Achal Sondhi, APAC Market Director at Fluence, discusses the value of energy storage in making the grid more efficient and how this technology can be supported in ASEAN.
If there is one positive thing about COVID-19, it’s realising the feasibility of energy storage to be adopted in Southeast Asia (SEA). We had the opportunity to sit down with Achal Sondhi, APAC Market Director at Fluence, a storage solution provider, and delve deeper into this topic in the context of SEA.
Power demand will continue to grow parallel with increased manufacturing diverted to the region, population growth, urbanisation and migration, and an increasing call to action on climate change. With this power demand growth comes the necessity to make the energy grid more efficient as Southeast Asian countries expand their capacity. This, Sondhi believes, is where energy storage comes in.
Grid support and efficiency
Some assets end up being underutilised, thus, compromising the efficiency as well as the CAPEX put into building them. When you have a thermal plant that is only used 40% of the time or a full line that only uses 10%, it is impractical to not think about energy storage for backup in case extra power is needed or as a temporary source while you eventually re-evaluate the power requirement for your assets.
Moreover, as we see a drop in power demand and load because of the ongoing pandemic, we also see a higher level of renewable penetration, particularly wind and solar, in several countries in the region. But as we are aware, renewable sources are intermittent. Whereas we have massive surplus energy during the day, most countries relying on renewables have turned to coal and gas power plants during the night. This intermittency thus shows a more pronounced need for a “more flexible capacity and more technology that can support the grid,” says Sondhi.
Battery storage is the best source of frequency regulation. “Coal plants aren’t designed to ramp up that quickly, so we either must have a coal plant running all the time and just ramping up and down while running, which is really inefficient given there are enough renewables like wind and solar,” Sondhi explains. With batteries, however, we can make this more cost-effective and more efficient as batteries can ramp up and down during night time. Where we traditionally needed 1GW of frequency regulation assets, we can do the same with 700MW battery storage, Sondhi adds.
Weighing its viability
Energy storage is “extremely feasible” for Southeast Asia, Sondhi unflinchingly tells us. “There’s definitely a place for this technology in ASEAN,” he says and shares how Fluence is seeing a rising demand for storage solutions and how the company has a portfolio of 500MW of storage to be deployed in the region., underlining his assertion that storage is not something we are yet to expect in the future, but it is a technology that is already economically viable today.
There are, of course, some challenges, in particular the commercial structuring for storage. Since there is no regulation yet to support it, storage solution providers have to be more innovative in translating the value of storage for customers. Yet, Sondhi believes there is “enough commercial sense for storage to be deployed at an economical value to customers and utilities.” Contracts are also currently in place and the supply chain and the prices are in line with what the power grids today require.
In the next three years, 2GW storage capacity may be realised in the region. But for this to happen, there has to be a battery storage target as most countries in the region do not have rules around storage or fundamental commercial structures to support the technology. A target would provide an incentive and developers, utilities, and investment funds would soon find ways to capitalise on the opportunity provided and everything will stem from here.
Finally, utilities or developers, although they acknowledge that battery storage will be the next big thing for the industry, have to be proactive in supporting this technology. To be the first mover and gain experience and a track record, developers need to look not just at the revenue line but the cost savings as well. In terms of pricing, Sondhi believes that the supply chain will come and the price will drop further once projects are developed in their respective countries.
To hear the full recording of this interview, visit Enlit Asia’s Expert Insights Series, Episode 9.