INTERVIEW - Battery maker AESI expands manufacturing to Malaysia for global growth

The lack of a committed supply chain for a 100% US-made battery energy storage system (BESS), along with the significantly higher cost of manufacturing in the US, would far outweigh the benefits that come from local incentives, grid-scale BESS provider American Energy Storage Innovations Inc (AESI) has concluded after conducting deeper analysis.

AESI develops grid-scale lithium-ion BESS under the TeraStor brand. It also offers the StorView distributed energy management suite of software and control hardware for sizing, configuring, simulating, deploying and managing TeraStor.

The entity, a spin-off from American Battery Solutions Inc, became an independent company in September 2023. A year later, it announced plans to build a new manufacturing facility in Malaysia and open the site by the fourth quarter of 2025.

AESI's vice president of operations, Rick Cwiakala, disclosed more details about the future plant, its targeted markets and the growth opportunities faced by the company in its regular operations in an interview with Renewables Now.

Q: Can you provide more details about your plan to establish a new factory in Malaysia? At what stage is the project currently, and have you identified the precise location and target capacity for the facility?

Our expansion into Malaysia marks an exciting new chapter for AESI as we scale to meet growing global demand for our advanced battery energy storage solutions. We are currently in the advanced planning stages and have identified the location, targeting an initial production capacity of 4 GWh annually in an excellent, state-of-the-art 5,000 square meter (53,819 sq ft) facility. This site is great for us as it offers scalability, allowing us to expand rapidly as our customer base and production requirements grow. We see this as a key enabler of AESI’s future growth, positioning us to deliver on the ever-increasing worldwide demand for battery energy storage.

Q: Which specific markets will the new facility serve, and how does this align with your broader business strategy?

At AESI, our goal is to always provide the most efficient, most reliable and most cost-effective BESS to customers around the globe. The new facility is strategically located and able to serve our worldwide markets, benefiting from its geopolitical stability and proximity to key regions. This expansion aligns perfectly with our global growth strategy, doubling our production capacity for grid-tied, utility-scale BESS while maintaining operational efficiency with a continued focus on a first-shift, five-day workweek. By scaling our manufacturing capabilities, we’ll ensure we can continue to deliver high-quality solutions at the best possible prices, all while maintaining the flexibility necessary to support the diverse needs of our global customer base.

Q: AESI mentioned that the decision to build the new plant was influenced by additional tariffs on material sourced from China and the lack of a committed supply chain for a 100% US-manufactured BESS. What are some of the key challenges the company faces in its regular operations?

The Inflation Reduction Act (IRA) offers tax credits -- up to USD 45/kWh (EUR 41/kWh) for US domestic cell and module production and a 10% project tax credit for US domestic content -- seemingly making US-based manufacturing an attractive option. Additionally, increasing tariffs on batteries sourced from China, set to rise from 7.5% today to 25% by 2026, add further pressure to shift production to the United States. However, our deeper analysis revealed that the lack of a committed supply chain for a 100% US-manufactured BESS, along with the significantly higher cost of manufacturing in the US, would far outweigh any financial relief these incentives provide. The overall impact would result in higher costs for our customers. To ensure we maintain competitive pricing without sacrificing quality or performance, we’ve decided to move forward with Malaysian manufacturing which will allow us to continue delivering affordable, high-quality solutions to all our customers, without being constrained by domestic supply chain challenges.

Q: Are there any additional plans for expanding your manufacturing capacity, either domestically or internationally, in the near future?

Our current plan is designed with flexibility at its core, ensuring that both our existing and upcoming facilities have the ability to scale efficiently with demand without the need for significant additional investment. We remain open to exploring further expansion opportunities -- both domestically and internationally -- should market conditions or customer demand warrant it. Our goal is to stay agile and responsive to the needs of the rapidly evolving BESS market.

Q: What new innovations have you been working on?

TeraStor represents a game-changing leap in large-scale energy storage, packed with innovations that set it apart from other systems on the market. We've minimised installation connections, so the unit is self-powered, self-cooled and self-managed, driving down both on-site installation and long-term O&M costs. Since TeraStor is fully manufactured and tested in the factory, it arrives on-site ready to be commissioned in as little as six hours -- so projects can start generating revenue faster.

Beneath the surface, TeraStor’s parallel-before-series architecture reduces complexity and significantly lowers the number of parts and potential failure points, making it more reliable than any competing system. It also offers precise state of charge and state of health monitoring without the need for system downtime. Safety was a priority throughout the design process, and TeraStor was engineered for zero cell-to-cell thermal propagation for the utmost protection.

(USD 1 = EUR 0.921)

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