Sichuan DKT Energy Technology Co., Ltd.( A subsidiary of Hydrexia (China))

　　So-called energy storage primarily refers to the process of converting electrical energy into other forms—such as chemical energy, potential energy, kinetic energy, and electromagnetic energy—through specific technologies. This conversion endows the stored energy with the characteristics of spatial transferability (without reliance on grid transmission), temporal transferability, or controllability of quality, enabling it to be released at the appropriate time and location in a manner that matches electricity demand—in terms of power, voltage, AC or DC—and thereby providing long-term or temporary power supply to power systems and end-use facilities and equipment. Examples include battery energy storage, flywheel energy storage, pumped hydro storage, and compressed air energy storage, among others.

　　From the perspective of industry classification, energy storage falls under the clean-tech sector, primarily for the following reasons:

　　First, energy storage technologies enhance grid efficiency, ultimately reducing energy consumption.

　　Secondly, energy storage technologies enable the efficient utilization of renewable energy sources such as wind and solar power. The timing and magnitude of renewable energy generation are highly variable, which can impose significant stress on both the power grid and end-use equipment if the energy is deployed directly, thereby hindering the integration of renewables into the grid and their reliable delivery to consumers.

　　Thirdly, energy storage technologies offer relatively clean power sources for pollution sources such as automobiles and heavy-duty power equipment powered by internal combustion engines, or enhance energy efficiency through hybridization, thereby reducing greenhouse gas emissions.

　　According to research by the Cleantech Research Center, since 2010, energy storage has emerged as a new investment hotspot within the clean-tech sector. Data from the center show that in the first half of 2010, a total of 10 VC/PE investment deals were disclosed in China’s energy-storage industry, with seven of these deals specifying the investment amounts, totaling US$43.01 million. Energy-storage deals accounted for 28.6% of all investments in the broader clean-energy sector. The majority of these investments were concentrated in the battery segment, with some also going to supercapacitor projects. Within the battery space, lithium-ion batteries received the lion’s share of funding, while traditional lead–acid batteries also attracted a number of investments. Other advanced battery technologies receiving investment include flow batteries and others.

　　According to an analysis by the Qianzhan Research Center, there are three main reasons for the surge in investment in energy storage:

　　First, this is inherent in the stage-specific characteristics of the clean-tech industry. From the perspective of energy conservation and emissions reduction, the various sub-sectors of clean technology can be broadly categorized into three types: supply-side innovation (i.e., the development of new energy sources), efficiency enhancement (i.e., the optimized utilization of existing energy resources), and end-of-pipe treatment (including the treatment and recycling of wastewater, exhaust gases, and solid waste). These categories will, in turn, become the focal points of each developmental phase. Supply-side innovation sub-sectors, such as the photovoltaic industry, were the investment hotspots in the previous phase; however, due to high costs and the challenges of integrating renewable energy into the grid, their full-scale development remains difficult at present. It is precisely because of this bottleneck in supply-side innovation that efficiency-enhancement initiatives have emerged as a dominant force in the clean-tech sector, making them the primary focus of the current stage of development.

　　Secondly, subsidy policies for new-energy vehicles have served as a direct catalyst. In January 2009, the Ministry of Finance and the Ministry of Science and Technology jointly issued the “Notice on Launching Pilot Demonstration and Promotion Projects for Energy-Efficient and New-Energy Vehicles,” and in 2010 the National Development and Reform Commission took the lead in drafting the “Draft Plan for the Development of Automobiles and New-Energy Vehicles.” Throughout, policy has acted as a guiding beacon for investment in the clean-tech sector; given that energy storage is a critical technological foundation for new-energy vehicles, it has naturally become a hot target for investment.

　　Furthermore, the demonstration effect of the collective IPOs in the lithium-battery industry cannot be overlooked. Since the second half of 2009, a number of companies involved in the production and manufacturing of lithium-ion batteries—ranging from iron-lithium carbonate raw-material suppliers to manufacturers of positive and negative electrodes and electrolytes—have successively gone public, which has undoubtedly had a positive impact on investment across the entire industry.

　　The primary challenges currently facing the energy storage industry include: high costs, which may make it more economical to waste energy than to store it; and the environmental impacts associated with the production of energy storage materials, which could render conventional energy use more environmentally friendly than energy storage.