A Fire Broke out at A Battery Energy Storage Plant in Hainan Province, China

At 18:30 on October 20, 2022, a fire broke out in a battery compartment in the battery energy storage plant of the 100MW affordable photovoltaic project at Yingge Haiyan Salt Field in Hainan Province. No casualties occurred.

Globally, several fire accidents also occurred before, including the ESS explosion in Arizona, USA and over 30 ESS Plant fire accidents in South Korea. Although the accident in Hainan did not cause casualties and serious social impacts, it exposed the safety issue of the energy storage business that hinders the development of the entire industry.

Most importantly, the true causes of such accidents are more worthy of consideration by all relevant participants, decision-makers and managers.

Low Price Bidding

The 25MW/50MWh battery energy storage plant located in Tianneng Yingge Haiyan Salt Field is the largest one on the new energy side in Hainan Province. It has a total of 10 battery compartments, and it was the No. 6 battery compartment that caught fire. At present, these batteries are still in the commissioning stage and have not been put into operation, and the general contractor of the project has not handed over the battery to the EPC.

The cause of the fire has not been announced so far. However, the BESS Integrator won the bid in early March, at a lower price compared to the average level of 1.62 RMB/ Wh for China's BESS integration in the first half of 2022. In other words, this project is a low price bid.

Regarding the low-price bid, a head of a leading energy storage company expressed his great concern: “Nowadays, new energy projects are required to install the energy storage system. The recent bidding price of energy storage on the new energy side has decreased from 2.15 RMB/ Wh. (PC price) down to 1.3 RMB/ Wh or even below, which is far below a normal cost.”

 “No company is willing to lose money to do projects. To a certain extent, reducing costs must be at the expense of quality or after-sales protection, which will affect this industry’s sound development, and will also cause serious waste of resources,” he or she told Energy Storage 100 people.

Experts from the China Electric Power Research Institute also said that the entire energy storage industry is currently at a critical crossroads. If the harm of low-price competition is not taken seriously, the entire industry will pay a heavy price.

Mixed Integrators of Battery Energy Storage Systems

Low-price competition is just one of the challenges facing battery energy storage plants. In the opinion of industry insiders, the entire industry is lacking or imperfect in policy standards, and technical routes; some companies are not credible to conduct such business. Good and bad integrators of BESS are mixed, posing the biggest “stumbling block” threatening the safety of plants.

A senior energy storage practitioner said that a large number of companies poured into the field of system integration to take a share, regardless of whether they are truly able to. They are too reckless to quote any low price. If this phenomenon continues, bad money will drive out good money, and accidents will be more frequent, which could be devastating for the industry.

Actually, with the rapid rise of the energy storage industry, guided by policies and attracting subsidies, BESS integration has become the first choice for many players to enter. Frankly, some companies lack core technologies in the market and simply interpret BESS integration as “assembling individual pieces like PCS, batteries, and containers together”. However, the integration of BESS is a multi-disciplinary and multi-field technical field as well as a key part of the industry chain, as it connects upstream manufacturers upwards and opens up Party A's services downwards.

Meanwhile, BESS integration is also a very complex business, and its technical threshold is the highest. It involves various technologies such as electrochemistry, power electronics, electrical, IT, and power grid scheduling. The integrator must have a deep understanding of the application scenarios of different downstream industries. However, the reality of the market is that due to the imperfection of all links in the current industrial chain, most of the integrated energy storage systems remain “extensively-assembled machines”.

Currently, inferior product quality, insufficient reliability, non-standard and unprofessional integration etc. of BESS lead to the occurrence of safety problems in BESS plants. According to the published analysis of the causes of frequent battery energy storage safety accidents worldwide, more than 60%-80% are caused by non-professional integration.

What is even more frightening is that, as the integration scale of BESS continues to increase, the number of battery products or electrical equipment will double, and so will the potential danger of quality problems. Besides, the number and levels of batteries in series and parallel increase, and the combination of electrical and power electronics will be more complex. Hence, the safety of the energy storage system must be taken great care of.

In the future, how to correctly guide BESS integrators from simply assembling pieces to professionally integrating the system, and to ensure safety, lower cost and make the system more intelligent is the key for the entire energy storage industry.