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Market AnalysisCurrent US Energy Storage Market

11-Jan-14

Ib OlseneMail olsen@edgebusinessadvisory.comPhone (US) +1 917 379 3590 EdgeBusinessAdvisory.com

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About EDGE Business Advisory?

EDGE Business Advisory is a Nordic, San Francisco-based market development consultancy unlike any other...

We operate like your local business development subsidiary in the US and provide you with a cost efficient way to enter or further develop the US market without the risk and costs associated with establishment of your own office.

Our services are designed to support your business interests in establishing or growing the US market for your products and services.

Given our location in San Francisco and Silicon Valley, we are well positioned to market companies in the tech industry, but we also operate as a US market hub for other products and services.

Our team is made up of experienced consultants, often with a cross-cultural backgrounds, from market leading companies. Due to our low overhead we provide highly skilled consultants at competitive rates

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The US Energy Storage Market

• According to the DOE Global Energy Storage Database there are at least 141 energy storage installations in operation in US rated at 100kW or more, with another 37 installations in contract or under construction

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The US Energy Storage Market

Technology Type Category Operational Under Construction

Contracted Announced Offline/Under Repair

De-Commissioned

Battery 54 units 21 units 10 units 4 units 2 units

Compressed Air 3 units 3 units

Flywheel 3 units 1 units

Pumped Hydro 36 units 1 units 5 units 3 units

Thermal Storage 45 units 3 units 1 units 1 units

Technology Type Category Operational Under Construction

Contracted Announced Offline/Under Repair

De-Commissioned

Battery 204 MW 40 MW 7 MW 32 MW 16 MW

Compressed Air 114 MW 626 MW

Flywheel 26 MW 2 MW

Pumped Hydro 20,330 MW 1,300 MW 2,950 MW 2,012 MW

Thermal Storage 227 MW 540 MW 6 MW 0.1 MW

Technology Type Category Operational Under Construction

Contracted Announced Offline/Under Repair

De-Commissioned

Battery 310 MWh 88 MWh 20 MWh 31 MWh 11 MWh

Compressed Air 6,050 MWh 43,934 MWh

Flywheel 7 MWh 0.01 MWh

Pumped Hydro 247,010 MWh NA 27,963 MWh 36,344 MWh

Thermal Storage 1,621 MWh 3,980 MWh 12 MWh 0.1 MWh

4Data extracted and analyzed from: http://www.energystorageexchange.org/

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Technical Drivers

• Several technologies have reached a maturity that allows for predictable performance over the 10 to 15 years life of an installation.

• Significant development money is going in to especially battery based energy storage.– Mechanical, thermal, and compressed air storage have also received

substantial public funding to be developed into commercial scale.

• Early installations have shown the benefits of fast acting resources on the grid and the electrical grid is getting better at integrating multiple resources.

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Multiple Value Streams Maximizes Asset Utilization

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Energy Storage Provides Flexibility That TraditionalGeneration Cannot Provide

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Estimated Target Market Size and Target Value Analysis EPRI Analysis 2010

8Source: http://www.epri.com/abstracts/pages/productabstract.aspx?ProductID=000000000001020676

2014: The markets are significantly increased. Frequency regulation alone is now more than 1 GW, and the study did not include ramp-rate control for renewable energy, which is expected to be at least 600MW for Puerto Rico aloneHowever, the $/kWh is still a good guideline

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Total Addressable US Market - 2012

• In 2012 Kema (now DNV GL) pooled data from various sources including EPRI and Sandia National Laboratories, and came up with a total potential market of ranging from 232GW to 415GW in US.

• Since then a lot has happened on the regulatory side…

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Kema report: Market Evaluation for Energy Storagein the United States, 2012

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Regulatory Drivers

• FERC (Federal Energy Regulation Committee) in 2012 and 2013 recognized energy storage as fast acting regulation for the grid, which should be able to bid into the open electrical market

• Several Independent System Operators (ISO) have / are following the FERC rulings by creating actual markets.

– At this point PJM, serving the Mid Atlantic area, is the largest

• California has issued a separate bill requiring energy storage as part of the mix to replace several outdated power plants

• Puerto Rico and Hawaii require firming of renewable energy, which can best be served by energy storage

• Texas has recognized that energy can provide service both during discharge and charge

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North American Regional Transmission Organizations

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California Public Utilities Commission’ Energy Storage Procurement Targets

• The targets adopted on Thursday, October 17, 2013, apply to California’s three major investor-owned utilities (IOUs): Southern California Edison, Pacific Gas & Electric, and San Diego Gas & Electric. The IOUs are required to collectively procure 1,325 MWs of energy storage capacity by 2020, with an installation deadline of the end of 2024, to implement AB 2514 (2010). The CPUC directed the utilities to file, by March 1, 2014, separate procurement applications with a proposal for their first energy storage procurement. The IOUs are required to conduct their first solicitation by December 1, 2014, and further procurement applications and solicitations will be held biennially until 2020.

12http://www.reedsmith.com/California-Public-Utilities-Commission-Adopts-Energy-Storage-Procurement-Targets-10-23-2013/

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CA Energy Storage Targets (MW)

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The mandate does not specify duration, but talking with utility representatives it will probably be at least four hours (i.e. 1 MW for 4 hours = 4MWh of energy)

Based on Transmission and Distribution demand alone, the addressable market in California is at least 1.1GW / 4.5GWh

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US Fast Regulation Market

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Status Today

• Today there is an identified energy storage market in the US for at least 2GW of capacity, which translates into at least 4GWh of energy

• As renewable energy penetration increases this number will go up – especially the need for longer duration energy storage

• As outdated power plants are phased out, there is a trend towards increased renewable energy– New York just announced the closure of a nuclear power plant and the

announcement associated replacement is expected soon

• States continue to pass regulation, which expands the energy storage market

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