The latest trends in lithium-ion batteries for BESS (storage battery systems) | Explain cost reduction, return on investment, and implementation cases at Asian factories

From 2024 to 2025, the BESS lithium-ion battery market has reached a historic turning point. Due to a dramatic 40% year-on-year price drop, industrial energy storage systems have transformed from simple disaster preparedness to strategic infrastructure that generates profits. In this article, I will explain everything from the latest technology trends to practical implementation points for equipment personnel at companies with factories in Asia.

Basic configuration and mechanism of BESS and lithium-ion batteries

BESS (Battery Energy Storage System) is an integrated system composed of multiple components centered on storage batteries. Here, we will explain the basic configuration and operating principles of the system.

BESS is a general term for battery storage systems that store energy and release it as needed. There are four main components: the storage battery body, PCS (power conditioning system), EMS (energy management system), and BMS (battery management system).

The storage battery is responsible for storing and releasing power, and PCS performs AC/DC bidirectional conversion. EMS controls power flow and monitors charging status, and BMS ensures battery safety. This integrated control makes it possible to support system synchronization within 1 second.

Lithium-ion batteries are the mainstream in industrial BESS, and they have achieved excellent performance with an energy density of 150-250 Wh/kg and a charging/discharging efficiency of 95-98%. This performance greatly exceeds that of lead-acid batteries (30-50Wh/kg, 75-85% efficiency).

https://batterybank.jp/glossary/a/ess_bess.php https://kmecsone.jp/article/moxa-column/column_184/ https://nissin.jp/product/stb/index.html

Comparison of lithium-ion battery types and characteristics

Iron phosphate (LiFePO4) is the mainstream for stationary batteries. Although the energy density is 90-120 Wh/kg, which is lower than the ternary system, it achieves excellent durability and safety with a cycle life of 6,000-10,000 cycles and an operating temperature of -20°C to +70°C.

The ternary system (NMC) has a high energy density of 150-220Wh/kg, but the thermal decomposition temperature is as low as 200-300℃, and safety measures are necessary. Meanwhile, LFP batteries have a high thermal decomposition temperature of 700℃, which greatly reduces the risk of ignition.

Toshiba's SCiB™ technology uses lithium titanate anodes to achieve a cycle life of over 20,000 cycles and 80% fast charging for 6 minutes, ensuring long-term reliability in industrial applications.

https://evdays.tepco.co.jp/entry/2025/05/16/000075 https://www.sbbit.jp/article/st/139814 https://www.toshiba-itc.com/lithiumion/scib/

Investment benefits and economics brought about by the 2024 price revolution

Historic price declines occurred in the BESS market in 2024, and the economic efficiency of industrial storage batteries improved dramatically. Shorter payback times are expanding opportunities for strategic implementation.

According to BloombergNEF's latest survey, BESS prices in 2024 fell to 165 US dollars per kWh on a global average, and recorded a 40% drop compared to the previous year. The Chinese market has achieved an exceptional price level of 66-101 US dollars/kWh.

In the industrial peak-cut project example, we have achieved a payback period of 3-5 years and an internal rate of return of 10-15% due to an initial investment of 1 million US dollars in a 1 MW/4 MWh system and an annual demand fee reduction of 15-250,000 US dollars. The equipment investment ratio is 45-50% for battery packs, 15-20% for inverters, and 10-15% for installation work/grid connections.

In Japan, the Ministry of Economy, Trade and Industry adopted a subsidy of 34.6 billion yen in 2024 to subsidize 1/2 to 2/3 of equipment and construction costs. This further shortens the real payback period.

https://www.energy-storage.news/behind-the-numbers-bnef-finds-40-year-on-year-drop-in-bess-costs/ https://liberalandlovingit.substack.com/p/the-cost-of-battery-energy-storage https://japanenergyhub.com/news/fy2024-meti-grid-scale-storage-subsidy-results/

Subsidy Systems and Support Measures in Asian Countries

China has set a target of reducing the unit price of kWh by 30% in the 14th five-year plan, and capacity compensation of 0.2 yuan/kWh for independent storage batteries has been implemented. The Xinjiang Uyghur Autonomous Region is also providing additional support for capacity leases of 300 yuan/kW/ year and peak shaving compensation of 0.55 yuan/kWh.

In Southeast Asia, the Thai government is expanding tax incentives for the introduction of industrial batteries against the backdrop of a 7.8-fold increase in new BEV registrations compared to the previous year. Similar support measures are being considered in Malaysia and Indonesia.

https://www.china-briefing.com/doing-business-guide/china/sector-insights/china-s-energy-storage-sector-policies-and-investment-opportunities http://en.cnesa.org/new-blog/2023/7/2/official-release-of-energy-storage-subsidies-in-xinjiang-capacity-compensation-of-02-cnykwh-capacity-lease-of-300-cnykwyear-and-peak-shaving-compensatio n-of-055-cnykwh

Implementation examples and usage patterns at Asian plants

Manufacturing companies in Japan and Southeast Asia have achieved power cost reduction and BCP enhancement through strategic use of BESS. We will analyze success factors based on specific implementation cases.

Sekisui House Tohoku Plant achieved a reduction of 700 kW of contracted electricity through a comprehensive energy system that integrates 2 MWh storage batteries and solar power generation. Basic fees have been drastically reduced through peak cut operation, and at the same time, it also functions as a BCP countermeasure.

The three main usage patterns in the manufacturing industry are as follows.

1. Peak cut: Basic fee reduction due to contracted power reduction (30-40% reduction cases in many cases)
2. BCP countermeasures: Continued production during power outages (independent operation for 72 hours or more)
3. Renewable energy collaboration: CO2 reduction by combining with solar power generation (50-70% reduction)

In Thailand, Kokken High School has started operating a battery pack factory with an annual output of 2 GWh (8 GWh expansion in the future), and is building a supply system for the local manufacturing industry.

https://taiyoukou-secchi.com/column/ems/peakcut_peakshift/ https://www.eco-hatsu.com/battery/industryuse/

Optimal configurations and design guidelines for each implementation scale

For small to medium factories (contracted power less than 500 kW), the peak cutting effect can be maximized with 100-500 kWh BESS. For large plants (1,000 kW or more), 1-5 MWh systems are standard.

Key design metrics

• C-rate: 0.25-0.5C (long life priority)
• DOD (depth of discharge): 80-90% (for LFP batteries)
• Efficiency: 85% or more round-trip efficiency
• Installation area: 50-100 square meters per MWh

https://atb.nrel.gov/electricity/2024/utility-scale_battery_storage

Technology trends and product selection guides for major manufacturers

While Chinese manufacturers have an overwhelming share of the BESS market, Japanese manufacturers are also trying to differentiate themselves with their own technology. I will explain the characteristics and selection points of each company.

Global Market Share (2024)

• CATL: 37.9% (cost leader for LFP batteries)
• BYD: 17.2% (stable supply through vertical integration)
• Panasonic: 5.3% (high quality, long life)
• LG Energy: 4.8% (ternary technology)

CATL maintains technology leadership by achieving a cost of less than 100 US dollars/kWh and a new M3P technology capable of driving 1.5 million km. Among Japanese manufacturers, Panasonic is developing a wide lineup with the S+ Savings Cooperation System (3.5 to 37.8 kWh).

Evaluation items when selecting products

1. Initial cost vs. total cost of ownership (TCO)
2. Warranty details (10-15 years, 60-80% capacity maintenance)
3. Safety certification (UL9540, IEC 62619, etc.)
4. After-sales service system

https://cnevpost.com/2025/02/11/global-ev-battery-market-share-2024/ https://www.nidec.com/jp/technology/casestudy/bess/ https://www.cummins.com/jp/news/2024/08/01/what-are-battery-energy-storage-systems-bess

Comparative study points between Chinese and Japanese products

The advantage of being made in China

• Price competitiveness (50-70% of products made in Japan)
• Mass supply capacity
• Technical advantages of LFP batteries

Advantages of being made in Japan

• Quality Control and Reliability
• Fine-grained support
• Long-term warranty support

From a risk management perspective, a phased approach is recommended where reliability is confirmed for initial implementation and Chinese products are examined during expansion.

https://project.nikkeibp.co.jp/energy/atcl/19/feature/00022/080900002/

Practical points for compliance with laws and regulations and safety management

Due to the Fire Service Law revision in January 2024, regulations on industrial storage batteries have changed drastically. I will explain specific measures for ensuring compliance and safety management.

Major changes to the Fire Service Act

• Regulatory unit: changed from “Ah cell” to “kWh”
• Notification standards: 20 kWh or more (previously over 4,800 Ah cells)
• Required measures: overcharge prevention, external short circuit prevention, internal short circuit prevention or fire spread prevention

Technical standards for installation

• Ventilation equipment: Keep the flammable gas concentration below 1/4 of the lower explosion limit
• Separation distance: 3 m or more from housing to building (mitigated when partitioned with non-combustible materials)
• Sign installation: Obligation to display “battery storage equipment”

Safety measures using BMS (battery management system)

• Constant monitoring of cell voltage/temperature
• Automatic shut-off function when detecting abnormalities
• NFPA855 compliant fire detection and extinguishing systems

https://www.jema-net.or.jp/Japanese/pis/batteryamend230531.html https://eco-denki-service.jp/fire-service-act-amend/ https://www.wtwco.com/ja-jp/insights/2024/03/inherit-risks-in-battery-energy-storage-systems-and-effective-risk-management

Thermal runaway risk and preventative maintenance measures

The main cause of thermal runaway

• Overcharge/Overdischarge
• External short circuit
• physical damage
• high temperature environment

Preventive maintenance programs

1. Monthly inspection: exterior check, abnormal noise/odor check
2. Quarterly inspection: insulation resistance measurement, terminal temperature measurement
3. Annual inspection: capacity test, internal resistance measurement

As an early warning system, monitoring electrolyte decomposition gases (CO, H2) with gas detection sensors is effective.

https://www.bakerrisk.com/ja/news/myths-battery-energy-storage-systems/

Maintenance planning and long-term operation best practices

In order to maximize the economy of BESS, it is essential to extend its life through proper maintenance. We will introduce practical management methods to achieve 20-year operation.

Key Operation Management Metrics

• SOC (State of Charge): Recommended operation in the 20-80% range
• Temperature control: Maximizing lifetime by operating at 25±5°C
• Cycle management: Ensure a lifespan of 10 years or more with 1 cycle or less per day

Cost reduction effect through preventive maintenance

• 80% reduction in unplanned outages
• 30% reduction in maintenance costs
• 20% increase in depreciation period due to extended life

Utilization of operational data: Construct a deterioration prediction model by accumulating charge/discharge history, temperature history, and abnormal history using EMS. Life span can be further extended by optimal charge/discharge control using AI.

https://www.energy-storage.news/the-truth-about-large-scale-battery-storage-om/ https://battery-manufacturing.com/column/バッテリーマネジメントシステムbmsとは

Deterioration diagnosis and formulation of renewal plans

Deterioration diagnosis method

1. Capacity test: conducted once a year, considering renewal at 80% of initial capacity
2. Internal resistance measurement: performed quarterly; pay attention to 150% of initial value
3. Charge/discharge efficiency: monthly monitoring, detailed diagnosis at 85% or less

Gradual update approach

• Year 10: Partial renewal of deteriorated modules (20-30%)
• Year 15: Full renewal or consideration of transition to next generation technology
• Continued Use: Operation Review Assuming Reduced Capacity

https://www.dtsolarpower.com/info/how-do-the-investment-and-o-m-costs-of-bess-sy-94805724.html

Technological innovation and market outlook for 2025-2030

Storage battery technology is undergoing a period of major transformation, led by the practical application of all-solid-state batteries. We look at technology trends over the next 5 years and their impact on capital investment plans.

Practical implementation schedule for next-generation technology

• 2025-2026: Full-scale spread of semi-solid state batteries (led by Chinese manufacturers)
• 2027-2028: Mass production of all-solid-state batteries begins (Toyota, Nissan)
• 2028-2030: Industrial deployment of sodium-ion batteries

The innovation of all-solid-state batteries

• Energy density: 2-3 times the current ratio (400-500Wh/kg)
• Charging time: 80% charge in 10 minutes
• Operating Temperature: -40°C to +100°C
• Cycle life: 10,000 times or more

Market size forecast

• 2025: US$32.6 billion
• 2032: USD 114 billion (19.58% annual growth)
• Capacity base: 572 GW → 1,848 GWh (4 times larger)

https://www.fortunebusinessinsights.com/industry-reports/battery-energy-storage-market-100489 https://aconnect.stockmark.co.jp/coevo/all-solid-state-battery-pickup/ https://evdays.tepco.co.jp/entry/2024/01/15/000053

Proposals for investment strategies

Short term (1-2 years)

• Enjoying cost reduction effects through early implementation of current LFP technology
• Reducing investment burden by utilizing subsidies

Mid-term (3-5 years)

• Closing the trend of solid-state batteries and preparing for a phased transition
• Extending life through partial renewal of existing equipment

Long term (5-10 years)

• Full transition to next generation technology
• Sophistication of energy management

In technology selection, early adoption with current economically rational technology is recommended without excessively waiting for next-generation technology.

https://www.ey.com/ja_jp/insights/energy-resources/four-factors-to-guide-investment-in-battery-storage https://www.marsh.com/jp/ja/industries/energy-and-power/insights/what-is-next-for-bess-an-important-link-in-renewables-chain.html

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