General Secretary Xi Jinping said in this year's New Year message: 'New energy vehicles, lithium batteries, and photovoltaic products have added new brilliance to Chinese manufacturing.' General Secretary Xi placed lithium batteries between new energy vehicles and the photovoltaic industry, which is very clever because lithium batteries serve as both the power battery for new energy vehicles and the energy storage battery for photovoltaic products, making their role very clear. This was the opening remark by Chen Liquan, an academician of the Chinese Academy of Engineering, at the '2024 China International New Energy Storage Development Summit (INES2024)' on July 17.
01. The future will be the era of electric aircraft and electric ships.
China's energy situation is rich in coal, but lacking in gas and oil. The oil situation in 2023: domestic crude oil production was 209 million tons, and crude oil imports were 564 million tons, with an external dependence of 73.3%. I once participated in a consulting project initiated by Premier Wen Jiabao regarding China's oil situation from 2024 to 2026 and up to 2050. The result showed that it would be around 180 million tons per year, not too much or too little. From this, we can see that 2023's production of 209 million tons is relatively high. At that time, we said that external dependence should not exceed 50%, but now it is at 73.3%, far exceeding 50%. Where has the oil gone? The number of cars is 417 million; during the consultation, we estimated that each car consumes about 2 tons of oil, so domestic and imported oil has basically been consumed by cars.
Therefore, we proposed 'Electric China', which includes transportation electrification (electric trains, electric aircraft, electric ships), equipment intelligence, and low-carbon energy. In 2023, China's production of new energy vehicles reached 9.443 million units, a year-on-year increase of 30.3%. By 2025, sales of new energy vehicles are expected to reach about 25%.
In addition to new energy vehicles, electric ships are also developing. For example, 'Yangtze River Three Gorges No.1' is equipped with a 7500KWh lithium-ion battery provided by CATL. Various provinces and cities have successively introduced a series of subsidy policies for electric ships and shore power facilities; Shanghai has also proposed some requirements. Electric ships are definitely the direction of development.
We have just completed a consulting project for the Academy of Engineering on electric aviation. The first step is to develop vertical take-off and landing aircraft (eVTOL), which can play a significant role in cities as well as in rural areas. On February 27, 2024, the five-seat vertical take-off and landing aircraft 'Shengshi Long' developed by Fengfei Aviation Technology flew from Shekou in Shenzhen to Jiuzhou Port in Zhuhai; it takes three hours by car but only takes 20 minutes by air. Therefore, the potential for low-altitude economy is enormous. Shenzhen has established a low-altitude economic demonstration zone; from opening flight routes to using drones for food delivery, Shenzhen's low-altitude economy continues to explore new tracks and build a low-altitude economic center as outlined in this year's Shenzhen government work report.
02. Practical application scenarios of low-altitude economy.
The low-altitude economy continuously empowers transportation logistics, cultural tourism, and other industries to provide new momentum for national economic development. By the end of the '14th Five-Year Plan', China's low-altitude economy will contribute comprehensively to the national economy between 3-5 trillion yuan, becoming a new economic growth pole. The following scenarios illustrate the important applications of Shenzhen's low-altitude economy: for instance, drones delivering blood because blood banks are near Bao'an Airport; if hospitals in suburban areas need blood, they can use drones for delivery. Another example is high-rise firefighting; drones can fly up and connect water hoses to fire trucks; many buildings in Shenzhen are three or four dozen stories high; if a high-rise catches fire, it can be easily extinguished; drone medical rescue can also be utilized when someone collapses on the street; if someone calls the hospital, they can send a drone with smart glasses to the scene so that doctors can guide them through rescue while an ambulance rushes over.
In 2022, Shenzhen had over 1,500 drone-related companies, accounting for 90% of the national total; industrial-grade drones hold a market share of 60% domestically. The Shenzhen Low Altitude Economy Industry Association stated: 'In the process of forming the drone industry chain, Shenzhen is very optimistic about research and development as well as applications related to drones and low-altitude flight services.' In addition to drones flying around Shenzhen's skies, there are also helicopters and fixed-wing general aviation aircraft working together to create a diverse general aviation landscape.
Suzhou officially released China's first local low-altitude air traffic regulations, marking an important milestone in the development of China's low-altitude economy. These regulations will take effect on September 1, 2024.
Key contents: 1. Establish low-altitude flight service management agencies under guidance from air traffic management authorities. Establish service guarantee mechanisms to form a concise and efficient 'unified acceptance and full-service' mechanism. 2. Define airspace below true altitude of 120 meters outside national designated controlled airspace as suitable flying space for micro-, light-, and small-sized civil unmanned aerial vehicles (UAVs). 3. Uniformly plan low-altitude public air routes and set warning zones for civil UAV takeoff and landing points. 4. Report expected takeoff times and preparations to air traffic management agencies one hour before takeoff. 5. City-level low-altitude service management platforms should keep track of information regarding the addition, removal or modification of low-altitude flight support facilities and release it promptly; provide meteorological services including weather forecasts and real-time information to support planning for low-altitude flights as well as takeoff, operations, landing activities.
'The Rules' will strongly promote the healthy development of Suzhou's low-altitude economy and facilitate the formation of a one-stop service mechanism for low-altitude flights.
03. Low-altitude economy promotes rural revitalization.
Low-altitude flight is not just an urban issue; given China's geographical environment alone cannot solve rural revitalization issues with cars alone; addressing the contradiction between urban-rural dual structure requires both low-altitude economy and digital economy to play an important role together. China's digital economy is thriving but the low-altitude economy has yet to develop effectively; if we do not catch up quickly enough, we may miss critical opportunities.
Academician Yan Chuliang discussed the relationship between the low-altitude aviation industry and rural revitalization as a golden industry for local development. In terms of low-altitude economics at around 1000 meters altitude—how many meters exactly varies; for example Shenzhen proposes at around 500 meters while Suzhou proposes at around100 meters—the country may categorize it into three types: below either3000 meters or2000 meters or1000 meters; it is estimated that this will become clearer in the future. Academician Yan suggested that new rural construction counties (towns/villages) should play important roles in business platform construction along with express logistics systems etc.; drones combined with express delivery can achieve full coverage delivery while drones combined with orchards or aquaculture can connect with agriculture—key is building good 'sky roads' at low altitudes using rural areas as nodes through real-time big data platforms established via technologies like5G communication or low-altitude satellites.
Agricultural drones planting rice seedlings in fields along with harvesting robots delivering food—coming from Sichuan Province where it's notoriously difficult to travel—if even 'takeout' has arrived then rural areas can undergo significant changes. The drone-based low-altitude economic industry will play a significant role in rural areas.
04. Without an energy storage industry, there would be no low-altitude economy.
The low-altitude economy is very important for the development of the energy storage industry. Without the energy storage industry, there can be no low-altitude economy. Shenzhen supports the accelerated development of the electrochemical energy storage industry. On February 7, 2023, the Shenzhen Development and Reform Commission issued several measures to support the accelerated development of the electrochemical energy storage industry, which proposed many suggestions, optimized the construction of energy storage business models, supported diversified development of user-side energy storage, and expanded a network model centered on new energy storage for electricity charging and discharging.
From 2021 to 2023, the global power storage situation shows that pumped storage was 86.2% in 2021 and dropped to 67% in 2023. This indicates that the new energy storage industry is developing rapidly, while pumped storage is declining relatively. By the end of 2023, China's pumped storage will be at 59.4%, and new energy storage at 39.9%, with lithium battery storage accounting for 97.3%. The main component of new energy storage is lithium battery storage. Pumped storage and new energy storage serve different roles.
The combination of wind energy, solar energy, and lithium/sodium battery storage is the best way to replace fossil fuels. To address the intermittency of wind and solar energy, about 8 hours of power reserve is needed. Professor Li Ju from MIT introduced that in the U.S. alone, an 8-hour reserve requires 25 TWh of lithium/sodium batteries. What does this mean? The entire world has just exceeded 1 TWh now. If the U.S. relies mainly on wind and solar renewable energy, it would need 25 TWh of lithium/sodium batteries. The U.S. population is over 300 million, while China has 1.4 billion people. If we also aim for 95% renewable energy, the demand for energy storage would be enormous.
Gas stations can also be combined with battery swap stations and charging stations, but they need to maintain a certain distance and cannot be completely adjacent to each other. This way, the energy internet and off-peak electricity can utilize battery swap/charging stations for energy storage. Since they can provide battery swaps for cars, power and energy storage are integrated together. How much battery does a car actually need? Currently, it requires about 150 kWh; however, I believe that only about 50 kWh is actually needed—just installing a capacity of 1000 Wh would suffice. For instance, if someone works at Tiananmen Square and lives outside the Fifth Ring Road, an electric vehicle would only need about 10 kWh for a round trip. What if long-distance travel requires more electricity? One could rent a power bank at a battery swap station to facilitate the development of new energy vehicles. The integration of battery swapping and energy storage will become an innovation point; this model can increase the range of electric vehicles, electric ships, and electric planes, serving as an important means to alleviate range anxiety. Using off-peak electricity for power banks enhances the economic efficiency of transportation tools. Off-peak electricity is definitely cheaper now; every household can charge their power banks and sell them during peak times. I have stayed near the border between France and Germany where their electricity meters can run forward or backward: using electricity at night runs forward while selling stored electricity runs backward; we could consider this in the future as well. Currently, charging remains mainstream; however, due to insufficient charging capacity, slow charging speeds, compatibility issues with equipment, we need to build infrastructure that integrates power storage, battery swapping + charging to create a network that facilitates the development of electric vehicles, electric ships, and electric planes to achieve transportation electrification as soon as possible.
