Energy Storage Landscape & Challenges in Alaska

1. Energy Storage—Current state of Charge Archie DeBunker & Dennis Witmer

2. Where I’d rather be….

3. Why do we need energy storage? • Grid environment— • Renewables Firming (Wind and PV) • Frequency Stabilization • Energy Arbitrage (buy low, sell high) • Transmission upgrade deferral (GVEA BESS) • Alaska • Save Diesel • Allow very high penetration of wind (much greater than 100% of peak demand) • Diesels off operation • Load shifting to save fuel after wind event • Alaska needs are different—but our market isn’t big enough to drive product development

4. Product Development Scale • Ends of the scale don’t require much investment risk—ideas are cheap, commercial products can produce profits to support incremental R&D • “Pre-Commercial” phase is especially dangerous for energy products—requires significant capital investment at high risk. • Different than software development • Real hardware needs to be developed—good engineering skills required—and you limited by chemistry and physics • Must compete with existing commercial products (electrical grids, diesel generators) • Inventors turn to capital markets for investment • Customers are important to convince investors that there is a real market, but customers are not the source of sufficient funding to drive product development.

5. Commercial Products • Commercial products have: • Fixed Price • Fixed delivery date • Fixed specifications • Warrantee • If product lacks any of the above, it is not a commercial product • Commercial products are cheap and they work • Most energy storage devices are not real commercial products yet • A brochure describing technical specs can be made in Adobe InDesign—it does not mean that a real product exists—specifications may be more aspirational than real • There is almost always a gap between the hype and the hardware in pre-commercial products

6. Playing the role of “First Customer” (Hard lessons from Fuel Cells) • If cheap, reliable energy storage is possible, Alaska needs it • Product developers need to understand our needs so their products will work here—but will be developing products for larger markets • Pre-commercial products are very likely not to work as well as advertised • Product failures must be expected— • Failure to deliver on purchase order • Failure to meet initial specifications • Rapid degradation or other failures in the field • This is research—the product we get is information about the energy storage systems • Funding should be intended for R&D—not from operations. • Recognize that suppliers are more interested in investors than in customers—we really aren’t that important to them now • Supplier independent thinking—it’s the job of the developer to provide us with a product that works, and if they can’t, we try another supplier—or another technology. • A number of large utilities in the lower 48 are following storage for grid applications—Duke, SMUD, EPRI—perhaps worth visiting.

7. Need for modeling • How much is energy storage worth? • How much diesel fuel can be saved? (modeling?) • How long will storage system last? (Need testing data) • Back of envelope calculations—show that many energy storage systems are too expensive for load shifting applications • More sophisticated modeling is needed to assess value for stabilization applications • Electrochemical systems often degrade more rapidly under high current density conditions • Modeling can be used as a screening tool to properly size systems, and screen out systems that are unlikely to be economical • Cannot answer basic questions about hardware—need to find other sources of information on systems.

8. Preliminary Modeling Of KEA System for 24 hour period

9. State of the Energy Storage Market • Energy storage is becoming part of the US grid market • Recent changes to FERC rules that allow third parties to provide frequency stabilization services and bill for them. • Dozens of companies are developing products for this market • Many of the companies are small, and are chasing capital. • Money is flowing—about $600 M in investment across the industry, mostly in past few years

10. Types of Energy Storage • Pumped Hydro • Compressed Air • Underground • Above ground—SustainX Isothermal Storage • Flywheels • Beacon Power had failures, went bankrupt, is back under new management • Powercorp has flywheel system, but appears to be tentative about marketing unit • Batteries

11. Batteries • NGK Sodium Sulfur battery appears dead • Two fires, appear to be preparing to shut down and recall all batteries in the field • Lead Acid and Advanced Lead Acid • Xtreme Power • Appears to be using advanced lead acid battery technology developed for automotive applications • Ecoult Lead Carbon battery • Appears to have much better deep discharge and partial charge performance—but high quality graphite can be expensive

12. Li-Ion Batteries • Still appear to be quite expensive and may suffer from relatively rapid degradation • A123, Altairnano, and numerous other suppliers exist • Automotive applications are main driving force—but stationary applications might be able to use reconditioned automotive batteries • Use in peak shaving applications, not for load shifting

13. Flow Batteries • Prudent Energy • Vanadium has become quite expensive, but major cost of small systems (UAF sized) is in balance of plant • Larger system being demonstrated in California at onion processing plant • ZBB appears active but emphasized power electronics rather than battery technology • Redflow gave initial results from a community based demonstration, but gave no economics • Premium Power attended, but did not present • Numerous new companies are attempting to develop flow battery technologies

14. Other Batteries • Zinc Air • Nice presentation, but apparently unchanged from past three years • Aquion • Appears to be the darling of the VC crowd • Some slippage in schedules, but appears to be aiming for demonstration later this year • MIT liquid metal battery • Lots of interest, but still keeping fairly low profile.

16. EPRI Cost Benefit Analysis

17. Update on Premium Power • Recent change in ownership of company • New investors are putting $60M into company • Deal completed October 2011 • Previous management is gone • Battery shipped to Kotzebue is currently being described as a “mistake” • Transflow 2000 difficult to work on in field • Fittings that loosened during shipping are impossible to access • Lack of requested plastic shrink wrap around unit allowed salt water intrusion during shipping—may lead to electrical problems • Issues between old management and new management were brought to a head over discussions on how to support the unit

18. Update on Premium Power • Discussions with Premium Power reps at ESA meeting, and with KEA in May—PP wants the unit back. • Company is stepping back from product, focusing current work on basic understanding of technology • Have hired a flock of consultants to help with product development • Running stacks to failure, and conducting FMA • Discovering issues at deep discharge levels, high current densities • Admitted that promised storage levels on Transflow 2000 had never been verified (FAT showed about half of 2.8 MW-hr capacity) • Backing away from trailer mounted system to smaller 125 kW Conex based systems • Will not be shipping any product from factory before end of 2012 • Proposed shipping a 125 kW stack to Kotzebue in 2013, balance in 2014 • Promise that their units will meet specs, whatever they turn out to be