Storage Industry: Q1-Q2 2016 August 3, 2016 Housekeeping Who We - - PowerPoint PPT Presentation

State of the U.S. Energy Storage Industry: Q1-Q2 2016

August 3, 2016

Housekeeping

Who We Are

3

www.cleanegroup.org www.resilient-power.org

Resilient Power Project

4

• Increase public/private investment in clean, resilient power systems
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developers get deals done

• See www.resilient-power.org for reports, newsletters, webinar recordings

www.resilient-power.org

Today’s Speakers

• Brett Simon, Analyst, Energy Storage,

GTM Research

• Ravi Manghani, Director, Energy Storage,

GTM Research

Prepared For:

August 2016

Ravi Manghani - Director, Energy Storage Brett Simon - Analyst, Energy Storage

State of the U.S. Energy Storage Industry: Q1-Q2 2016

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State of the U.S. Energy Storage Industry: Q1-Q2 2016

News/Online

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GTM Research is the market analysis and consulting arm of Greentech Media. GTM Research is comprised of analysts covering solar, grid edge, and energy storage markets. Our analysts combine diverse backgrounds in energy, environmental, emerging technology, information technology and strategic consulting sectors. This diverse team provides critical and timely market analysis in the form of research reports, consulting, and data subscription services.

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Greentech Media and GTM Research experts come together to produce all of Greentech Media’s industry conferences throughout the year. These summits provide a platform for our latest market intelligence and draw together the industry influencers from

• rganizations across the value chain.

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State of the U.S. Energy Storage Industry: Q1-Q2 2016

Contents

1. Deployment Trends 3 2. Market Drivers 8 3. Outlook 19

State of the U.S. Energy Storage Industry: Q1-Q2 2016

Deployment Trends 1.

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State of the U.S. Energy Storage Industry: Q1-Q2 2016

Q1 2016 Deployments Grew 127 Percent Year-Over-Year to 18.3 MW

Fr Fron

• nt of
• f the

the Me Meter Beh Behin ind the the Me Meter Tot

• tal
• 1.0

2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 Front of the Meter Q1 U.S. Energy Storage Deployments (MW) Q1 2013 Q1 2014 Q1 2015 Q1 2016

• 1.0

2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 Behind the Meter Q1 U.S. Energy Storage Deployments (MW) Q1 2013 Q1 2014 Q1 2015 Q1 2016 18.3

• 2.0

4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 Total Q1 U.S. Energy Storage Deployments (MW) Q1 2013 Q1 2014 Q1 2015 Q1 2016

Source: GTM Research / ESA U.S. Energy Storage Monitor: Q2 2016

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State of the U.S. Energy Storage Industry: Q1-Q2 2016

Behind-the-Meter Sector Continues 4-Quarter Trend of Deploying at Least 10 MWh in Q1 2016

1 2 3 4 5 Front of the Meter Q1 U.S. Energy Storage Deployments (MWh) Q1 2013 Q1 2014 Q1 2015 Q1 2016 2 4 6 8 10 12 14 16 18 Behind the Meter Q1 U.S. Energy Storage Deployments (MWh) Q1 2013 Q1 2014 Q1 2015 Q1 2016 21.2 5 10 15 20 25 Total Q1 U.S. Energy Storage Deployments (MWh) Q1 2013 Q1 2014 Q1 2015 Q1 2016 Fr Fron

• nt of
• f the

the Me Meter Beh Behin ind the the Me Meter Tot

• tal

Source: GTM Research / ESA U.S. Energy Storage Monitor: Q2 2016

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State of the U.S. Energy Storage Industry: Q1-Q2 2016

California and PJM (Excl. NJ) Account for 92 Percent of Deployments Since Q1 2013

*GTM Research is currently monitoring seven individual markets. Complete coverage of all markets is available in the full report.

Rank Residential Non-Residential Utility 1 California California PJM (excl. NJ) 2 All Others* All Others* California 3 Hawaii New Jersey All Others*

Source: GTM Research / ESA U.S. Energy Storage Monitor: Q2 2016

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State of the U.S. Energy Storage Industry: Q1-Q2 2016

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Energy Storage Deployments by Technology – MW (%) Lithium Ion Lead Acid Sodium Chemistries Flow - Vanadium Flow - Zinc Other

Lithium-Ion Technology Comprised 97% Of Deployments in Q1 2016

*”Other” includes flywheel and unidentified energy storage technologies

Qu Quarterly Ene Energy St Storag age Dep Deployment Shar Share by by Tec echnology (M (MW %)

Source: GTM Research / ESA U.S. Energy Storage Monitor: Q2 2016

State of the U.S. Energy Storage Industry: Q1-Q2 2016

Market Drivers 2.

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State of the U.S. Energy Storage Industry: Q1-Q2 2016

MI MISO MI MISO held an energy storage workshop and classified priorities into three phases.

Front-of-the-Meter Policy and Market Developments, Q1 2016

Colo

• lorado

Colo

• lorado PUC

PUC approved two energy storage projects proposed by Xce cel Ene Energy. New Yor

• rk

A proposal to extend property tax exemptions to energy storage was amended and passed the State As Assembly and was amended by the State Senate. NYSEG issued an RFP for a non-wire alternative upgrade for the area served by the Java Substation. NY PS PSC C updated NY’s standardized interconnection requirements; also issued an Order Adopting Distributed System Implementation Plan Guidance. NYISO O started initiative to evaluate energy storage participation in existing programs. California PG PG&E, SCE CE and nd SDG&E filed their 2016 Biennial Storage Procurement Plans. SDG&E issued 2016 LCR RFO to seek up to 140 MW of preferred resources, including energy storage; also signed a contract with He Heca cate Ener Energy Bancr croft for 20 MW of energy storage which is pending approval by CPUC. The Bur ureau of

• f Land

Ma Management approved ARES’ proposal for a rail-energy storage system to be located in southern NV and provide ancillary services in CAISO. CAI AISO initiated stakeholder process for track 2 of ESDER. Federal The he U.S. Sup upreme Court t granted a stay

• n the Clean Power Plan. The U.S.

Senate passed Grid Modernization Act

• f 2016, though it still must be

reconciled with HR 8. FER ERC issued a notice to hold a technical conference to discuss interconnection requirements; also initiated AD16-20 to allow ISOs the opportunity to provide data on energy storage participation in existing markets. Ha Hawaii HE HECO CO filed a Power Supply Improvement Plans update report. SB B 2739 proposed to establish a long-duration storage mandate but was deferred. Nevada PU PUCN opened an investigation into battery storage technologies and held a workshop to discuss the role of energy storage.

Source: GTM Research / ESA U.S. Energy Storage Monitor: Q2 2016

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State of the U.S. Energy Storage Industry: Q1-Q2 2016

Front-of-the-Meter Policy and Market Developments, Q1 2016 (Cont.)

New Je Jers rsey NJ J BPU approved a $2 million loan for Eos Eos Ener Energy Sto torage under the Edison Innovation Green Growth Fund. Ar Arizo zona TEP EP filed its 2016 Preliminary Integrated Resource Plan. Arizona Corporation Commission approved TEP’s 20 MW RFP projects. Uta tah The he Uta tah legi gislature passed SB 115, which permits utilities to pursue battery storage projects if authorized. Vi Virgi ginia HB HB 452 to establish an Energy Storage Consortium continued to 2017. Mi Minnesota Mi Minnesota PUC PUC issued a staff report on grid modernization and Xce cel Ene Energy answered comments on its Biennial Grid Modernization Report. Con

• nnect

cticut CT DEE DEEP issued an RFP to procure energy resources, including energy storage. Ma Maryland HB HB 787 to establish utility targets for energy storage procurement received an unfavorable report and was withdrawn. Texas Texas PU PUC approved Oncor’s application for the Bethel CAES

• project. ERCO

ERCOT FAS AST is working on ancillary redesign; ERCO ERCOT DRE DREAM Task For

• rce

ce was disbanded. Iowa Mi MidAmerica can Ene Energy filed its Preliminary Implementation Plan. PJM PJM PJ PJM MR MRC convened meeting to discuss DER participation; PJM PJM Senior Task For

• rce

ce held meetings to evaluate regulation market.

Source: GTM Research / ESA U.S. Energy Storage Monitor: Q2 2016

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State of the U.S. Energy Storage Industry: Q1-Q2 2016

Behind-the-Meter Policy and Market Developments, Q1 2016

California CPUC issued a final decision concerning NEM credit estimation methodology for small storage systems paired with NEM-eligible generation; additionally investigating how to deal with funding allocation issues resulting from February SGIP application process. PG PG&E, SCE CE and nd SDG&E filed their 2016 Biennial Storage Procurement

• Plans. PG

PG&E filed an advice letter to outline its proposed time-of-use rate pilot plan, which CPUC conditionally approved. SDG DG&E issued 2016 LCR RFO to seek up to 140 MW of preferred resources, including energy storage. California Ener Energy Commission approved $9 million in grants for the installation of DC fast chargers. Ha Hawaii HB HB 2507 was introduced and recommended for deferral by Committee on Economic Development and Business. HB HB 2511 introduced and passed second reading in the state House. HE HECO CO and Gre reenlots initiated a behind-the-meter energy storage and DC fast-charging pilot for EVs. HE HECO filed a PSIPs update report. SB SB 27 2738/HD 2/SD 2 is undergoing discussion in state legislature. Ma Maryland The he sta tate te legi gislature proposed a tax credit for behind-the-meter energy storage systems. Colo

• lorado

Colo

• lorado PUC

PUC approved two energy storage projects proposed by Xce cel Ener Energy. New Yor

• rk

A proposal to extend property tax exemptions to energy storage was amended and passed the Sta tate te As Assembly and was amended by the Sta tate

• Senate. NYS

YSERDA launched Phase II of NY Prize.

Source: GTM Research / ESA U.S. Energy Storage Monitor: Q2 2016

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State of the U.S. Energy Storage Industry: Q1-Q2 2016

Behind-the-Meter Policy and Market Developments, Q1 2016 (Cont.)

Ar Arizo zona ACC, ACC, UniS niSource ce Ene Energy Service ces and several intervenors submitted documents concerning UniSource Energy Services’ proposed rate changes. Nevada PUC PUCN opened an investigation into battery storage technologies and held a workshop to discuss the role of energy storage. Federal The he U.S. Senate passed Grid Modernization Act of 2016, though it still must be reconciled with HR 8. Guam uam Guam uam PU PUC C considering a rebate for residential energy storage systems paired with solar PV. Texas ERCO ERCOT disbanded the DREAM Task Force.

Source: GTM Research / ESA U.S. Energy Storage Monitor: Q2 2016

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State of the U.S. Energy Storage Industry: Q1-Q2 2016

Total Closed Acquisition of Saft

Completed $1.1 Billion Deal Is the Largest in Energy Storage to Date

Source: GTM Research / ESA U.S. Energy Storage Monitor: Q2 2016

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State of the U.S. Energy Storage Industry: Q1-Q2 2016

Tesla and SolarCity Announced $2.6 Billion Merger Deal

Goal to create vertically integrated clean energy company offering solutions across the value chain including energy storage, solar PV and electric vehicles

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State of the U.S. Energy Storage Industry: Q1-Q2 2016

$800 $650 $950 $750 $1,100 $900 $0 $200 $400 $600 $800 $1,000 $1,200 Utility (Power Application, $/kW) - Q1 2016 Utility (Power Application, $/kW) - 2018E Q1 2016 System Price Ranges ($/kW) $700 $500 $850 $700 $1,100 $950 $0 $200 $400 $600 $800 $1,000 $1,200 Utility (Energy Application, $/kWh) - Q1 2016 Utility (Energy Application, $/kWh) - 2018E Q1 2016 System Price Ranges ($/kWh)

Front-of-Meter System Price Trends in Q1 2016

Source: GTM Research / ESA U.S. Energy Storage Monitor: Q2 2016

Utility-Scale Price Trends Q1 2016 2016 and 2018 2018E, E, Energy Applications – 2 Hours ($/kWh) Utility-Scale Price Trends Q1 2016 2016 an and 2018 2018E, E, Power Ap Applications ($/kW)

Source: GTM Research / ESA U.S. Energy Storage Monitor: Q2 2016

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State of the U.S. Energy Storage Industry: Q1-Q2 2016

$1,300 $950 $1,500 $1,100 $2,000 $1,500 $0 $500 $1,000 $1,500 $2,000 $2,500 Residential Non-Residential Q1 2016 System Price Ranges ($/kWh)

Behind-the-Meter Price Trends in Q1 2016

Behind-the-Meter Price Trends Q1 2016 2016 ($/kWh)

Source: GTM Research / ESA U.S. Energy Storage Monitor: Q2 2016

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State of the U.S. Energy Storage Industry: Q1-Q2 2016

Wholesale Markets’ Structures Evolving to Include Storage

CAISO SO reduced performance threshold for frequency regulation PJM JM reduced RegD cap to 40% from the previous cap of 62%. A Senior Task Force was created to re-evaluate application of marginal benefit function to regulation market. SPP PP implemented pay-for- performance compensation for frequency regulation. ISO-NE NE introduced an energy- neutral regulation signal and different parameter sets to track conventional and energy-neutral dispatched resources. FERC issued an order relating to third-party provision of primary frequency response. ER ERCOT established the DREAM Task Force to determine protocols and market rules for distributed energy

• resources. (The taskforce was

disbanded in April 2016, having met its objective.)

Jan ‘15 Mar ‘15 Aug ‘15 Oct ‘15 Nov ‘15

CAISO SO approved DERP framework

Jul ‘15

MISO SO created a platform to address storage-related market rules and questions, ranging from development of a fast AGC signal to tariffs and storage classification.

Jan ‘16

Source: GTM Research / ESA U.S. Energy Storage Monitor: Q2 2016

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State of the U.S. Energy Storage Industry: Q1-Q2 2016

Wholesale Markets’ Structures Evolving to Include Storage (Cont.)

The CAISO SO Board of Governors approved changes to the non- generator resource model under ESDER

Feb ‘16 Mar ‘16

The NY NYISO SO Market Issues Working Group initiated an evaluation of programs in which storage can participate, targeting near-term changes to better integrate storage

Mar ‘16

ISO-NE NE released a white paper to outline energy storage participation requirements in its markets

Apr ‘16

CAISO SO started work on ESDER – Phase 2 initiative to address multiple-use applications, NGR model enhancements, station power and transmission access charges

Apr ‘16

The PJM JM Markets and Reliability Committee convened a special meeting to determine most effective and least-cost options to interconnect distributed energy resources

Feb ‘16

The ER ERCOT Future Ancillary Services Team resumed work

• n future ancillary

services framework

Apr ‘16

FERC issued AD16-20 to examine participation of energy storage in wholesale markets; announced a Technical Conference to explore interconnection issues

Source: GTM Research / ESA U.S. Energy Storage Monitor: Q2 2016

State of the U.S. Energy Storage Industry: Q1-Q2 2016

Outlook 3.

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State of the U.S. Energy Storage Industry: Q1-Q2 2016

226 281 2,081

• 200

400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E 2021E Energy Storage Deployments by Segment (MW) Residential Non-Residential Utility

U.S. Energy Storage Market Will Exceed the 2 GW Threshold in 2021

Source: GTM Research / ESA U.S. Energy Storage Monitor: Q2 2016

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State of the U.S. Energy Storage Industry: Q1-Q2 2016

$528 $2,855 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E 2021E Annual Energy Storage Market Size (Million $) Residential Non-Residential Utility

U.S. Energy Storage Market Will Be Worth $2.9 Billion by 2021

Source: GTM Research / ESA U.S. Energy Storage Monitor: Q2 2016

Interested in other GTM Research products and services? Please visit www.gtmresearch.com or contact sales@greentechmedia.com

Thank you!

Brett Simon Analyst, Energy Storage simon@gtmresearch.com Ravi Manghani Director, Energy Storage manghani@gtmresearch.com

August 2016

Thank you for attending our webinar

Todd Olinsky-Paul Project Director Clean Energy Group todd@cleanegroup.org Find us online: www.resilient-power.org www.cleanegroup.org www.facebook.com/clean.energy.group @cleanenergygrp on Twitter @Resilient_Power on Twitter