Germany’s recent news of “negative electricity prices” sparked a lot of discussion on social media, and in 2024, several European countries have experienced similar situations. The Wall Street Journal analyzed that the root cause of the frequent occurrence of “negative electricity prices” in Europe is the lack of supporting energy storage facilities for unstable renewable energy sources like solar and wind. This serves as a clear warning to countries: large-scale development of energy storage technology is essential to ensure the successful promotion of renewable energy.
Electric Vehicles Can Also “Store Energy”
Reuters reported that due to wind energy generation far exceeding demand, Germany’s overnight market on January 2 saw a 4-hour “negative electricity price” period in the common sense, where electricity producers had to pay users to consume excess power. According to statistics, similar situations have occurred multiple times in Europe before: in 2024, Germany experienced “negative electricity prices” for 468 hours, a 60% increase year-on-year; France had 356 hours; Spain also saw “negative electricity prices” for the first time last year, totaling 247 hours. However, corresponding with the frequent occurrence of “negative electricity prices” is the fact that many European countries also experienced sharp electricity price hikes. The root cause of this situation, the report stated, is the rapid growth of Europe’s clean energy and its impact on the current grid structure. For instance, in December last year, Europe experienced several days of windless and cloudy weather, leading to stagnation in solar and wind power generation, but shortly afterward, strong winds caused a surge in generation. Since Europe’s energy storage facilities cannot handle such large-scale electricity production, it results in a situation where new generation cannot be consumed or stored.
To address this, the construction of new energy storage facilities is considered the most effective solution. The European Photovoltaic Industry Association’s “European Energy Storage Market Outlook 2024-2028” industry report reveals that in 2023, the European energy storage market added 17.2 GW of installed capacity, bringing the total to 35.9 GW. However, the report predicts that by 2030, Europe may need over 100 GW of storage capacity to balance power supply and demand, a massive gap.
Currently, Europe mainly relies on electrochemical energy storage systems, which use high-energy density storage batteries to store electricity generated by solar or wind power and release it when needed, or serve as tools for grid load balancing. The energy storage batteries are classified into various types, including power type, capacity type, backup type, and energy type, based on different application scenarios. According to the “European Energy Storage Market Outlook 2024-2028,” most of the electrochemical energy storage systems in Europe are small residential storage systems. For example, Germany’s storage market will grow rapidly from 8 GWh in 2023 to 38 GWh by 2030, with residential storage accounting for more than half. However, studies have found that residential storage systems designed to meet individual users’ needs have relatively small capacities due to cost limitations. For instance, a personal user’s photovoltaic system may fill the associated residential storage system in just a few hours after sunrise, making it unable to perform the “day charging, night discharging” grid load-balancing function. To solve this, Europe is building large-scale grid-side energy storage facilities that can better balance load while reducing storage costs.
Other countries worldwide are also constructing similar large-scale electrochemical energy storage facilities. Tesla CEO Elon Musk has repeatedly stated, “In the long run, Tesla’s energy business will be roughly equal in size to Tesla’s automotive business. Overall, the energy business is bigger than the car business.” On January 3, 2025, Tesla’s Shanghai Energy Storage Superfactory passed inspection. The factory will produce the massive commercial energy storage battery Megapack, the world’s largest electrochemical energy storage device, with each unit storing over 3.9 MWh of energy. 200 Megapacks can form an energy storage power plant capable of storing 1 million kWh.
On January 7, 2025, China’s largest tidal flat photovoltaic energy storage station—the Huadian Laizhou Large-Scale Saline-Alkaline Tidal Flat Photovoltaic-Storage Integrated Project—began generating power on the shores of the Bohai Sea. The installed capacity is 1,000 MW, with a matching 200 MW/400 MWh electrochemical storage project to store excess energy for release during periods of insufficient sunlight or peak nighttime demand.
Moreover, with the popularity of electric vehicles, Europe and the U.S. have also proposed the concept of “vehicle-to-grid” (V2G). Since the power battery in electric vehicles is essentially an energy storage system with a capacity of tens of kWh, by connecting hundreds of thousands of parked electric vehicles to the grid through IoT technology and controlling them intelligently, these electric vehicles can theoretically act as a super-large flexible energy storage system. During low-demand periods, the grid charges the electric vehicles, and during high-demand periods, the vehicles discharge power to the grid. However, pilot operations have found that due to the significant variations in driving and charging habits, the number of connected vehicles fluctuates noticeably, and the current battery technology suffers from losses due to repeated charging. Therefore, large-scale implementation of V2G requires further research.
Pumped Storage Power Stations: Suitable for Large-Scale Storage
The latest report, European Energy Storage Market Outlook 2024-2028, mentions that another mature large-scale storage technology route includes pumped storage power stations. Typically consisting of an upper reservoir, lower reservoir, and reversible pump-turbine, during low-demand periods, the pump-turbine uses low-value electricity to pump water from the lower reservoir to the upper reservoir, storing potential energy. During high-demand periods, the turbine releases water from the upper reservoir, converting potential energy into high-value electricity. Compared with other storage technologies, pumped storage power stations offer advantages such as low loss, large total storage capacity, long storage duration, and rapid response to sudden changes in grid load. They are highly effective in addressing the randomness, fluctuation, and intermittency issues of renewable energy generation like wind and solar, ensuring the safe and stable operation of the grid.
Pumped storage power stations have been in use for a long time. The first pumped storage power station in the world was the Leighton Pumped Storage Power Station in Switzerland, built in 1879. The Bath County Pumped Storage Power Station in the U.S., which came online in the 1980s, was the largest in the world at the time, with an installed capacity of 3 million kW. With China’s rapid development in renewable energy, the title of “World’s Largest Pumped Storage Power Station” has now gone to the Fengning Pumped Storage Power Station in Hebei Province. This station will fully commence power generation by December 31, 2024, with its upper reservoir storing nearly 40 million kWh of renewable energy and creating four “world-firsts” for “installed capacity,” “storage capacity,” “underground plant size,” and “underground cavern scale.”

However, pumped storage power stations also face challenges such as large investments, long construction periods, substantial engineering work, and high environmental requirements, which have limited their widespread adoption. The EU‘s research report predicts that by 2030, Europe will need a storage system with an installed capacity of 108 GW, but the pumped storage capacity will only account for 15 GW. The reason for this is that Europe has already developed 70% of sites suitable for hydropower facilities, so there is limited room for new pumped storage power stations. Even converting existing hydropower stations into pumped storage facilities faces significant investment and unclear returns.
“Air Power Banks”: Flexible Supplements
Similar to pumped storage, compressed air energy storage, often referred to as the “air power bank,” stores energy in the form of compressed air. During storage periods, the system uses electricity to drive compressors, converting electrical energy into pressurized air, which is then sealed in abandoned mines, rock caves, old oil wells, or man-made storage tanks. During discharge periods, the high-pressure air is released to drive an expansion engine, converting the stored pressure energy into mechanical or electrical energy.

In 1978, Germany built the world’s first commercially operated compressed air storage power station, using underground abandoned mines with a release power of 290 MW. On April 30, 2024, the world’s largest compressed air storage project—the Shandong Feicheng 300 MW Compressed Air Storage Demonstration Project—was connected to the grid. This power station uses local natural salt caves as storage reservoirs for compressed air, with a storage capacity exceeding 500,000 cubic meters and an air pressure of 100 atmospheres. When power generation is needed, the station releases high-pressure air to drive a turbine expansion engine, generating electricity, with an average storage-to-release efficiency of 0.72 kWh per kWh.
From a power generation efficiency perspective, compressed air storage power stations are only slightly less efficient than pumped storage stations. The cost per kWh of compressed air storage is significantly lower than that of electrochemical storage. Additionally, compared to pumped storage, which requires large-scale operations to be economically feasible, compressed air storage stations are more flexible and can operate commercially with relatively small installed capacities.
In addition to natural salt caves, China is also constructing new pilot projects for compressed air storage with artificial chambers as air storage reservoirs in places like Gansu Jiayuan, Ningxia Zhongning, and Henan Xinyang. These projects’ key feature is the use of artificial excavated chambers, utilizing solid geological conditions at depths of over 100 meters to store ultra-large volumes of ambient-temperature, high-pressure air. Unlike salt-cave compressed air storage, artificial chambers allow for virtually unlimited expansion of storage volume, and the system’s pressure and temperature can be doubled or more.
Hydrogen Energy Storage: Bright Prospects
In addition to traditional storage technologies, hydrogen energy is also considered an important new storage technology. Hydrogen energy storage uses electricity to electrolyze water and split it into hydrogen and oxygen. After storing the hydrogen gas, it can be converted into electrical energy through fuel cells or combustion turbines when needed. Due to the energy conversion efficiency of hydrogen storage being lower than that of electrochemical batteries, this technology is still in its early stages and requires large-scale pilot projects for practical implementation.
At present, countries such as the U.S., Germany, and Japan are exploring the use of hydrogen storage systems for grid-side applications. For example, Germany is constructing the 100 MW power-to-gas plant “WindGas” in the northeastern state of Mecklenburg-Vorpommern. The hydrogen energy produced by this plant will be injected into the natural gas pipeline network and stored in underground reservoirs to meet energy demand during peak periods.
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