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China sets ‘capacity price’ floor for grid-scale storage, tying payments to coal benchmarks

Source：pv magazine

China’s top economic planner and energy regulator have moved to formalise a “capacity price” for standalone, grid-side energy storage, widening a mechanism originally designed for coal plants and offering investors a clearer route to recovering fixed costs.

In a joint notice issued on January 30 2026, the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) said qualified standalone new-type storage projects that support system reliability – and are not built as mandatory co-located storage for renewables – can be brought under the generation-side capacity pricing framework on a project-list basis.

The policy defines storage capacity payments as compensation for “available capacity” (a fixed-cost recovery concept), rather than remuneration for electricity actually discharged – a distinction that is intended to stabilise cash flows for assets whose system value is often highest during a small number of tight peak periods.

How is the price anchored? The notice links storage capacity prices to local coal capacity benchmarks, building on China’s coal capacity pricing regime that uses a national fixed-cost reference of CNY330 ($47.5)/kW/year. CNESA, an industry association, interprets the design as “equal pay for equal work”: storage is remunerated for its peak-support contribution, with local parameters expected to reflect peak duration and supply–demand conditions.

Why does it matter for the grid-side storage market? Grid-side standalone storage in China has struggled to rely on a single revenue stream such as peak–valley arbitrage, particularly as market rules, cycling patterns and spreads change. By adding a capacity payment layer, the policy aims to make storage investable as a reliability resource alongside coal’s “supporting” role, while still keeping energy and ancillary-service markets central to dispatch and operational incentives.

CNESA argues the move effectively completes a three-part revenue framework for standalone storage – energy-market income, ancillary services and capacity payments – and expects the new mechanism to accelerate project commissioning and push competition towards availability, deliverability and system value, not just installed megawatt-hours.

Implementation details will be left largely to provincial governments, including eligibility lists and verification rules, but the direction is clear: Beijing is signalling that in a power system with rising renewable penetration, “being ready to discharge” is a service the market must pay for – even when the electrons do not flow.