CNE (0182.HK): 5MWh Energy Storage Project in Naidong, Tibet Was Successfully Connected Into the Grid

On Dec. 18, 2018, Concord New Energy Group Limited (“CNE” or the “Company”)’s project of 20MW photovoltaic power generation+5MWh energy storage power station in Naidong, Tibet was successfully connected into the grid. Up to now, this project is not only the first energy storage power station utilizing the lithium battery technology in China with largest capacity at highest altitude, but also the energy storage power station adopting battery echelon utilization at highest altitude at present. Previously, the Company already caught the industry’s attention because of its joining in the fused salt energy storage project splitted by Alphabet, the parent company of Google, so the connection of its energy storage power station project into the grid this time will no doubt further enhance its confidence in the energy storage related business. After completion, the project will be made accessible on the Company’s smart operation & maintenance platform Power+, to provide data analysis for increasing new energy access to a large extent, and help with the comprehensive energy service exploration.


1. For the purpose of resolving the issues of power shortage and instability of power transmission in middle Tibet, CNE co-works with Beijing Jiangxin Battery Technology Co., Ltd (“Jiangxin”), a subsidiary of Beijing Automotive Group Co., Ltd (“Beijing Automotive”), to implement energy storage project at the roof of world.

Invested by CNE, the photovoltaic power generation + energy storage power station in Naidong, Tibet, is the first energy storage project co-carried out with Jiangxin of Beijing Automotive. From its kicking off of hoisting on Oct. 13, 2018 to its fully connection into the grid on Dec. 18, 2018 , totally 4 energy storage containers equipped with lithium battery have been connected into the original photovoltaic pooling station via 35KV box transformer substation.
As the natural environment in Tibet is fragile and cannot be easily recovered ecologically by itself, the Tibetan government has refused to approve any thermal power generation like projects that may contaminate its environment, and given priority to hydropower assisted by photovoltaic power and geothermal power and other new energy power generation in installing its local power grid, which makes the overall structure of its power source relatively simple. Affected by its geographical location and climate environment, Tibet’s maximum load appears in the drought period in winter. However, the poor quality of power supply caused by its undeveloped infrastructure, low coverage rate by power grid and week grid structure, in addition to the instability of photovoltaic power generation, always result in severe power shortage, especially at night, the basic power demand from its residents even cannot be guaranteed.
Tibet possesses rich mineral resources, for which Julong Copper, Yulong Copper and many other companies have planned to put into operation during the “13th Five-Year Plan” period. Moreover, the railways connected into Tibet have been opened to traffic. Along with the high-speed economic development in Tibet, its power supply demand will grow with each passing day. Therefore, the development of new power supply shall be accelerated and power peak load regulation measures shall also be adopted to guarantee the stable power supply in Tibet.
Upon the completion of CNE’s energy storage project in Naidong, the problem of local power shortage at night and electricity consumption difficulties encountered by local residents can be effectively alleviated to benefit the society. Meanwhile, it can also be served to increase the power quality and stability of local power supply through helping level the peak load and/or regulate smooth output of the power grid. In the future, the Company will intense its study in the field of peach load regulation, frequency modulation and backup power, etc. by virtue of continuous experiment and improvement, to enhance the safety and reliability of power systems and contribute to power transmission. Besides, the battery echelon utilization has important strategic significance and demonstration effect for the fast growing battery industry in realizing the environmental friendly sustainable development.
2. CNE expands business segments to layout energy storage business.
CNE is a large-scale comprehensive company specializes in the development and operation of wind/solar power and energy storage. To date, the Company is the only pure vertical integrated clean energy power company listed on the Hong Kong Stock Exchange.
Since 2015, CNE has transformed into a power generation company, cut down substantially the EPC business, and improved constantly the proportion of power plant business with high stability. Now the revenue generated from its new energy business has reached 80%, showing that the result of transformation is remarkable.
In 2017, along with the outbreak of domestic power grid energy storage projects, and encouraged by multiple favorable policies, Jiangsu power grid took the lead role in establishing the largest energy storage station in China, which greatly motivated the domestic companies to layout the energy storage market, and pushed forward the qualitative leap in developing energy storage. It is under this circumstance that CNE seized the opportunity to actively carry out energy storage business.
3. CNE helps with the consumption and utilization of renewable energy by developing the promising distributed energy storage.
China plays the leading role in developing renewable energy so far, especially in wind/solar industry which shows the highest development momentum in recent years. By the end of 2017, China’s installed capacity of the renewable energy already reached 650 million KW, but the volatility of new energy power supply also gave rise to some problems about its connection into power grid at the same time. While, adopting energy storage technology may remedy this imperfection to substantially advance the large scale application of new energy power supply.
The Guidelines on Promoting Energy Storage Technology and Industrial Development (Draft for Comments) issued in March of 2017 defines the strategic positing of energy storage in China’s energy industry for the first time, and proposes stage goals and 4 key directions for the future development of energy storage. According to these guidelines, targeted compensation policy shall be introduced based on the application scenarios, and for the purpose of inspiring the investment and development in energy storage industry, policies relating to some fields could be carried out at first. The Methods for Managing Distributed Power Generation issued by the Bureau of Energy in March of 2018 also specifies the distributed energy storage facilities and the integrated energy utilization system such as new energy micro grid, terminal integration assembling energy supply system and regional energy network (energy internet).
According to our estimation, if we take 20% of the newly installed capacity of wind/solar power generation as the calculation base and configure the power of energy storage system at 10%, the installed capacity of energy storage will achieve 2.94GW, and on the basis of 2 hours, the energy storage capacity will reach 5.88 GWH. At present, the peak shaving and grain filling against traditional power grid is the most popular measure in the market, which has been able to be promoted commercially without subsidies. If energy storage projects could be invested in large industrial cities during the "13th Five-Year Plan" period, its market size is expected to reach RMB150-240 billion. In the future, if energy storage could be comprehensively promoted in large industrial provinces, the market scale will be more considerable. The market size of backup power supply and UPS energy storage without subsidy is about RMB 100 billion.
Considering the fact that the energy storage development in China has speeded up, and energy storage will boast huge market potential along with the continuous cost decreasing of chemical energy storage, CNE will lose no time to layout energy storage business actively. The landmark of putting into production of this project has strategic significance for the Company to invest and operate energy storage technology based projects and technical service in the future.