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

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].