Energy storage and power battery development in Southeast Asia

With its advantages and endowments in future consumer market space, labor cost and manufacturing capacity, and new energy mineral resources, Southeast Asia is becoming a hot place for investment in Chinese electric vehicles, power batteries and their key raw material processing manufacturers. Although the Southeast Asian market is still in the early stages of the energy transition, it is growing rapidly and showing vigorous development potential.

Reasons for energy development in Southeast Asia

Market potential
Southeast Asia is a region with a population of 600 million and sustained economic growth, but the penetration rate of cars is less than 20%, with the wave of vehicle electrification sweeping the world, the potential value of Southeast Asia’s new energy market highlights.

Production technology
At present, Southeast Asian countries have been relatively mature in the production technology and labor force and other automotive industry chain links. At present, Thailand has become the largest automobile manufacturer in ASEAN and the tenth largest automobile producer in the world. Almost all of the world’s leading car manufacturers have production lines in Thailand.

Mineral resources
In addition to having a mature industrial chain and manufacturing capacity, the mineral resources required for electric vehicle batteries contained in the local area have also become an important capital for Southeast Asia to attract foreign investment. Indonesia and the Philippines account for nearly half of the world’s nickel reserves, making them ideal for electric vehicle and power battery manufacturers to build nearby.

Previously, CATL has announced that it will cooperate with two Indonesian state-owned companies to jointly invest no more than 5.968 billion US dollars to invest in the construction of power battery industry chain projects in Indonesia, including laterite nickel mine development, pyrometallurgy, hydrometallurgy, battery recycling, ternary cathode materials and ternary battery manufacturing.

Policy incentive
At present, many Southeast Asian countries are using tax breaks and other incentives to attract global electric vehicle manufacturers, power battery companies, and even upstream raw material companies to invest in local. Thailand, for example, has attracted several electric vehicle companies to invest in the country over the past few years, such as China’s Great Wall Motor and BYD. The Thailand government aims to support and subsidize large battery production facilities and is prioritizing funding investments for plants with a capacity of more than 8GWh.

At the same time, because Southeast Asian countries have not cultivated local leading brands in electric vehicles and power batteries, China’s lithium battery industry chain companies have strong competitiveness in products, technology, supply chain, etc., therefore, Chinese companies have become the first choice for electric transformation in Southeast Asia.

Energy development status of Southeast Asian countries

Malaysia
On January 13, 2023, Gentari Green Mobility Sdn Bhd, a wholly-owned subsidiary of Petronas’ clean energy Company Gentari Sdn Bhd, and Evolt Technology Company Ltd, an electric vehicle (EV) charging infrastructure provider based in Bangkok (Thailand), has signed a Memorandum of Understanding (MOU) to collaborate on the construction of EV charging pile facilities in Southeast Asia and other areas of renewable energy and green mobile power.

Gentari is targeting a 10% market share in key Asia-Pacific markets by 2030, around 25,000 charging points according to current estimates. In the medium term, Gentari aims to install 9,000 public charging points by 2026, with operations mainly in Malaysia and India. Indonesia’s National Battery Corporation (IBC) is also looking for opportunities to build and develop an integrated battery and energy storage system (BESS) plant with Citaglobal Engineering in Malaysia.

Citaglobal Bhd is an integrated construction group with businesses in the energy, telecommunications infrastructure, civil engineering and construction as well as manufacturing and real estate sectors. Among them, Citaglobal’s renewable energy team is developing a battery management system (BMS) to develop energy storage battery projects together with industry partners. In October 2022, Citaglobal also signed a similar cooperation agreement with General Technologies Malaysia to collaborate on the development of BESS technology to store and manage excess energy during renewable energy generation.

Vietnam
In Vietnam, VinES Energy Solutions Co., Ltd. and China’s Gotion Hi-tech started construction of the lithium iron phosphate battery project in Vung Ang Economic Zone in November 2022, with 51% owned by Gotion Hi-tech and 49% owned by VinES Vietnam. The project has a total investment of nearly VND 6.33 billion (US $275 million), covers an area of 14 hectares, and has a designed capacity of 5GWh/ year.

If each electric vehicle carries 50 KWh of electricity, the power battery of 5GWh can support 100,000 electric vehicles. After production, the battery products will be prioritized for VinFast’s electric vehicles and VinES energy storage products. In the next phase, VinES and Gotion will study the feasibility of the project expansion in line with market development needs.
In addition, Gotion High-tech also plans to invest in the construction of battery factories in Thailand.

Singapore
Jurong Island is a large industrial park and base to most of Singapore’s energy production and infrastructure. Starting in 2018, the Electricity Market Authority of Singapore started the Accelerating Energy Storage Access for Singapore. In 2020, it launched the first grid-scale battery energy storage system (BESS) project, developed by Wartsila with a capacity of 2.4MWh.

At the beginning of 2022, the Singapore Power Regulatory Authority launched a global public tender for the Jurong Island 200MW/200MWh energy storage power station investment project, which was finally won by Singapore’s local company Sembcorp Group in June, and achieved trial operation at the end of the year.

Next, EMA will continue to develop policy and regulatory conditions and standards to support and guide the deployment of energy storage in Singapore.

The Philippines
SMC, a local energy company in the Philippines, has announced a 1,000 MW/ 1,000 MWH investment target for 31 projects. It is distributed in Masinloc, Zambales and Malita, Davao Occidental, Jasaan, Misamis Oriental and Maco, Davao De Oro and other regions, with a total investment of $1 billion. It is said that by July 2022, the construction of half of the target installed capacity has been completed. SMC is also investing in the construction of battery production plants within the state to supply the battery demand for energy storage power stations.

Aboitiz Power, a local company in the Philippines, plans to develop 12 energy storage power plant projects with a total capacity of 248MW within ten years. In November 2022, Aboitiz Power’s 49MW energy storage project on Davao Island began trial operation.

ACEN Corp, a unit of the Philippines’ Ayala Group, will invest in the construction of a 270 megawatt (MW) battery energy storage system (BESS) worth PHP6.875 billion through its joint venture Ingrid Power Holdings Inc (IPHI). Construction is scheduled for the first quarter of 2023 and commercial operation in the second half of 2024.

The project is said to be in the pre-construction stage, including preliminary site investigations and obtaining the required permits and permits. Located in Barangay Malaya in Pililia, Rizal, the project will absorb and store electricity from the Luzon Power Grid and provide supplementary services to the Luzon Power Grid.

In addition, ACEN (AC Energy) and Indonesia’s Puri Usaha Group announced in May 2022 that they will work closely together to jointly develop renewable energy projects in Indonesia, focusing on large-scale photovoltaic power plants, battery energy storage systems (ESS) and green hydrogen. ACEN said that the plan has passed the group’s internal business approval and entered the execution stage of the final document.

According to an official statement from ACEN, the joint venture platform Suryagen between the two parties will cover the islands of Batam, Bintan and Karimun as well as East Nusa Tenggara province, where the majority of the Puri Usaha Group project pool in Indonesia is located. The company plans to start construction of its first project by 2023.

Chinese battery manufacturers in Southeast Asia

In addition to CATL, at present, Chinese lithium battery companies including Gotion High-tech, EVE, Sunwoda, REPT, Tianneng, Aucksun, GEM, Huayou Cobalt, Zhongwei Shares and other battery and raw material companies have or are preparing to invest and cooperate in Southeast Asia.

Gotion Hi-tech
In South Asia and Southeast Asia, through cooperation with local companies such as Tata, Vinfast and NuovoPlus, Gotion High-tech has steadily promoted the construction of overseas manufacturing bases. On November 18, 2022, the battery factory cooperated by Gotion Hi-tech and Vietnam VinGroup officially started in Vietnam’s Ha Tinh Economic Development Zone. The first step of the project, with an annual capacity of 5GWh, is the first lithium iron phosphate battery factory in Vietnam and is expected to be put into operation by the end of 2023.

On December 15, Gotion announced that the company’s wholly-owned subsidiary Singapore Gotion and Nuovo Nuovo signed a joint venture Agreement. The two sides intend to jointly establish a joint venture company in Thailand to build a power lithium-ion battery pack base. It is expected that by the fourth quarter of 2023, the first step of the production line will be commissioned and provide high-quality battery products to the market.

EVE
In October last year, EVE announced that it would invest in cylindrical lithium battery manufacturing projects in Malaysia, with an investment amount of no more than $422 million, mainly producing cylindrical lithium-ion power tools, lithium battery two wheeler and cleaning tools battery series products.

Sunwoda
On April 12, Sunwoda issued an announcement that the company set up a wholly-owned subsidiary in Vietnam with its wholly-owned subsidiary, Hong Kong Xinwei Electronics as the main body of investment, and has completed the registration procedures for industrial and commercial establishment, and obtained the business license issued by the commercial registration office of the Planning and Investment Department of Tỉnh Bắc Giang, Vietnam.

The new company, named Sunwoda Vietnam, has a registered capital of $4 million and its business scope includes manufacturing, processing and assembling lithium batteries for mobile phones, laptops and other electrical and electronic devices. It is not clear if this includes the automotive business.

REPT
REPT’s layout of the ultimate factory in Southeast Asia and other regions has also been put on the agenda. Its planned establishment of cell production plants in Southeast Asia is conducive to helping the company take advantage of Tsingshan Group’s various strategies in the upstream of the industrial chain in Indonesia.

Aucksun
In September 2022, Aucksun planned to invest in the construction of lithium battery projects in Malaysia, with a total investment of 280 million USD, and a new 10GWh cylindrical lithium battery manufacturing project. The production capacity mainly serves customers in the application fields of energy storage (portable, household, industrial and commercial), power tools, intelligent travel, clean appliances, etc. After the completion of the project, it is expected that the annual production capacity of 21/46/50 lithium batteries will be 10GWh.

HighpowerTech
On March 28, HighpowerTech announced that it intends to invest no more than 20 million USD (about 1.377 billion RMB) or equivalent foreign currency to invest in the establishment of subsidiaries in Vietnam to carry out research and development, production and sales of lithium batteries, nickel-metal hydride battery power batteries, and energy storage battery systems.

Tianneng
As one of the top 10 e-bike battery manufacturers in China, Tianneng’s Vietnam plant construction project is in the application and approval stage, and will enter the construction stage after completing the preliminary preparation work.

It is also worth mentioning that, in addition to Chinese manufacturers, Japanese and South Korean companies occupy a considerable part of the market share in Southeast Asia electric vehicles upstream industry chain market. LG new energy, SDI and other South Korean companies are increasing investment in Southeast Asia. With the entry of Chinese battery companies into the Southeast Asian market, the future competition between Chinese manufacturers and Japanese and Korean manufacturers in the Southeast Asian market will be intense.