AEGIS PHC Vancouver 2017 Battery Storage Technology and Exposures Contains Forward Looking Statements 1 The AES Corporation - Presenters Andrew Baillie, Program Director, Global Insurance Andrew oversees the arrangement of various insurance programs for AES Corporation including property, casualty and financial lines as well and overseeing the underwriting and financial results of the Captive. AES Corporation is a global power producer and distributor with assets in 17 countries, which are insured by the AES captive. Justin Voss, Director Risk Engineering, Global Insurance Justin s primary responsibility is to develop, implement and manage a self-directed Global Risk Engineering Program for the purpose of identification of risks and providing mitigation strategies for loss potentials which have direct impact on safety, reliability, and regulatory offices. Justin is active in several industry committees and standards making bodies. Michelle Wilkerson, Program Director, Global Insurance Michelle provides strategic direction for the design, development, implementation and maintenance of global insurance risk management guidelines, policies and procedures in support of The AES Corporation, its strategic business units and businesses in alignment with corporate goals. Michelle has oversight of AES financial and casualty lines including cyber and directors and officers insurance, energy storage, distributed energy and the AES drone program. Contains Forward Looking Statements 2 1
AES Speakers Andrew Baillie Michelle Wilkerson Justin Voss Agenda AES Experience with Energy Storage Risk Engineering Considerations Future Vision and Exposures to Consider Contains Forward Looking Statements 3 About the AES Corporation Our Mission: Improving lives by providing safe, reliable and sustainable energy solutions in every market we serve. 5 4 17 MARKET-FACING STRATEGIC BUSINESS UNITS CONTINENTS COUNTRIES AES Serves 9M CUSTOMERS 7 UTILITY COMPANIES $36B TOTAL ASSETS OWNED & MANAGED $14B TOTAL 2016 REVENUES 36,000 MW GENERATION CAPACITY 19,000 GLOBAL WORKFORCE Contains Forward Looking Statements 4 2
The AES Corporation - a decade of real world experience with Energy Storage 436 MW In operation, construction or late stage development Los Andes Angamos Kilroot Netherlands Masinloc Philippines SDG&E APS 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Carina Barbados Laurel Mountain Tait Warrior Run Harding Street Alamitos 2020 Contains Forward Looking Statements 5 Grid scale energy storage delivers a clean, unbreakable grid Latest lithium-ion battery technology used to store and release energy into the electric grid GRID EFFICIENCY CLEAN ENERGY RENEWABLE INTEGRATION TWICE THE RESOURCE INCREASED RELIABILITY Contains Forward Looking Statements 6 3
Proven solution for multiple applications Enhancing grid efficiency and reliability SEGMENT OFFERED SOLUTIONS LMS100 Turbine Credit: GE Generation Alternatives Capacity Release Frequency Regulation/Ancillary Services Flexible Peaking Power Renewables Integration 20 MWi Angamos, Chile Capacity Release Investment Deferral, Replacement 20 MWi IPL Array, USA T&D Alternatives Demand-charge Management & Reliability 10 MWi India Commercial & Industrial Contains Forward Looking Statements 7 Generation Alternative Energy storage for critical spinning reserves, replacing oil & standby Primary & secondary reserves Contingency management Avoided load shedding Increased energy & reduced costs Inertia-like performance 12 MW Energy Storage Array Los Andes, Atacama, Chile Contains Forward Looking Statements 8 4
Generation Alternative Wind with added revenue from frequency regulation Frequency regulation Ramp control Saving $20M / year Less regulation needed Saves 62,000t of CO 2, 329t of SO 2 & 97t of NO x / year 32 MW Energy Storage Array Laurel Mountain, West Virginia, USA Contains Forward Looking Statements 9 Generation Alternative World s largest battery providing peak power & capacity Capacity, local reliability Ramping / flexibility Ancillary services Rapid deployment Peak power mitigation Competitive & cost effective Meets flexibility (duck curve) 30 MW Advancion Array Escondido, San Diego, California Contains Forward Looking Statements 10 5
Distribution Alternative Embedding storage in the distribution network for reliability 2 MW Advancion Array Buckeye, Arizona Peak demand management Renewable integration Support rooftop solar growth Manage local feeder reliability Alternative to substation upgrades Contains Forward Looking Statements 11 Transmission Alternative 20 MW Advancion Array Indianapolis, Indiana Frequency control to meet new regulations for transmission Frequency response Capacity Voltage control Support rooftop solar growth Manage local feeder reliability Alternative to substation upgrades Contains Forward Looking Statements 12 6
Generation Alternative World s largest contracted energy storage project for local capacity in California Capacity, local reliability Peak power/off peak mitigation Ancillary services Competitive bid vs thermal peaker, cost effective Replaces environmental retired units Meets flexibility (duck curve) 100 MW Alamitos Energy Center Long Beach, California Contains Forward Looking Statements 13 Risk Engineering Considerations Safe, reliable operations with largest installed grid battery fleet A SAFE RELIABLE FLEET Safely operated for nearly a decade Dependable top decile availability Quality, on-time installations Components recycled at end of life Contains Forward Looking Statements 14 7
Risk Engineering Standards and Testing Consensus Standards Internal Document NFPA 1 National Fire Code Chapter 52 NFPA 855 Standard for the Installation of Stationary Energy Storage Systems FM Global FMDS05-33 Electrical Energy Storage Systems Burn Testing No large scale testing to date Some testing done on smaller modules FM Global Warehouse Storage Contains Forward Looking Statements 15 Risk Engineering Protections and Learning from History Protection (Building/Container) Water Gaseous Clean Agent None What are you willing to lose? BATTERY CELLS BATTERY PACKS Separation (Building/Container) Distance Barriers History & Future Hawaii Wind Farm (2012) S&C Electric (2016) Future.. BATTERY MODULES ADVANCION NODES Contains Forward Looking Statements 16 8
Advancion patented control system unlocks the full value of the Nodal Architecture DISTRIBUTED CONTROL SYSTEM Each node is controlled independently, enabling simultaneous operations Increased plant performance Improved battery life Reduced auxiliary consumption Contains Forward Looking Statements 17 Looking to the future The ability to store energy anywhere on the grid changes everything. When, where, and how people consume electricity is changing. The rise of renewables and distributed generation are creating new challenges and opportunities for the electric power system. Transform the grid with energy storage. Energy storage decouples supply and demand and introduces an unprecedented level of flexibility and control. Contains Forward Looking Statements 18 9
Renewable Integration Solving peak energy demand through solar + storage in Hawaii Contains Forward Looking Statements 19 Potentially Insurable Exposures and Coverages Professional Liability / Errors & Omissions Product Liability First Party Property Coverage for owned assets Product Warranty Extensions [5-10 years] Performance Guarantees [10-20 years] Contains Forward Looking Statements 20 10
Battery Storage An Energy Disruptive Technology Disruptive Technology means it will be Disruptive! Increased use of smart meters and smart grids Personal ES installations How does ES fit into Utility or Commercial models for payment Increased electric car fleet use Contains Forward Looking Statements 21 Thank You Contains Forward Looking Statements 22 11