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Emerging Liquid Batteries Could Solve China’s Grid Stability Problems, Insiders Say

Published: Jul. 2, 2025  6:55 p.m.  GMT+8
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An iron-chromium flow battery energy storage system. Photo: Zhonghai Energy Storage
An iron-chromium flow battery energy storage system. Photo: Zhonghai Energy Storage

China’s vast expansion of its renewables sector has come with challenges: like how to keep the energy supply stable when the sun isn’t shining and the wind isn’t blowing.

One answer is energy storage using huge batteries. Now, as cash pours into this area, flow batteries are emerging as a challenger to their more widely-used lithium ion counterparts.

Flow batteries store energy in liquid electrolytes, rather than the solid electrodes used in conventional batteries. This makes them larger and heavier than their conventional counterparts — a major downside for applications like electric cars, but less of a problem in energy storage.

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  • Flow battery installations in China surged 570% to 1.81 GWh in 2023, but still comprise a small share of the 101.13 GWh total new energy storage added.
  • Iron-chromium flow batteries offer lower long-term costs and greater safety, with projected installation costs dropping to 800–1,000 yuan/kWh within three years.
  • Policy changes have shifted energy storage demand from mandatory to value-driven, potentially spurring innovation and favoring cost-effective technologies.
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China’s rapid expansion of renewable energy—primarily solar and wind—has highlighted the challenge of maintaining a stable electricity supply when weather conditions are unfavorable. To address this, energy storage using large-scale batteries is gaining importance, with flow batteries emerging as a promising alternative to the dominant lithium-ion batteries. Flow batteries, which store energy in liquid electrolytes rather than solid electrodes, are generally larger and heavier, making them unsuitable for applications like electric vehicles but suitable for stationary energy storage solutions. In 2023, China’s installation of flow batteries increased by 570% year-on-year to 1.81 GWh, according to GGII estimates. However, they still only make up a small fraction of the 101.13 GWh total new energy storage capacity added that year, as reported by government data. Lithium-ion batteries continue to dominate the market, buoyed by China’s strong electric vehicle industry and established supply chains [para. 1][para. 2][para. 3][para. 4][para. 5].

A key advantage of flow batteries, particularly over the long term, lies in their cost structure. The initial installation cost of iron-chromium flow battery systems is about 1,500 yuan ($209) per kWh—roughly three times that of lithium-ion batteries. However, over a 25-year lifecycle, their cost per kWh drops to less than one-third of that of lithium batteries, according to Zhang Peng, deputy general manager of Zhonghai Energy Storage Technology Co. Ltd. Zhonghai Energy Storage recently raised over 100 million yuan in funding, primarily for research, development, and capacity expansion of flow battery technology. Government support is also increasing: in February, eight government agencies released an action plan to boost “new-type” energy storage technologies, emphasizing the need for storage solutions that improve safety, cost-effectiveness, and efficiency, especially as the renewable sector challenges grid stability. Flow batteries are also safer than lithium-ion batteries because they use water-based electrolytes instead of flammable organic ones [para. 6][para. 7][para. 8][para. 9][para. 10][para. 11][para. 12][para. 13].

Most installed flow batteries use vanadium, but iron-chromium systems are gaining attention as a cheaper and more scalable alternative. Global vanadium production is around 120,000 tons annually, while iron and chromium output reaches 40 million tons, making supply more stable for iron-chromium batteries. The initial installation cost of all-vanadium flow batteries exceeds 2,000 yuan per kWh, but iron-chromium systems could fall to 800-1,000 yuan per kWh within three years. Zhang Peng emphasizes that both technologies are complementary—the progress in all-vanadium batteries has paved the way for improvements in iron-chromium technology. Advances in material science are now addressing critical drawbacks and facilitating broader adoption of iron-chromium flow batteries [para. 16][para. 17][para. 18][para. 19].

A significant policy shift came in February 2024, when Chinese authorities ended the mandate requiring energy storage installation as a precondition for new renewable projects. This shift from a “policy-driven” to a “value-driven” market will require energy storage providers to demonstrate economic viability. While there has been a short-term dip—a 5.5% year-on-year decrease in newly installed capacity in the first quarter—industry stakeholders expect this policy to drive higher-quality innovation and development [para. 20][para. 21][para. 22][para. 23][para. 24].

Zhonghai Energy Storage’s first commercial iron-chromium project began in 2023 at a cloud data center in Hebei, and it recently secured a contract for a 300 MWh project in Guangdong. Internationally, the company is expanding, including a deal to provide Saudi Arabia with its first iron-chromium flow battery project. These batteries are well-suited for hot climates, as they do not require the costly cooling systems needed by lithium-ion batteries [para. 26][para. 27][para. 28][para. 29].

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Who’s Who
Zhonghai Energy Storage Technology Co. Ltd.
Zhonghai Energy Storage Technology Co. Ltd. is a Beijing-based company specializing in iron-chromium flow battery technology. They recently secured significant funding to advance R&D and expand capacity. The company deployed its first commercial project in Hebei in 2023 and is preparing for international expansion, with a deal signed for Saudi Arabia's first iron-chromium flow battery project.
Ant Group Co. Ltd.
Ant Group Co. Ltd. is a fintech giant that led a recent funding round for Zhonghai Energy Storage Technology Co. Ltd. This investment, over 100 million yuan, will primarily support research, development, and capacity expansion for Zhonghai's iron-chromium flow battery technology.
Shenzhen Sinexcel Electric Co. Ltd.
Shenzhen Sinexcel Electric Co. Ltd. (300693.SZ) is a power equipment and solutions supplier. They stated that the Chinese government's policy change, ending mandatory energy storage for new renewable projects, will shift the industry from "policy-driven" to "value-driven" demand. While anticipating a temporary drop in installations, they believe this change will foster higher-quality development and innovation in the long run.
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What Happened When
2023:
Zhonghai Energy Storage deployed its first commercial iron-chromium flow battery project at a cloud data center in Hebei province.
2024:
China’s installation of flow batteries surged 570% year-on-year to 1.81 GWh, while total new energy storage capacity added reached 101.13 GWh.
February 2025:
Eight Chinese government agencies jointly released an action plan to boost the 'new-type' energy storage sector, including flow batteries.
February 9, 2025:
The National Development and Reform Commission and the National Energy Administration issued a notice prohibiting local governments from requiring energy storage systems as a mandatory precondition for new renewable project approvals.
Later in February 2025:
Shenzhen Sinexcel Electric Co. Ltd. released a statement on the policy change, expecting a temporary drop in installations but long-term industry improvements.
First quarter of 2025:
China’s newly installed energy storage capacity fell 5.5% year-on-year.
April 2025:
Zhonghai Energy Storage won a contract for a 300 megawatt-hour storage station in Guangdong province.
Late June 2025:
Zhang Peng, deputy general manager of Zhonghai Energy Storage, gave a media briefing regarding costs and the lifecycle of flow batteries.
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