The Hype and Reality of Electrical Energy S torage Brett A. Perlman - PowerPoint PPT Presentation

The Hype and Reality of Electrical Energy S torage Brett A. Perlman S enior Fellow

Agenda for today  Promise of Energy Storage  Current Energy S torage Market S ize  Energy S torage Technology Overview  Business cases for energy storage and the importance of regulatory incentives  Competitive landscape  What’s next? 2

Bret t A. Perlman Bio and Research Int erest s Current Activities:  Energy S t orage  Non-Resident Fellow, BU Inst it ut e for S ust ainable Energy. − Proj ect Acorn: Working wit h Mike Aziz Fellow, Harvard Advanced Leadership Init iative. (Harvard S EAS ) on organic flow  President, Vect or Advisors. Current act ivities on providing bat t ery t echnology management consult ing services t o energy client s  Energy Technology Commercialization  Board of Direct ors, Just Energy. NYS E/ TS X t raded ret ailer of − Mat erials Translat ional Init iat ive: gas and elect ricit y in 17 deregulated Nort h American Working wit h Ramana Nanda (HBS ) market s, UK and Germany and S adas S hankar (Harvard S EAS ) on Professional Background: new business model t o commercialize  Commissioner, Public Ut ilit y Commission of Texas (1999 t o energy t ech. 2003): Responsible for t he successful rest ruct uring of Texas ’  Elect ricity Market S t ruct ures $17 billion elect ric ut ilit y indust ry and $4 billion − HBS Case S t udy (2017): Mexican Power t elecommunicat ions indust ry. Market wit h HBS Prof. Dick Viet or  Management consult ant : Houst on office of McKinsey & − Upcoming S ummit on Nort h American Company, wit h focus on developing business st rat egy for Energy S ecurit y wit h former Mexican t elecommunicat ions and elect ric ut ilit y client s Deput y Energy S ecret ary and MIT Education: Fellow Lourdes Melgar  MP A, Harvard Kennedy S chool  JD, Universit y of Texas Law S chool  BA, Nort hwest ern Universit y 3

ALMOS T 150 years aft er phot ovolt aic cells and wind t urbines were invent ed, t hey st ill generate only 7% of t he world’s elect ricity. Y et somet hing remarkable is happening. From being peripheral t o t he energy syst em j ust over a decade ago, t hey are now growing fast er t han any ot her energy source and t heir falling cost s are making t hem compet it ive wit h fossil fuels. Y et green energy has a dirt y secret . The more it is deployed, t he more it lowers t he price of power from any source. That makes it hard t o manage t he t ransit ion t o a carbon-free fut ure, during which many generating t echnologies, clean and dirt y, need t o remain profit able if t he light s are t o st ay on. The good news is that new technology can help fix the problem. Digitalisation, smart meters and batteries are enabling companies and households to smooth out their demand — by doing some energy-intensive work at night, for example. The bigger task is to redesign power markets to reflect the new need for flexible supply and demand. 4

Vision for Role of Energy S torage … . is creating the need for more flexible California ISO’s “Duck Curve,” caused by high resources, and perhaps a role for energy storage renewables penetration and GHG reduction goals… .  Calif. GHG and renewable policies… − 50 percent of electricity from renewable sources by 2030 − GHG reductions to 1990 levels − 1.5 MM zero emission vehicles by 2025  Creating grid reliability issues.. − Overgeneration during peaks − S teep, sharp ramping after peaks − Frequency issues since renewables aren’ t dispatchable  … driving the need for flexible resources, such as energy storage − Could soak up “ excess” on-peak renewables − Provide rapid dispatch to meet ramping requirements and frequency issue 5

Much Hype Around Energy S torage U.S. Energy Storage Deployment by Segment (MV) 1,800 Annual deployments cross 1GW mark in 2019 1,662 1,600 1,400 1,200 1,000 800 600 400 200 0 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E Utility Non-residential Residential 6

Agenda for today  Promise of Energy S torage  Current Energy Storage Market Size  Energy S torage Technology Overview  Business cases for energy storage and the importance of regulatory incentives  Competitive landscape  What’s next? 7

Global Installed Generation and S torage Base: January 2016 GW >6000 Storage < 2% of 10000 power generation 1000 144 capacity 100 10 1.9 1.0 0.4 0.9 1 Pumped-hydro 0.1 represents 99% of <0.1 0.01 storage 0.001 S ource: “ The Fut ure of t he Elect ric Grid and t he Role of Energy S t orage” Elect ric Power Research Inst it ut e, May 24, 2016 8

Energy storage heavily focused in California due to regulatory incentives US Energy Storage Capacity – Q3, 2016 (MW) BTM Battery Storage by State 177 67 29 110 Utility- connected 81 S torage Thermal storage proj ects Total= 81 MW Total U.S . BTM S torage BTM Battery Energy Installed S torage Proj ects S torage Installed Installed S ource: Enovat ion Part ners analysis from variet y of sources (primarily S GIP dat a for California proj ect s and DOE Global Energy S t orage Dat abase for ot her st at es) 9

Agenda for today  Promise of Energy S torage  Current Energy S torage Market S ize  Energy Storage Technology Overview  Business cases for energy storage and the importance of regulatory incentives  Competitive landscape  What’s next? 10

Advanced Energy S torage Technologies Chemical Mechanical Elect rochemical Thermal Elect rical (hydrogen) Lead acid, Pimped Hydro lithium Ion, S ensible-Molten Power-to-Power (conventional S odium S ulfur, salt, chilled S upercapacitors (fuel cells, storage) and S odium water etc.) Nickel Chloride S MES Flow batteries – CAES Latent – Ice (S uper- (Compressed Vanadium storage, conducting Power-to-Gas Air Energy redox, Phase change Magnetic Zinc-bromine S torage) materials Energy S torage) Thermo- Flywheel chemical storage 11

Different S torage Technologies for Different Applications More “energy” More “power” S ource: Environment al and Energy S t udy Inst it ut e, Issue Brief, August 2013 Dat a source: S andia Nat ional Laborat ories 12

Comparison of Alternative Battery Chemistries for Grid S torage S ource: “ Beyond Four Hours” , ES S whit e paper, 2016 13

Continued Dramatic Cost Declines In S torage Over the Next 5 Y ears Technology Trends Flow Battery Capital Cost ($/KWh) and Opportunities S low Median Fast • Designing out high cost materials, and scale CAGR -3% -9% -16% • Improved manufacturing and design will improve performance – S ize/ thickness reduces current flow 5 Y ear -14% -38% -58% • Integration time for manufacturing • Reducing required high cost materials Flywheel • Improving control and response time to increase CAGR -1% -2% -12% usable range of operation • Improvements in operation sustainability – ability 5 Y ear -5% -10% -47% to remove heat, higher efficiency motor/ generator • Improvements in competitive cost position from increases in capability / performance Lead CAGR -1% -5% -16% • Material additives such as carbon is increasing the 5 Y ear -5% -24% -58% usable energy and capability envelope • Design changes to reduce lead requirement • S cale manufacturing lowering cost (Gigafactory) Lithium • Design improvements reducing needed materials CAGR -2% -12% -13% • Chemistry improvements increasing capability of 5 Y ear -10% -47% -50% battery, increases usable energy and range of operation • Cost reduction depends on manufacturing at scale CAGR 0% -1% -7% • Design improvement to reduce high cost sub- Zinc components 5 Y ear 0% -5% -30% • Chemistry improvements will increase lifespan and range of operation 14 S ource: Enovat ion Part ners, Lazard LCOS survey

Proj ect Acorn –Aziz Energy Group Aqueous, Organic, Neut ral pH Flow Bat t ery  Market-driven approach to engineer a storage system that meets market needs  3 rd iteration of an aqueous flow battery using organic active materials  Low Cost  Chemicals become a small fraction of system cost  New chemistry enables use of cheaper ion exchange membranes  Good performance  High capacity  Long cycle lifetimes  S afe & environmentally friendly  Aqueous  Neutral pH

Li-Ion Batteries Dominating Recent Additions to Grid S ource: GTM Research/ ES A, US Energy S t orage Monit or (3Q 2016) 16

Will LION Rule the Energy S torage Market? $1370/ kw or $685/ kWh* 17 * Assumes a 2 hour syst em

Agenda for today  Promise of Energy S torage  Current Energy S torage Market S ize  Energy S torage Technology Overview  Business cases for energy storage and the importance of regulatory incentives  Competitive landscape  What’s next? 18

Lots of “ Use-Cases” for S torage… 19

… But only 5 ways to monetize 20

Grid S t orage Cost s Oft en Great er Than Any One Value S t ream “Stacking” of value streams generally required for economic viability at current storage costs S ource: Lazard “ Levelized Cost of S t orage V2.0” , December 2016 21