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Shaping and Firming Wind Energy UsingVanadium Redox Flow Batteries

Prepared for the California Wind Energy Collaborative Forum 2006

December 13, 2006

Topics for today

Benefits of integrating energy storage with wind

Vanadium redox flow battery technology

Overview

Key technical advantages

Recent customers

Case studies that address each of the benefit streams

VRB in Ireland Energy Storage at Sorne Hill

VRB in Japan Tomamae Wind Farm VRB in the US PacifiCorp T&D Deferral case study

Conclusions and policy implications

Importance of incorporating all value streams

Achieving manufacturing economies of scale

Policy implications for CA


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Benefits of integrating energy storage withwind

Firm renewable generation for sale on peak Capture spilled generation off peak, sell on peak

Capture capacity payments

Smooth intermittent generation

Mitigate impact of frequency variation

Reduce spinning reserve required for grid stabilization

Relieve grid congestion or defer upgrade cost

Defer T&D capital cost Improve power quality and customer service

Vanadium redox flow battery technology overview

A liquid electrolyte that is separate from the electrode.

An electrochemical energy storage systemoperating at ambient temperatures

Reversible fuel cell reduction and oxidationof single unique element: Vanadium

No cross contamination Electrolyte never wears out high residual

value Very low maintenance

Deep cycles (20 to 80%) >10,000 Low self discharge indefinite energy storage Energy can be recovered instantaneously Battery can recharge as fast as it discharges

(1:1) Power and Energy separately scaleable

Charge

Discharge

V 4+ V 5+ + e - V 3+ + e- V 2+Reduction processOxidation process

V 5+ + e - V 4+ V 2+ V 3+ + e-


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VRB Technology power and energy aremodular and separately scaleable

5kW 10MWVRB controls worldwide patents*

(*excludes Japan)

Preserves flexibility:Capacity or duration can easily be

increased at a later time

VRB is ideally suited for integrationwith wind

Key technical advantages of the VRB flow battery

Environmentally safe - easy to site and permit

Operates at ambient temperatures and low pressure

No heavy metals such as lead or cadmium

System maybe relocated and re-used

Very long 15-30 year life -- >10,000 deep cycles at 20-80% SOC

Recharges at the same rate as it discharges

Electrolyte never wears out and is not prone to contamination

Lowest life cycle cost for frequent cycling, long duration applications (6+hours/day, 250+ cycles/year)

High round-trip efficiency: > 70%

Storage can be easily added by increasing electrolyte

Very low maintenance ($0.001/kWh)-- easy to integrate into current operations

Remote monitoring and control, autonomous operation

Real time SOC feedback

UPS functionality via instantaneous energy dispatch & response

Programmable PCS provides four-quadrant control and simultaneous real andreactive energy


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Sales / CustomersTapbury / Sorne Hill 1.5MW x 8hr VRB-ESS for Irish wind farm

PacifiCorp 250kW x 8hr VRB-ESS (3 years of successful operation)

Pinnacle - 1MWH and 3 x 10kWh VRB-ESS for RAPS applications in Australia

Magnetek Letter of Intent for Eighty, 5kW VRB-ESS systems

Ris 15kW x 8hr (120kWh) VRB-ESS, Danish wind applications

Eskom 10kWh VRB-ESS, back-up for substation of major South African utility

Solon AG 10kWh VRB-ESS, solar applications in Germany

University of Alaska 10kWh VRB-ESS, assessment in RAPS applications

South Carolina Air National Guard 30 / 60 kW x 2hr VRB-ESS, back-up power

National Research Council Of Canada 10kWh VRB-ESS, RAPS

Strategic Order Focus and Strong Pipeline

VRB has 12-15 MW of installedcapacity worldwide

Ireland Drivers and Market Overview2,908 MW of wind in place, approved or under application (network 4500MW)

1,560 MW connected or contracted, 730 MW complete by end 2006

1,348 MW has been sent forward in Gate 2 for processing (nov.2006)

Intermittency - curtailment issues (>20%) already impacting ability to roll out wind

Electricity supplied from wind farms is heavily discounted

As much as 35% discount to base dispatched generation

Significant amounts of off peak wind energy is spilled

If timing of output can be controlled, price uplift is significant

Estimates that over 700MW of storage may be required

Wind is not well correlatedwith demand

WindDemand

MW MW


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Ireland Drivers and Market Overview

Issues are already beginning to arise with about 550MW of installed

wind (12% of total demand of 4500 MW)

SEI Funded project under the RE RD&D Programme to investigatethe use of VRB-ESS to increase the reliability and amount ofwindpower

Example of Daily Wind Output Smoothing

The VRB-ESS (green line) runs continuously to smooth wind farm production

(aquamarine line) - dispatching smooth power (magenta line) At 25- 30% of the wind-farms nameplate capacity, the VRB ESS has a significant

smoothing effect to total wind-farm + battery output (magenta) looks like baseload The VRB-ESS recharges throughout the day so that it maintains 50% State of Charge

and can also be used for peak trading 8.30-9.30am and 5pm to 7pm The VRB-ESS can also deliver frequency control, primary reserve, flicker control,

voltage control, ensuring that the system remains stable.

When used with a self learning forecasting system, forecast error can be reduced to 0, sothe windfarm then becomes day ahead dispatchable


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Case study: Sorne Hill 32MW Wind Farm,Ireland

32 MW Commissioned in October 2006 40% overall capacity Factor 12MW hour (2.0MW x 6 hours) VRB System to be installed Fall 2007 possible to install 40+ MW

(40MW x 6 hours) of storage (pending additional wind installation of ~130MW) Contract Value US$6.3million ($525/kWh storage capacity) Various income streams / benefits

Higher pricing for main off take for electricity smoothed by VRB-ESS (57 Euro/MWH increased

to 77.4 Euro/MWH) Arbitrage value for storing energy at night and selling it on peak Higher capacity payments for higher available power in negotiation Ancillary Payments primary, secondary reserve etc. in negotiation

6-7 year payback, 15%+ IRR

For the first time, wind can be a viable alternative to coal in Irelandbecause with energy storage, the wind production can be matched topeak demand

John Ward, Sorne Hill Developer

Case study: Sorne Hill 32MW Wind Farm,Ireland


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6 MW x 1.5 hour (9MWH) VRB-ESSTomamae Wind Farm, JapanGrid-Connected Wind Farm Output Smoothing

Daily Wind Output Smoothing at Tomamae

8:00:00 10:00:00 12:00:00 14:00:00 16:00:00

The VRB-ESS (blue line) runs continuously to smooth wind farm production (green line). At only 20% of the windfarms nameplate capacity, the VRB ESS has a significantsmoothing effect to total windfarm + battery output (red line)

The VRB-ESS intelligently recharges throughout the day so that it maintains 50% SOC


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600 Daily cycles at 6MW peak wind farm installation NOT cycle limitedas with all other batteries

PacifiCorp VRB-ESS in Castle Valley, UTT&D Asset Optimization

Situation: 85 mile long 25kV feeder, with 5-lineregulators and 7-reclosers

- New connects denied b/c feeder at capacity- Low reliability and power quality frequent

Public Service Commission complaints

Problem: new connects denied because feeder cannotsupply new load without causing low voltage toexisting customers

Solution: 250kW X 8h VRB-ESS was the lowest cost,

best technical solution.- VRB-ESS charges at night, discharges on peak- Maintains stable voltage- Unmanned, autonomous operation via dedicatedreal time radio communications

Currently considering upgrade to provide self healinggrid functionality

Expandable to 1,000kW x 4 hours in same building

VRB

Substation

CB

Feeder capacity

limit

Load Concentration


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Inside the 2MWh PacifiCorp installation in Moab

PacifiCorp plant performance metricsNormalised Plant Operating Hours - YE Feb-05

0.00

0.20

0.40

0.60

0.80

1.00

Feb-05 Mar-05 Apr-05 May-05 Jun-06 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Total

Planned Downtime

Unplanned Downtime

Idle T ime

Run Time


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Cost Benefit Asset Optimization

Capital deferral - 7.5%, 10 years. Cost of upgrade $4 million with 3 yearlead time

Cost of VRB-ESS = $1,000,000 ($500/kWh in 2003)

Arbitrage savings 3 to 4 c/kWh = $17,280/year

Net Annual savings = ($4 million - $1 million) x 7.5% plus arbitrage savings= $242,420

IRR = 20% (before tax, unleveraged, 10 years)

Reduced line losses offset parasitic loads

Strategic siting is important

Conclusions

Integrating energy storage with wind can increase the value of wind andlower system costs of delivering wind generation

Vanadium redox flow battery technology is one type of advanced energystorage technology that can handle winds cycling behavior Capable of hundreds of cycles per day with no impact to lifecycle Capable of long duration (8+ hours) of storage for firming Lowest cost per lifecycle of all advanced energy storage technologies

Ways of incorporating all value streams into financial decision-making arerequired Capture benefits of firming renewables for sale on peak Capture benefits of smoothing intermittent generation Relieve grid congestion and defer T&D upgrade cost

Deployment of promising applications today will accelerate progress onmanufacturing cost curve

Use of advanced VRB energy storage iscommercially ready today


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VRB-ESS System CostSignificant cost reductions possible with volume

Projected VRB-ESS Cost at Various Manufacturing Volumes

(as % of 2006 Cost)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Current (2006) 10 MW 100 MW

Cumulative Manufactured Volume

TotalSystemCost

PCS and Controls Balance of Plant Cell Stacks Electrolyte

100%

89%

69%

CA policy can catalyze these costreductions

Policy implicationsDemonstration projects are needed

Demonstrate VRB applied to wind in CA focus on technologyintegration

Measure and quantify benefits

Learn by doing

Tariff reform

Capture benefits of smoothing intermittent generation andrelieving grid congestion

Transparency needed for value prescribed to firmer windgeneration for modeling and project development

Advanced energy storage can go a long way to optimizing wind andother renewable resources under CAs Energy Action Plan

Use of advanced VRB energy storagecan help CA achieve its energy policy

objectives


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Janice Lin, Managing Partner510-665-7811 [email protected]

For more information, please visit:www.strategenconsulting.com

www.vrbpower.com

Thank you for being a great audience!

VRBs flow battery enables many new applications ofenergy storage

T&D Asset OptimizationLocation: At feeder line/substationBenefits: Defer T&D capital investment Dispatch stored energy to shave peak Improve power quality & customer service Provide voltage and frequency support Capture energy arbitrage savings Reduce line lossesPrimary user: Utility

Substation StorageLocation: In substationBenefits: Provides emergency backup power SOC remotely monitorable Easily relocatablePrimary user: Utility

Distributed Energy StorageLocation: Customer side of the meterBenefits: Offset peak usage with stored energy Integrate with distributed renewables, DSM, DR Provide UPS/emergency backup powerPrimary user: Utility Customer/End User

Integration with RenewablesLocation: Large scale renewable energy sitesBenefits: Smooth intermittent generation Firm renewable generation for sale on peak Reduce spinning reserve required for grid stabilizationPrimary user: Site Developer/Investors

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