Singapore-based Gurin Energy plans to build a large energy storage facility in Japan, investing 91 billion yen ($628 million) to tap the country's need for storage capacity driven by a rapid shift to renewable energy.

The site will have an output of 500 megawatts and a storage capacity of 2,000 megawatt-hours, enough to charge 50,000 electric vehicles. The plan is to bring the site online as early as 2028.

The facility will have triple the capacity of the battery storage operation opened by Toyota Tsusho in Hokkaido this year.

Gurin, which is backed by New Zealand investment company Infratil, operates solar and wind power plants in various parts of Asia, such as Indonesia and South Korea. Its facilities, including projects under development, can produce over 7,000 MW of green energy.

The Singaporean company plans to develop a new business focused on storing electricity derived from renewables. A Japanese subsidiary will be established as soon as the first half of 2024.

Toshiba Mitsubishi-Electric Industrial Systems and a Nippon Koei subsidiary will cooperate in acquiring and designing the batteries. A 10-hectare to 15-hectare site will be selected from candidates in Fukushima and Tochigi prefectures.

Gurin will consider building other facilities in Japan in the medium to long term.

Output from renewable sources such as solar and wind varies depending on the weather and time of day. Gurin earns money by purchasing electricity from the market during the day -- when surplus solar power lowers the price -- storing it in batteries and selling it in the evening.

Gurin Energy CEO Assaad Razzouk told Nikkei that "curtailment," in which the output of renewable energy facilities is temporarily limited to balance supply and demand, is "going to be more of a feature" in Japan as the county is expected to add more solar, offshore and onshore wind facilities in the next decade.

Battery storage can be used as a regulating mechanism, charging and discharging based on supply and demand, helping to avoid wasting the energy. "We think the [power] grid would be much strengthened by adding batteries in multiple locations in Japan," Razzouk said.

Battery storage has become more popular in the U.S. and Europe. Tokyo's decision this year to boost subsidies for storage batteries helped increase the number of companies entering the Japanese market.

Foreign companies are using their know-how to take the lead. Australia's Akaysha Energy, which is owned by BlackRock, has partnered with Japanese trading house Itochu to develop energy storage in Japan.

Australian investment bank Macquarie Group is also exploring investment opportunities in Japan through its battery storage business Eku Energy.

Japanese companies aren't sitting by the wayside. Eneos Holdings will use its domestic oil refineries and former refinery sites to install 300 MWh of battery storage by 2025.

JFE Engineering also looks to develop a battery storage business, starting in the southernmost main island of Kyushu, where output controls are particularly common.

Lithium-ion batteries for battery storage are getting cheaper. The price of lithium-ion storage batteries in 2023 was $139 per kilowatt-hour, down 14% from last year and a record low, according to a November report from U.S. research firm BloombergNEF.

Aggressive investment in lithium-ion battery production in China, anticipating rising EV and storage battery demand, has resulted in an oversupply. BloombergNEF predicts that prices will drop to $80 by 2030, which could become a tailwind for large battery farms.