What We Learned at Energy Storage Summit Asia 2023

From macro-level policy, supply chain and finance talks down to co-location, fire safety and microgrids, it was exciting to see stakeholders from across Asia and beyond come together to tackle them all.

It was interesting to see that many of the questions facing nascent or emerging markets in Asia are the same as those we saw a few years ago in the earlier days of the maturing US and European markets.

Those same questions include: how to make banks comfortable with financing storage assets, how to alert policymakers to put similar efforts into promoting storage as they have done with renewable energy, and how to secure the sufficient volumes of batteries and other equipment needed to `deploy, deploy, deploy!`

Other questions are more specific to the region, and of course, Asia is a very big region with extremely varied geographic – and perhaps more importantly – market and regulatory profiles, meaning many country-specific questions still need to be tackled.

We look forward to seeing everyone at next year`s edition, and hope to see many more new faces there, but for now, here are some of the big takeaways from Energy Storage Summit Asia 2023.

Solving the energy trilemma

Energy storage has the unique capability to help solve the energy trilemma that faces Asia, balancing out reliability, sustainability and affordability of energy supply, as panellist Nicolas Leong of Wärtsilä pointed out.

In a discussion on the role of energy storage systems (ESS) in strengthening Asia`s electricity grids, Leong, north and southeast Asia director for Wärtsilä`s energy business, said that the energy transition is a [marathon, not a sprint". Nonetheless, faced with worsening climate crises and soaring or volatile energy costs, the pace of running needs to accelerate.

In the past, everyone talked about grids in terms of how much energy generation capacity is on them, whereas today, with the rise of variable renewable energy (VRE), the key question is [how flexible is your grid?", Leong said.

[Storage is here to stay, it will continue to improve, and I really think it will help solve the trilemma we are facing," Leong said.

Storage can bring sustainability to the grid by integrating variable or intermittent renewable generation, and it can enable reliability too, particularly with technology providers and system integrators offering longer and longer term guarantees for project owners.

It`s in the area of affordability where challenges remain, particularly for some of the less wealthy nations in Asia, Leong said, while noting that the industry is committed to solving that aspect of procurement and deployment.

Replicating models from other countries

One theme that came up time and time again, is that financing energy storage projects requires bankability not just of technology, but of business models. That means being able to show a degree of certainty over revenues. Many countries in Asia are not quite there yet.

Across the Asia-Pacific region, after China and perhaps South Korea, the most mature market for standalone battery energy storage system (BESS) technologies is Australia.

That market has grown quickly because big power generators and retailers like AGL have offered long-term contracts for capacity or grid services to developers in some cases. In other cases, the level of merchant opportunity through the Australian National Electricity Market (NEM) for frequency control ancillary services (FCAS) and arbitrage are enough to entice investors.

And, as we`ve seen in many other markets around the world, financing battery storage is more complex than solar PV and wind, for which fixed revenue models have been around for years. Financiers from Standard Chartered Bank and debt financing platform Pentagreen Capital both said that cash flow certainties are desirable, but still being figured out.

Meanwhile simply porting over business models from other countries, however successful they may have been, won`t be easy if going from Australia, to Southeast Asia, for example.

The good news is that some countries like India and Japan are at various stages of rolling out supportive frameworks to incorporate energy storage into the power sector. It`s a trickier question in the ASEAN markets, where regulations are largely yet to change, with the exception of the Philippines, although renewable energy and net zero targets across the region will drive an inevitable need for storage.

ASEAN regulators have embraced renewable energy but not yet energy storage

We heard on the opening day`s first panel that countries in the ASEAN region have come a long way in their adoption of renewable energy, but are yet to extend that embrace to energy storage.

Beni Suryadi of the ASEAN Centre for Energy intergovernmental association said a [lack of involvement" by regulators in discussions about energy storage is the biggest challenge facing the technology in the region`s 10 countries.

Suryadi offered the example of Vietnam, where solar PV has been deployed at a rapid pace. Yet it is difficult to find any serious discussion of energy storage in the country, he said.

Nonetheless, where [pain points" on the grid can be found, the need for energy storage will be most critical, Georg Garabandic, DNV`s energy storage lead for the APAC region said in a later panel session. Contracting for services from storage systems to solve these pain points would be a powerful way to stimulate investment, Garabandic said.

Supply chain challenges require sharing of risks to mitigate

The energy storage industry has become a [victim of its own success", as well as of the success of the electric vehicle (EV) industry, making supply chain management ever more difficult.