us solar –plus-storage market drivers , economics and

RESEARCH PROVIDED BY

July 2015

U.S. SOLAR-PLUS-STORAGE MARKET Drivers, Economics And Outlook

EES Reception

Ravi Manghani Senior Analyst, Energy Storage GTM Research

www.gtmresearch.com -2-

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About GTM Research

GTM Research, a division of Greentech Media, is the leading source of intelligence on the transformation of the U.S. electricity sector. We focus in three key areas: solar power, energy storage, and grid edge technology. GTM Research's analysis also underpins Greentech Media's webinars and events.

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The State of U.S. Solar-Plus-Storage

-4-

1

Agenda

Non-Residential Segment 2

Utility-Scale Segment 3

Utility-Scale Segment 4

Outlook 5

The State of U.S. Solar-Plus-Storage

www.gtmresearch.com

Solar-Plus-Storage Deployments and Installation Share in the U.S.

-6-

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

0

1

2

3

4

5

6

2011 2012 2013 2014

% of Solar Installations w

ith Storage (%) So

lar-P

lus-

Stor

age

Dep

loym

ents

(MW

)

Solar-Plus-Storage Deployments (MW) Solar-Plus-Storage as % of Solar Installations

Source: GTM Research

www.gtmresearch.com

Behind-the-Meter Incentive Programs and Pilots

-7-

California PUC added advanced energy storage as a qualified technology for the Self-Generation Incentive Program in 2009. 2015 base incentive level for energy storage is $1.46/W and is set to decrease by 10% annually. In 2014, New Jersey BPU issued

a competitive solicitation for a renewable electric storage incentive. The program budget was $3 million and awarded to 13 storage projects totaling 8.75 MW paired with renewable generation. 2015 round of funding will likely total $6 million. In winter of 2015, several bills

introduced to establish tax credits for grid-connected and off-grid storage systems; PUC ordered Hawaiian Electric to streamline interconnection requirements for customer-sited energy storage with solar. Stem has 1 MW pilot program underway.

APS 2 MW solar-plus-storage; $1 million rebates for pilot program, residential non-volumetric charges that could impact storage

U.S.: DOE $15 million funding behind-the-meter solar and storage integration

In 2014, Con Edison and NYSERDA initiated a Demand Management Program to achieve 125 MW of peak demand reduction in summer. Battery storage has a base incentive level of $2.10/W and thermal storage of $2.60/W.


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Battery and System Costs Will Continue to Drop

-8-

$1,400

$1,000

$700 $600

$500

$2,000 $1,816

$1,632

$1,300

$1,100

$0

$500

$1,000

$1,500

$2,000

$2,500

2010 2011 2012 2013 2014

Cos

t ($/

kWh)

Battery Cost ($/kWh) Installed Commercial System Cost ($/kWh)

$429/kWh

$250kWh

Certain Vendor Who’s Name We Shall Not Speak



Solar-Plus-Storage Benefits Vary in Duration and Frequency

Discharge Duration

Freq

uenc

y of

Use

DR Revenues DG Electricity Sales

Renewables Smoothing

Ancillary Services

Resiliency

Power Quality

Fuel Costs

Peak Demand Charges

Time-of-Use Shifting

Occ

asio

nal

Freq

uent

R

are

Long Medium Short Customer-site application Front-of-meter application Both sides of meter


Non-Residential Segment


Primary Drivers of Non-Residential Adoption – TOU Shifting and Demand Reduction

Discharge Duration

Freq

uenc

y of

Use

Peak Demand Charges


Occ

asio

nal

Freq

uent

R

are




Lifetime Commercial Solar-Plus-Storage System Economics

-$6

-$4

-$2

$0

$2

$4

$6

$8

$10

Revenue/Savings Costs Total Value

Syst

em E

cono

mic

s fo

r Lar

ge O

ffice

- 45

0 kW

So

lar,

375

kW/7

50 k

Wh

Stor

age

(USD

Milli

ons)

Energy Savings Demand Charge Savings ITC Credit

State Storage Incentive System Cost (Excluding benefits) O&M Cost

Battery Replacement Cost Inverter Replacement Cost Interest Payment

Total Tax Payment Total System Value

$7.8 million

-$4.1 million

$3.6 million

Energy Savings $2.3 million Demand Charge Savings $4.5 million ~ Double that of Energy Savings


Residential Segment


Primary Drivers of Residential Adoption - TOU Shifting

Discharge Duration

Freq

uenc

y of

Use


Occ

asio

nal

Freq

uent

R

are




Hawaiian Electric Case Study

Customer Profile

Customer Type Large Residential

Utility Hawaiian Electric (HECO)

Tariff Schedule TOU-R

Year of Installation 2018

Scenario 1 - Today Full Retail NEM Weighted Avg. Electricity Price: $0.38/kWh Optional Time-of-Use Pricing

Scenario 2 - Theoretical

PV Export Price Drops to $0.16/kWh



0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Export (kWh)

Export - Solar Only Export - Solar Plus Storage

Reduce Export

Avoid Peak Prices

$0

$50

$100

$150

$200

$250

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year

1 -

Rev

enue

/Sav

ings

($

)

First Year Revenue/Savings on Excess Solar Generation

NEM Revenue (Current) FIT Revenue (Proposed) w/o Storage FIT Revenue (Proposed) w/ Storage Storage Savings (Proposed)

How Residential Energy Storage Actually Works



Storage Can Improve Residential Solar Economics in Lower Export Tariff Scenario - Hawaiian Electric Company

21%

13% 13%

0%

5%

10%

15%

20%

25%

Solar - Current NEM Solar - Proposed Tariff Solar-Plus-Storage - Proposed Tariff

Unl

ever

ed In

tern

al R

ate

of R

etur

n (%

)


Utility-Scale Segment


Primary Drivers of Utility-Scale Adoption – Renewable Smoothing and Electricity Sales (TOU)

Discharge Duration

Freq

uenc

y of

Use

DG Electricity Sales

Renewables Smoothing

Occ

asio

nal

Freq

uent

R

are




Utility-Scale Solar-Plus-Storage Explored in Five Flavors

Mandates and Utility

Procurements

Capacity Needs

PPAs or Auction

Mechanisms Technical

Requirements

Co-Location with Benefits

Anahola Solar Farm, Kauai, HI 6 MW on 12 MW PV

Three 4 MW Projects at PG&E-Owned Solar Sites

in CA (AB 2514 RFO)

TBD Salinas, Puerto Rico

3.6 MW on15.5 MW PV

Jacumba, San Diego, CA 10 MW with 20 MW PV


Outlook


Annual U.S. Solar-Plus-Storage Market to Reach 769 MW by 2020

5 5 4 4 22 71 91

195

407

769

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

0

100

200

300

400

500

600

700

800

900

2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E

Percentage of Solar-Plus-Storage Installations /Total Solar Installations

Sola

r-Plu

s-St

orag

e D

eplo

ymen

ts (M

W)

Utility-Scale Deployments (MW) Total Deployments (MW) % of Behind-the-Meter Solar-Plus-Storage Installations % of Utility-Scale Solar-Plus-Storage Installations


www.gtmresearch.com

Annual California Solar-Plus-Storage Market to Reach 422 MW by 2020

-23-

0 3 1 3 9 34

52

98

205

422

0%

2%

4%

6%

8%

10%

12%

0

50

100

150

200

250

300

350

400

450

500

2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E

Percentage of Solar-Plus-Storage Installations /Total Solar Installations

Sola

r-Plu

s-St

orag

e D

eplo

ymen

ts (M

W)

Behind-the-Meter Deployments (MW) Utility-Scale Deployments (MW) % of Behind-the-Meter Solar-Plus-Storage Installations % of Utility-Scale Solar-Plus-Storage Installations


www.gtmresearch.com

Annual U.S. Solar-Plus-Storage Market to Cross $3.1 Billion by 2020

-24-

$346 $104 $59 $52

$246

$643 $554

$1,025

$1,817

$3,135

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E

Annu

al S

olar

-Plu

s-St

orag

e M

arke

t Siz

e (M

illion

$)

Behind-the-meter (Million $) Utility (Million $)


RESEARCH PROVIDED BY

Thank You!

Ravi Manghani Senior Analyst, Energy Storage

GTM Research [email protected]

us solar –plus-storage market drivers , economics and

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