How Can the Energy Storage Industry Secure a Stable Journey into the "Operational Era"?
2026 marks a true "mechanism transition year" for the new energy storage industry.
This is a watershed moment: the administrative "mandatory allocation of energy storage" policy is being phased out, and energy storage is no longer a "ticket" for the approval, grid connection, and grid connection of new energy projects; at the same time, fixed time-of-use tariffs are gradually fading from the historical stage in many regions, further narrowing the traditional arbitrage space relying on fixed peak-valley price differences.
However, the withdrawal of policies does not mean the disappearance of demand. As the proportion of new energy installed capacity continues to rise, the demand of the power system for peak shaving, frequency regulation, reserve, and even emergency support under extreme conditions is increasing. The key change lies in the fundamental reshaping of the way energy storage value is realized—from "compliant allocation" to "verifiable returns," and from "administrative pricing" to "market clearing and performance-based settlement."
Faced with this new cycle of "no mandatory allocation, but with a safety net," the industry urgently needs to answer a core question: When the "crutch" of administrative directives is removed, how should the "functional boundaries" of the pricing mechanism be defined? How can the system value of energy storage be transformed into measurable and settleable cash flow? Does the safety net mechanism mean we can "lie flat"? This article will deeply analyze how to transform the "safety net" into a driving force for sustainable development and navigate this crucial year from three dimensions: mechanism design, business model, and technology delivery.
I. Mechanism Restructuring: Transforming the System Contribution of Energy Storage into Measurable Price Signals
The withdrawal of "mandatory energy storage allocation" is essentially an upgrade in development logic. In the past, energy storage was a "cost item" in new energy development, implemented through administrative indicators; now, energy storage must become a "value item" in the power system, ensuring its "use and value" through mechanism design.
The core characteristic of the policy environment in 2026 is that, under the general direction of market pricing, a multi-dimensional revenue framework of "capacity + electricity + ancillary services" will be built through safety net arrangements such as capacity compensation and ancillary services. Clarifying the functional boundaries of the pricing mechanism and transforming the system contribution of energy storage into a measurable price signal forms the cornerstone of a "safety net."
1. Introduction of the Capacity Mechanism: From "Identity Confirmation" to "Value Measurement"
The introduction of the capacity mechanism signifies that new energy storage assets have been formally incorporated into the power system's regulation resource system, and their power support value during peak hours has received institutional confirmation. This means that the energy storage industry is transforming from simple electricity trading to providing "reliable capacity" regulation services, with discharge duration and peak capacity becoming core elements of value accounting.
Observations from various regions show that the capacity mechanism is moving from "point-based support" to "provincial-level systematization," exhibiting distinct differentiated characteristics:
In some provinces, the new energy storage pricing mechanism emphasizes "priority market entry and a safety net to prevent price inversions," compensating grid-side independent energy storage within the included scope based on available capacity. The key to this mechanism lies not in the compensation amount itself, but in the introduction of performance constraints such as available discharge power and equivalent charge-discharge cycles, forming a combined structure of "basic compensation—delivery assessment—market expansion." Through the measurement and assessment of available capacity, the public attribute contribution of energy storage has gained a settlementable institutional expression.
Other provinces have incorporated grid-side independent new energy storage into the capacity tariff system through reliable capacity compensation mechanisms, setting key parameters such as capacity supply and demand coefficients and system peak periods to strongly correlate capacity value with real-time system demand. In some major renewable energy provinces, newly issued capacity compensation policies explicitly exclude newly constructed energy storage power stations from capacity compensation, requiring them to participate equally in electricity market transactions, reflecting a clear orientation of "providing a safety net but not taking on all responsibilities, and ensuring compensation is effective."
2. Deepening of Ancillary Service Mechanisms: From "Ancillary" to "Essential"
With the increasing penetration rate of renewable energy, the power system's demand for ancillary services such as frequency regulation, reserve, and ramp-up is shifting from "icing on the cake" to "indispensable." The improvement of the ancillary service market mechanism has opened another channel for energy storage to transform system contribution into price signals.
Compared to electricity trading, ancillary services place higher demands on energy storage's response speed, regulation accuracy, and sustainability, but their value density is often also higher. Some regions have implemented refined designs tailored to the characteristics of energy storage, such as mileage compensation in the frequency regulation market and tiered pricing in the standby market, to ensure reasonable returns on the rapid response capabilities of energy storage.
Based on the measures taken across various regions, the main mechanism for new energy storage in 2026 has clearly emerged: the "bottom line" of returns is shifting from one-off, weakly constrained compensation arrangements to a capacity compensation and ancillary service mechanism that is linked to effective capacity contribution, is assessable, liquidable, and dynamically adjustable. The deeper meaning of this shift is that the "bottom line" is not a universal welfare program, but rather an attempt to anchor the system value of energy storage to its actual capacity using a measurable institutional framework.
II. Revenue Restructuring: From "Construction-Oriented" to "Calculation-Oriented and Operation-Oriented"
In an environment without mandatory allocation, the new energy storage industry must undergo a paradigm shift: from emphasizing "construction logic" back to "operation logic." Whether an energy storage project is viable no longer depends on passing the allocation and storage acceptance test, but rather on three fundamental questions: Are the revenue sources diversified and verifiable? Is the cash flow predictable and financeable? Are the operational and trading capabilities compatible with the regulatory framework?
1. The Three-Tiered Revenue Structure
The revenue structure of mainstream independent energy storage is converging, which can be understood as a "three-tiered structure":
Baseboard Revenue – Capacity-related revenue (capacity compensation, capacity market, etc.). Its core function is to provide a cost recovery path commensurate with the effective capacity contribution, directly affecting the project's financing availability and minimum revenue. This part of the revenue is relatively stable, but strongly linked to delivery indicators such as available capacity and peak performance.
Operational Revenue – Electricity and price difference revenue (spot market, time-of-use arbitrage, medium- and long-term deviation management, etc.). This part is highly dependent on the clearing cycle, price limits, charging and discharging frequency constraints, and dispatch assumptions, resulting in significantly increased volatility. This part of the revenue tests the ability to grasp market rules and optimize operational strategies.
Service revenue—ancillary service revenue (frequency regulation, standby, ramp-up, etc.)—often has a higher value density, but imposes stronger constraints on responsiveness, availability, control strategies, and metering performance.
For investors, the real challenge in 2026 is shifting the evaluation paradigm from "static financial calculations" to "deliverable revenue under mechanism constraints." Capacity arrangements can provide a certain degree of recovery guarantee, but within the framework of "capacity obligations—delivery assessments—market linkage," a project's risk exposure and marginal returns are largely determined by operational availability, performance degradation management, and trading and scheduling strategies. In other words, evaluating a project cannot simply focus on whether it has a safety net; it must also answer: Under given rules, can it continuously deliver effective capacity? Can it consistently pass assessments? Can it optimize its strategy between electricity and ancillary services and convert it into settleable cash flow?
2. The Transformation of User-Side Energy Storage: From "Price Spread Sensitive" to "System Optimization"
In the past, commercial and industrial energy storage mainly relied on time-of-use electricity price arbitrage, but this model is facing fundamental challenges. With the deepening of power market reforms, the certainty of fixed-price arbitrage is being replaced by the normality of market fluctuations.
Against this backdrop, the core task of user-side energy storage in 2026 is no longer to further amplify "price spread sensitivity," but rather to improve the "comprehensive profitability of the energy system." This includes reducing basic electricity tariffs by combining with maximum demand management, participating in demand response to obtain response revenue, collaborating with virtual power plants to participate in the ancillary services market, and optimizing the electricity consumption structure by combining with green electricity trading. Through multiple mechanisms superimposed to hedge against single price spread fluctuations, energy storage is evolving from an "arbitrage tool" to a "regulatory core of the energy system."
3. The Deeper Meaning of "Backstop, Not a Winning Strategy"
It is worth emphasizing repeatedly that the establishment of backstop mechanisms such as capacity compensation and ancillary services does not mean that one can "lie low." On the contrary, "backstop" places higher demands on delivery capabilities.
Judging from the assessment rules already issued in many regions, capacity compensation is strongly constrained by delivery performance such as available discharge power, equivalent charge-discharge cycles, and peak-hour availability. Projects that fail to meet the assessment requirements will have their compensation eligibility reduced or even canceled. This means that the practice of "free-riding" by simply "listing capacity without contributing" is being systematically eliminated.
The capacity compensation mechanism does not mean one can "lie back," but rather places higher demands on the technical performance, construction, and operation capabilities of energy storage power stations. Investors and operators need to assess the regional capacity supply and demand situation, avoid blindly following investment trends, and scientifically balance the relationship between electrical energy, ancillary services, and capacity revenue to achieve diversified revenue synergistic growth, allowing projects to continuously create value in market competition.
III. Delivery Capability: The True Watershed in the Era of Guaranteed Support
In the era of "no mandatory allocation," the key to evaluating energy storage projects is no longer "how much can the initial investment be reduced," but rather "whether the available capacity can be verifiable and delivered."
1. A Profound Shift in Cost Logic
When price competition compresses the initial investment space, the profitability of a project depends more on availability, failure rate, performance degradation, and the operation and maintenance system. If low prices correspond to high failure rates, low availability, or shortened lifespan, under the framework of "capacity assessment + dispatching," the resulting revenue loss will be systematically amplified on the operational side.
In other words, energy storage project development in 2026 needs to incorporate "grid connection progress" and "delivery capacity" as key variables for management within the applicable mechanism:
During the planning phase, access conditions, absorption constraints, trading product access and scheduling logic, metering and settlement standards, and performance evaluation clauses need to be incorporated into model assumptions. During the construction phase, engineering milestones should be aligned with the applicable cycle window of the mechanism to reduce the uncertainty of rule switching and revenue accrual. During the operation phase, availability, response time, status management, lifetime degradation, and performance evaluation clauses should be incorporated into the control strategy to make "delivery capacity" a verifiable, auditable, and traceable operational indicator.
2. Value Reversion of Technology Selection
Different regions have different system bottlenecks in terms of peak capacity, regulation capacity, and inertia support. Whether a technology route can realize higher unit value depends on whether its capability characteristics can be accurately measured and reasonably settled within mechanisms such as capacity, electricity, and ancillary services. The advancement of demonstration projects such as compressed air energy storage and sodium-ion energy storage in some regions provides the industry with a window to observe the value realization of "long-duration, high-power" and "non-lithium route scaling."
The calculation of reliable capacity is not simply based on the nameplate installed capacity, but rather on assessing its ability to reliably output power during specific peak periods. For example, over longer peak periods, the reliability capacity conversion ratios for different technologies may differ significantly. This mechanism is guiding the industry from a "race for installed capacity" to a "race for real available capacity."
3. Three Changes in the Supply and Demand Landscape
Considering both the mechanism design and the industry's two ends, the energy storage supply and demand landscape in 2026 will exhibit three significant changes:
First, the demand structure will shift from primarily supporting new energy sources to an increased weighting of independent energy storage and system regulation resources. The industry's focus will shift from "installed capacity" to "effective capacity and available capacity." Second, the revenue structure will shift from a single price difference logic to "capacity guarantee + multi-market overlap." Differences in provincial rules will lead to regional differentiation, and revenue can no longer be estimated using a single template. Third, supply-side competition will shift from "price competition" to "reliable delivery competition"—equipment and system integration companies need to support the financingability and sustainable operation of projects with clearer performance guarantees, operation and maintenance capabilities, safety systems, and risk-sharing mechanisms.
IV. Mechanism Coordination: From "Single-Point Breakthrough" to "System Optimization"
With capacity compensation, ancillary services, and other safety net mechanisms gradually in place, the next key question is: how can these mechanisms coordinate to avoid mutual obstruction or distorted incentives?
Capacity and Electricity Coordination
The capacity mechanism guarantees "availability," while the electricity mechanism incentivizes "usage." Their design needs to avoid imbalances such as "capacity without electricity" or "electricity without capacity." For example, excessively high capacity compensation may lead power plants to be content with "easy profits" and not actively participate in market transactions; conversely, insufficient capacity compensation will struggle to support project investment returns. Finding a balance between the two is crucial for mechanism design.
Ancillary Services and the Electricity Market Coordination
There is a resource allocation relationship between the ancillary services market and the electricity market. Energy storage participating in frequency regulation during a certain period means forgoing arbitrage opportunities during that period. Therefore, price signals from the two markets need to be coordinated to enable energy storage to make rational choices between different value orientations, maximizing overall social welfare.
Coordination of Provincial Mechanisms
Currently, capacity compensation standards and ancillary service rules vary across provinces, determined by their respective resource endowments and system demands. However, for inter-provincial and inter-regional power transmission and the construction of regional power markets, these differences may lead to arbitrage opportunities or efficiency losses. In the future, with the integration and development of regional markets, coordination among provincial mechanisms will become a crucial issue.
In 2026, "no mandatory allocation" does not mean eliminating demand, but rather abandoning the extensive growth model; "having a safety net" is not about guaranteed returns, but rather an attempt to incorporate the system value of energy storage into a measurable, assessable, and settlement-based institutional framework through mechanisms such as capacity compensation and ancillary services.
This is a period of mechanism testing as we transition from the "construction era" to the "operation era." At the mechanism level, the functional boundaries of the pricing mechanism need to be clearly defined to prevent the "safety net" from becoming a new distortion; at the industry level, the path to project revenue formation needs to be solidified, and the matching relationship between cost, performance, and risk needs to be stabilized; at the operational level, available capacity needs to be transformed into verifiable delivery indicators, realizing the mechanism's benefits through real contributions.
Only by establishing sound mechanisms and delivering the necessary capabilities can we transform "safety net" into "sustainability." In this first year of bidding farewell to mandatory allocation, projects that can prove themselves in capacity assessments, create value in ancillary services, and optimize returns in market transactions will ultimately become indispensable cornerstones of the new power system. Safety net is not about passively accepting losses; only through genuine hard work and practical efforts can we achieve steady and long-term progress in this new cycle.
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