1. The Malaysian National Grid and power systems face numerous challenges in the coming years with an expected rise in electricity load and the integration of more renewable energy (RE) sources. Specifically, Malaysia has set RE capacity targets of 31 % and 40 % by 2025 and 2035, respectively, which will be primarily supported by solar (PV), mini-hydro and biomass.
2. According to Malaysia’s Energy Transition Plan 2021-2040, PV is expected to be the most significant contributor to Malaysia’s renewable energy generation. The estimated solar irradiance in Malaysia averages between 4000-5000 W/m2. From this, the IEA has calculated that Malaysia has a PV potential capacity of almost 270 GW, of which 2 GW has been awarded via large-scale solar tenders and net-metering schemes. The intermittent production of energy from PV will lead to an energy mismatch between supply and demand if grid flexibility is not also improved. Furthermore, peak energy demand in Malaysia is expected to rise on average by 1.6 % annually till 2030, increasing grid system costs from RM 28.79 billion (2021) to RM 41.96 billion (2030), which will likely be passed on to the consumer, resulting in higher energy prices.
3. To address these issues, the Malaysian government aims to support 20 % of their electricity production sites with BESS and 500 MW of ESS is already planned under the Peninsular Malaysia Generation Development Plan (2020). One of the main drivers for this is the expiry of 7 GW of coal PPAs out of Malaysia’s 13 GW produced from coal. With the support of BESS, the replacement power of intermittent renewables such as solar over coal increases and therefore system flexibility. Moreover, BESS technology can also provide spinning reserves, voltage support, frequency regulation, arbitrage service, peak shaving and blackout services. These services provided by BESS will increase grid flexibility, addressing the high system costs caused by integrating more renewables and the expected future grid congestion.
4. The adoption of BESS itself has its limitations. These include the lack of supporting regulatory framework, sufficient investment and addressing supply chain issues behind BESS projects.
5. With the current policy framework and planned RE projects (BAU), Malaysia will miss out on their 2025 and 2035 RE capacity goals by 2 % and 8 %, respectively. Additionally, the expected supply issues of materials such as cobalt and lithium will hinder market growth. Recent studies suggest that a focus on incentives such as FITs and financial schemes including government financing and non-governmental funds will encourage more adoption of BESS.
SUPPLY CHAIN ISSUES IN BESS
1. Managing your battery energy storage system (BESS) supply chain is a complex issue with no easy fixes, according to leading developers, system integrators and investors.
2. “You have transformer delays, battery delays etc. Trying to tie all that up with an asset class that, if you get it online too early it sits there and degrades, is challenging. We have problems with BESS that did not exist with other supply chains,” said Matt Clare, CEO of UK developer Masdar Arlington Energy.
3. Alicja Kowalewska, principal at battery storage investor Gore Street Capital sounded a similar note of pessimism, saying it was “hard to see capex numbers coming down”.
4. That had followed on from Clare saying that broad brush stroke numbers on how much capex had risen in the past year or two were misleading because of the wide variety of factors that can go into the figure: “One of the main points that everyone needs to remember, in relation to the effective management of the supply chain, is that it’s very complicated.”
5. Ultimately, Kowalewska said, management of supply chain issues depended “…on the geography and the strength of the system integrator’s relationship with the key component suppliers”.
6. “You had it in the solar panel industry ten years ago where initially it was only Tier 1 suppliers that people were comfortable with but then you had the Tier 2 ones arrive in force. You’re now seeing it in the BESS industry. It’s not quite there yet, but people are becoming more familiar and comfortable with other (non-Tier 1) products,” Clare said.
7. Kowalewska added: “You don’t have huge negotiating power with the Tier 1 suppliers. If we can get comfortable with Tier 2 then, despite the lack of lithium pricing drops, we can keep delivering small capex price wins.”
Source:
https://owcltd.com/media/blog/the-challenges-and-outlook-for-bess-developments-in-malaysia/
https://www.energy-storage.news/no-easy-answer-on-managing-battery-storage-supply-chain-issues-but-things-are-getting-better/
