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1 Business Plan Angelo Aliquò Senior Advisor, Green Energy Storage

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Page 1: Aliquò - GES...The FTI pilot (2015-2016) is the only fully boKom-up measure in Horizon 2020 promo>ng close-to-the-market innovaon ac>vi>es that is open to all types of par>cipants

1

Business Plan

Angelo Aliquò Senior Advisor, Green Energy Storage

Page 2: Aliquò - GES...The FTI pilot (2015-2016) is the only fully boKom-up measure in Horizon 2020 promo>ng close-to-the-market innovaon ac>vi>es that is open to all types of par>cipants

•  MarketAnalysis•  Implementa1onStrategy•  FinancialBudgets&Forecasts•  Go-ToMarketApproach

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Page 3: Aliquò - GES...The FTI pilot (2015-2016) is the only fully boKom-up measure in Horizon 2020 promo>ng close-to-the-market innovaon ac>vi>es that is open to all types of par>cipants

MarketAnalysis

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•  EnergyStorageMarket

Page 4: Aliquò - GES...The FTI pilot (2015-2016) is the only fully boKom-up measure in Horizon 2020 promo>ng close-to-the-market innovaon ac>vi>es that is open to all types of par>cipants

MarketAnalysisBenefitsofElectricEnergyStorageEnergystoragetechnologyholdsthepromisetoprovidemanybenefitsacrosstheenergydeliveryvaluechain—fromgenera>ontotransmissionanddistribu>on(T&D)toend-users.Specifically,energystoragetechnologyisconsideredakeycomponentforintegra>onofrenewableenergyandasanessen>altoolforsmartgrids.Inaddi>on,anumberofsocietalbenefits,suchasreducingemissions,canbecapturedusingstoragetechnologies.

Battery storage for grid regulation

Community scale Battery storage

Battery storage for renewables integration

Commercial campus Battery storage

EESApplica1onAreas

ElectricSupply

AncillaryServicesGridSystem

EndCustomerEndCustomer

RenewablesIntegra1on

mainly PHS, CAES

up to 100 kW power

Page 5: Aliquò - GES...The FTI pilot (2015-2016) is the only fully boKom-up measure in Horizon 2020 promo>ng close-to-the-market innovaon ac>vi>es that is open to all types of par>cipants

MarketAnalysisEESmarketwillboominnearfutureEnergystoragewillplayakeyroleinenablingtodevelopalow-carbonelectricitysystemsupplyingmoreflexibility,balancingtothegridandprovidingaback-uptointermiKentrenewableenergy.Locally,itcanimprovethemanagementofdistribu>onnetworks,reducingcostsandimprovingefficiency.Inthisway,itcanenablethemarketintroduc>onofrenewables,windandsolarandimprovethesecurityandefficiencyofelectricitytransmissionanddistribu>on.Currently,inEurope,thereislimitedusageofenergystoragesystems(almostexclusivelyfrompumpedhydro-storage).OtherformsofstoragelikebaKeriesarejuststar>ngtobeused.ThebaGerymarketfortheElectricEnergyStorage(EES)isattheearlystageofdevelopmentanditwillincreasedrama1callyinthenearfuture(5-7years).

2020 - 2022

Total Market Size

2015

> 200 B$

1 B$ Source: EPIA, PiperJaffrey, BCG Mckinsey

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MarketAnalysisEnergyStorageworldwideMarket•  EnergyStoragetechnologymayprovidemanybenefitsacrosstheenergydeliverychain

fromgenera>ontotransmissionanddistribu>ontoendcustomer.IndetailtherearetwomajoremergingmarketneedsforElectricEnergyStorage(EES)technology:

–  Integra>onofrenewableenergy(solarandwind)–  BuildingoffutureSmartGrids.

•  EEScanbeconnectedatdifferentlevelinthegridsystem,mostimportantandsizeablestorageApplica>onsare:

–  DistributedEES–forresiden>alandsmallcommercialsloads(10–100kW)–  RenewablesIntegra>on–levelingsolarandwindfarmgenera>oncapacity(1–10MW)–  AncillaryServices–usedbygridoperator(TSO)tobalancethegrid

•  StoragecapacityMarketgrowingx20in5-7years:

actuals year 2014: 0.98 GW installed (excluding PSH)

forecast year 2020: 20-25 GW

Renewables: 10 -15 GW Ancillary Services: 6 - 8 GW Distributed: 3 - 4 GW

Sources: Navigant, IEA, IRENA According to a report by Germany Trade and Invest the solar PV battery in German market is forecast to reach more than 100,000 systems to be sold annually by 2018 (from 6,000 in 2013).

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MarketAnalysisEnergyStorageMarketTrendsandOutlook

Poten1alMarketSize

TotalAddressableMarketin$Bby2020:200-400

McKinseyresearchlistsEnergyStorageasoneofthekeydisrup>vetechnologyfornextdecadewithaglobaleconomicimpactof$B100-600.

EuropeanEESmarketaccountsforabout30-40%

ofworldwidemarket.(about$B80-160)

Renewablesandelectricitystorage(IRENAJune2015)…es>matesthat150GWofbaGerystorageand325GWofpumped-storagehydroelectricitywillbeneededtodoubletheshareofrenewablepowergenera>onby2030.

Page 8: Aliquò - GES...The FTI pilot (2015-2016) is the only fully boKom-up measure in Horizon 2020 promo>ng close-to-the-market innovaon ac>vi>es that is open to all types of par>cipants

MarketAnalysisGlobalMarket–forecast2014-2023

Source:MAINelabora0ononNavigantResearchdata(a)  includes4,000MWand$2,200mofu>lityscalewind/solarintegra>on

Year2014 Year2023 CAGR

TypeofStorageApplica1on

installedpower(MW)

annualrevenue($m)

installedpower(MW)

annualrevenue($m)

(revenue)

DistributedESS 172 452 9,500 12,800 45%

Wind/SolarIntegra>on

110 150 21,800 10,300 60%

ESGAncillaryServices 538 675 (a)16,500 (a)13,000 39%

TOTAL 820 1,277 43,800 33,900 44%

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MarketAnalysisKeymarkets

WhileNorthAmericacon>nuestomovethemarketforwardwithcommercialanddemonstra>onenergystorageprojects,WesternEurope–Germany,Italy,andtheUnitedKingdominpar>cular–isalsoleadingthemarketwithu>lity-scaleanddistributedstorageadvancedbaKeryinstalla>onsandannouncements.Thees>matedshareofEuropeanESSmarketisabout32%ofglobalmarket.

23%

32%

31%

8%6%

NorthAmerica

Europe

AsiaPacific

La>nAmerica

MiddleEast&Africa

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MarketAnalysisEnergyStorageMarket–FlowBaKery

Poten1alMarketSizeforFlowBaGery52%shareofoverallESSmarket(*)by2017 -source:Lux,2012$7billionofESGmarketby2021(Gridstorage) -source:PikeResearch,2012

(*)excludingPHSandCAES.

Flow Battery

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Implementa>onStrategy

•  Masterplan•  RiskAnalysisandMi>ga>on

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MasterplanTimelineandInvestments

2016 2017 2018

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

ExperimentReplica1on

ProductDevelopment

Battery Prototype 1 kW

Storage System 1kW

Storage System 10 kW

Q2 Q3

Marke1ngExecu1onMarke1ngPlan Commercializa1on

Produc1onESSmodules

Q2 Q3

PilotProject

ManufacturingSupplyChainSetup

Battery Lab 1W

€ 0.5m

€ 5-7m

€ 2-5m

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MasterplanExperimentReplica>on

2015 M2 M3 M4 M5 M6

License Agreement signature

Productspurchasing

Knowledge&TechnologyTransfer

Assemblingexperiment

Conductexperiment

Measures&finetuningNew

experiment condition

Experimental battery

UniversityPartnershipsetup

TheDepartmentofChemicalScienceandTechnologiesofUniversityofRomeTor

Vergataisthescien>ficpartnerinchargeofbaKeryexperimentreplica>on.

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M7 M8

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MasterplanProductDevelopment

2016

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2017 2018

Technologyscreening

DevelopmentofBaGeryComponents

DevelopmentofControlSystem

1kWPrototypeOp1miza1on

10kWSystemDevelopment&Integra1on

Tes1ng&MarketCer1fica1on

Stack 1 kW

Battery Prototype

1 kW

Optimized Prototype

1kW

Storage System 10 kW

Prototype 10 kW

Q2 Q3

Stack 10 kW

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DemonstratethetechnologicalfeasibilityandeconomicviabilityofstoragesystemsbasedonAQDSflowbaKeriesofrelevantpowerandcapacityforindustrialuses.ThetwoAQDS/HBrbaKeryprototypesof1and10kW,4hoursdischarge>me,willbetestedinlabandrealopera>ngenvironments.Intermsofmaterialproper>es,theexpectedresultswillberelatedofefficiency,cyclabilityandcost,inpar>cularforthestack:-Uniformflowdistribu>onbetweencellsandthroughbipolarplates<1%difference;-Shuntcurrentlosses<1%;-Energyefficiency>70%AC/AC;-Currentdensity>200mA/cm2;-Retainedcapacityaqer10,000cyclesofcharge/discharge>70%.-Itcanbeeasilyproducedonalargescaleatlowprice(<€400/kW).Forthemanagementandcontrolsystem:-Defini>onofopera>ngprocedures;-Analysisofthedegradedmodesandvalida>onofmi>ga>onprocedures;-Adap>veManagementforop>miza>on,andself-learning.

MasterplanProductDevelopmentProjectobjec>ves

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RiskAnalysisandMi>ga>onRiskArea Poten1alrisk Mi1ga1onplan

Technology •  Productsdonothaveperformance,scalability,costsasplanned

•  Productsarenotcer>fiedbecauseofsafetyissue

Conductearlyassessmentoftechnologyreadiness.Engagethirdpartyforcer>fica>onandsafetyissue.

Technology&Market

•  TechnologyspeedcouldmakeorganicflowbaKeryobsoleteveryquickly

•  EESandflowbaKeryindustryishighlycompe>>vedrivingbaKerypricedownquickly

Monitorresearchtoquicklyiden>fynewtechnologiesandimprovements.Monitorcompe>torsac>vity

Financial •  Requiredasubstan>alamountoffundstofinancecapitalrequirementsandthegrowthofthebusiness

FocuseffortsonfewproductsUseofPublicgrantsfunding

Market •  BusinessesandconsumersmightnotadoptflowbaKerystoragetechnologyinthenearfuture.

•  Wemaynotbeabletorapidlygrowtoachieveprofitability

•  marke>ngandsellingproductsinnumerousinterna>onalmarketscouldbedifficultandexpensive

AdaptpricingstrategyReviewProductandServiceofferingUseoflocalsalesworkforce

Opera>on •  noexperienceinmanufacturingstoragesystemproductsonalarge-scalebasis

Partnerwithmoremanufacturerstolimitrisk.

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FinancialBudgets&Forecasts

•  Financialhighlights•  Profit&LossForecast•  PublicFundingopportuni>es

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FinancialhighlightsEESPriceprojec>ons

EESsystemprice(forwhichbaKerycontributesfor50-70%)representstodaythemajorbarrierforenergystorageadop>onanditispredictedtodeclinebynextdecadetarge>ngarangeof$100-150/kWh(equalto$600-900/kWforatypical6hdischarge>me)duetoperformanceimprovementsandscaleefficiency.

Page 19: Aliquò - GES...The FTI pilot (2015-2016) is the only fully boKom-up measure in Horizon 2020 promo>ng close-to-the-market innovaon ac>vi>es that is open to all types of par>cipants

FinancialhighlightsPreliminary5yearsSalesforecastGESisplanningtosellthefirst5kWESSsystemmoduleby2017andisforecas>ngasteadygrowthofrevenueupto$170million/yearin5yearswithamere2%ofmarketshare.GEStargetstodeliveryEESsystemsupto200MWofannualpowerby2021(about800MWhenergy)atapricebelow$200/kWh.

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2,615,8

52,1

86,2

165,3

0,0

50,0

100,0

150,0

200,0

250,0

2017 2018 2019 2020 2021

AQDSbaKeryInstalled/year(MW)

RevenueForecast($m)

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Profit&LossForecastPreliminaryPriceandCostAssump>ons

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AverageESSprice €200/kWh

TargetESScost <€170/kWh(85%offinalprice)–  BaKery(electrolyte,stack) 60-65%–  PowerConversionSystem –  BaKeryManagementSystem 35-40%–  Other(TMS,tanks,frames,…)

Totalcosts 2016–2018 2019-2021•  SG&A €3.2m €8m•  R&D €5m €4.5m

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Profit&LossForecastOpera>ngProfit5yearsforecastGESisplanninginvestmentsinR&Dforabout€10m.

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-4,0

-2,0

0,0

2,0

4,0

6,0

8,0

10,0

12,0

2016 2017 2018 2019 2020 2021

R&D

S&GA

Opera>ngProfit

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PublicFundingFundingOpportuni>esforGES

EUROPEANUNION–FASTTRACKFORINNOVATIONPilot(FTI)TheFTIpilot(2015-2016)istheonlyfullyboKom-upmeasureinHorizon2020promo>ngclose-to-the-marketinnova>onac>vi>esthatisopentoalltypesofpar>cipants.Thebudgetfor2016isofEUR100million.Calldeadline:December1,2015.EUROPEANUNION–Horizon2020Workprogramme2016-2017‘Secure,CleanandEfficientEnergy’ThenewWorkProgrammefor2016-2017intheareaofH2020energyresearchwillbepresentedon14September2015.FirstcalldeadlineisexpectedtobeinApril2016.ProvinceofTrento(Italy)–Fundsforappliedresearchprojects(Lawn.6/99)GEShassubmiKedonJuly2015arequestforfundingtodevelopthe1kWand10kWbaKeryandstoragesystem.ForthisprojectwearepartneringwiththeresearchcenterFBK(Founda>onBrunoKesslerhKp://www.uk.eu/andhKp://ares.uk.eu).

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Go-ToMarketApproach

•  TargetCustomers•  Product&Services

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Go-ToMarketStrategyTargetCustomers

TheTargetMarkethasbeensegmentedinthreemajorclustersofendcustomersdependingontheApplica>onareaoftheEESSystem:•  Buildingowner/energymanager•  SolarandWindplantowner/operator•  TransmissionGridSystemOperator(TSO)Giventhedifferentregulatorylaws,standardsandincen>veschemesexis>nginEuropefortheenergysectoreachsegmentwillbeproperlyaddressedatcountrylevelwithlocalsalesforcestructure.

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Go-ToMarketStrategyProducts&Services

Productfeatures:ThreeEESSystemproductsmodularandscalableandhavebeendefinedtocovermarketneedsbasedonpower/energyrequired:

–  EESSystemSmall: 5–50KWp 2-8h–  EESSystemMedium: 50–500KWp 2-6h–  EESSystemLarge: 0.5–5MWp 2-6h

Services:•  Preliminaryenergyauditandeconomicanalysis•  BusinesscasedevelopmentforESSadop0on•  EnergyStorageSystemandSitedesignandengineering•  Submissionandapprovalofallnecessarypermitsandu0lityinterconnectfiling•  Completeinstalla0on,includingallmechanicalandelectricalwork•  Systemstart-up•  Fullmaintenanceandservice

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Go-ToMarketStrategyProductValueProposi>on

•  EESSystemasaturn-keysolu1onreadyforuse.ForcustomerswhowanttoowntheirEESSystem,GESoffersa"turn-key"op0onprovidingequipment,systemsengineering,installa0on,interconnectapprovals,on-sitelaborandstartupservicesnecessarytobringthecompletestoragesystemon-line.•  EnergyStorageasaService(EESaaS)fortheendcustomer.Forcustomersseekinganalterna0vetotheoutrightpurchaseofaEESSystem,GESmayinstall,maintain,finance,own,andoperatecompleteon-sitesystemsthatsupplyelectricitystorageservicesonalong-term,contractualbasis(EESaaS).

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Businessplan

Fly High, Look Far