TOKYO -- Huawei Technologies will begin selling large-scale battery systems for renewable energy storage in Japan in March, Nikkei has learned, seeking to tap growing demand as the nation transitions away from fossil fuels.
Huawei will buy small battery packs from manufacturers including Contemporary Amperex Technology (CATL). These will be bundled into shipping-container-sized units that can each store 2,000 kilowatt-hours of energy -- roughly 200 times as much as a standard home battery. Capacity can be adjusted based on the buyer's needs.
China's largest telecommunications equipment maker will be entering a space also occupied by Tesla, which has been selling its own large battery projects here since last year. The entry by the Chinese and U.S. players with a significant cost advantage could pose a major threat to domestic rivals. Both companies already offer smaller household battery systems in Japan.
As demand for renewable energy grows, battery storage will be essential to ensure a stable power supply from these intermittent sources. Japan aims to have renewables account for 36% to 38% of energy generation by fiscal 2030, and the dearth of spare capacity in its power grid makes facilities for temporary storage that much more important.
Research firm Fuji Keizai expects the Japanese market for battery storage for solar and wind power to grow from an estimated 16.7 billion yen ($146 million) in 2020 to 45.8 billion yen in 2030.
Huawei's Japanese arm is eyeing Hokkaido as a promising market, where there is much potential for renewable energy generation but a lack of spare grid capacity. The company expects "rapid development in solar power technology and cost reduction" in Japan, Huawei Japan President James Chen said.
Huawei Technologies' storage battery. (Photo courtesy of Huawei) Tesla is already establishing a foothold. Tesla Motors Japan installed its first Megapack in the country last April at a research facility in Ibaraki Prefecture run by Takasago Thermal Engineering. The system controls power flows from solar and biomass gasification facilities there.
This summer, Tesla is set to start up a Megapack in Hokkaido connected directly to the transmission grid, to be operated by emerging power provider Global Engineering. Japan Renewable Energy, a power company recently acquired by oil wholesaler Eneos Holdings, has said it is using a Tesla battery system in a demonstration project.
Power provider J-Power set up a Tesla storage system inside a group facility in Hiroshima in November last year.
Other companies joining the fray include Chinese Solar Panel maker JinkoSolar, which won an order from an undisclosed customer in September for a large-scale battery system in Japan. The company looks to raise its profile with smaller batteries for home energy storage before ramping up sales of larger units.
"We want to sell more than 10,000 household batteries in 2022," Vice President Qian Jing said.
Tesla has begun selling large-scale battery storage systems in Japan, such as this one operated by J-Power. (Photo courtesy of Tesla) Japan has its own producers of large battery systems, such as NGK Insulators and Sumitomo Electric Industries, the latter of which delivers dozens per year to customers inside and outside Japan. Power companies including Tokyo Electric Power Co. Holdings, and trading houses such as Sumitomo Corp. and Marubeni, look to commercialize large storage systems made up of linked auto batteries.
American and Chinese companies, however, enjoy a significant cost advantage.
The cost of Japanese-made stationary batteries for industrial use clocked in at 240,000 yen -- about $2,100 -- per kilowatt-hour in fiscal 2019, including construction costs, according to the Mitsubishi Research Institute. Japan's cabinet set a goal in October of bringing the price down to about a quarter of that figure.
Tesla Japan is believed to sell its systems for $440 per kWh or less, and Huawei aims to be competitive with that price.
"When we get batteries, we pick the company with the lowest cost," said an executive at an emerging power company that is involved in renewable energy.
Unless Japan cultivates its own producers of large-scale storage systems along with automotive batteries, it will risk falling behind the curve on a major global trend. Yano Research Institute forecasts worldwide shipments of stationary batteries roughly tripling from 33,690 MWh in 2020 to 101,660 MWh in 2030.
"If foreign players entering the Japanese market create competition on cost, that will promote the expansion of the battery market," said Mitsubishi Research's Isao Hasegawa. "On the other hand, it could also lead to a repeat of the situation with Solar Panels and semiconductors, where foreign companies quickly snap up market share."
