Dan Rastler Technical Leader, Distributed Energy Resources Program drastler@epri 650-855-2521

1. Accelerating Innovations in Distributed Energy Storage Systems – for Electric Utility MarketsAn EPRI Innovator Circle Project Dan Rastler Technical Leader, Distributed Energy Resources Program drastler@epri.com 650-855-2521

2. Agenda1-What are Your Critical Challenges? • What are your issues of greatest concern over the next 3-5 years? • What breakthroughs in electricity storage could produce the most beneficial solutions to address your concerns? 3. How important is a quantum improvement in efficient asset utilization, perhaps engineered through distributed electricity storage? 4. What are the most important metrics and parameters for Distributed Energy Storage to be a success?

3. Agenda 2- Solutions to Your Critical Challenges: • Distributed Energy Storage Market Requirements: 1.What are the points of interconnection and integration with your systems? 2. What are the key features, characteristics, and product attributes? 3. What are your cost targets, capital, O&M; installation requirements? 4. What are your durability and life targets? 5. What are the most current difficult technical challenges to a breakthrough in DES ?

4. Agenda 3- Project Overview • How will EPRI address these challenges? (Objectives, Goals, Action Plan of EPRI Innovation Initiative) • What is a Collaborative Innovation Network (COIN)? • Why become a Stakeholder?

5. A Convergence of Drivers - Creating an Opportunity for Innovation in Electric Storage Hybrid Vehicles Energy Security Electric Storage Advanced Materials Aging Grid Global Electrification Renewables & Sustainability Increasing Electric Costs

6. What are your issues of greatest concern over the next 3-5 years? Some Examples from our last Web Cast: • Maintaining High Service Reliability • Managing Costs of Delivered Service • Effective Integration of Renewables • Significantly Improving Use of Grid Assets

7. Draft SpecificationMetrics for Breakthrough in Distributed Energy Storage Utility Distribution Substation Application: • Size: 5-10 MWs / 25 to 100 MWhs • Fully integrated system with PCS & controls • Total Installed cost < $ 300 per kWh • 10 Year storage system life • 500 deep cycles per year • Excellent Power Quality (IEEE 519) • Fast Transient response • Easy installation and interconnection • Easy Siting and Permitting • UCA / Intelligrid Communication and Control • Foot Print and space: easy fit within utility substation area

8. Draft SpecificationMetrics for Breakthrough in Distributed Energy Storage Commercial Market Segment Application: • Size: 50 – 200 kW / 500 -1500 kWhs • Fully integrated system with PCS & controls • Total Installed cost < $ 300 per kWh • 10 Year storage system life • 500 deep cycles per year • Excellent Power Quality (IEEE 519) • Easy installation and interconnection • Easy Siting and Permitting • UCA / Intelligrid Communication and Control • Foot Print and space: small & compact • Out door installation

9. Draft SpecificationMetrics for Breakthrough in Distributed Energy Storage Residential Market Segment Application: • Size: 1 – 5 kW / 20 -50 kWhs • Fully integrated system with PCS & controls • Total Installed cost < $ 300 per kWh • 10 Year storage system life • 500 deep cycles per year • Excellent Power Quality (IEEE 519) • Easy installation and interconnection • Easy Siting and Permitting • UCA / Intelligrid Communication and Control • Foot Print and space: small and compact • Out door installation

10. Project OverviewAccelerate Innovation in Development of Breakthrough Distributed Energy Storage Systems – for Electric Utility Markets • EPRI’s Road Map identified electricity storage as a key technical challenge to enabling a more robust electric distribution and power delivery system. • This project will seed a “virtual” collaborative to drive R&D innovation in distributed energy storage. • This project is funded from EPRI Technology Innovation Area and is separate but closely linked to EPRI’s DER and Energy Storage Programs.

11. Project ApproachAccelerate Innovation in Development of Break-Through Energy Storage Systems – for Electric Utility Markets Innovation Processes To help solve the issue of cost effective energy storage, ERPI will pilot a new innovation process.  The unique features are: • Market Pull - Utilities Define Key Electric Storage Attributes – Purpose of this Web Cast • Rigorous focus on key issues and difficult challenges and develop the “Core Discovery Puzzle (CDP) for cost reduction breakthroughs in distributed electricity storage 2. Application of advanced discovery/innovation methodologies and Internet search and networking 3. Building a virtual collaborative network and public/private partnerships of strategic alliances and global innovation networks

12. Project Approach – Project Work PlanAccelerate Innovation in Development of Break-Through Energy Storage Systems – for Electric Utility Markets • Task 1: Organize and Launch the Project - Define market requirements and electricity storage requirements. - Identify key stakeholders to helpdefine the Core Discovery Puzzle (CDP), including problem definitions, bottlenecks, and difficult challenges • Task 2: Initial 2-Day Organizational Meeting at EPRI Industry experts and stakeholders help drive research effort; develop networking protocols and start to build public/private partnership • Task 3: Workshop at the Institute for Engineering and Management (TiME) at Case Western Reserve University Apply i-TRIZ, one methodology in the Innovation Engine, to the specific problems of distributed electricity storage systems in the 5 kW-h to 5 MW-h range. • Task 4: Synthesis of Important Findings and Action Plan Integrate work into EPRI’s R&D Program and develop follow-on implementation activities: e.g. R&D, test and validation, field deployment, market integration.

13. Project Approach – Engage StakeholdersAccelerate Innovation in Development of Break-Through Energy Storage Systems – for Electric Utility Markets Stakeholders • Markets: Electric Utilities • Scientists, Researchers • Public Institutions: DOE, CEC • Private Investors - Venture Capital Firms • OEMs: Equipment Vendors • System Integrators • Component and Material Suppliers • Universities, and National Labs • DARPA • Auto Companies • NASA

14. Portfolio of Electric Energy Storage Options Decentralized Energy Storage Options: • Battery Systems (Various Types) • Flywheels • Superconducting Magnetic Energy Storage (SMES) • Ultra-Capacitors

15. Core Innovation Challenges OptionChallenge Battery Larger Surface Area Electrodes Frequent deep cycles Low cost integrated system SMES Higher Capacity Current high-temp superconductors Flywheel Higher Tensile Strength Material s Super Caps Higher voltage cells High reliability Lamination of cells & stacks

16. EPRI Project Team • Dan Rastler, Project Manager • Steve Eckroad • Robert Schainker • Mark Duvall • Steve Gehl • Julian Gresser, Alliance for Discovery • Gary Wnek, Case Western University

17. Project Next Steps • Continue Web Casts with Key Stakeholders • Utilities • Vendors • National Labs, DOE • Plan for 1st Project Workshop at EPRI • Tentatively Planned for March 2006 • Build Collaborative Network • Web site • Plan for 2nd Project Workshop at Case Western University • Tentatively Planned for June 2006

18. EPRI Innovation Matrix

19. Why Become a Stakeholder in the EPRI Innovation Consortium ? Finally solve the electricity storage challenge