Energy Storage: A Game Changer for the Energy World

Florian Mayr, Partner

Dubai, April 26, 2017

Apricum – The Cleantech Advisory.

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Apricum at a glance

Business • Founded in 2008

• >200 successful projects

Industry focus • Cleantech. Strong focus on solar, wind,

water, energy storage and digital energy

Team • >40 experts

Clients • Companies, investors and public institutions

Services • Transaction advisory

• Strategy consulting

Locations • HQ in Berlin, Germany

• Branch offices: Abu Dhabi, Dubai

• Representative offices in South and North

America, Europe, MENA and Asia

Apricum has been active in MENA for several years.

Globally, increasing projects in the energy storage space.

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References from the MENA region (examples):

References from global players / energy storage companies

…and many more

Drastic market growth expected for energy storage –

increasingly appreciated by the financing world.

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Global energy storage installations [GWh]

1) In cooperation with Cairn ERA

“Energy storage:

An underappreciated

disruptor” (Feb 8, 2017)

“Energy storage: An

underappreciated

disruptor” (Feb 8, 2017 “Energy storage will grow

exponentially”

(Feb 9, 2017) 0

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Market for

energy storage

Reducing costs

• Capex

• Lifetime costs

• “Outside of the storage box”

Increasing demand for…

• …flexibility in the power

system

• …replacements/expansion of

grid and generation

infrastructure

• …optimization of (combined)

sources of power supply

• …adequate quality

and reliability of power supply

Improving frameworks

• Remove barriers for storage

to participate in markets

• Incentives to push

early market

We see three principal drivers for future growth of the global

energy storage market.

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2

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There are four basic categories of demand, resulting in multiple

use cases for energy storage.

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Demand for Key drivers of demand Energy storage use case

Increased flexibility

in electricity

systems

• Increasing share of intermittent renewable energy

• Loss of inertia (decommissioning of fossil plants)

• Need for higher grid resilience

• Increasing rural electrification

• Ancillary services (frequency/voltage control,

microgrid islanding, black start)

• Direct RE1 integration (e.g., ramp control, RE

smoothing, RE firming)

Replacement/

expansion of

generation/grid

infrastructure

• Aged/strained grid and peak generation infrastructure

• Rising (peak) power demand/supply

• Increasing rural electrification

• Peaker replacement (peak shaving2, peak

shifting2, demand response2, energy arbitrage)

• RE time shift (PV, wind)

• T&D deferral/avoidance

• Grid congestion relief

Optimization of

(combined) sources

of power supply

• High prices for retail electricity

• Decreasing FiT

• High prices for fossil fuels

• Increasing rural electrification

• RE self-consumption optimization (residential,

RE-hybrid systems)

• Optimization performance of fossil generation

(replacement of spinning reserve, load firming)

Adequate

quality/reliability of

power supply

• Weak/strained generation/transmission infrastructure

• (Perceived) unreliable power generation

• Backup

• UPS

Source: Apricum analysis; 1) Renewable energy; 2) Behind-the-meter use cases, but incentivized by utilities to create value in-front-of-the-meter, i.e., avoiding additional

infrastructure investments

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B

C

D

Demand drivers – and potential applications for storage –

depend on the individual challenges in a specific region.

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Source: Apricum analysis; 1) Energy storage

• Examples of challenges:

• Aging infrastructure

• Time-of-use pricing, demand

charges

• Natural disasters

• Typical use cases for ES1:

• T&D deferral

• Peak shifting/shaving

• Microgrid islanding

• Examples of challenges:

• Decreasing FiT

• C&I demand charges

• High penetration of intermittent

renewables

• Typical use cases for ES1:

• RE self consumption opt.

• Peak shaving

• Frequency control

• Examples of challenges:

• Electrification of rural areas

• Insufficient infrastructure

• Expensive/inefficient diesel based

generation

• Typical use cases for ES1:

• T&D avoidance

• Anc. services in microgrids

• Opt. perf. fossil generation

Challenges in different global regions and resulting use cases (examples)

In the MENA region, there is a high potential for energy storage

as all principal demand drivers are present…

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• Masdar rural electrification project, Morocco

• Rated power/status: ~5 MW (17,610 batteries)/under construction

• Use case: Renewables self consumption optimization

• Demand driver: Increasing rural electrification

• NEPCO battery procurement, Jordan

• Rated power/status: 20 MW/announced

• Use case: Direct renewables integration

• Demand driver: Increasing share of intermittent RE

• Dukhan Oil Field, Qatar

• Rated power/status: 2 MW/contracted

• Use case: Direct renewables integration, backup

• Demand driver: (Perceived) unreliable power generation

• Afourer Pumped Storage Scheme, Morocco

• Rated power/status: 465 MW/operational

• Use case: Renewables time shift

• Demand driver: Strained grid infrastructure

Examples of MENA energy storage projects, use cases and drivers

A

B

C

D

…which has already led to an increasing number of energy

storage installations in different stages of implementation.

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Energy storage installations announced, contracted and operational, as of April 2017

Source: DoE, Apricum analysis

815 MW

161 MW

5 MW

30 MW

20 MW

2.25 MW

0.02 MW

0.1 MW

8 MW

(Electro)-chemical Thermal

Energy storage technologies

Mechanical

(Pumped hydro) Plus an undisclosed number of 1 MW storage pilots

announced by DEWA

Increasing cost competitiveness of energy storage will further

increase demand in the region.

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Price forecast for lithium-ion battery system prices1 for large-scale stationary storage applications [USD/kWh]

• Significant cost decreases expected due to:

• Technological improvements, in particular

growing energy densities

• Economies of scale due to rising battery

sales to multiple industries

• Declining costs not only for battery cells, but

also for packaging and other system

components

Source: Apricum BESS cost model Q1/2017; 1) On DC level

-51% 368

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Missing piece: Regulatory framework to create a level playing

field for energy storage in MENA (and elsewhere).

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USA:

Reward benefits

• PJM followed order 755 from the Federal Energy Regulatory

Commission (FERC)

• Performance payments for “MW-mileage”

International examples for regulatory activities supporting energy storage

India:

Set storage

targets

• Central Electricity Authority (CEA): Storage seen as

necessary to realize “solar dream”

• 10 GW of pumped hydro storage by 2022

UK:

Remove barriers

• Energy systems and

regulations were designed

for a pre-storage world

• Barriers for storage need to

be removed, no state

incentives needed

necessarily

• Individual approach for each

geography required

Energy storage will play an increasing role in MENA – be prepared!

• Call for Evidence by the Dept. of Business, Energy and

Industrial Strategy (BEIS)

• Aim to define clear framework for storage

Various energy storage technologies exist – but which is the

right one for the targeted use case?

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Overview storage technologies

Source: Apricum, ISEA, Avicenne; 1) Includes NaS, NaNiCl and Sodium-ion batteries; 2) e.g., Zinc-Air, liquid metal batteries, NiMH, NiCd

Energy storage technologies

Mechanical Electrical (Electro)-

chemical Thermal

Batteries

Power-to-X

Lithium-

based

Redox-

Flow

Sodium

batteries1

Latent heat

storage

Lead-acid

Thermochemical

storage

Sensible

heat storage

Others2

Double layer

capacitors

Superconducting

coils

Pumped hydro

Pressured air

Flywheel

Mechanical

springs

Energy storage value chain offers various opportunities to

participate in the market – but which are most attractive?

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Example: Battery energy storage system (BESS) value chain – non-residential

Cell mfg. Materials

Developer

Source: Apricum; 1) Energy Management System; 2) Storage Management System; 3) Battery Management System; 4) Power Conversion System; 5) Distributed Energy Resource Management

System

System

owner Module/

pack mfg.

BMS3 mfg.

Manufacturing

electrodes,

electrolyte,

binders…

Containerized

solution

System

management,

aggregation

Benefitting from

storage/selling

BESS as a

service

System

operator/

service

provider Storage

provider

Integrator

Financing,

site

selection…

DERMS5

provider PE/PCS4

provider

High-level controls (EMS1) provider

Low-level controls (SMS2) provider

Physically integrating

hardware and

software into a

working system

Construction

(“EPC”),

maintenance

Upstream Downstream

What can we do for you?

Meet me at the conference or contact:

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Florian Mayr

Partner

mayr@apricum-group.com

T +49 30 30 87 76 228

M +49 170 96 86 366