Work begins on 2 GWh lithium ion-redox flow battery hub in China

Construction has commenced on the 1 GW/2 GWh Yantai Energy Storage Center in Yantai, a coastal city in eastern China’s Shandong province. The CNY 3.5 billion ($490 million) project, backed by local firm Lantian Dongfang (Laizhou) Energy Co., Ltd., is a key initiative under the Shandong Energy Bureau’s 2024 energy storage development plan. The development marks a significant step in Yantai’s efforts to enhance energy storage deployment and renewable energy consumption.

The project is majority-owned by Yantai Energy Investment and Development Group, a state-owned enterprise, with Lantian Dongfang overseeing the investment. Construction will be carried out by a consortium comprising Lantian Dongfang and two other state-owned enterprises.

Hybrid storage model

The project will be developed in two phases. The first phase will add 450 MW/950 MWh of storage capacity, with an initial 100 MW/210 MWh batch requiring an investment of approximately CNY 292 million ($41 million). According to the construction timeline, storage equipment installation and commissioning will be completed by April 2025, with grid connection scheduled for May 30, 2025. Subsequent installations will follow as part of the first phase.

The facility will use a hybrid storage model, with lithium iron phosphate (LFP) batteries accounting for 95% of the system and vanadium redox flow batteries (VRFB) making up the remaining 5%. The first phase will deploy 95 MW/190 MWh of LFP batteries alongside 5 MW/20 MWh of VRFB units, with future expansions maintaining this ratio.

Lantian Dongfang officials highlighted that LFP batteries were chosen for their high energy density, cost efficiency, and mature production technology. Meanwhile, VRFBs, known for their superior safety, long cycle life (exceeding 20,000 cycles), and rapid response capabilities, will enhance the system’s peak-shaving performance when integrated into the grid.

A key advantage of VRFBs lies in their ability to operate across extreme temperatures (5°C to 45°C), making them well-suited for Yantai’s humid winters and hot summers. The batteries can achieve a cold start within two minutes when filled with electrolyte and switch between charging and discharging states in just 0.02 seconds. This rapid response capability allows them to complement LFP batteries by swiftly adapting to grid demands, whether discharging power to the grid or absorbing excess electricity.

Lantian Dongfang expects the project, once fully operational, to generate annual revenue of CNY 330 million ($46 million) and a net profit of approximately CNY 190 million ($27 million), underscoring its strong financial viability.

Shandong province, the first in China to surpass 100 GW of installed renewable capacity, mainly are wind and solar PV, has an urgent need for flexible energy storage solutions. According to the Shandong Energy Bureau, the province aims to install over 6 GW of new energy storage capacity and 10 GW of pumped hydro storage by the end of 2025. Yantai, as part of this strategy, plans to develop three large-scale independent energy storage hubs to support its 9 GW solar and 3 GW offshore wind capacity targets.