficiency of compressed air energy storage directly affects the energy conversion efficiency. Assuming that the variation range of the cycle efficiency is 55% to 75%, as the cycle efficiency gradually increases, the internal rate of return level steadily rises. When comparing the conditions without capacity subsidy and those with capacity subsidy, the internal rate of return is more sensitive to the cycle efficiency under the condition without capacity subsidy.

Energy release price: When the energy storage price remains unchanged, if the energy release price changes, the corresponding peak-valley price difference will also change. When the energy release price is 0.61 yuan per kilowatt-hour, the peak-valley price difference at this time is only 0.34 yuan per kilowatt-hour, and the internal rate of return is negative, indicating that the power station project cannot recover the cost. With the gradual increase of the energy release price, the peak-valley price difference has gradually widened, and the IRR of compressed air energy storage projects has gradually increased. When the energy release price reaches 1.01 yuan per kilowatt-hour, the internal rate of return level without capacity subsidies is as high as 24.76%.

Initial investment cost: Changes in the initial investment cost directly affect the annual cost of the project. For a 10MW non-fuel-fired compressed air energy storage power station, when the investment cost per kilowatt is reduced from 6,678 yuan per kilowatt to 5,678 yuan per kilowatt, the internal rate of return will increase from 9.37% to 11.53%, and the static investment payback period will be reduced from 10.54 years to 9.11 years. It is expected that with the large-scale development of compressed air energy storage and technological progress, there is still room for further reduction in the initial investment cost, and the economic viability of compressed air energy storage projects is expected to be further enhanced.

3. The industry has a broad market space, and core equipment enterprises are expected to benefit

3.1. The installed capacity is increasing rapidly and the market space is vast

The installed capacity of compressed air energy storage is increasing rapidly. Under the catalysis of policies, the demonstration application of 100-megawatt-level compressed air energy storage will be accelerated. In addition, as the reform of the domestic electricity market continues to advance, the price difference between peak and off-peak hours is expected to widen further, and the economic efficiency of projects will be further enhanced. Under multiple factors, it is expected that China's compressed air energy storage industry will enter a period of rapid development. According to Guanyan Tianxia's prediction, under neutral conditions, the penetration rate of compressed air energy storage in China's newly added energy storage capacity from 2022 to 2025 May reach 10%, with an additional installed capacity of 6.59GW. It is estimated that the cumulative installed capacity by 2025 will be 6.76GW. From 2026 to 2030, the penetration rate of compressed air energy storage in the newly added energy storage capacity is expected to reach 23%, with an additional installed capacity of 36.39GW. It is estimated that by 2030, the cumulative installed capacity of compressed air energy storage in China will reach 43.15GW. It is estimated that the average annual growth rate of installed capacity of compressed air energy storage in China will reach 85% from 2021 to 2030.

The cost structure of compressed air energy storage equipment: From the perspective of cost proportion, data from Zhongshang Industry Research Institute shows that compressors and expanders each account for about 20%, heat storage and heat exchange devices account for 15-20%, gas storage systems account for 20-30%, factory buildings and land account for 10%, and others account for 10%.

Under neutral conditions, it is estimated that the market space for compressed air energy storage will reach 37.18 billion yuan in 2025. Based on the forecast of the installed capacity of compressed air energy storage in 2025, we have calculated the market space of compressed air energy storage in 2025. Assuming that the average unit construction cost of energy storage power stations is 5,500 yuan per kilowatt, under neutral conditions, the cumulative market space for air compression energy storage construction investment is expected to reach 37.18 billion yuan by 2025. Among them, the market Spaces for compressors and expanders, which are key equipment for compressed air energy storage, are 7.44 billion yuan and 7.44 billion yuan respectively. The market space for heat storage and heat exchange devices is expected to reach 5.58 billion yuan, and the market space for gas storage systems may exceed 9.3 billion yuan.

3.2. Upstream equipment manufacturers may benefit first and the development is promising

The industrial chain: The upstream is the supply of resources and equipment, including four types: air compressors, expanders, heat exchange equipment, and salt cavern resources. The midstream involves development and construction, including technical support, design and development, system integration, and construction and operation. The downstream is comprehensive application. Compressed air energy storage power stations are connected to the power grid system, serving industrial and commercial electricity consumption, residential electricity consumption and other departments, and playing a role in peak shaving and valley filling. From the perspective of industrial chain construction, at present, China has initially formed the prototype of the compressed air energy storage industrial chain. Many listed companies are actively laying out the compressed air energy storage business based on their own resources.

1) Compressor: It determines the system efficiency. With relatively high technical barriers, it can be partially localized. Compressors are generally multi-stage compressors with inter-stage cooling devices, which determine the efficiency of the entire compressed air energy storage system. Therefore, developing compression technologies with large flow rates, high efficiency, and high exhaust temperatures has become the key to the industry's development. According to "Compressed Air Energy Storage Technology and Development" written by Wang Fuqiang et al., currently, the main domestic manufacturers include Shenyang Blower Group and Shaanxi Blower Power, while the main foreign ones are Atlas Copco and Siemens. At present, 100MW-class compressors can basically be produced domestically, but the design and manufacture of large-scale compressors still require technological research and development. There are still significant difficulties and technical bottlenecks in achieving a single-unit 300MW level, and existing compressors need to be connected in parallel or in series to achieve this.

2) Expander: It is a key core component for power generation. According to "Compressed Air Energy Storage Technology and Development" written by Wang Fuqiang et al., expanders utilize the principle that potential energy is converted into kinetic energy when compressed air expands and depresses. They can be classified into piston expanders and turbine expanders. Among them, turbine expanders feature large flow rate, simple structure, small system size, high efficiency, and long operation cycle, making them suitable for compressed air energy storage projects. The main domestic manufacturers are Dongfang Electric, Shanghai Electric and Harbin Electric. At present, all companies are intensifying their research and development efforts in the field of turbine expanders and are conducting research and development work on expanders with 300MW compressed air energy storage.

3) Heat exchange system: It is a key component that helps enhance system efficiency. According to "Compressed Air Energy Storage Technology and Development" written by Wang Fuqiang et al., through heat exchanger equipment, part of the heat from the hot fluid can be transferred to the cold fluid. Domestic chemical and power equipment supporting manufacturers all have the ability to design and process heat exchangers, and most of them can carry out the design and calculation of heat exchange devices. For the compressed air energy storage system, Harbin Turbine Works has developed a "U" -shaped hairpin heat exchanger for the compressed air energy storage project. It features large flow rate, high pressure resistance, high temperature resistance, quick start-up and shutdown, and high efficiency. It has been applied to the 60MW compressed air energy storage project in Jintan, Jiangsu Province. The Chinese Academy of Sciences has developed a gas-water heat exchanger and applied it to the 100MW compressed air energy storage power station in Zhangbei.

Traditional energy equipment manufacturers are actively laying out the manufacturing of equipment for compressed air energy storage. 1) Air compressor: The main clients are Shanggu Power and Shenyang Blower Group. Shanggu Power has the capability to provide technical solutions for 300MW compressed air energy storage compressors and won the order for the 300MW compressed air energy storage project in Yingcheng, Hubei Province in November 2022. Shenyang Blower Group, on the other hand, provided compressor equipment for the 60MW compressed air energy storage project in Jintan, Jiangsu Province. 2) Expanders and heat exchangers: The main enterprises involved are the three major power equipment manufacturers, namely Dongfang Electric, Shanghai Electric, and Harbin Electric. Among them, the turbine plants under the three major thermal power equipment manufacturers can provide turbine expanders. Take the 60MW project in Jintan as an example. Dongfang Electric provided the turbine expander, Harbin Electric provided the heat exchanger, and Shanghai Electric provided the high-power motor.

4) Gas storage devices: These include underground caves and pressure vessels above ground. Underground caves include naturally formed salt caverns, modified mine caves, artificial chambers, etc., while pressure vessels above ground mainly consist of artificial gas storage tanks/pipelines, etc. According to "Research Status and Development Trend of Gas Storage Devices in Compressed Air Energy Storage Systems" by Guo Dingzhang et al., the characteristics of various gas storage devices are as follows: 1) Natural underground caves such as salt caverns have a large gas storage scale and low cost, but they rely on special locations and geographical conditions; 2) Artificial caverns reduce the reliance on special geological and geographical conditions and are relatively large in scale. 3) Metal material containers, including artificial gas storage tanks and gas storage pipelines, are not dependent on geographical location but are relatively expensive. Compared with gas storage in storage tanks, gas storage in pressure pipelines with smaller diameters is more flexible and can be arranged underground.

Salt caverns have the best economy, followed by abandoned caverns. Metal gas storage devices are expensive and still in the experimental stage. According to "Compressed Air Energy Storage Technology and Development" by Wang Fuqiang et al., through statistics on planned, feasibility studies, ongoing and completed projects in China, it is found that the unit capacity of salt cavern gas storage facilities is mostly large, and the investment per kilowatt is relatively low. Old and newly built mines can also be used for the construction of large-scale power stations, and the investment per kilowatt is slightly higher than that of salt cavern gas storage facilities. Metal gas storage devices mainly composed of cryogenic storage tanks and high-pressure gas tanks are generally used in small power stations, and the investment cost per kilowatt is relatively high.

Salt caverns are the products left after salt mining or the loss of salt mines. Salt can be extracted from thick underground salt layers or salt mounds through methods such as irrigation and extraction, leaving huge cavities underground. After transformation, salt cavern can be used for natural gas storage, compressed air energy storage power station storage, etc. Among them, due to the characteristics of high temperature, high pressure, daily cycle and large pressure variation of compressed air energy storage power stations, higher standards have been put forward for the screening of salt cavern cavities. China is rich in salt cavern resources and has a large number of exploitable salt cavern resources. It is estimated that the existing salt cavern resources can meet the development requirements of 35.45GW. According to "Advanced Adiabatic Compressed Air Energy Storage Technology Based on Salt Cavern Gas Storage and Its Application Prospect" written by Mei Shengwei et al., China currently has 130 million cubic meters of salt cavern resources, most of which have good sealing performance after cavity construction. Only 0.2% of the salt cavern resources have been utilized, and the vast majority of the salt cavern resources are idle. Referring to the salt cavern volume of 220,000 cubic meters of the 60MW compressed air energy storage project in Jintan, Jiangsu Province, the current salt cavern resources are expected to meet the demand of 35.45GW (as of November 2022, the filed project was 8.2GW). In addition, China has relatively abundant well and mine salt resources. According to the Institute of Rock and Soil Mechanics of the Chinese Academy of Sciences in Wuhan, China can generate over 20 million cubic meters of underground salt cavern space each year. The newly added salt cavern can provide a guarantee for the construction of compressed air energy storage projects. In terms of the distribution of salt cavern resources, the rock salt deposits suitable for the construction of underground gas storage facilities in China are mainly located in the eastern region, including the middle and lower reaches of the Yangtze River, and some areas of Shandong and Guangdong. However, in the "Three North" regions, where the installed capacity of photovoltaic and wind power is huge and there is an urgent need for large-scale energy storage, there is a lack of rock salt strata suitable for the construction of salt cavern underground gas storage facilities.

Salt enterprises are actively laying out the compressed air energy storage industry by setting up joint ventures. While domestic salt companies are doing a good job in the production and sales of their own salt and salt chemical products, they are also actively laying out the compressed air energy storage industry. Among them, representative enterprises are Suyan Jingshen, Xuetian Salt Industry and Luyin Investment. The salt industry company already has abundant salt cavern resources. By cooperating with the provider of compressed air energy storage technology solutions to jointly develop a compressed air energy storage demonstration project, on the one hand, it can achieve risk sharing, and on the other hand, it can gradually expand from the demonstration project to carry out industrialization construction. It is expected that while developing the main business, a second growth curve can be constructed.

Source: Industry research report