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Utility-Scale (Grid) Energy Storage Development –Increased Demand Results in Industry Innovation
Sara Bradford, Principal Consultant
Energy & Power Systems Group
June 18, 2009
2
Poll Question
Which grid energy storage technology offers the strongest value proposition?
• Compressed air energy storage (CAES)
• Thermal energy storage (TES – molten salt, sand, sandstone, etc.)
• Pumped hydropower
• Flow and electrochemical batteries
• Flywheels
• Fuel cells
*Turn off your pop-up blocker, so you can respond to the next polling
question
3
Focus Points
� Impact of current economic situation
� State of the industry for large format utility-scale energy storage
� Growth trends
� Major market shifts
� Market challenges and drivers
� Revenue projections
� Key industry stakeholders
� Summary of conclusions
Agenda
4
Impact of Current Economic Situation
�The new U.S. administration’s push towards alternative energy development has supported industry growth in grid energy storage solutions
�However, constricted credit/finance and available funding is expected to lower capital investments and R&D spending in this industry for the next two to three years
�Long-term potential and environment-friendly initiatives are key push factors that enable this market continue commercialization activities
�Today’s strict CO2 and other air contaminant regulations have encouraged utilities to identify alternative power generating technologies such as wind and solar
�With no commercially available energy storage technology available, utilities are forced to rely on gas and diesel-powered generators to supply peak power demand
�With increased wind/solar power generation in addition to smart grid modernization movement, utility-scale energy storage technologies market will continue to grow even in this harsh economic environment
Minimal Impact
5
Current State of the Industry
�To reach the U.S. renewable energy target of 20% of power generated from renewable sources by 2020, grid energy storage is essential
�U.S. government is laser focused on this area and understand the need to support technology development in this area
�Without utility-scale energy storage, the U.S. cannot achieve the renewable energy targets
�Billions of stimulus dollars and other programs through the national laboratories are directed towards utility-scale energy storage development
�Bottom-line – utility-scale energy storage is the next highest growth potential battery market
�Utilities currently conducting test projects
�Venture capitalist investments active in this area
�Wind and solar projects require energy storage to expand
�Smart grid, energy storage and grid infrastructure are intertwined – all three needed to modernize the U.S. grid
Action is Required!
6
Grid Energy Storage Definitions
�Known as utility-scale or grid energy storage technologies
�Used to manage the flow of electricity in an electric power grid
�For peak shaving, energy storage solutions are used to reduce the cost of peak electricity demand without the need for excess power generation capacity
Purpose
�Energy storage technologies are in various stages of development – from pre-commercial to commercial designs
�Grid stabilization alternatives to conventional lead acid batteries �Flywheels
�Fuel Cells
�Ultracapacitors
�Electrochemical batteries
�Peak shaving energy storage solutions�Compressed air energy storages (CAES)
�Superconducting magnetic energy storage (SMES)
�Thermal energy storage (TES) including storage mediums such as water, ice, molten salt, sand, sandstone, or chalk layers
�Flow batteries
�Electrochemical batteries
�Flywheels
Technologies
7
Growth Trends
8
Market Shifts
9
Technology Segmentation – Advantages and Disadvantages
10
Hot Progress Areas – Funding Opportunity to be Released Soon!
� U.S. Governmental Support – “President Obama has made a ‘smart power grid’a key element of his plan to lower energy costs for consumers, achieve energy independence and reduce greenhouse gas emissions”� The Obama Administration and Department of Energy have identified grid energy
storage and smart grid technologies as areas that require immediate funding support
� This progress is a result of key benefits this technology implementation will bring to the nation’s power grid
� Funding Opportunity Announcement (FOA) – Smart Grid Investment Grant� Proposes funding for one or two energy storage demonstration projects for grid frequency
regulation
� Proposed total funding to be made available for the project(s) is a maximum of $200 million, on a 50% applicant cost-share basis
� The demo projects will help to establish costs and benefits, verify technical performance, and validate system reliability and durability. Goal is to establish a technology that can be readily adapted and replicated across the U.S.
� Energy storage solutions eligible for this funding include advanced battery systems (including flow batteries), ultracapacitors, flywheels, and compressed air energy systems
� Application areas include wind and photovoltaic (PV) integration with the grid, upgrade deferral of transmission and distribution assets, congestion relief, and system regulation
� The formal FOA was expected to be released on or about June 17, 2009….
11
Poll Question
What other form of support (financial, developmental) is required to advance grid energy storage?
• Increased subsidies
• Tax incentives
• Mandates
• Increased financial support
*Turn off your pop-up blocker, so you can respond to the next polling
question
12
Major Challenges
TECHNOLOGY: This market has been slow to develop as a result of technology limitations and high capital costs
CONSERVATIVE: Utilities are risk adverse, often require at least a 15 year track record for new technologies
RISK: Rapid deployment of grid energy storage is challenged by concerns over technology risk and financial complexity
REGULATION: Utility industry highly regulated although minimal regulations exist for grid energy storage
COMPLEX: Battery alternatives for this application require a complex arrayof battery modules, electronics, software, and thermal management systems
13
Major Drivers
� INTEGRATION: Utility-scale energy storage solutions have reached technology development success level and are now being integrated for grid-stabilization applications
� DEMAND: Growing demand for electricity coupled with the lack of available non-fossil fuel options drive energy storage development
� GREEN: Increasing resistance to new fossil fuel and nuclear power plants results in more focus on bulk energy storage
� RENEWABLE: Push for alternative power generation plants such as wind and solar create higher demand for bulk energy storage solutions
� INTEGRATED STORAGE: Innovation accelerating bulk energy storage focus such as next generation concentrating solar power plants with integrated storage (molten salt system)
Drivers
14
Revenue Projection – Grid Energy Storage Market (North America), 2005-2020
0.0
1,000.0
2,000.0
3,000.0
4,000.0
5,000.0
6,000.0
7,000.0
2005 2008 2011 2014 2017 2020
Revenues ($ Million)
Note: All figures are rounded. Base Year 2008. Source: Frost & Sullivan
25.8% Compound
Annual Growth Rate
(2008-2020)
15
Market Growth by Technology
7%
27%
5%
6%
36%
7%
12%
21%
8%
3%37%
9%
13%9% CAES
Pumped Hydro
TES
SMES
Battery(Electrochemical/Flow)Flywheel
Fuel Cell
20102020
Source: Frost & Sullivan
16
Key Industry Stakeholders
CAES
Flywheel
Flow Batteries
Fuel Cells
Electrochemical
Batteries
TES
SMES
Pumped
Hydro
17
Summary of Conclusions
Each energy storage technology plays a different role when it comes to managing the power grid. Key functions include:
� Load leveling – improving power quality by minimizing voltage fluctuations
� Spinning/non-spinning reserve applications – limited backup
� Regulation service/ peak shaving – peak demand reductions
For example:
CAES better suited for load leveling
Flywheels better suited for regulation/peak shaving
18
Bottom Line
Bulk Energy Storage Power Generation Grid Modernization+ =
19
Next Steps
� Request a proposal for a Growth Partnership Service to support you and your team to accelerate the growth of your company. ([email protected])1-877-GoFrost (1-877-463-7678)
� Join us at our annual Growth, Innovation, and Leadership 2009: A Frost & Sullivan Global Congress on Corporate Growth, September 13-16 2009, Hyatt Scottsdale Resort & Spa at Gainey Ranch, Scottsdale, AZ(www.gil-global.com)
� Register for the next Chairman’s Series on Growth:
The CEO's Growth Team™: Research & Development Driving Growth and
Innovation (July 9th) (http://www.frost.com/growth)
� Register for Frost & Sullivan’s Growth Opportunity Newsletter and keepabreast of innovative growth opportunities(www.frost.com/news)
20
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21
For Additional Information
Johanna Haynes
Corporate Communications
Energy & Power Systems
(210) 247-3870
Diana Bragg
Sales Manager
Energy & Power Systems
(210) 247-3879
Sara Bradford
Principal Consultant
Energy & Power Systems
(650) 475-4550