Energy Storage Landscape. by Bertie Strydom, Industrial Development Corporation of South Africa

Energy Storage Landscape by Bertie Strydom, Industrial Development Corporation of South Africa

CONTENT Background Energy storage use cases Global market and trends Opportunities Technology landscape Economics for energy storage Financial considerations Regulatory perspective Way forward

BACKGROUND

BACKGROUND Positioning of Energy Storage SOURCE : IRENA ROADMAP REPORT

ENERGY STORAGE USE CASES Power-to-Power: A process of converting electrical energy from a power network into a form that can be stored for converting back to electrical energy when needed with as low as possible energy losses due to inefficiencies. Power-to-Heat: A process where electricity is used to generate heat for consumption at a later time Power-to-Gas: A process where electricity is used to produce a gas such as hydrogen. The hydrogen can then be used as a fuel or to produce electricity at a later stage.

POWER TO POWER STATIONARY USE CASES

POWER TO POWER STATIONARY USE CASES Mobility

POWER TO HEAT USE CASES Comfort Heat Industrial Heat Space heating Process heat (water) Water heating Process heat (non-water, smelters) Still to be analyzed

POWER TO GAS USE CASES Fuels Power-to-Gas (CH4) Chemical Feed stocks H2 as chemical feedstock Power-to- Liquids (CH3OH, -CH-) CO2 as feedstock H2 as fuel Still to be analyzed

ENERGY STORAGE MARKET Energy Storage is globally considered the new wave in the energy sector. Various sources predict different growth figures for storage Common Energy storage will growth and it is ALREADY A REALITY. Energy storage has arrived!! According to Bloomberg 45 GW/81 GWh of distributed or advanced stationary energy storage will be installed by 2024 (excluding pumped hydro and electric vehicles). According to IRENA, non-pumped hydro electricity storage will grow from an estimated 162 GWh in 2017 to between 5 821 and 8 426 GWh in 2030. The top five markets are Japan, India, the United States, China, and Europe. They represent 71% of the global total in 2024 for storage installed. Between 2016 and 2024, some $44bn is expected to be invested in storage. Current still dominated by pumped-storage

CURRENT GLOBAL INSTALLATION - ELECTRO- CHEMICAL BASE

CUMULATIVE INSTALLED STATIONARY ENERGY STORAGE BY MAJOR REGION

CUMULATIVE STATIONARY MARKET DEPLOYMENT IN KEY AREAS (GW)

CUMULATIVE STATIONARY MARKET DEPLOYMENT IN KEY AREAS (GWh)

ANNUAL STATIONARY DEMAND COMPARED TO OTHER APPLICATIONS (GWh)

FORECAST : STATIONARY POWER TO POWER USE CASES (GWh)

OPPORTUNITIES FOR SOUTH AFRICA Energy Storage could unlock opportunities in: Mining and Beneficiation Research and Development Commercial exploitation Local Industry Development Developmental Impact Global market player aspirations

STORAGE APPLICATIONS VERSUS TECHNOLOGY Important Differentiation Power versus Energy applications

MAIN ELEMENTS OF ESS Boundary of Energy Storage System Grid Monitoring and Control Monitoring & Control DATA Required Power & ESS State ESS Management System Battery Management System Power transfer & converter state Monitoring & Control Monitoring & Control Balance of Plant Systems Battery System Conditioning & Environmental Control Power Conversion Equipment POWER Comprised of packs (strings) of modules containing cells and includes pack, module and cell management systems POWER POWER GRID POWER Transformer

STORAGE TECHNOLOGIES In the recent USTDA study more than 16 different power-topower technologies was identified and reviewed (excluding pump storage). These technologies have different Performance criteria Maturity Risk/barriers Advantages/disadvantages Best use case application Study provide some view and comparison on this. Important: It is a view and different role players could have different views

HIGH LEVEL COMPARISON (SAMPLE)

HIGH LEVEL COMPARISON

TIME FRAMES OF RELEVANCE FOR SA

STORAGE BENEFITS Storage is not a source of primary electricity it is net electricity consumer; It can work as generation or load, provide lots of flexibility

STORAGE BENEFITS

ENERGY STORAGE - CHALLENGE?

COST TRENDS Source : IRENA

ES INSTALLTION COST VERSUS CYCLES

ES INSTALLTION COST ROUNDTRIP EFFICIENCY

VALUE OF STORAGE

VALUE OF STACKED BENEFITS FOR STORAGE

ENERGY STORAGE BUSINESS CASE Although it seems that there is current no business case at national grid level, that does not mean there is no benefits for South Africa from storage The near term benefits is considered to be in uses cases such as T&D deferral, voltage support, frequency regulation, behind the meter, etc. from which benefits can be already be derived already; The business case is consistently improving and is driven by : Cost reduction for storage Performance Energy mix

ENERGY STORAGE FINANCIAL CHALLENGES It need to be understood there are three different dimensions for consideration when financing of energy storage project is considered: TECHNOLOGY BANKABILITY COMMERCIAL READINESS PROJECT BANKABILITY The majority of energy storage projects to date has not been done on project finance It is challenging to identify energy storage projects that are financially sufficiently robust to be bankable. The ability of projects to enter into a PPA or ESA that could provide adequate confidence in the ability to generate and collect multiple revenue streams over the life of the project (inclusive of quantification of the stacked values).

ENERGY STORAGE REGULATORY CHALLENGES Compared to international best practices the following shortcomings were identified within the bigger SA energy storage context: Improvement and amendments are required to existing legislation, regulations, policies and incentives to be specific for energy in order to create a conducive environment. Lack of procurement targets related for specific use cases that can be provided by energy storage. Lack of specific and dedicated financial incentives and subsidies and tariff structure for energy storage. Lack of demonstration and pilot projects that will enable evaluation of the different use cases and understand the learning curve.

ENERGY STORAGE REGULATORY CHALLENGES In the current framework is storage considered as energy generation? Act definition generation means the production of electricity by any means, and generate and generating have corresponding meanings Considerations o storage is a net consumer electricity it requires an input to delivery an output o Some use cases such as T&D deferral energy storage is effective a piece of equipment or equivalent of capacitor bank Does this translates to a need to have a generation license for the deployment of large scale stand-alone storage above 1MW peak? Recent regulations promulgated do provide for exceptions if generation : o Below 1MW peak o Demonstration site - start date, end date and no income o Other exceptions.

ROADMAP

STEERING GROUP

ENERGY STORAGE OPPORTUNITIES If South Africa wish to be part of the energy storage wave, it is time to get our foot in the door All role players need to understand their role and be willing to play that role Achieve collaboration (Government, Private Sector, Research Institutions); Understand SA ability to achieve mineral beneficiation; Demonstrate the abilities of storage; Quantify the stacked advantages/benefits; Experience and understand the learning curves Technology expertise need to be established that will enable leap frogging Achieved a conducive regulatory and policy framework

ENERGY STORAGE OPPORTUNITIES Despite current pricing, some commercial opportunities may already exist and need to be development within : o Distribution networks (deferrals, voltage support, etc) o Hybrid-, Mini- or Smart grids o Security of supply / arbitrage o Blackstart o etc.. In order to achieve this it will be required: o Identify such opportunities and assess on a case by case basis o Match those with appropriate storage technology o Secure Government support to establish a conducive framework and environment o Policy framework need to be place o Close co-operation between Government and Industry o Need to find a model how such opportunities can be funding by DFIs and commercial banks

ENERGY STORAGE OPPORTUNITIES Industry o ES developers o C&I clients o Technology providers o Manufacturers o Research and Development institutions o Mining industry Government o DST, thedti, DOE, DMR, DEA, DPE, National Treasury, Nersa, etc Financiers o DFIs (IDC) and Government Agencies o Commercial banks

CONCLUSION South Africa need to prepare itself if we wish to be part of the energy storage growth opportunities within o Stationary value chain o Mobility value chain If South Africa wants to be part of the global ES market, we need to: o not try to re-invent the wheel o understand our competitive advantages and the sustainable opportunities within the respective value chains; o commence exploiting those opportunities and secure our position in collaboration with key international partnerships SA cannot expect to mobilize and become only involved once the market really take off or pricing is viable storage is already taking off!!! South Africa need to be ready to supply ES components / solutions globally from a locally established industry that contribute to economic growth and developmental impact (jobs, etc.)

BOLD STEPS NEED TO BE TAKEN!!! however ENSURE WE CRAWL BEFORE WE RUN!!!

THANK YOU