1、Batteries on the GridPricing Dynamics and Application Forecasts6th China International Energy Storage Conference| Shenzhen | May 25, 2016Primary Author: Sam JaffeAll rights reserved Cairn Energy Research Advisors 2016Table of Contents TODAYS BATTERIES TOMORROWS BATTERIESAll rights reserved Cairn Ene
2、rgy Research Advisors 2016TODAY S BATTERIESTECHNOLOGIES, PRICING, CAPABILITIESAll rights reserved Cairn Energy Research Advisors 2016The “Battery as a Virus” TheorySource: Car & DriverSource:GizmodoSource: Milwaukee ToolSource: TeslaDailyBatteries are not a dumb component in a device. They are a dyn
3、amic intelligent part of themachine. Putting a battery into something doesnt just enhance it, it changes it dramatically.And by changing it, a new device is created that is more battery than device.All rights reserved Cairn Energy Research Advisors 2016Batteries on the GridHistorically, the grid has
4、nt used batteries because theyare:Too ExpensiveToo DirtyToo WeakToo FragileAll rights reserved Cairn Energy Research Advisors 2016Li-ion PricingSource: Cairn ERA Lithium ion pricing has already dropped on an average cell-level basis from $900 per KWH in 2010 to around$275 per KWH today. Three factor
5、s underlie this trend: Scale Manufacturing expertise Supply chain maturityAll rights reserved Cairn Energy Research Advisors 2016Pricing Reduction Reason: ScaleSource: Ford MotorSource: TeslaManufacturing capacity of four of the top six manufacturers is expected to double or triple in thenext five y
6、ears. This will happen in both Asia and North America.The only viable players left in the battery manufacturing industry are the multinationalconglomerates that have decades of manufacturing experience in the space.All rights reserved Cairn Energy Research Advisors 2016Pricing Reduction Reason: Expe
7、rtiseSource: ShenzhenSource: SaftSource: Asahi Kasei Making batteries is as much art as it is science, with millions of permutations in ingredient proportions andprocess tasks; After more then two decades, the Li-ion industry has finally reached the stage of a matureunderstanding of how to manufactu
8、re the batteries cheaply, efficiently and quickly Much like the solar photovoltaic industry before it, the Li-ion industry has recently moved from hand-builtmachinery to mass produced pieces of equipment that are sold into the multi-billion dollar industry; Capitalcosts for Li-ion manufacturing are
9、much more consistent and understood by investorsAll rights reserved Cairn Energy Research Advisors 2016Pricing Reduction Reason:Supply Chain MaturitySource: SZ GraphiteSource: Cairn ERASource: Cairn ERASource: Cairn ERA Most battery material inputs have taken decades to turn from specialty, batch-pr
10、ocessedchemicals into large-scale continuously processed chemicals; battery markets are also largeenough to become the main demand sources for many materials, including cobalt, lithiumand graphite Other high-cost materials are also dramatically declining in price, including the additives,solvents an
11、d binders that are inactive but highly important ingredients in the battery The battery industry, led by Tesla, is starting to successfully pressure further price declinesin input materialsAll rights reserved Cairn Energy Research Advisors 2016Supply Chain Forecast:Clear Horizon Lithium Graphite Cob
12、altOther Materials Copper Only 12% ofthe cost of a Li-ion cell comesfrom Lithium Prices haveincreased by35% in last sixmonths, whilebattery priceshavecontracted Industry is Potentialmoving fromsyntheticbottlenecks ifgrowth Aluminumgraphite to Specialtyhappens toonatural graphiteChemicalsquickly Curr
13、ently toomuch supply,with multiplemining projectsopening Cobalt isdependent oncopperproduction fornew reservesAll rights reserved Cairn Energy Research Advisors 2016Still To Be Done:Durable BatteriesDepth-of-Discharge Profiles and Cycle Requirements ofSample Duty Cycles30,00025,00020,00015,00010,000
14、5,0000100806040200Toyota Chevy Volt Tesla ModelTeslaTeslaNG CC PeakLoadPriusBattery3 Battery PowerWall PowerPack ShiftingShiftingBattery(NCA)(NMC)Discharge DoDCyclesCharge DoDSource: Chianelli et al., 1976Source: Cairn ERA The anode and cathode of a battery change volume by .75x with every charge di
15、scharge cycle; On the nano-scale,spots of the separator can reach 300 degrees Celsius. For widespread adoption of grid storage to work, batteries have to now become much more durable. Unlike all other applications, battery usage in grid applications is a direct factor in revenue generation. The grid
16、 needsbatteries to be cheap (below $200/KWH), powerful (2C and above) and durable (20,000 cycles at 95% DoD). The firsttwo goals have been achieved. We are now in the midst of the march to the third goal.All rights reserved Cairn Energy Research Advisors 2016TOMORROWS BATTERIESMARKET FORECASTSAll ri
17、ghts reserved Cairn Energy Research Advisors 2016Cairn ERA Forecast MethodologyDemandSupplyBusiness modelingExternal Stress TestingPrice ForecastingHistorical ProxyComparisons Pricing threshold model: individual applications are modelled to determine a battery price threshold for that application to
18、 becomefeasible More than 25 individual grid applications tracked and modelled, as well as transportation and consumer electronics pricing impactmodels Pricing data is then forecasted based on knowledge of materials markets, manufacturing process and manufacturing capacitychanges Forecasts are then
19、built around expected pricing and expected market demand based on ROI-positive business models Forecasts are then stress-tested against historical proxy growth curves to determine how other historical examples have grownunder similar supply/demand circumstancesAll rights reserved Cairn Energy Resear
20、ch Advisors 2016Explanation of ApplicationsReserve PowerAncillary ServicesGrid ManagementPeak Shifting MovingLoad Shifting Providingemergencyreserve powerwhen grid goesdown. Merchant energyprovision of Electric utilitiesdistribution gridservices to ensurereliability andresilience Moving largeblocks
21、ofgeneration fromlow-demandancillarygeneration fromnight to dayelectricity services(spinning reserve,frequencyhours to periodsof peak demand. Duration of Cycle:30 minutes to 2hours Duration of Cycle:(harmonics,voltagemanagement,etc.) Duration of Cycle:2 to 12 hoursregulation, etc.)5-30 minutes Durat
22、ion of Cycle:15-45 minutes Duration of Cycle:15-60 minutesAll rights reserved Cairn Energy Research Advisors 2016Stationary Storage:Reserve Power ForecastGlobal Reserve Power Batteries Forecast in Energy Capacity and Revenue,2015-20256005004003002001000$3,000$2,500$2,000$1,500$1,000$500$020152016201
23、720182019202020212022202320242025Source: Electrical EngineeringTotal RevenueNorth AmericaAsia PacificEastern EuropeMiddle East AfricaSouth & Central America Western EuropeSource: Cairn ERA Reserve power is a stable, mature market, growing revenue at 1.8% for the next ten years and growing in energy
24、capacity by 2.9%annually. The reserve power segment is moving from lead acid towards Li-ion, but not wholesale. By 2020, half of new UPS systems will have Li-ion batteries.All rights reserved Cairn Energy Research Advisors 2016Stationary Storage:Ancillary Services ForecastGlobal Ancillary Services B
25、atteries Forecast in Energy Capacity and Revenue, 2015-20257006005004003002001000$800$700$600$500$400$300$200$100$0Source: ECoult2015Total Revenue Asia Pacific Eastern Europe Middle East Africa North America South & Central America Western EuropeSource: Cairn ERA2016201720182019202020212022202320242
26、025 The use of batteries for ancillary services on the grid will see low growth between 2015 and 2025 globally, but significant contractions ingrowth in some regions (North America) and expansions in others (Asia Pacific). Globally this will even out to an annual CAGR of 13.6% interms of energy capa
27、city of systems sold, and 4.4% in terms of revenue for batteries sold. Globally, system shipments will grow from 161MegaWatt-Hours in 2015 to 575 MegaWatt-Hours in 2020 and revenue for battery cells sold will reach $748 million in 2025.All rights reserved Cairn Energy Research Advisors 2016Stationar
28、y Storage:Load Shifting ForecastGlobal Load Shifting Batteries Forecast in Energy Capacity and Revenue,2015-20258,0007,0006,0005,0004,0003,0002,0001,0000$1,400$1,200$1,000$800$600$400$200$020152016201720182019202020212022202320242025Okinawa Seawater Pumped Hydro PlantSource: WorldwatchTotal RevenueN
29、orth AmericaAsia PacificEastern EuropeMiddle East AfricaSouth & Central America Western EuropeSource: Cairn ERA Traditional load shifting has been done with pumped hydro/nuclear systems; To meet those costs with batteries, priceshave to significantly decline further Load shifting with batteries is t
30、he most immature market today, with growth expected late in the coming decade. Energy capacity will grow from 46 MegaWatt-Hours in 2015 to 7,300 MegaWatt-Hours in 2025. Revenue will grow from$31 million to $1.2 billion in 2025. Load shifting will be the one application which will see significant com
31、petition for Li-Ion, in the form of flow batteriesAll rights reserved Cairn Energy Research Advisors 2016Next-Gen Load Shifting ChemistriesGlobal Flow Battery Market Forecast in EnergyCapacity and Revenue, 2015-203030,00020,00010,0000$10,000$5,000$0201520162017201820192020202120222023202420252026202
32、7202820292030Asia PacificEastern EuropeMiddle East AfricaWestern EuropeNorth AmericaTotal System RevenueSouth & Central AmericaSource: FraunhoferSource: Cairn ERAThe only other battery technology that comes close to Li-Ion in terms of near-term competition is the flow battery, which pushes acharged
33、liquid electrolyte past a porous membrane through which charged ions can pass, generating a current.Strengths:Weaknesses: Cheaper for long duration cycles (6 hours or more) More expensive than Li-ion today Toxic chemicals Expandable No fire risk Moving partsAll rights reserved Cairn Energy Research
34、Advisors 2016Stationary Storage:Grid Management ForecastGlobal Grid Management Batteries Forecast in Energy Capacity and Revenue,2015-20252,5002,0001,5001,000500$600$500$400$300$200$100$0020152016201720182019202020212022202320242025Total RevenueNorth AmericaAsia PacificEastern EuropeMiddle East Afri
35、caSouth & Central America Western EuropeSource: Cairn ERA The use of batteries for grid management today is largely the realm of pilot projects. However Cairn ERAexpects electric utilities to start purchasing large amounts of batteries in the 2017 time frame for gridmanagement (voltage control, harm
36、onics management, etc.) By 2025, this market will account for 1,900MegaWatt-Hours worth of new batteries sold, or $503 million.All rights reserved Cairn Energy Research Advisors 2016Stationary Storage:Peak Shifting ForecastGlobal Peak Shifting Batteries Forecast in Energy Capacity and Revenue,2015-2
37、02545,00040,00035,00030,00025,00020,00015,00010,0005,000$16,000$14,000$12,000$10,000$8,000$6,000$4,000$2,000$0020152016201720182019202020212022202320242025Total RevenueNorth AmericaAsia PacificEastern EuropeMiddle East AfricaSource: EnernocSouth & Central America Western EuropeSource: Cairn ERA Batt
38、eries sold to provide peak shifting services will grow from 403 MegaWatt-Hours in 2013 to 39,700 MegaWatt-Hours in 2025, representing a CAGR of 58.2% between 2015 and 2020. Peak shifting will become the mainapplication of batteries on the grid. Revenue for battery sales will increase from $289 milli
39、on in 2015 to $3.9 billion in2025, representing a ten year CAGR between 2015 and 2025 of 47.7%.All rights reserved Cairn Energy Research Advisors 2016The Toehold Application:Demand Charge MitigationExample Demand Charge Mitigation System: CA School ROI Analysis Commercial ratepayers in North America
40、 usuallypay demand charges that are calculated on theirpeak demand periods. Combining a solarComparable Rooftop SystemPhotovoltaic System Size500 Kilowattsphotovoltaic system with a battery pack canmitigate the amount of demand charges that anindividual commercial ratepayer will be charged.Energy St
41、orage System Size178 KW, 178 Kilowatt-HoursTotal Cost of System$1,334,870$569,870 The market for demand charge mitigation energystorage systems installations is expected by CairnERA to grow from $31.8 million in 2013 to $7.9billion in 2025. The vast majority of those systemswill be installed in Nort
42、h America. The majority ofsystems are, and will continue to be, installed atsmall commercial sites, ranging from 50 to 500Kilowatts of installed P V.Total Cost of System After localCalifornia subsidyResidual Value of System at End ofLoan$240,777Profits EarnedAnnual ROI$1,691,36519.8%Source: Cairn ER
43、AAll rights reserved Cairn Energy Research Advisors 2016The Killer App: Hybrid NG/Battery Peak ShiftingComparison of 1.2 Combined Cycle Natural Gas Plant With Same Built with 1,600 Megawatt-hours of BatteriesNG Combined Cycle +UnitsNG Combined CycleBatteriesPower Capacity of PlantCost of Plant Equip
44、mentCost of 20 Years of FuelRevenue ProducedAnnual ROIMegawattsMillions USDMillions USDMillions USDPercentage1,200$2,160$5,12411,4327.3%1,2002,620$3,94212,22012.7%Source: Cairn ERA All generation technologies suffer from lack of ability to efficiently match load demand The most expensive use of batt
45、eries is to directly match to solar or wind. By using batteries to make natural gas turbines more flexible and efficient, the grid will be able to absorb far more renewables than itis otherwise capable of doing. Systemic use of batteries as a balancing tool in direct linkage with natural gas generat
46、ors will be the largest application of batteries onthe grid in the coming ten years.All rights reserved Cairn Energy Research Advisors 2016Stationary Storage: All ApplicationsAll Stationary Storage Applications Forecast in Energy Capacity and Revenue, 2015-202560,00050,00040,00030,00020,00010,0000$2
47、0,000$18,000$16,000$14,000$12,000$10,000$8,000$6,000$4,000$2,000$020152016201720182019202020212022202320242025Total RevenueAsia PacificEastern EuropeMiddle East AfricaNorth AmericaSouth & Central AmericaWestern EuropeSource: Cairn ERA Stationary storage battery sales will grow from 671 MegaWatt-Hour
48、s in 2015 to 8,200 MegaWatt-Hours in2025. The 2015 to 2020 forecasted CAGR is 51.1%. Cell revenue will grow from $2.3 billion in 2015 to $4.8billion in 2025. The Forecasted CAGR for revenue growth between 2015 and 2020 is 12.4%.All rights reserved Cairn Energy Research Advisors 2016Stationary Storag
49、e:Breakdown by Electrode ChemistrySegmentation of Global Li-Ion Battery Market by Electrode Chemisry500,000450,000400,000350,000300,000250,000200,000150,000100,00050,0000OtherLTOLFPLMONMCNCALCOUnits20152016201720182019202020212022202320242025Source: Cairn ERA LCO batteries are still the leading elec
50、trode chemistry in 2016. By 2025, NMC will be the dominant electrode, with more than 212 GWHs to be sold that year. LFP willcome in a close second with 145 GWHs sold in 2025.All rights reserved Cairn Energy Research Advisors 2016Where Could We Go Wrong? Uncertainties that could impact the Cairn ERA
