High growth expected for modular, battery-based energy storage systems, finds Frost & Sullivan

Utilities are increasingly demanding that the life of battery-based energy storage systems (BESS) be extended to 10 years so they can obtain sizeable returns on their investment, according to new research from Frost & Sullivan. Battery manufacturers currently offer five years and are making concerted efforts to enhance the durability of BESS, as well as provide value-added services such as warranty and operations and maintenance contracts.

In addition to higher energy efficiency, manufacturers are focusing on offering modular systems to help utilities achieve their environmental targets.

“Battery manufacturers are working toward providing modular, containerized systems that can be easily transported and quickly installed,” said Frost & Sullivan Energy & Environment Principal Consultant Suchitra Sriram.

“These modular systems will also be able to withstand higher temperatures and work under extreme physical conditions. Moreover, manufacturers are acknowledging the need to offer modularity in terms of battery sizing to meet diverse application needs,” she added.

Battery Energy Storage Systems for Grid Applications in Asia-Pacific, Forecast to 2021 is part of Frost & Sullivan’s Energy Storage Growth Partnership Subscription. The key objective of the study is to understand the dynamics of the utility-scale, grid-connected BESS market for utility application. The study covers the geographic markets of IndiaChinaSoutheast Asia (VietnamIndonesiaThailandMalaysiathe PhilippinesSingaporeMyanmar), East Asia (JapanTaiwanSouth Korea) and AustraliaNew Zealand.

According to the report, the most successful companies in the Asia-Pacific BESS market are those with a strong local presence. Battery manufacturers are finding increasing value in partnering with System Integrators (SIs) all along the value chain in order to entrench themselves in the market and offer robust value to clients. As SIs act as a bridge between utilities and vendors, these partnerships are inevitable and help vendors establish a direct relationship with utilities.

Over the next three to five years, the markets with the biggest opportunities in BESS utility-scale projects are likely to be ChinaJapanSouth Korea and Australia. The application scope of BESS across these markets is as follows:

  • China: More than 80% of the country’s installed BESS is applied in distributed energy, renewable energy (RE) integration and microgrids.
  • Japan: The use cases are across electric bill management, electric energy time shift, electric supply reserve capacity, frequency regulation, onsite renewable generation shifting, RE time shift, renewable capacity firming and on-site power.
  • South Korea: This country mainly employs BESS for electric bill management, electric energy time shift, frequency regulation, voltage support, RE time shift and transmission congestion relief.
  • Australia: The use cases mainly include back start, demand response, electric bill management, electric energy time shift, electric supply reserve capacity (spinning), microgrid capability, on-site power, load following (tertiary balancing), and resiliency.

“Next-generation business models will redefine business propositions and influence future technology and product development. For instance, an emerging business model is one in which private parties own the energy storage system and offer services to transmission and distribution companies,” noted Sriram.

“Virtual power plants are another key model for OEMs in Asia-Pacific, while many others are working on providing additional revenue streams that increase utilities’ net present value (NPV) over time,” she added.

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