Energy

2015

2© 3M 2015. All Rights Reserved. 3M Confidential.

Unlocking a sustainable energy future in which energy is more…

Preserving of our natural resources and climate

Available and affordableto people around the globe

Reliable and secureagainst stresses and attacks

3

Energy sector is evolvingMore distributed, connected and diverse

Centralized distributed

Fossil cleaner

Unreliable grid resilient

Petrol vehicles Electric vehicles

Looking to 2020

500 GW additional wind and solar

1 B rooftop panels in operation

40 GWh of grid-connected batteries

1.8 T of new Transm and Distrib spend (2015-2020)

1.2 M electric vehicles will be sold in 2020

4© 3M 2015. All Rights Reserved. 3M Confidential.

Pipeline Protection

and Renewal

Power Transmission

and Distribution

Grid Monitoring and Optimization

Thermal Management

Renewable and Distributed Power

and Storage

Power Conversion and Vehicle Electrification

Glazing and Lighting

Greenhouse Gas Management

5© 3M 2015. All Rights Reserved. 3M Confidential.

Dr. Brandon Bartling

Education:

B.S. in Chemical Engineering, University of Nebraska at Lincoln

M.Ss and PhD in Chemical Engineering, Case Western Reserve University …emphasis in electrochemistry and energy

storage

Experience:

Recently joined 3M

• development of next generation materials to enable energy storage and transmission to meet the global need

Four years at General Electric Global Research

• development/commercialization of large format, high-temp molten sodium batteries for grid level energy storage

Eight years at Energizer Battery Manufacturing

• technology engineering of Zinc-Air and Zinc-Silver Oxide batteries

• quality engineering of standard alkaline batteries

Other:

8 granted US patents and 6 published papers in the area of electrochemistry

Active member of the Electrochemical Society and AIChE

Shifting Sands of EnergyThe impact & growth of energy storage in the US.

Dr. Brandon Bartling

July 14th, 2015

Why the market cares about energy storage

Grid Resilience Needs

• ie. Energy Independence

• Blackouts – 3,236 in U.S. in 20131

• Japan: Fukushima Daiichi

• U.S.: Superstorm Sandy

New York State Energy Plan

• EU: Geopolitical Natural Gas Issues

Government Funding / Subsidies

Rate Reduction• Demand charge

• Time of Use

Future Proofing – Long Term • Mining, Banking, Datacenters, Airlines, etc.

• Insurance Premiums

• Infrastructure

Current capacity by initial year of operation and fuel type

Billion-Dollar Disaster Event Types by Year (CPI-Adjusted)

0

10

20

30

40

50

60

1930 1940 1950 1960 1970 1980 1990 2000 2010G

W In

stal

led

in U

S

coal hydro natural gas nuclear other petroleum wind

Over 60% more than 20 yrs old

Source:EIA.gov

Source:NOAA.gov

Where can energy storage be inserted?

Source: mpowerUK

Note: Voltages are for UK network, voltages for US will be different

Source:Kirby 2004

Frequency Regulation

Time Shifting & Peak Reduction

Time

Po

we

r

Load w/ no storage

Load Levelingcharge

Base Load

Peak Shaving/ Load Leveling - discharge

Distribution of Energy Storage Worldwide

3.3 GW281 Projects

3.64 GW582 Projects

Operational Under contract/proposed

Source: DOE Global Energy Storage Database

Growth cases in the US

• Top use cases for energy storage now, and planned are:

• Renewable capacity firming

• Time shifting

• Electric bill management

• Electrochemical storage has more projects

but other methods are greater in size

Source: DOE Global Energy Storage Database

What does the customer purchase

Power Management:InverterCommunications

Energy Storage:BatteryManagement Systemsbattery, thermal, safety

Grid Connection:Switching and wiring

Renewables, gas Loads

• Energy storage requires tailored materials needed

for harsh environments and long project life

• Arrangement of the components drives dramatic

differences in cost

• Renewables → Battery → PM (DC-DC)

• Renewables → PM → Battery (DC-AC-DC)

• Must also decide if storage serves as a backup or

as an active component in the energy delivery

system

Energy Storage Value Chain

Cell Makers

Software provider System IntegratorCustomer

Module Assembly

Pack ProviderSystem Integrator

Software provider DistributedCustomers

New ResidentialModels

• Commercial installation, in large part, still follows traditional model of order/installation

• New residential models are growing that allows a company to operate & coordinate over several installations

• Potentially even greater vertical integration going further to reduce cost with scale

Considerations and Definitions in a system build

Power Requirement

• Maximum power and time must be delivered

Life

• Number of cycles or time it takes until only a certain faction of battery is useable

Energy Density

• Available energy per unit volume or weight

Example:Need: 10kW for 4 hours = 40kWhName plate capacity: 10.4 WhUseable capacity: 10.4 Wh * 80% = 8.3 WhEnergy Density: 150 Wh/kg--------------------------------------------------------------

LiB: 40kWh/8.3Wh = 4820 cells = 267kg (588 lbs)

Lead Acid = 36 cells = 1000kg (2200 lbs)

Nameplate capacity Useable Capacity Depth of Discharge

Cycle life vs. Discharge Rate for Li-ion

Source: batteryuniversity.com

Grid Storage Technology Usage & Maturity Varies Widely 63 Distinct Technologies installed Globally

0%

0%0%

4%

5%

5%

7%

8%17%

17%

21%1%

1%1%

1%

1%1%

2%

2%3%

Nickel Battery

Compressed Air

In-ground Natural Gas Combustion Compressed Air Storage

Thermal Storage

Flywheel

Sodium and Potassium Nitrate Molten Salt Thermal Storage

Molten Salt Storage Electrochemical

Nickel Manganese Cobalt Battery

Modular IsoThermal Compressed Air Storage

Zinc Bromide Flow Battery

Sodium Sulfer Battery

Vanadium redox flow battery

Zinc-Nickel Oxide Redox Flow Battery

In-ground Compressed Air Storage

Hydrogen Bromine Redox Flow Battery

Zinc Bromide Flow Battery

Aqueous Hybrid Ion (AHI) Battery

Ultracapacitors

Zinc-Nickel Oxide Redox Flow Battery

Nickel Iron (NiFe) Battery

Ultra Battery

Lithium Ferrous Phosphate Battery

Zinc Hybrid Cathode Battery

Zinc Hybrid Cathode Battery

Lead Carbon Battery

Sodium Sulfur Battery

Hydrogen Energy Storage

Zinc Bromine Redox Flow Battery

Lithium Ion Titanate Battery

Nickel Metal Hydride Battery

Sealed Lead Acid Battery

Lithium Polymer Battery

Iron Chromium Redox Flow Battery

Lithium Nickel Cobalt Aluminum Battery

Zinc Bromine Flow Battery

Liquid Air Energy Storage

Lead Acid Battery

In-ground IsoThermal Compressed Air Storage

Lithium Ion Battery

Hybrid Battery

Double-layer Ultra Capacitor Battery

UltraBattery

Modular Compressed Air Storage

Valve Regulated Lead Acid Battery (VRLA)

Sodium Nickel Chloride Battery

Zinc Chlorine Redox Flow Battery

Zinc Chlorine Redox Flow Battery

Vanadium Redox Flow Battery

Zinc Bromide Redox Flow Battery

Nickel Cadmium Battery

Ice Thermal Storage

GigaCapacitor

Gravitational Energy Storage

Lithium Iron Phosphate Battery

Sodium Sulfur Battery

Advanced Lead Acid Battery

Chilled Water Thermal Storage

Heat Thermal Storage

Growing pipeline of technologies mean the need for flexibilityexists now more than ever

DeployedDemonstrationEarly Stage

Technologies

Energy technologies in commercial & residential systems

Lithium-ion• Largest growth chemistry

• High energy density = small

footprint

• Requires advanced safety

features

• Good cycle life

Source: www.teslamotors.com Source: blog.eecnet.com Source: pnnl.gov

Lead-Acid• Long proven history in UPS

operation

• Relatively “safe”, cheap

chemistry

• Requires space and

maintenance

• End of life reaches sharp cliff

Flow Battery• Development phase chemistry

• Enabled by advanced materials used in the similar fuel cell industry

• Energy and power de-coupled

• Long life demonstrated on the commercial scale

Adoption of Storage w/ PV - Residential

0

2,000

4,000

6,000

8,000

2012 2013 2014 2015 2016 2017 2018Inst

alle

d M

W W

orl

dw

ide

PV Systems w/ Storage PV System

0

100

200

300

400

500

600

700

800

900

1,000

2012 2013 2014 2015 2016 2017 2018

An

nu

al

En

erg

y S

tora

ge

Insta

llati

on

s (

MW

PV

)

EMEA Americas Asia

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

2012 2013 2014 2015 2016 2017 2018

% o

f P

V I

nsta

llation w

/ attached s

tora

ge

Germany UK North America Japan India Australia

0

20

40

60

80

100

120

140

160

2012 2013 2014 2015 2016 2017 2018

US

An

nu

al

En

erg

y S

tora

ge

Insta

llati

on

s (

MW

PV

)

Grid Connected Off-Grid

• PV Adoption leads PV w/ storage.

• Adoption of storage is led by Europe and Asia

• In the US PV-integrated storage driven by off-grid

• For those that use PV, Germany leads for including storage with PV

Source: IHS, 2014

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.5

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

LCO

E ($

/kW

h)

dai

ly c

yclin

g 1

0 y

ear

syst

em

Realistic Costing Tesla Claims

Economics of Residential Adoption

0.00

100.00

200.00

300.00

400.00

500.00

600.00

700.00

800.00

900.00

1,000.00

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Pro

ject

ed T

esla

10

kWh

co

sts

($/k

Wh

)

PowerWall price Installation and integration PCS Installer profit

-

100

200

300

400

500

600

700

800

900

1,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Res

iden

tial

en

ergy

sto

rage

sys

tem

($

/kW

h)

Battery cell Battery pack Power conditioning system Land, construction, and integration

Forecasted Residential Storage Pricing Projected Tesla Powerwall Pricing

Tesla Claimed

Source: Lux Research, 2015

• Pricing anticipated to come down, but PCS still a substantial cost (53-50%)

• While Tesla has moved the bar, there is a large gap between claims and the community

• These costs difference will drive storage from negative returns (-$2k/10 yr) or positive return ($800/10yr)

Summer Peak

Summer Off-Peak

Winter Peak

Winter Off-Peak

Adoption of Storage in Commercial

0

1000

2000

3000

4000

5000

6000

2012 2013 2014 2015 2016 2017 2020 2022

Annual B

ehin

d-t

he-M

ete

r E

SS

Insta

lled

Eff

ective S

tora

ge (

MW

h)

EMEA Americas Asia

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

2012 2013 2014 2015 2016 2017 2018

% o

f P

V I

nsta

llation w

\attached

sto

rage

Germany UK North America Japan India Australia

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 2014 2015 2016 2017 2020 2022

Li-Ion Lead-Acid Sodium Sulphur Flow Compressed Air

• Behind the meter adoption will grow worldwide, almost equally across the 3 regions

• US leads in the adoption of ESS w/ PV, but at a rate substantially lower than residential

• Lithium will become the dominant chemistry of installation as cost comes down

Source: IHS, 2014

Economics of Commercial Adoption

-

100

200

300

400

500

600

700

800

900

1,000

2015 2017 2019 2021 2023 2025

Ener

gy S

tora

ge P

rici

ng

($/k

Wh

)

Residential energy storagesystem (7.5 kW / 15 kWh)

Commercial energy storagesystem (100 kW / 200 kWh)

Utility or grid-scale energystorage system (5 MW / 10MWh)

• Economy of scale enables greater value story for commercial installation independent of use

• Transition to Time of Use (TOU) and demand based electricity pricing is driving favorable economics in areas of adoption

• Areas where existing policies encourage renewables (SGIP) for active storage also help adoption rates

Source: Antares Group

Summer Winter

Peak Off-Peak Peak Off-Peak

Demand Charge ($/kW)

19.04 15.07 15.31 15.07

Energy Rate ($/kWh)

0.16 0.07 0.10 0.07

Summer Winter

Customer A 50kW/50 hours during peak $1357 $1020

Customer B 5kW/500 hours during peak $501 $331

Customer C 50kW/50 hours during peak25kW provided by storage

$1148 $984

Source: PG&E, 2015

Barriers & changes to greater adoption

Component Pricing

• Batteries• Historical high pricing coming down as manufacturers move to scale.

• Power Electronics• Thermal management system becoming more efficient.

• Inverter technology efficiencies are improving but quality is still expensive

Integration

• Component makers• Growth in industry has pulled larger companies into making components.

• Vertical integration has reduced price and improved quality

• Business Models• New leasing and multi-function business models increase value of storage.

Regulation

• Changing utility rates structure favor commercial adoption, could discourage residential

• Government subsidies help adoption but are reaching a sunset

-

50

100

150

200

250

300

350

400

2014 2016 2018 2020 2022 2024 2026

$/k

Wh

of

maj

or

OEM

bat

tery

pac

k m

anu

fact

ure

rs

Source: Lux Research, 2015

Source: Sherlock, 2013

US Energy-Related Tax Breaks

0

5

10

15

20

25

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

Bill

ion

s o

f 2

01

1 d

olla

rs

Fossil Fuels Renewable Energy Energy Efficiency

Conclusions

A world-wide growth in energy storage is occurring:

• Meet new energy demands

• Satisfy regulations

• Address over-capacity infrastructure

A myriad of energy storage methods, coupled with the need to combine multiple unit

operations, has led to a convergence towards integrator based systems

Current economics in the US are favorable for commercial based system. While residential

ESS installations are driven by other factors (security, “green”, new business models)

Barriers in growth exist in battery and PCS pricing as well as governmental regulations

Source: Exxon Mobil, 2015

s

Thank You