The Government’s incessant electrification of vehicles is a signal for an increase in batteries. The projected battery demand in Indonesia, especially for the Energy Storage System (ESS) segment, ranges from 1.2 GWh to 1.8 GWh in 2035, and is part of the estimated demand which will reach 29.3 GWh for all segments (IBC, 2021).
In addition to the vehicle electrification factor, this strong growth was also supported by several other factors such as increased demand for industrial applications and increased sales of consumer electronics. The growing awareness of renewable energy sources also has a positive impact on the demand for batteries. This is because batteries are used as energy storage devices in these renewable energy sources.
Challenges of the Indonesia’s Battery Industry
Challenges for Indonesia’s battery industry lies in each of battery value chain.
The ‘upstream’ side concerns us with production of battery cells or cathodes. This product consumes nickel ore as the main feedstock. Fortunately, Indonesia has large deposits of nickel and cobalt and both minerals are important raw materials for the manufacture of batteries. The availability of these raw materials allows for the development of the market in Indonesia. The projected growth of the battery market above will in turn require the supply of nickel ore. The readiness of the nickel-processing industry is a challenge for battery growth and efforts to reduce the cost of producing battery cells.
The ‘midstream’ side is responsible in assembling battery cells into a compact battery system ready for use, namely battery pack. In this value chain, the battery pack manufacturers deal with suppliers of battery cells in the previous value chain. On the other hand, these manufacturers also come into direct contact with battery pack. The added value provided by battery pack producers is to package battery cells into sizes and capacities according to end-user needs and to provide complementary technologies into these packages.
The challenge for battery pack manufacturers lies in how to reach and serve their consumers. It is pretty much complex because of the wide scope of market share and different conditions. Residential users have different needs and constraints compared to commercial and industrial users. These constraints include not only technical and operational constraints, but also other aspects such as sales patterns, business patterns, purchasing systems, and commercial schemes. Such issues will in turn call for collaboration with other stakeholders and innovative business models.
Segmenting Battery Pack Market
The things that drive an end-user to purchase battery pack could be well-categorized into three factors: end-user needs, readiness, and positioning toward sustainability. Needs relates with the end-users’ goals in installing battery pack. This can be in the form of increased operational performance or cost savings. Readiness deals with end-users’ capability to acquire battery pack within their site’s limit. For instance, whether the customer has enough room for the installed battery pack. Positioning toward sustainability is also playing an important role as it indicates how urgent it is for the company to purchase the battery pack.
Other than those three factors, companies will also rely on external causes such as, infrastructure readiness within their sites, Government’s regulations on battery market, as well as energy supply readiness. Those situated in a weak grid will most likely turn into battery pack as back-up power supply. Government’s planning on electric vehicle will also drive the demand up for battery pack. Last but not least, the competitiveness of other energy sources such as diesel or gas engine will give battery pack manufacturers a resistance in expanding their market.
This quick overview just provides us with a glimpse on how to penetrate battery pack market. Here in PetroRaya, we develop our own methodology to assist our clients in marketing their products to suitable potential buyers.
