Energy Storage System Costs 2011 Update Executive Summary

Energy Storage System Costs 2011 Update Executive Summary Presented to Storage System Suppliers 22 February 2012 Dan Raslter, EPRI Abbas Akhil, SNL Dave Gauntlett, AECOM Eric Cutter, E3

Agenda Items for Today s Web Cast Introduction to EPRI -Overview of EPRI Energy Storage Program U.S. Activities in Energy Storage Background Cost Benchmarking Activity Summary of CapEx / O&M Estimates Summary of LCOE Results & Sensitivities Uncertainties To Consider Recommendations Future Work Discussion and Feed Back 2

The Electric Power Research Institute (EPRI) Independent, non-profit, collaborative research institute, with full spectrum industry coverage Nuclear Generation Power Delivery & Utilization Environment & Renewables Major offices in Palo Alto, CA; Charlotte, NC; and Knoxville, TN 3

Our Members 450+ participants in more than 40 countries EPRI members generate more than 90% of the electricity in the United States International funding of more than 18% of EPRI s research, development and demonstrations Programs funded by more than 1,000 energy organizations 4

Our Role Help Move Technologies to the Commercialization Stage Technology Accelerator! 5

EPRI Energy Storage Program Mission Facilitate the development and implementation of storage options for the grid. Understanding storage technologies Identifying and calculating the values of storage Specification and testing of storage products Implementation and deployment of storage systems 6

Collaboration The storage program is expanding cooperation with other groups to deliver more value EPRI programs (Transportation, Efficiency, Grid Ops, Intelligrid, Renewables, Generation) Government agencies (DOE, CEC, NYSERDA, and others) Industry groups (Electricity Storage Association) Universities (Case Western, University of Tennessee, Stanford, MIT, CalTech) 7

Energy Storage Key Resources Key Reports: Electric Energy Storage Technology Options: A White Paper Primer on Applications, Costs and Benefits (EPRI 1020676) Executive summary (EPRI 1022261) Functional Requirements for Electric Energy Storage Applications on the Power System Grid (EPRI 1022544) SMUD Case Study (1023591) Key Newsletters Strategic Intelligence Updates 8

Agenda Items for Today s Web Cast Introduction to EPRI -Overview of EPRI Energy Storage Program U.S. Activities in Energy Storage Background Cost Benchmarking Activity Summary of CapEx / O&M Estimates Summary of LCOE Results & Sensitivities Uncertainties To Consider Recommendations Future Work Discussion and Feed Back 9

Energy Storage Demonstrations in the U.S. Planned or Under way List is Not Complete DTE 500 kw / 250 kwh Li-ion MI (A123) NYSEG 145 MW Adv. CAES Watkins Glen, NY (EPRI) SustainX 1 MW / 4 MWh Isothermal CAES MA / NH SMUD 500 kw / 3 MWh ZnBr Sacramento, CA (Premium Power) 25 kwh Li-ion Berkeley, CA (Seeo) Amber Kinetics Flywheel Fremont, CA (LLNL) PG&E 300 MW Adv. CAES Kern County, CA (EPRI) PG& E NaS Battery (NGK) SMUD 5 kw / 9 kwh Li-ion (Saft) 25 MW Zn-Air Flow Battery Modesto, CA (Primus) Xcel Energy 1.5 MW / 1.0 MW Denver, Co (Xtreme Power) 25 kw / 50 kwh NaNiCl2 (FIAMM) KCP&L Li-ion Kansas City, MO (Dow Kokam, Siemens) PJM 20 MW Flywheel Chicago, IL (Beacon) NGrid 500 kw / 3 MWh ZnBr Syracuse, NY (Premium Power) AEP 2 MW Li-ion for CES OH (International Battery, S&C) NGrid 500 kw / 3 MWh ZnBr Everett, MA (Premium Power) DTE 500 kw / 250 kwh Li Ion MA (A123) PJM 3MW Adv Lead Acid Lyon Station, PA (East Penn, Ecoult) Carnegie Melon Na Ion Pittsburgh, PA (Aquila) SCE 8 MW / 32 MWh Li-ion Tehachapi, CA (A123) Vanadium ReDox (Prudent Energy) 250 kw / 1 MWh Iron / Chrome flow battery Modesto, CA (Ktech Corp ) PNM Adv, Lead Acid Albuquerque, NM (East Penn) Duke 20 MW TBD Wind Support Notrees, TX 10

Current / Planned U.S. Li-ion Demonstrations List is Not Complete Auto Major Contract DTE: 500 kw (A123) AEP: 2 MW (Int l Battery) No Auto Contract *Size of star indicates scale of demo SMUD: 5kW / 9kWh (Saft) SCE: 8 MW / 32 MWh (A123) SCE: distributed Li-ion systems, 10 kwh each (LG Chem) HECO: 5 kw / 20 kwh (GreenSmith) HECO: 1 MW / 15 min (Altairnano) UCSD: 15 kwh (Sanyo) APS: 0.5 MW (Electrovaya, ABB) Progress Energy: 5 kw/ 20 kwh (GreenSmith TS) NYPA: 1 MW / 250 kwh (Ultralife Corp) AES: 1 MW / 250 kwh (Altairnano) KCPL: 1 MW (Dow Kokam) Field Trials of Li-ion Systems has Accelerated in the past 2 years Duke Energy: 25 kw & 250 kw (Kokam) Southern Co: 60 kw / 240 kwh (GreenSmith TS) Southern Co: 25 / 75 kwh (RW Beckett) Battery OEMs A123Systems AltairNano EnerDel Saft Dow Kokam International Battery GreenSmith / Thundersky Sanyo Ultralife Electrovaya Kokam Boston Power 11

Agenda Items for Today s Web Cast Introduction to EPRI -Overview of EPRI Energy Storage Program U.S. Activities in Energy Storage Background Cost Benchmarking Activity Summary of CapEx / O&M Estimates Summary of LCOE Results & Sensitivities Uncertainties To Consider Recommendations Future Work Discussion and Feed Back 12

EPRI Energy Storage Cost Benchmarking Research Questions Understand Performance, Capabality, and Costs of Energy Storage Options in Various Applications Understand Total Installed Cost for Installation and Interconnection Develop Reference Designs and Cost Estimates for Bulk Storage Options Identify New Energy Storage Systems, Understand their capabality and timelines for Demonstration and Delpoyment Develop an Approach for Cost of Electricity and Life Cycle Ownership 13

Caveats Cost Benchmarking Results can only be used to provide a directional understanding of a system s capabality: Site and Location Specific details as well as Application Specific use cases will result in varying cost impacts from those detailed in this presentation. Not all suppliers and system integrators are represented among the technology options- and therefore costs within a group may vary. Benchmarking costs are not a substitute for obtaining detailed quotes based on detailed specifications and more detailed use caes. O&M costs, fixed and variable and component replacement costs are highly uncertain at this time. The Levelized Cost of Electricity ( life-cycle-owner s costs) is still evolving and needs continued development; improved definition of terms and input from industry stakeholders. 14

Energy Storage System Costs 2011 Update Participants "LG Chem Power, Inc" NEC Parker Hannifin Powergetics Premium Power Primus Princeton Power Systems Prudent Energy RedFlow Ricardo Inc. "RW Beckett Corp" S&C Saft Samsung SDI Satcon Siemens Silent Power Sunverge Toshiba International Corp Xtreme Power ZBB Energy Fluidic Energy ReVolt A123 ABB Inc Altairnano Aquion Energy Beacon Power Boston Power BYD Dow Kokam Dresser-Rand Dynapower Ecoult/East Penn Energy Storage & Power EnerSys Enervault Exide FIAMM GE Green Charge Networks GreenSmith EOS GS Yuasa/GS Battery (USA) Inc. International Battery IONEX Energy Storage Systems, Inc Isentropic Ltd 15

2011 ESS Cost Database Approach and Scope Approach: AECOM Under EPRI Contract - Update Performance and cost data sheets with input from DOE Scrub older data sheets from 2010 Update Supplier and System Integrator Contacts Solicit New Suppliers; Battery OEMs, System integrators; PCS companies Solicit New Inverter Companies: 3 Improve Functionality of data base via Project Selection Tool: Project Screening for Site Specific Analysis Project Budgeting Levelized Cost of Electricity Calculator ( 2012*) Cash Flow / Pro Forma ( 2012* ) * Integrated in 2012 Database 16

SUMMARY DATA Application Technology Technology / System Screening Tool SITE SPECIFIC SYSTEM SELECTION AND ANALYSIS The 2011 Energy Storage Cost Database was Updated GRAPHS Total Plant Cost Application/Technology and System Size Power Plant Cost Application/Technology and System Size Storage Plant Cost Application/Technology and System Size LEVELIZED COSTS -012 Life-cycle Analysis Levelized Life cycle cost Analysis Performa WORKBOOK LAYOUT COST ESTIMATES DATA DEVELOPMENT CAES Size: 3MW 440MW Hrs: 4-8 CT-CAES (Above Ground) CT-CAES (Below Ground) BRAYTON-CAES (Below Ground) PUMPED HYDRO Size: 280MW 1,400MW Hrs: 6-10 BULK STORAGE Size: 20MW 100MW Hrs: 4-7.2 NaS Advanced Lead Acid Zn/ Br Vanadium Redox Fe/ Cr Zn/ Air Zn-Halogen Na-ion NaNiCl2 RENEWABLE INTEGRATION AND FREQUENCY REGULATION Size: 1MW 100MW Hrs: 0.3-1.4 Advanced Lead Acid Li-ion Flywheel UTILITY T&D GRID SUPPORT Size: 1MW 100MW Hrs: 1-10 NaS Advanced Lead Acid Li-ion Zn/ Br Vanadium Redox Fe/ Cr Zn/ Air NaNiCl2 DISTRIBUTED ENERGY STORAGE SYSTEMS (DESS) Size: 25kW-50kW Hrs: 1-5 Advanced Lead Acid Li-ion Zn/ Br NaNiCl2 COMMERICAL AND INDUSTRIAL (C&I) WITH/WITHOUT PV Size: 50kW-1.2MW Hrs: 2-10 NaS Advanced Lead Acid Li-ion Zn/ Br Vanadium Redox Fe/ Cr Zn/ Air RESIDENTIAL ENERGY MANAGEMENT (REM) WITH/WITHOUT PV Size: 2kW-15kW Hrs: 1-8 Advanced Lead Acid Li-ion Zn/ Br WORKBOOK LAYOUT DATA DEVELOPMENT APPENDIX RESEARCH APPROACH AND ASSUMPTIONS SUPPLIERS POWER INVERTER SYSTEMS 17 INTERCONNECT DIAGRAMS APPLICATION REQUIREMENTS SCOPE

2011 ESS Cost Database Basis of Cost Estimates CapEx Assumptions: Battery Equipment Battery Installation & Enclosure PCS Utility Interconnection BOP Project Soft Costs Supplier Specific EPRI / AECOM Developed Consistent in Size & Technology O&M and Replacement Assumptions: Fix O&M Variable O&M Interim Replacement Costs Interim Replacement Yr EPRI / AECOM Developed Consistent in Size & Technology 18

2011 ESS Cost Database Basis of Cap-Ex Estimates General Assumptions for Cap-Ex Costs PCS and Interconnect Average of three surveyed suppliers. Interconnect and PCS one line diagrams developed for system sizes (5kW 100MW) Battery Installation and Enclosures Installation is 5% of the ES Equipment Cost unless included Buildings >= 1MW ; Containers < 1MW BOP Installation Civil Works only Project Soft Costs Project is dependent on Installation cost and Technology Maturity (0 15%) Process is dependent on Equipment cost and Technology Maturity (0 15%) 19

2011 ESS Cost Database Basis of O&M Estimates General Assumptions for Calculating O&M Costs* Fixed O&M is 2% of the PCS costs Variable O&M is 2$/kW for systems size <= 10 MW and 1 $/kw for systems size > 10MW Battery Replacement Costs = 30% of Battery Equipment for all technologies except Li-ion (50%) Battery Periodic Replacement 5 years for Li-ion and 7.5 years for all other technologies Periodic Major Maintenance for CAES systems is 2.5$/MWh for every 7 years Periodic Major Maintenance for Pumped Hydro systems is 20% of TPC for every 25 years Number of cycles per year = 365-17,500 depending on the application Plant Life = 15-50 years depending on technology * Proxy Estimates due to lack of industry credible data 20

PCS and Utility Interconnection - One-line electrical diagrams (5kW to 100MW) 21

PCS Equipment Costs - 2011 $ / kw Represents data from three suppliers only; several chose not to participate $2,500 $2,000 $1,500 $/kw PCS 1 PCS 2 PCS 3 Average $1,000 $500 $0 System Size 22

Project and Process Contingencies Technology 5kW - 50kW 100kW - 1MW 2MW - 10MW 25MW - 100MW 101MW - 500MW Process Project Process Project Process Project Process Project Process Project CAES na na na na 10% 10% 10% 10% 10% 10% Pumped Hydro na na na na na na na na Included Included NaS 0% 0% 0% 5% 0% 5% 0% 10% na na Advanced Lead Acid 5% 0% 5% 5% 5% 5% 5% 10% na na Li-ion 10% 0% 10% 5% 10% 5% 10% 10% na na Vanadium Redox 5% 0% 5% 5% 5% 5% 5% 10% na na Zn/Br 10% 0% 15% 10% 15% 10% 15% 15% na na Fe/Cr 15% 0% 15% 10% 15% 10% 15% 15% na na Zn/Air 15% 0% 15% 10% 15% 10% 15% 15% na na Flywheel na 0% na na na na 0% na na na Sodium Metal Halide na na 10% 5% 10% 10% 10% 10% na na Zinc Halogen na na 15% 15% 15% 15% 15% 15% na na Sodium Ion na na na na na na 15% 15% na na 23

Cap-Ex Summary -Energy Storage System Costs 2011 Total Installed Cost $ / kw $14,000 $12,000 BULK ENERGY STORAGE SUBSTATION/ FEEDER GRID SUPPORT END-OF LINE GRID AND END- USER ENERGY MANAGEMENT $10,000 $ / kw $8,000 $6,000 $4,000 $2,000 $0 PH CAES CAES NaS Advanced Lead Acid Zinc Bromine Vanadium Redox Fe / Cr Zn / Air Sodium Metal Halide Zn Halogen Sodium Ion CAES NaS Advanced Lead Acid Li-ion Zinc Bromine Vanadium Redox Fe / Cr Zn / Air Sodium Metal Halide Zn Halogen Advanced Lead Acid Li-ion Zinc Bromine Sodium Metal Halide Advanced Lead Acid Li-ion Zinc Bromine 280 MW 180 MW 50 MW 10-1 MW 100-50 kw 10-2 kw Technology Size / Type 24

Cap-Ex Summary -Energy Storage System Costs 2011 Total Installed Cost $ / kw $14,000 $12,000 BULK ENERGY STORAGE SUBSTATION/ FEEDER GRID SUPPORT END-OF LINE GRID AND END- USER ENERGY MANAGEMENT $10,000 1,2,3 $ / kw $8,000 1,3 1,2,3 1,2,3 1,2,3 $6,000 $4,000 $2,000 $0 PH CAES CAES NaS Advanced Lead Acid Zinc Bromine Vanadium Redox Fe / Cr Zn / Air Sodium Metal Halide Zn Halogen Sodium Ion CAES NaS Advanced Lead Acid Li-ion Zinc Bromine Vanadium Redox Fe / Cr Zn / Air Sodium Metal Halide Zn Halogen Advanced Lead Acid Li-ion Zinc Bromine Sodium Metal Halide Advanced Lead Acid Li-ion Zinc Bromine 280 MW 180 MW 50 MW 10-1 MW 100-50 kw 10-2 kw Technology Size / Type Wide Range of Costs Due to: 1. Technology; 2. Hours of Storage; 3. Maturity 25

Cap-Ex Summary -Energy Storage System Costs 2011 Total Installed Cost $ / kwh $5,000 $4,500 BULK ENERGY STORAGE SUBSTATION/ FEEDER GRID SUPPORT END-OF LINE GRID AND END- USER ENERGY MANAGEMENT $4,000 $3,500 $3,000 $ / kwh $2,500 $2,000 $1,500 $1,000 $500 $0 PH CAES CAES NaS Advanced Lead Acid Zinc Bromine Vanadium Redox Fe / Cr Zn / Air Sodium Metal Halide Zn Halogen Sodium Ion CAES NaS Advanced Lead Acid Li-ion Zinc Bromine Vanadium Redox Fe / Cr Zn / Air Sodium Metal Halide Zn Halogen Advanced Lead Acid Li-ion Zinc Bromine Sodium Metal Halide Advanced Lead Acid Li-ion Zinc Bromine 280 MW 180 MW 50 MW 10-1 MW 100-50 kw 10-2 kw Technology Size / Type 26

Cap-Ex Summary -Energy Storage System Costs 2011 Total Installed Cost $ / kwh at Rated DOD $5,000 $4,500 BULK ENERGY STORAGE SUBSTATION/ FEEDER GRID SUPPORT END-OF LINE GRID AND END- USER ENERGY MANAGEMENT $4,000 $3,500 $3,000 $ / kwh $2,500 1,3 1,2,3 1,2,3 1,2,3 1,2,3 $2,000 $1,500 $1,000 $500 $0 PH CAES CAES NaS Advanced Lead Acid Zinc Bromine Vanadium Redox Fe / Cr Zn / Air Sodium Metal Halide Zn Halogen Sodium Ion CAES NaS Advanced Lead Acid Li-ion Zinc Bromine Vanadium Redox Fe / Cr Zn / Air Sodium Metal Halide Zn Halogen Advanced Lead Acid Li-ion Zinc Bromine Sodium Metal Halide Advanced Lead Acid Li-ion Zinc Bromine 280 MW 180 MW 50 MW 10-1 MW 100-50 kw 10-2 kw Wide Range of Costs Due to : 1. Technology; 2. Hours of Storage; 3. Maturity 27 Technology Size / Type

Cost Comparison Metrics for Utility Resource Planning Levelized Cost of Energy (LCOE) - $/MWh All in $/MWh revenue needed to fully recover all fixed and variable costs (which include a return on capital invested) Levelized Cost (of Capacity) - $/kw-yr All in $/kw-yr revenue needed to fully recover all fixed and variable costs (which include a return on capital invested) Commonly used to compare costs of fossil and renewable technologies with different operating characteristics 28

Levelized Cost - Example Present Value $136 million $40 $20 Levelized revenue of $22.7 million per year $22.7 Million 109,500 MWh = $208/MWh = $455/kW-Yr. = $2,729/kW Installed $136 Million 50,000 kw $ Million $0 ($20) ($40) Annual operating costs, financing & taxes Costs Revenue $22.7 Million 50,000 kw ($60) Total battery cost $49.3 million 50 MW, 6 Hour Storage System 109,500 MWh Discharge per year 15 year life Installed cost of $1,428/kW = $49.25 Million Levelized annual revenue $22.7 million Levelized Costs $208/MWh $455/kW-Yr. PV Costs $2,729/kW Installed 29

Financial / Cash Flow Model Calculates levelized revenues needed to provide target return on equity/capital (after-tax cash flow) Energy production based on cycles per year input Includes: Operating costs Financing costs Depreciation Tax Credits Taxes Same model used for evaluating fossil and renewable energy project costs 30

Limitations of Levelized Cost Analysis Useful for high level policy and utility planning screening analysis Only a first step before more detailed analysis is performed Captures broad but not detailed differences across technologies e.g. capacity factor, efficiencies, replacement costs But not, speed of response, fast vs. slow cycling 31

LCOE EPRI Developed LCOE Calculator Key System Inputs Unit Capacity - kw Hours of Storage Hr Depth of Discharge - % Plant Life Yr *Round Trip AC/AC Efficiency - % Number of Cycles Cycles/Yr *Cap Ex - $ *O&M (fixed and variable)- $ *Replacement Cost $ *Periodic Replacement Yr * Inputs used in sensitivity analysis 32

LCOE EPRI Developed LCOE Calculator Financial Assumptions Typical of Investor Owned Utilities 33

LCOE EPRI Developed LCOE Calculator Financial Assumptions 34

Estimated LCOE $ / MWh BULK ENERGY STORAGE SUBSTATION/ FEEDER GRID SUPPORT 35

LCOE $/MWh Sensitivity Analysis 1MW 5Hr $665 $797 Number of Cycles/Yr (365) 10% Increase $719 $733 Round Trip Efficiency (90%) 10% Decrease $713 $738 O&M - Replacement (1563 $/kw) $726 $725 O&M - Variable ( 0.0013 $/kwh) $725 $726 O&M - Fixed (9.2 $/kw-yr) $668 $783 ES Equipment Cost ($3.2MM) $550 $600 $650 $700 $750 $800 $850 LCOE - $/Mwh 36

LCOE Sensitivity Analysis - $/MWh Key System Inputs Input -/+ % Change LCOE $/MWh -/+ % Change Energy Storage Equipment, $* 10% -7%/ +7% O&M (fixed, Repl, Var), $ * 10% -2%/ +2% Round Trip Efficiency, % ** 10% +1% / -1% Number of Cycles/Yr ** 10% +10% / -8% * LCOE is directly proportional Cap-Ex and O&M. ** LCOE is inversely proportional to Round Trip Efficiency and Number of Cycles per year 37

Estimated Levelized Costs - $/ kw-yr BULK ENERGY STORAGE SUBSTATION/ FEEDER GRID SUPPORT 38

Levelized Costs $/kw-yr - Sensitivity Analysis 1MW 5 Hr $1,311 $1,337 Number of Cycles/Yr (365) 10% Increase $1,312 $1,338 Round Trip Efficiency (90%) 10% Decrease $1,301 $1,347 O&M - Replacement (1563 $/kw) $1,324 $1,324 O&M - Variable ( 0.0013 $/kwh) $1,323 $1,325 O&M - Fixed (9.2 $/kw-yr) $1,219 $1,429 ES Equipment Cost ($3.2MM) $1,100 $1,150 $1,200 $1,250 $1,300 $1,350 $1,400 $1,450 LCOE - $/kw Yr 39

Reference Design Study: 50 MW / 250 MWh Bulk Energy Storage Cost and Performance - Product ID: 1021940 Project Manager: Dan Rastler Objectives & Scope Understand the cost, perfomance and capablity of alternative non- CAES bulk storage options. Approach Identify energy storage options which have potential for low capital cost Obtain data from vendors and prepare conceptual level reference designs Update 2010 vendor estimates Document timing, availability, and level of technical readiness for future R&D planning. 40

50MW/250Mwh Reference Design Summary Bulk Storage System Characteristics Technology Option/ Characteristics Zn / Halogen Na-ion Sodium Metal Halide CAES Above Ground NAS Adv. Lead Acid Zn/Br Redox Vanadium Redox Fe/Cr Redox Zn/Air Redox Unit Capacity MW MWH 83 250 50 250 50 250 50 250 50 300 50 250 50 250 50 250 50 250 50 250 Ac-Ac Efficiency,% (heat rate)* Energy Ratio** 75-80 85-90 87 -------- 1.3MW -------- (4000) 1.0 75-80 85-90 60-65 75-78 70-75 70-75 Foot print Ft2/kW 2.0 1.9-5.1 ~0.6 1.6 2.0 1.9-5.1 0.9 2.0 4.44 1.3 Total Capital 2021- Costs ( $/kw) 1 2470 2367-2894 ~2823-3665 1762-1958 2764-3378 1753-4897 1506-1841 3361-4107 1,284-1569 1285-1570 Technical Maturity and readiness R&D R&D Demo Demo Comm ercial Commerc ial-demo Demo Demo R&D R&D LCOE - $/MWh 447-547 338-413 374-553 260-278 321-392 274-630 257-314 457-559 220-269 187-229 1. For Systems with just one supplier an adjusted Capital Cost range of +/- 10% is illustrated. For Systems with multiple suppliers their total cost range is illustrated. 41

50MW/250Mwh Reference Design Assumptions Process and Project Contingencies Process and Project Contingencies were applied to each technology based on level of technical maturity Storage Options Process (%) Project (%) Comment NaNiCl2 10 10 System Integration; thermal management Strong basis for battery system Zn / Halogen 15 15 Uncertainties in costs, life and efficiency Sodium Ion 15 15 Uncertainties in costs, life and efficiency CT-CAES 10 10 Controls and piping uncertainty NaS 0 10 Strong technical and cost basis Lead Acid 5 10 Uncertainties in construction and life Vanadium Redox 5 10 Good technical basis; demo needed Zinc Bromine Redox 15 15 Uncertainties in costs, life and efficiency Fe Cr Redox 15 15 Zn Air Redox 15 15 Uncertainties in costs, performance, efficiency and cycle life Uncertainties in costs, performance and cycle life and efficiency 42

50MW/250Mwh Reference Design Assumptions - O&M Battery Systems* : o o o o Fixed O&M ($/kw-yr) is 2% of the PCS costs - ( 2%/yr X (PCS Equip.+ PCS Install)) / (System kw) Variable O&M ($/kwh) is 1 $/kw ((1$/kW x System kw) / (Rated DOD x Cycles)) Replacement Costs ($/kw) (30% of Battery Equipment Cost) / (System kw) Replacement Interval (Yr) 50% to 100% of plant life o Number of cycles per year 365 o Plant Life (Yr) 15 CAES Systems * : o o o o Fixed O&M ($/kw yr) - 3 (provided by the supplier) Variable O&M ($/kwh) 0.003 (provided by the supplier) Periodic Major Maintenance ($/kw) - 90 (provided by the supplier) Period between Maintenance (Yr) 7 (provided by the supplier) o Number of cycles per year 365 o Plant Life (Yr) 50 *Proxy Estimates due to lack of industry credible data 43

50MW/250Mwh Reference Design Summary Total Plant Cost ( $/kw) 50 MW / 250 MWh Systems ( note: Zn-Halogen is 83 MW / 250 MWh; NaS is 50 MW / 300 MWh) The Figure above presents the total installed capital costs ( including process and project contingencies) for the systems studied. For Systems with just one supplier an adjusted Capital Cost range of +/- 10% is illustrated. For Systems with multiple suppliers their total cost range is illustrated. 44

50MW/250Mwh Reference Design Summary Levelized Costs of Electricity in $/MWh Assumptions: Project Term 15 years; Charging Cost - $50.00 ($/Mwh) ; Fuel Cost - $5.00 ($/MMBtu) For Systems with just one supplier an adjusted LCOE range of +/- 10% is illustrated. For Systems with multiple suppliers their LCOE range is illustrated; See Appendix for performance and financial assumptions 45

50MW/250Mwh Reference Design Summary Levelized Costs in $/kw -Yr Assumptions: Project Term 15 years; Charging Cost - $50.00 ($/Mwh) ; Fuel Cost - $5.00 ($/MMBtu); For Systems with just one supplier an adjusted LCOE range of +/- 10% is illustrated. For Systems with multiple suppliers their LCOE range is illustrated; See Appendix for performance and financial assumptions 46

50 MW / 250 MWh Reference Design - Conclusions The cost and performance estimates developed in this study should be regarded as conceptual to preliminary depending on the maturity of the technology. Costs for all systems will vary after more detailed engineering is under taken so the findings should be consisered directional in nature. Of the Bulk Storage systems investigated, above ground CAES, Advanced Lead Acid, NAS and NaNiCl2 batteries are available in the near-term for early demonstration and field trials in system configurations which could be scale-able to the sizes developed in this project. Many of the flow type battery systems, still in R&D, show good potential for cost reduction but still require technical validation of performance and durability at smaller scale. In that regard, they should be followed & monitored. Advanced storage systems based on NaNiCl2, Na-ion, Fe-Cr, Zn-Air and Zn- Halogen showed the potential for lowest projected Capex costs based on vendor claims and projected estimates. Na-ion, Fe-Cr and Zn Air and Zn- Halogen systems are the least mature and less technically proven of all options and uncertainties in their performance, life, O&M and capital cost is high. Above ground CAES systems also show potential for low cost.. 47

50 MW / 250 MWh Reference Design - Recomendations Detailed design's of an above ground CAES system should be undertaken to further refine budget, layout and performance estimates. A small demonstration in the 5 MW 4 hr size should be considered in the near-term. Demonstrations of smaller NaNiCl2 systems should be undertaken and planned demonstrations of these systems in 2012 should be followed. Zn Br, and Vanadium Redox systems should be closely monitored and tested. Demonstrations should be conducted to verify performance, efficiency and cycle life of integrated ac systems. More detailed engineering evaluations of Na-ion, Zn-Halogen, Fe-Cr and Zn-Air systems should be undertaken once systems have been tested and validated in smaller scale. At that time, capital costs should be re examined & benchmarked for the potential in bulk storage applications. Finally, there are an number of ARPA-E technologies in the R&D pipeline. They should be closely monitored and prioritized for future study as a bulk storage option. Iso-thermal CAES and Hydrogen production and storage for feed into natural gas distributon systems should also be evaluated in future work. Concentration graidient based flow battery systems under development also should be evalauated in the 2012 effort. These systems, if proven to be functional and viable, may offer very low capital cost and long cycle life features. 48

Energy Storage System Costs 2011 Update - Uncertainties Maturity bases for cost estimates (Projection vs Actual) Specific supplier advantages (i.e. Operational ) Vendor equipment pricing Construction and Installation Accuracy Estimation near term projected Technical Maturity of Operational Peformance O&M Battery life and replacement costs 49

Energy Storage System Costs 2011 Update - Recommendations Add LCOE and Performa into update data base Publish Benchmarking Findings as Executive Summary Haromoize estimates for use in EPRI- DOE Handbook Conduct more detailed cost / analysis for seleteced systems or applications based on utility advisor needs Assess other technology options Ce / Zn Flow Battery Liquid Air Storage Cycles Dialytic Flow Battery Renewable to Hydrogen as fuel 50

2012 ESS HANDBOOK OUTLINE DOE/EPRI/NRECA Introduction Chapter I: Energy Storage Today Chapter II: Energy Storage Technologies and Capabilities Chapter III: Applications of Energy Storage and Some Value Propositions Chapter IV: Considerations in Acquiring an Energy Storage System Sample Energy Storage Projects: Past and Present References and Resources 51

Agenda Items for Today s Web Cast Introduction to EPRI -Overview of EPRI Energy Storage Program U.S. Activites in Energy Storage Background Cost Benchmarking Activity Summary of CapEx / O&M Estimates Summary of LCOE Results & Sensitivities Uncertainties To Consider Recommendations Future Work Discussion and Feed Back 52

Together Shaping the Future of Electricity! Dan Rastler Manager Special Initiatives in Energy Storage and Distributed Generation drastler@epri.com 650-855-2034 53