Presentation of a Subset of Projects that will be part of the National Electrical Grid

within the catchphrase of a “SMART GRID”

Due to the integration of multiple electrical power stations within one big electrical network expanding over several time zones and climate environments and the liberalization of the generation of electricity by local state bound utilities, a free for all electrical power market evolved. This market emerged with an active trade of electrical power from one geographical place to another over the once regional grids.

The steadily growing renewable energy generators (solar, wind, sea-wave,) without the power dependability and stability of the old systems of electricity generators, like the traditional coal, NG etc., introduced a new instability factor within the electrical grid which fact necessitated a rethinking of the way a conventional electrical grid should work resulting in the catchphrase of “Smart Grid”, which was subdivided in another catchphrase of “Micro-Grid” since or/about 2005. June 2015

The definition of a Micro–Grid is very wide and an all encompassing definition, but in general it is assumed that the power handled is below 50MW and usually exists within a defined community. Micro–Grids are part of the greater “Smart Grid” and interconnected with the ability to supply or withdraw electrical energy from the “Smart Grid”. Below is the conceptual example of a Micro Grid as presented by Siemens. There are many existing configuration of this type/setup

One of the key compelling features of a grid-tied micro-grid is its ability to separate and isolate itself from a utility’s distribution system during brownouts or blackouts and its ability to integrate diverse distributed energy resources (DER) into clusters that can then provide greater value, such as integrating micro-grid services into market operations.

Other benefits of micro-grids are great configuration flexibility within the mix of energy sources and their magnitude, and the size of the community they service

Enabling to choose the most cost-effective operation, thanks to extensive optimization possibilities of Micro-Grids to specific electrical power demands.

Low environmental impact due to resource efficient operation and the possibility of extensive integration of renewable energy

Highest efficiency of the entire power supply system through the joint optimization of district heating, HVAC and electricity

Enhancing the overall Smart Grid power quality due to the Micro – Grid ability to “feed in” or “feed out” of electrical energy to or from the Smart Grid and higher security of supply

During the last few years with the penetration of more and more renewable energy projects many corporation engaging in electricity related products entered the lucrative field of the so called “Micro- Grid”. The proliferation of solar panel farms in Israel will enable the implementation with the proper Command & Control Centers (CCC), with the electrical battery storage, the transformation of the present solar panel farms into a Micro-Grids setup.

Main Electrical Grid

"Two way" DC/AC - AC/DC Converter

Battery to Grid Unit loss 6% - 15%

Solar Panels or Wind* or Fuel Cells

High Density Battery Pack 350V

- 850V with embedded Super-

Capacitors Storage loss - 5% to 8% of Surplus

MAIN electrical trafic regulator between Battery Pack - Main Grid and End

User - loss 4% - 6%

End User LED lighting Low Voltage 36V or 48V parallel DC

wiring?

End User Terminals Computers

other Electronics

DC/DC Step Down

Converter to user 2% to

8%

Direct connection to grid or DC/AC Inverter where

needed

Navigant Research has profiled more than 50 companies over the last 6 years and the best integrators are; Schneider Electric, Optimal Power Solutions, Princeton Power Systems, Followed by; Siemens, Tecogen, Green Energy Corp., ABB, Alstom Grid, GE Digital Energy, Blue Pillar, Emerson Network Power, Eaton, Lockheed Martin, Toshiba,

My business approach would be to team up with one or more of those companies instead of competing with them with the additional in house developments some of which I propose.

Below is a proposed self-conceptualized “bi-directional” airport Micro-Grid setup with

saving of 10% to 20% in raw energy for peak hours relative to most Israeli solar farm setups, taking advantage of the great disparities in Peak to Off Peak pricing rates in Israel.

New Acronym - Solar PV plus Energy Storage Nano-gridsGrid-Tied Systems for Residential and Commercial Applications:

(There is nothing special in this new catchphrase as it is similar/same to Micro-Grids)

A more elaborate concept was presented by me to the Ministry of Environment to Dr. Eugenia Bernstein ( , מקורות' תחום ראש ברנשטיין יבגניה דר as a starter of my initiative in July this year and later to the Office of (אנרגיהthe Chief Scientist at the Ministry of Energy.

Growing utility opposition globally to traditional solar PV support mechanisms such as net metering and feed-in tariffs (FITs) only helps to build the business case for solar PV plus energy storage nano-grids. Extracting the greatest value from solar PV in the absence of subsidy will require linking this variable distributed generation (DG) to a battery.

As such, pairing solar PV with energy storage in a distributed fashion will soon emerge as the most economical way to successfully incorporate distributed energy resources into today’s market landscape. According to Navigant Research, global solar PV plus energy storage nano-grid revenue is expected to grow from $1.2 billion in 2015 to $23.1 billion in 2024 (in my opinion this reflects smaller stand alone systems).

This definition by Navigant Research in their report analyzes the global market for solar PV plus energy storage nano-grids, with a focus on distributed solar PV installations in behind-the-meter building-level applications for residential and commercial customers. Nano-Grid is defined networks below 100 KW to 150KW

The potential transaction volume of my proposal after proven ability to more than triple the installed solar power which is presently at 200

MW

Investment Assumptions; - preliminary figures to be tested in a market research.

Cost of Storage Batteries today is estimated at $350 to $450 Kwh @June 2015 with a price slide which is expected to be around $160 to $180 in 5 to 10 years when the batteries charge discharge economic viability of presently installed batteries will end.

To enable the proper leveling off, of peak electrical demand a capacity of around 2.5 hours is needed @ a discharge rate of around 30% which will cover 6 to 7 hours, with partial recharging possibility at the lowest rate of electrical power.

Depending on the shape of the load of a municipal or cooperative utility, it may be possible to use a less costly 2 or 3 hour storage solution. To summarize our 2016 comparison, it will require a high degree of selectivity, but storage economics can be better than some conventional NG Turbines even at 2016 projected storage costs.

Therefore, investment cost in batteries would be $875 - $1,125 per kw of solar panels

Installation and engineering cost are $160/kw+$90/kw = $250/kw as the DC/AC inverters are already installed within the solar panel farms.

Resulting in total cost of $1,120-$1,375 kw or $1.12 - $1.375 million per MW solar panels as of June 2015

The potential transaction volume of my proposal after proven ability to more than triple the installed solar power presently at 200 MW

(continuation)

Combined cycle NG turbines average today around $1,250 kw with much higher maintenance than storage battery packs, operating NG cost not included.

As a result of leveling off peak demand an additional 400 - 600 MW in solar panel farms, can be installed and the two approved projects of 300 & 340 MW Pumped Storage Hydro Power, will not be needed. According to a NREL price estimation, the investment cost of those Pumped Storage Hydro Power projects, will be around $1,430 million.

Presently there are about 200MW solar panel farms in operation, assuming a 75% penetration, estimated total sales will be $165 million to $205 million at assumed prices

The additional 400 - 600 MW of solar panels to be installed instead of the Pumped Storage Hydro, will need between $400 million to $650 million in energy storage investments.*** (the market penetration will be lower than 75%, as will be the prices of electrical storage batteries which from various sources are anticipated to be below $200)

Additional Micro-grid implementation on the existing 125-140 location with a 60% to 75% penetration @ an average cost of $500K to $1,000K will add $52 to $110 million.

Anticipating night lighting projects in the range of 20 to 30 independent locations at similar prices will add an additional $15 to $30 million

Alternative Financing Possibilities (on new projects)

The proposed new solar projects have proven technology which is reliable with a steady consumer the IEC. Therefore the project after start of operation could issue debentures and receive high credit rating.

The issued debenture of the Project would have an attractive yield, and will be relatively attractive, low risk investment venue, in a low interest rate environment.

As such the project debentures can be placed with pension funds or insurance companies or transformed into a partnership with a General Partner (a company subsidiary) and investment units distributed to the retail investors by various distribution channels of financial instruments.

Another venue, is financing the batteries installation with an equipment leasing company by an established lessor. As an example an US company LFC Capital (http://lfccapital.com/) has a leasing program that uses a traditional operating lease with attractive ownership options, plus tax efficiency to provide companies with a low-cost path to ownership. The operating lease has been designed to provide Lessees with assurance that they will be treated fairly in later years, while satisfying tax rules.

An additional income stream not taken into account is the Carbon Credits availability which is not clear to me if this credit is already embedded in the price that IEC pays for Kwh

Seasonal Pricing of Electrical Power by IEC to its consumers @ June 2015. It is important to note, that most peak pricing for electricity consumption is mostly after the

sun reaches the “zenith” (12 PM) when the solar irradiation is at its maximum for the day and therefore also the power output of the solar panels.

As such there is no maximization of the efficiency of a solar panel farm without proper electrical storage that would level out the power output of the solar panels maximizing returns on investments. Storage of peak energy output of solar panels by storage batteries solves this inefficiency and the need of power optimizers which lowers output.

Indicative pricing schedule of the IEC within various year periods @ June 2015

From the schedule below it is obvious that there are very substantial differences between the low price and peak prices of the electrical power of up to 300%This difference will justify the high initial investment in electrical storage in advanced battery banks and the needed Command and Control Centers

Remark from McKinsey & Co. - To inform the debate, we developed a detailed, bottom-up “should cost” model that estimates how automotive lithium-ion battery prices could evolve through 2025. Our analysis indicates that the price of a complete automotive lithium-ion battery pack could fall from $500 to $600 per kilowatt hour (kWh) today to about $200 per kWh by 2020 and to about $160 per kWh by 2025 (the report is from 2012) It is estimated that today prices are around $350 to $450 kwh

Storage Batteries trendsThe graph below indicates storage batteries trends and anticipated developments. There are many more chemistries and technologies aside form those mentioned in the graph and there is not one type of battery that would fit all needs. For each purpose a different battery pack would be suitable for a variety of reasons if for operating temperature or chemistry efficiency for various times of storage or just safety. There are over 200 various development programs

Beyond the lithium ion, toward a better performing battery – Magnesium Ion

SUMM ARY AND CONCLUSIONS - GUIDE TO PROCUREMENT OF FLEXIBLE PEAKING CAPACITY: ENERGY STORAGE OR COMBUSTION TURBINES? (from a report prepared in 2014)

Lower cost solar PV and its rising penetration in all market segments will have a profoundly disruptive effect on utility operations and the utility cost-of-service business model. This has already started to happen. Storage offers a way for utilities to replace lost revenues premised on margins from kilowatt hour energy sales by placing storage assets into the rate based and earning low-risk long-term regulated returns on capital.

Because solar PV is highly distributed, simply overlaying storage on a central station basis won’t maximize grid performance or cost reduction. Storage enables more PV while mitigating stability problems at the distribution circuit level. Availability of cost effective and technically proven distributed storage will further accelerate the shift toward distributed power grid architecture. The central station approach utilities have used to meet peak power requirements is on the verge of a paradigm shift. Central station topologies will give way to distributed grid architecture.

By 2017 Capex for a 4-hour storage “peaker” of “Zink Iron Redox Flow” battery (my proposal is for 2.5 hours) is projected to be $1,390. With added benefits from locating storage on the distribution grid, in 2017 storage will be roughly competitive with many CTs conventional assuming mid to higher range CT (NG Combustion Turbine) costs. For CTs at the high end of the cost range, 4-hour storage will be a clear win.

By 2018 the cost of ViZn Energy’s (http://www.viznenergy.com/) 4-hour storage solution is essentially identical to that of a conventional simple cycle “peaker”. Given the added benefits of installing storage in distribution, by 2018 storage will be a winner compared to a typical mid-range cost for a conventional simple cycle CT and generally disruptive for higher cost simple cycle CTs.

Visualization of a 1-MW/2.8-MWh Grid Storage Solution installation in Japan. The project was commissioned in March 2014 and is being used

for peak shaving and demand charge management.

By 2018 the cost for a 4-hour storage resource – that translates to $244 per (installed) kilowatt-hour of capacity. Given the added benefits of installing storage in the distribution network. By 2018 storage will be a winner against the mid-range cost for a simple cycle CT (Combustion Turbines) and clearly disruptive compared to higher cost simple cycle CT.

The proposed projects that would be a Subset item of the Micro-grid

Development of a “bi-directional” command and control center to be inserted between the battery pack the solar panel farm and the main grid.

Choosing the right price effective battery pack for each task including for CSP projects or lighting in urban areas.

Development of projects suitable for night LED lighting powered by batteries adapted to the human eye light spectrum and charged by solar panels in parks, campuses, kibbutzim etc., (night vision in the 500 nm range)

Increasing the overall energy efficiency of solar panels presently around 16% to 19% by adding a pumped fluid substrate that will cool the panel to about 50C and by this increase efficiency at high power output (at “zenith”) by around 15% of total sun irradiation.

Using the excessive heat which is around 80% of the solar radiation energy by extracting it with the pumped fluid for HVAC purposes where adequate and by this adding an additional yield improvement estimated at 10% to 15%

Developing a temperature and phase sensor to be attached to major main network transformers which sensors, will activate the inverter connected to the storage battery pack to stabilize the electrical phase and frequency.

Gravitational Energy storage system similar to “Pumped Hydro Storage” without water taking advantage of the local topography around the Dead Sea

Silicon Solar cells convert the wavelengths of around 450 to 1000 nm into in to electricity the rest is absorbed/transferred as heath. Human eyes spectral sensitivity is concentrated in the 450 to 670 nm range

above 1000 nm wavelength the energy is below the band gap

Best for night vision

Effects of overload on electrical transformers due to the hysteresis curve pulse as a result of temporary overload which can be mitigated by battery stored energy

The accepted rule of thumb is that the life expectancy of insulation in all electric machines including all transformers is halved for about every 7 °C to 10 °C increase in operating temperature, this life expectancy halving rule holding more narrowly when the increase is between about 7 °C to 8 °C in the case of transformer winding with cellulose insulation

Small dry-type and liquid-immersed transformers are often self-cooled by natural convection and radiation heat dissipation. As power ratings increase, transformers are often cooled by forced-air cooling, forced-oil cooling, water-cooling, or combinations of these. Large transformers are filled with transformer oil that both cools and insulates the windings.

Transformer oil is a highly refined mineral oil that cools the windings and insulation by circulating within the transformer tank. It is estimated that 50% of power transformers will survive 50 years of use, and that the average age of failure of power transformers is about 10 to 15 years, and about 30% of power transformer failures are due to insulation and overloading failures.

Prolonged operation at elevated temperature degrades insulating properties of winding insulation and dielectric coolant, which not only shortens transformer life but can ultimately lead to catastrophic transformer failure. This underlines the need to monitor, model, forecast and manage oil and winding conductor insulation temperature conditions under varying, possibly difficult, power loading conditions

Summary - The structure of a micro-grid is a discrete energy system consisting of distributed energy sources (e.g. renewables, conventional, storage) and loads capable of operating in parallel with, or independently from, the main grid.

The primary purpose is to ensure reliable, affordable energy security for commercial, industrial and government consumers. Benefits that extend to utilities and the community at large include lower greenhouse gas (GHG) emissions and lower stress on the transmission and distribution system.

The core of a micro-grid will be one or more small conventional generation assets (e.g. engines or turbines) fueled by natural gas, biomass or landfill methane in combination with renewable energy assets (solar, wind, hydro).

When connected to the main grid, micro-grids will rely on a mix of power generation sources depending on the metric to be optimized (cost, GHG, reliability). Specialized hardware & software systems control the integration & management of the micro-grid’s components and the connection to the utility.

The proposed projects will deal with an bottom up approach that will increase the efficiency of the renewable energy assets if by adding energy storage, or increasing system yield in harvesting natural energy mostly solar.

Theoretical schematics of the energy conversion of silicon solar cells

Scotopic vision is the vision of the eye under low light conditions. In the human eye cone cells are nonfunctional in low light – scotopic vision is produced exclusively through rod cells which are most sensitive to wavelengths of light around 498 nm (green-blue) and

are insensitive to wavelengths longer than about 640 nm (red).

400 nm 500 600 nm Stimulated examples of vision under low light. Top: human; bottom: cat

495-520 nm

650 nm450 nm

Human eye visual light sensitivity

PV solar can only be stored in batteries or other technologies that hold electricity. They are more expensive, less efficient, and less scalable than molten salts, according to SolarReserve CEO Kevin Smith. With renewables mandates rising, utilities will soon see the value of stored solar heat to meet an increasing late afternoon-early evening peak in demand, he said. As Utility Dive has reported, storage capabilities could prove to be the savior for large CSP projects in the coming years. Well not exactly, PV energy can be stored in liquid metal or molten salt as energy IS energy!!!

CSP is struggling to compete with PV on price!!

THANK YOU FOR WATCHING

Prepared by Haim R. Branisteanu during June/July 2015 – proprietary