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DI SPUT E S & I NVESTI GATI O N S • ECONOMI C S • F I NAN CI A L ADVI SO RY • MANAGEM E N T CONSULT I NG ©2015 Navigant Consulting, Inc.

Energy Storage Industry Overview

September 9, 2015

Prepared for:

1©2015 Navigant Consulting, Inc.

»Table of Contents

1 » Background

2 » Technologies

3 » Applications and Benefits

4 » Key Players and Deployment

5 » Market Forecast


» 1836 Daniell lead acid battery becomes the first commercial battery

» 1890’s Pumped storage used in Italy and Switzerland

» 1929 First U.S. pumped hydro storage system at Rocky River, New Milford, CT

» 1978 First compressed air energy storage (CAES) plant in Huntorf, Germany

» 1970’s Lead acid batteries begin to be used for reactive power

» 1991 First U.S. CAES plant in McIntosh, Alabama

» 2000’s Increased use of batteries in grid scale pilots

Pumped Storage Cutaway Diagram CAES

Source: DOE/EPRI 2013 Electricity Storage Handbook Source: Haisheng Chen, Progress in electrical energy storage system: A critical review, 2008

Background

Until recently, grid scale electric energy storage has been either pumped hydro, compressed air energy storage, or lead acid batteries.


Background

Policy Cost ReductionsTechnology

Demonstrations and Commercial Deployment

Energy Storage Advancements

Renewable portfolio standards (RPS) and goals

FERC Final Order 755 “pay for performance”

Federal “STORAGE” bills CA AB2514 CPUC Decision D13-10-040 MA DOER - Storage

Initiative MA DPU - Storage

Stakeholder Conference CT S.B. 1078 – DEEP

procurement of storage

Manufacturing improvements

Economies of scale due to electric vehicles

Competition Influx of capital

Federal DOE funding• Office of Electricity ESS

• Smart Grid Demonstration Program ~$160 million for 16 ES demonstration projects

• ARPA-E

• Loan Guarantees (proposed $4Billion)

State funded demonstrationsIPP and Utility demonstrationsCommercial deployments

While energy storage has been around for a century, recent advancements are causing the industry to re-examine storage.


Technologies

Source: www.ZBBenergy.comSource: SAFTSource: Beacon Power

Mechanical Batteries Flow Batteries

• Pumped Hydro Storage (PHS)

• Compressed Air Energy Storage (CAES)

• Flywheel

• Lead Acid• Advanced Lead

Acid• Zinc Air• Sodium Sulfur• Sodium Metal

Halide• Sodium Ion• Other

Lithium-• Iron Phosphate• Manganese Oxide• Titanate• Cobalt• Nickel Cobalt

Aluminum• Nickel Manganese

Cobalt

• Zinc Bromine• Vanadium Redox• Iron Chromium• Other

Other

Thermal• Ice Based• Thermal Molten SaltPower To Gas• Hydrogen• Synthetic Natural GasCapacitors• electric double-layer

capacitors, or “supercapacitors” or “ultracapacitors”

Source: www.smartgrid.gov

Electrical energy is generally stored through mechanical, chemical, thermal or electro-chemical means.


Technologies

A typical storage system contains a storage technology, thermal management system, power conversion system and software & controls.

Energy Storage System

Storage Mechanism

Thermal Management Power Conversion

Energy Storage System Components

Software & Controls

Image Source: REneweconomy, AVL, Energy Storage Report, Free-SQL


Technologies

Image Source: A123 Systems

For a battery system, the software & controls, and thermal management are often integrated across the modules, packs and system.

Representative Battery Storage System

Cells• High Power• High Energy• Chemistry

Modules• Internal Cooling• Sensors, monitoring,

balancing• Communication

Packs• Battery Management• Wiring & racking• Relays, fuses, etc.

System• Power Conversion

System• Software &Controls• Thermal

Management Systems


Navigant’s energy storage valuation framework categorizes applications as: load leveling, grid operational support, and grid stabilization.

•Renewable Energy Shifting•Wholesale Market & Cost Optimization (e.g., arbitrage)•Retail Market (e.g., time of use rates, demand charge management)•Asset Management

Load Leveling (Generating power off peak and using it on peak)

•Load Following•Operating Reserves•Frequency Regulation•Renewable Energy Firming •Black Start

Grid Operational Support (Matching supply to demand)

•Renewable Energy Ramping•Renewable Energy Smoothing•Backup Power•Power Quality

Grid Stabilization (Improving reliability)

Applications and Benefits


Depending on the application, energy storage will provide a combination of economic, reliability, and environmental benefits.

Applications

Economic Reliability EnvironmentalMarket

Revenue Asset Utilization Efficiency Cost Interruptions Air Water

Arb

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Cap

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Rev

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apac

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efer

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Tran

smis

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C

apac

ity In

vest

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efer

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Dis

tribu

tion

Cap

acity

Inve

stm

ents

Red

uced

Ele

ctric

ity

Loss

es

Red

uced

Ele

ctric

ity C

ost

Red

uced

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ages

Impr

oved

Pow

er Q

ualit

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Red

uced

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and

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er U

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Load LevelingRenewable Energy Shifting X X X X X X X X X X XWholesale Market Arbitrage & Cost Optimization X X X X X X X X X X XRetail Market X X X X X X X X X XAsset Management X X X X X X X X XGrid Operational SupportOperating Reserves X X X X X XLoad Following X X X X XFrequency Regulation X X X X X XRenewable Energy Capacity Firming XBlack Start X XGrid StabilizationRenewable Energy Ramping X X X X XRenewable Energy Smoothing X X X XBackup Power XPower Quality X

Applications and Benefits


Key Players and Deployment

The value chain includes technology manufacturers, system integrators, project developers, owners/operators, and financing organizations.

Energy Storage Value Chain

Storage Technology

Manufacturer

Power Conversion

Manufacturer

Software & Controls Vendor

System Integrator

Project Developer Financer EPC

ContractorMaintenance

ProviderOperatorThermal

Management Manufacturer

Upstream Downstream

Typical Upstream Activities: - Component manufacturing and testing- Software and controls algorithm

development- Component and system level modelling,

design, and testing

Typical Downstream Activities: - Site selection and permitting- Arranging project level finance- Contracting with storage system end user- Site preparation, installation and

commissioning- Operation- Ongoing maintenance



Source: www.ZBBenergy.comSource: SAFTSource: Beacon Power

CAES• Dresser Rand• MAN Turbo• GCX Energy • Hydrostor• Highview• APEX, RWE, etc.

Flywheel• Beacon Power• Temporal Power• PowerThru• Vycon Energy

Lithium Ion• Saft• Toshiba• AltairNano• Electrovaya• Dow Kokam• LG Chem• BYDSodium Metal Halide• Fiamm• GE Sodium Sulfur• NGK

Lead Acid• East Penn (Ecoult)• Exide• EnerSys• Axion• Trojan• AtraverdaZinc Air• Eos Energy • ViZnOther• Ambri• Aquion

Zinc Bromide• ZBB• Primus Power• RedFlowVanadium Redox• Prudent Energy• UniEnergy Techn. • Imergy• Gildemeister• Sumitomo• VionxOther• Enervault• Enstorage

Thermal• Ice Energy• CalmacPower To Gas• Hydrogenics• ITM Power• ETOGAS• SunfireUltracaps• Ionova• Maxwell

Source: www.smartgrid.gov

Technology manufacturers will often perform all the functions across the value chain.

Mechanical Batteries Flow Batteries Other



The following technology manufacturers have supplied energy storage systems for deployment globally.

(Source: Navigant Research)*Note: Does not include PHS, traditional CAES, or solar thermal storage.**NEC acquired the grid storage business from A123 Systems and is now a systems integrator***Younicos acquired Xtreme Power and is now a systems integrator.

Deployed Capacity Market Share by Top 20 Technology Vendors* World Markets: 1Q 2015

NGK Insulators47%

A123 Systems**

14%Xtreme Power* 6%

BYD6%

Beacon Power, LLC5%

Saft4%

Toshiba3%

ZBB Energy3%

Samsung SDI2%

Altairnano2%

LG Chem2%

Prudent Energy

1%

ABB1%

ETOGAS GmbH1%

DN Tanks1%EnerDel

1%Rongke Power

1%

Sumitomo1%


California and Texas lead the US in grid scale energy storage which is larger than the total deployed capacity of behind the meter storage.

FTM Storage, Q1 2015Capacity (MW)

California, 8.18

New York, 0.43

Vermont, 0.63

Washington, 0.75 Michigan, 0.5

Illinois, 73.25

California, 66.496

Texas, 43.737

West Virginia,

35.024

Ohio, 31.13

Top 5 States (10 MW)

BTM Storage, Q1 2015Capacity (MW)

Top 5 States (250 MW)

Source: Navigant Research



US grid scale pipeline is driven by policy in CA and frequency regulation elsewhere.

California, 158.1

Alaska, 25

West Virginia,

31.5

Illinois, 39.6

Indiana, 40

California, 180.23

New Jersey, 1.5

Hawaii, 1New York, 1

FTM Storage, Q1 2015Capacity (MW)

BTM Storage, Q1 2015Capacity (MW)




Lowest Cell Price for Utility Applications 2014, 2017, 2020


Cost reductions are expected across all technologies, with the largest percentage reductions expected for Li ion and flow batteries.

$-

$100

$200

$300

$400

$500

$600

$700

2014 2017 2020

$/kW

h

Lithium Ion Sodium Sulfur Sodium Metal Halide Advanced Lead-Acid Flow Batteries

Market Forecasts


TOU pricing will drive BTM growth, while FTM growth will be dominated by applications to defer T&D expenditures.

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

($ M

illio

ns)

(MW

h)

Residential Energy StorageCommercial Energy StorageTotal Revenue

Behind the meter battery energy capacity (MWh) and revenue ($M) by application)

Front the meter battery energy capacity (MWh) and revenue ($M) by application

$0

$500

$1,000

$1,500

$2,000

$2,500

0

1000

2000

3000

4000

5000

6000

7000

8000

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

($ M

illio

ns)

(MW

h)

Grid Asset Optimization

Utility-Scale Renewables Integration

Reserve Products

Frequency Regulation

T&D Upgrade Deferral

Total Revenue


Market Forecasts

KeyC O N T A C T S

©2010 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy.

KeyC O N T A C T S


KeyC O N T A C T S


KeyC O N T A C T S


16

Colette LamontagneDirectorBurlington, MA781-270-8340 [email protected]

mailto:[email protected]

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