Insert title of paper to be presented at SA Energy Storage 2018 by - PowerPoint PPT Presentation

Insert title of paper to be presented at SA Energy Storage 2018 by Beth O’Connor Cilliers and Silindokuhle Nyoka (Eskom)

Falling renewable energy prices, driving the uptake of renewables – displacing traditional generation Renewable have no fuel costs and thus they will be the first supply option dispatched to meet demand, displacing traditional “base load” generation technologies. For the first time in January 2018, Germany’s load was supplied by only renewables. source: Lazard levelised cost of energy (Business insider) source: carbonbrief.org • • The cost of renewable energy (RE) is now falling Renewable energy, including wind, hydro and so fast that it should be a consistently cheaper solar supplied a record 12% of the world’s energy source of energy than traditional fossil fuels in needs last year. • the next coming years The solar sector attracted $ 160.8 billion in investment in 2017 alone. • This accounted for an 18% increase over 2016 according to the UNEP report.

Increased renewables impact utility profits as utilization of existing assets decreases • Customers are leaving the grid for embedded renewable energy technologies, the demand for conventional energy generation using fossil fuels decreases significantly. This forces the utilities to raise their tariffs to those customers who are still connected to their grid to be able to cover their fixed costs, hence causing a phenomenon known as the “utility death spiral” • Italian utility, ENEL , has branched into battery storage through its subsidiary, Demand Energy - a software provider, project developer and operator in battery storage optimization, 100% of which was acquired by Enel to enter into new markets Utilities globally have responded to the “utility death spiral” by diversifying their products and services into new markets, including battery storage

Projected learning rates for Lithium ion grid scale battery technology Older study (2015) 1200 does not show sharp decrease in 2016, 1000 Battery cost ($/kWh) forecast may be high 800 600 400 Latest 200 studies (2017) show a 0 steep 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 decrease in 2016 IFC (2017) BNEF (2017) GMT (2016) Energy storage association (2015) Average Given the ongoing developments in the battery storage technology and the latest forecasts, The average is most likely a conservative estimate and costs would probably fall below this

Overview of Battery Storage Applications source: Electricity Energy Storage Technology Options (EPRI Dec 2010) Relative positioning of various energy storage technologies with respect to discharge time, application and power rating

Battery Storage Applications & Opportunities for Utilities – Peaking Power • Battery storage assists in the role of balancing the electricity grid particularly the intermittency of renewables as an alternative to traditional peaking power such as diesel, gas and pumped storage. • Grid scale battery storage can quickly com online assisting with time shifting, spinning reserve, frequency regulation and load following Battery storage may compete with gas as a peaker in the future, but is unlikely to replace gas completely. source: Greentech Media

Battery Storage Applications & Opportunities for Utilities Transmission and Distribution BESS can increase the existing transmission and distribution equipment and eliminate the need for expensive T & D additions Intermittency smoothing Source: AEP Benefits of BESS • Deferral of the construction of new distribution lines, transformers, capacitors banks, substations • Transmission line stability preventing possible system failure • Increasing power quality of the service which would result in protection of customer equipment

Case Study: Tesla’s Powerpack in Australia Musk promised on Twitter to build the energy storage system and get it working within 100 days of a contract being signed or Tesla would provide it free. • Tesla’s Elon Musk delivered on his promise to build the world's largest lithium -ion battery farm in 100 days, meaning he will avoid giving away the $50 million storage for free. • It is the world’s biggest lithium ion battery to date. • Tesla’s “big battery” has a power and energy capacity of 100MW and 129MWh respectively, is located right next to the 309 MW Hornside wind farm . • The battery was provided and built by Tesla, however following their success in a competitive auction set by the South Australian government the battery is owned and operated by Neoen. • Of the 100 MW/129MWh, around 70 MW of capacity contracted to the South Australian government to provide grid stability and system security. • The other 30 MW of capacity will have three hours storage time. This portion will be used by Neoen to load shift energy from Hornside windfarm. Source: reneweconomy 8 Source: https://greycellsenergy.com/examples/the-tesla-big-battery-south-australia/

Battery Storage Applications & Opportunities for Utilities – Electric Vehicles • The EV market holds a lot of potential for utilities to develop new products and services related to the networks and charging infrastructure required to support electric vehicles. • This infrastructure is capital intensive however the advantage for utilities is it provides an avenue for increased China is expected to lead the transition, with EV sales accounting for almost 50% of the global market from electricity sales which have fallen in now to 2025 and 39% in 2030, driven by policy many developed markets globally. changes Utilities that are already pursuing this market include German utility RWE’s subsidiary, Innogy, and Itaipu a subsidiary of Brazil’s Electrobras which has been involved in EV research since 2006 but is yet to move to commercialisation

Conclusion: Batteries need to be part of the solution if utilities are to survive in the long run Utilities should consider battery storage applications, looking for ways to save costs, expand their products and services and enter new markets. • Depending on the geographies utilities play in, financial status and other strengths utilities should focus on the most appropriate battery storage applications for their environment. • In most cases utilities have chosen to pursue opportunities in battery storage technologies through their subsidiaries . Very often these subsidiaries are joint ventures with or acquisitions of smaller non-energy utility organisations with specific expertise or intellectual property. • Utilities that have already invested in opportunities have had to increase their risk appetite but more conservative utilities like Itaipu Binacional are taking a wait-and-see approach. • The lessons learned from these undertakings should be studied in order to determine the most effective way for utilities to enter into the battery storage space. • Players who are too conservative and wait too long watching from the side-lines may find themselves squeezed out of an increasingly competitive market .