Anhui has proposed linking capacity payments for grid-side independent energy storage to discharge duration, in what industry analysis describes as the first such mechanism in China. The proposal uses a baseline of 165 yuan per kW per year and adjusts it by a formula: full-power continuous discharge duration divided by six hours.

How the formula works

Under the proposed design, a storage asset with a longer continuous discharge duration at full power would receive a higher capacity payment. The baseline is scaled by the ratio of its duration to six hours. A four-hour system would be credited at four-sixths of the baseline, while a six-hour system would receive the full baseline. A system with more than six hours could receive more than the baseline, based on the formula described in the analysis.

The proposal would apply to grid-side independent energy storage. The analysis says the mechanism significantly raises annualized revenue for 4–6 hour flow storage projects and examines the impact on commercialization of long-duration storage.

Why duration matters for flow batteries

Flow batteries are typically designed for longer durations and high cycle counts. A capacity payment that rises with duration improves the revenue stack for 4–6 hour vanadium flow projects, which have higher upfront electrolyte and tank costs but can spread them over more discharge hours. The analysis breaks down the formula, provides calculation cases and assesses the implications for long-duration storage commercialization.

Market signal

By tying the capacity payment to duration, Anhui would move the market away from a simple power-based payment and toward valuing energy-shifting capability. That is important for LDES technologies that compete on duration rather than on lowest upfront cost per kW. The proposal is not a final nationwide rule. It is a provincial design that could be watched by developers and financiers as a template.

Anhui’s proposal is the first in China to link capacity pricing to storage duration, according to the analysis.

This article was assisted by AI analysis. Please refer to the original source for official information.