Energy storage microgrids are poised for a new opportunity worth hundreds of billions of RMB!

I. Why Microgrids Have Been Pushed to the Forefront

Microgrids are not a new concept. As early as July 2015, the National Energy Administration issued the "Guiding Opinions on Promoting the Construction of New Energy Microgrid Demonstration Projects," marking the official entry of this field into the demonstration and exploration phase.

In the following years, although some sporadic projects were implemented, overall progress was lukewarm. Only recently, with the intensive release of relevant policies, has the development pace of microgrids become clearly apparent.

To understand its role in the new energy system, let's first return to the concept itself: What is a microgrid?

Simply put, a microgrid is a small, complete power system. It consists of distributed power sources, loads, energy storage devices, power distribution facilities, and a control system, capable of self-control, protection, and management. In other words, it possesses all the functions of power generation, distribution, and consumption, and can achieve optimized energy dispatch within the grid.

Why are microgrids becoming the focus of the market? We must first discuss the current challenges facing the power grid.

A set of data from 2025 succinctly illustrates the problem: my country's installed capacity of new energy sources is approaching 50%, but their share of electricity generation is less than 25%. This huge gap between installed capacity and generation exposes the grid's inability to keep pace with the expansion of new energy.

Specifically, in 2025, the national installed capacity of wind and solar new energy is projected to reach 370 million kilowatts. However, at the same time, more than 150 regions across the country are already struggling to connect new distributed photovoltaic projects due to saturated distribution network capacity. On one hand, installed capacity continues to climb; on the other hand, access channels are blocked. Grid connection difficulties have become a real bottleneck restricting the development of new energy.

Even with successful grid connection, the cost of system integration of new energy is rising. Xie Kai, general manager of the Beijing Power Exchange Center, once calculated that for every 1% increase in new energy penetration, the system integration cost will increase by approximately 1 cent per kilowatt-hour.

According to the State Grid's "Service for New Energy Development Report 2025," the proportion of new energy power generation within its operating area has reached 24.2%. Based on this calculation, the system cost allocated to each kilowatt-hour of new energy currently approaches 0.3 yuan.

What does this mean? If the power grid architecture is not adjusted in time, with the 2035 target of 3.6 billion kilowatts of wind and solar installed capacity approaching, new energy sources will be trapped in a vicious cycle of "scale growth, difficulty in absorption, and high costs."

As an important innovative model of the new power system, microgrids offer a new solution. Instead of crowding all new energy sources into the large power grid, they can achieve localized absorption and self-balancing. This not only alleviates the connection pressure on the main grid but also reduces losses and costs associated with long-distance transmission.

II. Energy Storage + Microgrid: A New Trend

Discussions of microgrids inevitably involve energy storage. Among the many components of a microgrid, energy storage plays a central role.

From an operational perspective, energy storage is key to achieving internal energy balance within a microgrid. Distributed energy sources such as photovoltaics and wind power are intermittent and fluctuating, with power generation occurring intermittently and at varying levels. Through unified scheduling by the Energy Storage System (EMS), energy storage systems can effectively smooth out these fluctuations, transforming unstable power generation into stable and reliable power output. This regulatory capability allows distributed energy sources to be consumed locally and self-balanced within the microgrid, reducing the impact on the main power grid and improving the utilization efficiency of new energy sources.

Besides regulating energy throughput, energy storage is equally crucial for improving the power quality of microgrids. The energy storage converter in the system undertakes the responsibility of fine-tuning, stabilizing voltage and frequency while flexibly adjusting active and reactive power output, effectively addressing issues such as voltage drops and dips. This function is particularly important for loads with high power quality requirements, such as those connected to precision manufacturing and data centers.

It can be said that the integration of energy storage has enabled microgrids to evolve from simple distributed generation systems into complete, controllable, dispatchable, and optimizable power systems. Of particular note is the breakthrough in grid-based energy storage technology, which can autonomously construct voltage and frequency, giving microgrids true independent operation and black-start capabilities.

It is worth noting that the development of microgrids, in turn, has opened up new market opportunities for energy storage. As microgrids move from pilot projects to large-scale deployments, and from remote areas to diverse scenarios such as industrial parks, data centers, and urban complexes, the demand for energy storage is increasing exponentially.

Currently, leading companies such as Sungrow Power, Huawei Digital Energy, Kehua Digital Energy, Sungrow Power Supply, TBEA New Energy, Mingyang Ruiyuan, CRRC Zhuzhou Institute, and NARI Group have already implemented grid-based energy storage projects in multiple microgrid scenarios, and the technology is moving from reserve applications to large-scale deployments.

Energy storage has gained broader applications because of microgrids, and microgrids have gained stronger vitality because of energy storage. This mutually beneficial relationship is a clearly visible technological thread in the evolution of new power systems.

At this juncture, the dual development of energy storage and microgrids is receiving unprecedented impetus. During the 15th Five-Year Plan period, the State Grid and China Southern Power Grid will invest over 5 trillion yuan in fixed assets, injecting substantial funds into the construction of the new power system. Where will this huge sum of money go? From a policy perspective and technological trends, upgrading distribution networks, constructing smart microgrids, and deploying energy storage systems are undoubtedly of paramount importance.

It is foreseeable that with the opening of the power grid investment gates, both energy storage and microgrids will enter a period of rapid growth. They are mutually dependent and supportive, together forming the most dynamic growth pole in the new power system.