Building the Business Case for Energy Storage

Seconds Minutes Hours Days Weeks SIESTORAGE utilization for very different purposes Application Segmentation (use-cases) Reserve capacity Reserves Response to emergencies Firming Consumer / Prosumer Decentralized generation Variable generation (PV, Wind) Conventional power plants Time shifting Residential/ commercial self supply Industrial peak shaving On-Grid + grid upgrade deferral Remote areas/ offgrid Avoid curtailment Rules for grid integration Energy arbitrage (time shifting) Increase flexibility/ load optimization System stability Distribution grid Ensure stability Load optimization Transmission grid Ensure power system stability 1 kw 100 kw 1 MW 10 MW 20 MW Power

The solution: The energy storage system SIESTORAGE Power supply The energy storage system on the basis of cutting-edge power electronic and storage technology contributes to : Establishing a balance between production and consumption of energy Meeting the challenge of managing power grids Power demand Optimizing the utilization of renewable energy. Enabling micro-grids Energy storage technology Enebling new business models

Case Study: Back-up DG Replacement (Pakistan) Even though oil prices have been falling, the situation is considered temporary and they are expected to continue to rise. In contrast for Battery Energy Storage Systems (BESS) with proven technology, costs are falling. When considering all CapEx and OpEx, BESS is already a viable alternative to DG and GG BESS has almost zero impact in terms of noise and air pollution, BESS is much faster to respond (less than 1s) and can be considered to have the same operational lifecycle as traditional utility assets. Pakistan has chronic power deficit and grid-connected customers experience numerous outages in one day, leaving them no choice but to run costly, polluting DGs. The supply chain for diesel and natural gas is becoming more and more unreliable

Typical Load Profile and Utility Supply Customer has a contract demand of 1MW The red line shows a typical load profile. Due to high demand in the system the utility performs load shedding resulting in 3 power outages per day. During this time the customer runs DGs Resulting in costs of PKR100m/year (when fuel is available)

Investing in Energy Storage: The Business Conditions (Approx.) CapEx and OpEx for Diesel Generation CapEx Cost (PKR) 1MW Diesel generator: 25,000,000.00 OpEx Cost Cost of Diesel per Year: 65,000,000.00 Cost of AMC per Year: 450,000.00 Cost of Diesel Transport per Year: 10,000,000.00 Total OpEx: 100,450,000.00 (Approx.) CapEx and OpEx for Battery Energy Storage System CapEx Cost (PKR) 2 MWh Energy Storage System 175,000,000.00 Cost of 5 Full Battery Replacements* 105,000,000.00 Total CapEx: 280,000,000.00 OpEx Cost Cost of Electricity per Year 40,000,000.00 Cost of O&M 115,000.00 Cost Assumptions 2MWh BESS that cycles 2MWh 3 times per day (Assuming 7days per week) Replacing a 1MVA DG running 6hrs per day 20 year asset life. Due to the batteries having a 4000 cycle limit they will need to be changed 5 times (however costs will continue to fall). The Battery Energy Storage System will be >90% efficient and will require 6.6MWh of electricity at PKR17 per day. The DG will require approximately 175k.litres of fuel per day @ PKR86.23 per litre. AMC for DG (required to ensure performance for 20 years) 15% for diesel transport costs 10% year in year price increase for the cost of diesel and electricity. The case study does not consider the cost of finance, transport, import duty or tax incentives. Total OpEx: 40,115,000.00

Investing in Energy Storage: The Business Case Return on Investment (ROI) 4 years 40% over the lifecycle of the asset. Without any incentives Possible lease option with SFS Turkey to transfer CapEx to OpEx Local Emissions NO X, SO X, CO, CO 2, PM Min. 20k metric tonnes of avoided emissions in the local environment. Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 NO x 57 113 170 227 283 340 397 453 510 567 623 680 737 793 850 906 963 1020 1076 1133 CO 8422 16844 25266 33687 42109 50531 58953 67375 75797 84219 92641 101062 109484 117906 126328 134750 143172 151594 160015 168437 SO x 12388 24776 37163 49551 61939 74327 86715 99102 111490 123878 136266 148654 161041 173429 185817 198205 210593 222980 235368 247756 CO 2 1776 3552 5329 7105 8881 10657 12434 14210 15986 17762 19539 21315 23091 24867 26644 28420 30196 31972 33749 35525 PM 1 2 3 4 5 6 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Total 22644 45287 67931 90575 113218 135862 158505 181149 203793 226436 249080 271724 294367 317011 339655 362298 384942 407585 430229 452873

Energy Storage: Mode of Operation Charging Off-peak hour Discharging Peak hour During the time that the utility supply is available and load is below contract demand then storage system charges the batteries. During the time when the utility is experiencing demand challenges and implements load shedding, the stored energy in the batteries is used to support the load.

Energy Storage: Battery Performance The green shaded area shows the SoC only using 6MWh in energy (the same as the DG) During low load times it is possible to fully charge the batteries. However due to high load and small gaps between outages it is not possible to support the load during the 3 rd outage. The orange shaded area shows the additional energy (0.68MWh) that is required to ensure full SoC (considered in the calculation)

Case Study RE Arbitrage: The Business Case Background Philippines has a mature and thriving power market with obligations on utilities to utilise it. Now starting to face cronic peaktime shortages. Govt. Encouraging investment in RE Cost Assumptions 5MWh BESS that cycles 5MW for 1hr, once per day (Assuming 7days per week) 20 year asset life. Volume Price Assuming magnitude of 10 between cost to generate and selling price Due to the batteries having a 4000 cycle limit they will need to be changed once(however costs will continue to fall). Renewable energy availability Load 1 2 The Battery Energy Storage System will be >90% efficient. 10% year in year price increase for electricity. Time The case study does not consider the cost of finance, transport, import duty or tax incentives.

Case Study RE Arbitrage: The Business Case Return on Investment (ROI) Normal consideration: >40% saving over lifecycle of the asset. However not cash positive until 7 years (maybe too long for some investors) Option 2: with accelerated depreciation (available to some RE assets) However still 5 years until project is cash positive. Option 3: with an OpEx lease model Even though not cash positive until 5 years no initial huge outlay of capital. Siemens has just introduced StoRent

StoREnt: the risk free solution to investigating storage applications Challenges Increasingly viable storage applications Ancillary services Grid stability Peak shaving & Time shifting Perceived investment risk Complex, individual business cases Engineering expertise to design the electric power system and to connect it to the grid Changing regulatory framework StoREnt Rent-a-Storage System Application evaluation Gain in experience No capital tied-up Increasing cost efficiency and operational performance of storages

Totally Integrated Power: Everything for a future-proof power supply Automation Process/ Industrial automation. Operation & Monitoring Hydro curves Forecast Load management Maintenance Status reporting/ failure management Protocols Power Quality Cost center Building automation PROFINET PROFIBUS Industrial Ethernet Modbus Electrification Renewables 110 kv Storage technologies Medium-voltage switchgear and protection technology Transformer Low-voltage switchboard with protection and measuring technology Low-voltage distribution Products, systems and solutions Consulting, planning Engineering Ordering, delivery Installation, commissioning Operation Service, modernization