Thomas

Edison on Storage circa 1920

When we learn how to store electricity, we will cease being apes ourselves; unAl then we are tailless orangutans. You see, we should uAlize natural forces and thus get all of our power. Sunshine is a form of energy, and the winds and the Ades are manifestaAons of energy. Do we use them? Oh, no! We burn up wood and coal, as renters burn up the front fence for fuel. We live like squaLers, not as if we owned the property. I hope we don't have to wait unAl oil and coal run out before we tackle that. Thomas Edison in conversa0on with Henry Ford and Harvey Firestone (c1920)
2013 Strategen Consul3ng, LLC

Thomas Edison

About Strategen
We combine strategic thinking with deep industry exper0se to create protable clean energy businesses
Who we serve:
CorporaAons Exploring Clean Energy OpportuniAes Clean Tech Manufacturers & Service Providers Private Equity / VC Firms InvesAng in Clean Tech Next GeneraAon Real Estate Developers and Campuses The Energy Storage Community (CESA)

A sampling of our clients:

U.S. Department of Energy Conden3al

CESA Strength Through Diversity & CollaboraAon

Steering CommiMee

General Members

2013 Strategen Consul3ng, LLC

Grid-Connected Energy Storage is a Dierent Market

Key Dierences Between Energy Storage and Tradi0onal Markets
Applica0on Diversity Most applica0ons have mul0ple benet streams Regulatory/Policy/ Incen0ve Complexity Geographic Diversity Immature Market/Growing Pains There are dozens of applicaAons, each with its own value proposiAon, demand curves, and business structure. Each applicaAon can have 2-4 ownership models. The rules governing the benet streams are dierent for each of the dierent users (uAlity types, states, ISOs), and are governed by vastly dierent groups. Many of the benet streams are dependent upon regulaAon, policy, or incenAves that are sAll be determined. New incenAves, regulaAons, or policies could completely change the landscape. Benets, regulaAons, and payment structures vary widely by state and region. Many of the companies are sAll unproven. Reliability and costs of new technologies is ohen unknown, even to providers themselves. Markets are immature, requires turnkey soluAon systems integraAon skills, and regulatory intervenAon

AB2514 implementa0on FITC implementa0on Storage system reliability Storage system cost FERC Rulemakings
4

Major Variables
U.S. ConsAtuAon State ConsAtuAons Congress

FERC

POUs

PUCs

RTOs/ISOs

NERC

WECC

2013 Strategen Consul3ng, LLC

Tremendous PotenAal: U.S. Market, by Benet Stream

Electric Service Power Quality Electric Supply Reserve Capacity Renewables Energy Time-shih Electric Service Reliability

The U.S. market potenAal based on uAlity spending is promising at $238B over 10 years, but certain applicaAons dominate
Market Reference Size = $10,000 M Electric Bill Cost Management $98.4B

Ease of Deployment

Wind GeneraAon Grid Frequency RegulaAon IntegraAon, Long DuraAon T&D Upgrade Deferral 50th percenAle T&D Upgrade Deferral Renewables Capacity 90th percenAle Firming Voltage Load Following Support Wind GeneraAon Grid Transmission Support Electric Energy Time-shih IntegraAon, Short DuraAon Transmission Electric Supply Capacity CongesAon Relief
$0 $500 $1000 $1500 $2000

SubstaAon On-site Power

$2500

$3000

ApplicaAon LifeAme Value ($/kW for 10yr Project Life)

Source: SANDIA Report SAND2010-0815, Energy Storage for the Electricity Grid: Benets and Market Poten3al Assessment Guide, Jim Eyer & Garth Corey (February 2010); ease to deployment developed by Strategen

2013 Strategen Consul3ng, LLC

The Grid Connected Energy Storage Market is Large

Estimated Global Installed Capacity of Energy Storage (MW)
Non-Pumped Hydro or UPS: 2,677 MW Global Total (Incl. UPS): 202,506 MW

Compressed Air, 440 UPS*, 64,820 Solar Thermal, 601 Pumped Hydro, 135,009 Flywheel, 42 BaMeries***, 594

Thermal**, 1,000

* UPS is primarily Lead Acid. Global UPS size extrapolated from 2011 Global Data UPS Market Revenue report (Assume $250/kWh avg. cost, 2 year replacement cycle) ** Thermal energy storage esAmates include storage for cooling only. *** BaLeries include Flow, Lithium Ion, Sodium Sulfur, Nickel Cadmium, Lead Acid (not Incl. UPS & standby power), and Ultra BaLeries Source: Strategen ConsulAng, LLC research; thermal storage installed and announced capacity esAmated by Ice Energy and Calmac. EsAmates are current as of August 2012

2013 Strategen Consul3ng, LLC

Key Forces Driving the AdopAon of Energy Storage

Variable Genera0on from Renewables
Residen0al Demand (kW)

Variable Energy Consump0on

10.0 8.0 6.0 4.0 2.0 0.0 0:00 2:00 4:00 6:00 8:00 10:00 12:00 14:00 16:00 18:00 20:00 22:00
ResidenAal Baseline Load EV Charging (Level 2)

$!!"# ,!"# +!"# *!"# )!"# (!"# '!"# &!"# %!"# $!"# !"# -./01#

Peak Load Growth & T&D constraint

&"#$% &&#$% )#$% (#$% '#$% "#$% &#$% !&#$%
&))#% &))&% &))*% &))"%

$# %# &# '# (# )# *# +# ,# $!# $$# $%# $&# $'# $(# $)# $*# $+# $,# %!# %$# %%# %&# %'#

Rising Energy Costs

./01/2345/%67425/%82%9/:8;/2<4=%>=/1308183?%.081/:%@821/%&))#%
AB% E9% GB% DI% JF% JB% IC% BF% JC% F>% GM% J>% 6E% DH% 6H% C>% PL% 9B% EK% .H% @F% C6% RI% CJ% BL% CD% F6% GH% JI% HK% 6I% HL% GD% @6% KM% JH% CA% IN% CO% BC% CM% J@% QH% EA% K@% CF% BH% JE% HS% LH%

&))+%

&))'%

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2013 Strategen Consul3ng, LLC

*#&*%

!"#$%

Biggest Driver: Regulatory IntervenAon!

Policy MaMers! Local interven0on is needed for storage par0cipa0on
California Energy Storage Alliance (CESA) Founded Texas Energy Storage Alliance (TESA) Founded Energy Storage Association (ESA) Advocacy Council Created India Energy Storage Alliance (IESA) Founded Ontario Energy Storage Alliance (OESA) Founded

2009

2010
China Energy Storage Alliance (CNESA) Founded

2011
European Association for the Storage of Energy (EASE) Founded

2012
German Energy Storage Association Founded

2013

2013 Strategen Consul3ng, LLC

However, Markets are Global

Global fragmentation is a challenge for energy storage stakeholders (current Storage Alliance members)
Most energy storage companies have limited budget and Ame, forcing them to prioriAze markets, and thus storage alliance parAcipaAon No global markets have emerged so far but we are close! Markets driven by legislaAve change take Ame to develop, forcing many energy storage companies to lose money and downsize prior to market acceleraAon Just at the Ame we need to double down and invest, available resources from energy storage incumbents are becoming increasingly scarce. Fundraising competition among existing ESAs becomes a red ocean each chasing scarcer resources
Source:

2013 Strategen Consul3ng, LLC

An AlternaAve: Blue Ocean Strategy

Success at this critical time requires focus on accelerating market expansion Achieve faster market results for the storage industry -- work smart and leverage combined resources; 1+1=3 Develop and share best pracAces energy storage market development tool kit Improve advocacy/operaAonal eciency Reduce transacAon/cost/hassle for common member companies Expand funding pool Bring new stakeholders to the market development scene such as NGOs, foundaAons, large global corporaAons interested in adjacent markets AddiAonal funding can expand toolkit creaAng virtuous cycle Successful implementaAon of blue ocean strategy will result in a larger market . Faster!

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2013 Strategen Consul3ng, LLC

Working together, we are stronger

The rationale of local storage alliances applies globally
No single storage alliance can aord to spearhead global advocacy eorts Global advocacy eorts will always be seen as more credible if sponsored by mulAple alliances vs. by a single alliance MulA-party input results in the best market structures Certain acAviAes will, by deniAon, be much more successful if led and managed at the global level (eg. Tool Kit, Development of specic energy storage deniAons, standards and protocols) CESAs focus is in California, but we are acutely aware that our members companies focus is global
Source:

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2013 Strategen Consul3ng, LLC

GESA Mission and Goals

Make energy storage a mainstream resource which accelerates the adoption of renewable energy and promotes a more efficient, reliable, affordable and secure global electric power system

Support and replicate local and regional energy storage alliances Advance educaAon, knowledge and proven frameworks about the benets of energy storage and how to incorporate it into the electric power system in a cost eecAve way Recruit new global stakeholders to support and promote GESAs mission Foster collaboraAon among key stakeholders including policy makers, uAliAes, renewable energy community, nancial insAtuAons and environmental organizaAons Establish standards and protocols to advance energy storage interoperability worldwide

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2013 Strategen Consul3ng, LLC

GESA Principles
Transformation to a clean energy economy requires: diversity, competition and collaboration
Encourage Market Diversity Support all forms of energy storage
Chemical Mechanical Thermal GravitaAonal

Support all applicaAons of energy storage throughout the electric power system Support all ownership models
UAlity owned Third party owned Customer owned

Explicitly help advance renewable energy, but collaboraAvely integrate with all exisAng resources Culture of collaboraAon proacAvely seek win win soluAons Culture of commitment to results were in it for the long haul!

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CollaboraAon is the key to success

Not only among ESAs, but also more broadly within and across industries and stakeholders

Source:

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2013 Strategen Consul3ng, LLC

QuesAons?

Janice Lin

Founder and Managing Partner 2150 Allston Way, Suite 210 Berkeley, CA 94704 www.strategen.com

O 510 665 7811 M 415 595 8301 F 888 453 0018 jlin@strategen.com

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2013 Strategen Consul3ng, LLC