© 2014 Natureo Finance 1
CLEANTECH INVESTMENT RESEARCH
Analysing Energy Storage Trends and Projects
(April 1, 2014)
Olivier Vallée CFA Senior Analyst
Cleantech Investment [email protected]
Page 2 © 2014 Natureo Finance
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Energy storage market segments
Motive
On-RoadAutomotive starter batteries (including start/stop)Hybrid / Electric light passenger vehiclesHybrid / Electric heavy commercial vehicles
Off-RoadForkliftsGolf carts, marine, etcMilitary vehicles
Stationary
Front-of-the-MeterFrequency / voltage regulationLoad management / peak shiftingRenewable energy integration
Behind-the-MeterTariff arbitrage / demand-responseIndustrial / network / data center backupResidential energy storage
Other
ConsumerNon-rechargeable (general disposable)Rechargeable (consumer electronics)Specific (hearing aids, etc)
SpecialtyMilitary / AerospaceIndustrialMedical
$15-20b
Lead acid primarily, lithium emerging
$10b
Grid a growth area, network/data too
$30b
Rest is Duracell bunny, aero ..
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Stationary storage sub-segments
Front of the meter
§ Heavily regulated§ High voltage§ Usually utilities§ Grid services§ Larger projects§ Higher profile§ Government support§ Collective investment
Typical app: grid supportInvestor: utilities
Behind the meter
§No regulation§Low voltage§Private players§Grid enhancement§Smaller, numerous§Low key trend§Profit motive§Individual investment
Typical
app:
grid
backupInvestor:
users
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Stationary storage business models
Front of the meter
§ Capex deferral
§ Peaker plants§ Distribution
§ Renewable integration
§ Capture of free electricity§ Load leveling
§ Ancillary services§ Voltage support§ Frequency regulation
Behind the meter§ Tariff arbitrage
§ Demand-response§ Electricity trading
§ Residential storage
§ Solar storage§ Grid backup
§ New models§ Wide variety
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Power vs energy applications
Power:
§ The size of the faucet§ Measured in MW§ Fast response§ Examples:
§ Flywheels§ Ultracapacitors§ Lithium batteries
§ Hybrid car: passing power
Example: voltage support
Energy:
§ The size of the tank§ Measured in MWh§ Long periods§ Examples
§ Pumped hydro§ Sodium sulfur§ Lithium batteries
§ EV: driving range
Example: solar storageThe "pipe:pond" ratio, or power/energy ratio
is the C (charge or discharge) rate
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Natureo's database of ESS projects
Natureo maintains a database of announced storage projects:
§ Large-scale projects (500KWh or more)§ Worldwide view§ Since 2007 and announced going forward
… 120+ projects
For each project:
§ Client, integrator and technology supplier§ Power, energy, project cost, cost per KWh§ Location and application
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2008
2009
2010
2011
2012
2013
020
4060
80100
120140
160
Lithium PhosphateLithium TitanateLithium Nickel/Cobalt/ManganeseFlywheelNickel CadmiumSodium SulphurFlow batteryLead AcidOther
Grid storage - analysis of 120 projects
Key Takeaways§ Strong subsidized growth in 2011§ Pause in 2012, weakness in 2013§ Sodium sulfur, flywheels out; to re-emerge?§ Big emergence for Lithium§ Flow batteries emerge too
Mostly A123 and AES Energy Storage
Beacon Power before bankrupcy
Emergence of Flow BatteriesLithium nickel,
cobalt, manganese
Breakdown by POWER
Source: Natureo Finance
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2008
2009
2010
2011
2012
2013
020
4060
80100
120140
160
Lithium PhosphateLithium TitanateLithium Nickel/Cobalt/ManganeseFlywheelNickel CadmiumSodium SulphurFlow batteryLead AcidOther
Grid storage - analysis of 120 projects
Key Takeaways
§ Sodium sulfur, largest energy capacity by far, disappears suddenly§ LARGE opportunity for alternatives § Lithium and flow batteries will benefit
Big flow battery opportunities
Breakdown by ENERGY
Source: Natureo Finance
NMC: maintained;LFP:A123 difficulties
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2008
2009
2010
2011
2012
2013
020
4060
80100
120140
160
RenewableUtilityCommunityResidential
Grid storage - analysis of 120 projects
Key Takeaways
§ Trend from power (frequency regulation) in 2011 to energy (solar/wind power storage)§ Residential/community market tiny, possibly growing fast in Japan, Germany, California due to subsidies
Appearance of community storage
Breakdown by App
Renewable projects now the major app
Source: Natureo Finance
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2008
2009
2010
2011
2012
2013
020
4060
80100
120140
160
US/CanadaEuropeROWAsia
Grid storage - analysis of 120 projects
Key Takeaways§ European storage market small; robust, heavily invested grid structure, renewable energy is focus§ US larger due to antiquated grid, less interconnect, frequency regulation is focus § Recently, trend is shifting to frequency regulation in Europe and renewable integration in US
Two giant Chinese projects with BYD
Breakdown by REGION
Source: Natureo Finance
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Energy storage market drivers
Technological progress
§ Storage capacities§ Price declines
Changes in generation
§ Renewable energy targets§ Distributed generation
New demand constraints or patterns
§ Climate change; energy cost§ EV charging; etc
Transmission and distribution issues§ Organic demand growth => Higher peak demand§ Country-scale network transmission concerns
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Siting issues in Germany
Renewable goes from 17% in 2010 to 35% in 2025. But this is in the North.
3600km of high-voltage lines budgeted for 2020; Expansion of 11-28% of medium and low voltage network; €10—27b in network upgrades
Transmission cannot be done on demand.
Peaks must be handled by storage or by other distribution system such as power-to-gas.
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Siting issues in Italy (Puglia)
Puglia region's overcapacity problem:
§ Puglia region of Italy – 3.5GW of renewable generation capacity § Low local electricity demand§ New €30m Campagna-Puglia high voltage line to be built, but offtake of only 500MW
INGRID power-to-gas project:
§ $29m project for 39MWh of hydrogen storage ($744/KWh)§ 1.2MW electrolyser (65% efficiency) = 10.5GWh/year§ Assuming 3-year lifetime and no opex, financing cost: $0.003/cycle§ No distribution cost§ Add $0.13/KWh for fuel cell (LCOE, capex included)
SAFT, Samsung SDI have also sold big batteries
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Situation in California
10GW of wind coming online by 2020, much by 2015North-south divide; most of hydro power comes from North
§ In South, Son Onofre nuclear plant (2GW supplying 20% of Southern California requirements) is prematurely offline
Three organizations are active:
§ CPUC - California Public Utility Commission§ CEC - California Energy Commission§ CAISO - California Independent System Operator
Resulting in Assembly Bill 2514 (AB 2514)
§ Requires CPUC to set targets for energy storage; Storage now a "preferred asset class".
In March 2012, CPUC acted on AB 2514:
§ Instructed Southern California Edison to procure by 2022 1400-1800MW in generation assets of which 650MW in preferred asset classes and 50MW using storage
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Renewable in Germany averages 23%, but often over 50-60%
An average of 35% (2025) would mean days of 100%+Storing only 10% of production: 22TWh/yr, 60GWh/day
Excess electricity is free
Page 17 © 2014 Natureo Finance POWER (Watt)
ENER
GY
(wat
t-ho
ur)
1MW 10MW 1GW
seco
nds
hour
sda
ys
Source: Natureo Finance
Centralised solution here
100MW
Lithium
Flywhe
el s?
Pumped hydro
Where to store 60GWh?
Com
pres
sed
air
Power-to-Gas
Grid solutions unavailable
Local storage, ie residential solar
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Alternatives inadequate
20MW flywheel plant (Beacon Power)20 x 40ft containers
20MWh lithium battery (A123 Systems)20 x 40ft containers
Hydrogen plant (Hydrogenics)48MWh/day, 17.5GWh/year
4 x 20ft containers
Germany's entire pumped hydro capacity is 50GWh
Strong seasonality: high solar production in summer, high heating demand in winter
Page 19 © 2014 Natureo Finance
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Newsletters and Reports § Solar Newsletters§ Lithium Battery Sector: Lithium Batteries Emerge – 65 pg§ SAFT: Set to Exploit Lithium’s Rapid Emergence – 50 pg § Solar Inverters: Parvenues vs. SMA – 64 pg § Investing in Lithium batteries – 101 pg § 3W/AEG: Turn on the Power – 48 pg § Investment Themes in Batteries: Lithium, Lead & Ultracaps – 85pg § CIGS Thin-film Solar: Go Thin to Win – 93 pg§ Recycling Sector: Analyzing European Recycling Value Chain – 72pg § Automotive Start Stop: Maxwell and Company Visits – 18 pg§ Lithium Market: Model Updates – 14 pg§ Batteries 2012: Conference notes and presentation – 12 pg§ E-Scrap Processing: Treasures from the Trash – 107 pg
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