Only the Best for BESS!

The country’s first battery energy storage system (BESS) – which will allow for storage of renewable energy like solar – is about to kick off. The bidding process is likely to attract interest from bigger energy-related companies, including foreign players. 

Energy Transition and Water Transformation Ministry (Petra) launched the bidding process for the project, which will offer a total capacity of 400 megawatts (MW) and 1,600 megawatt-hours (MWh). The project – broken into four separate projects with a capacity of 100MW/400MWh each – essentially entails the design, installation and operation of BESS at various sites in the peninsula. Each project must achieve commercial operations by 2026. 

Source: https://en.wikipedia.org 

The bidding process will be conducted in two stages starting with a Request for Qualification (RFQ) where interested bidders may submit their qualifications to the Energy Commission (EC). Qualified bidders will then be invited to submit their proposals for the BESS project via a Request for Proposal (RFP). 

BESS is a system that uses batteries to store energy from renewable energy (RE) sources for later use, often to balance supply and demand on the grid or to provide backup power. However, such a project requires substantial upfront investment and active management throughout its life span. 

Battery storage costs range between US$300 and US$400 per kilowatt-hour (kWh). This should take the cost for each 100MW/400MWh system to about US$120mil to US$160mil. One local benchmark is the recently-awarded 100MW/400MWh BESS project in Sabah – it was set at RM645mil. The project was awarded to an associate of Seal Inc Bhd in September, which subsequently roped in China’s Sungrow Power Supply Co Ltd to supply the BESS technology. 

The good news is that battery storage has been seeing a continued decline in prices. In view of this, Solarvest Holdings Bhd estimates the feasible topline pricing to be around RM600mil for similar projects. Besides the one in Sabah, Tenaga Nasional Bhd (TNB) is also undertaking a similar BESS project. 

With the high barrier of entry for BESS, the interest may not be as robust as that of the fifth cycle of the large-scale solar programme five (LSS5), which is expected to be announced by the government in the first quarter of 2025 (1Q25). 

One challenge is picking the optimum site, which could entail land acquisition. Another is the reliability of their solution – how the system charges and discharges from the grid. 

The government has set an ambitious target to achieve 70% RE mix by 2050, which will necessitate a quadrupling in annual RE installation over the next two-and-a-half decades. Grid stability is a concern. The addition of 800MW from the Corporate Green Power Programme (CGPP) and at least two gigawatt (GW) from LSS5 will increase load variability on the grid. Based on the last CGPP guidelines, analysts note that the EC strongly encourages solar plants to include a BESS that can support at least one hour of full export capacity. 

Malaysia now stands as an early adopter of BESS in the Asean region. The key as usual is to review carefully the cost and implementation timeline. But does it provide some stability on power output by REs?

 

Reference:

Only the best for BESS, Gurmeet Kaur, Star BIZ7, The Star, 9 December 2024