1_Aster Capital_Fabio Lancelotti

Report
Micro Grid: the business case
September 18th, 2013
1
Table of Contents
2
1.
Intro to Aster
2.
Why bother about Micro-Grid
3.
The Business Case
1.
Distributed Energy Storage
2.
Microgrid in remote areas - mining
4.
Drivers of Competitiveness
5.
Identifying market opportunities and biz models
3
Table of Contents
1. Intro to Aster
2. Why bother about Micro-Grid
3. The Business Case
4
1.
Distributed Energy Storage
2.
Microgrid in remote areas - mining
4.
Drivers of Competitiveness
5.
Identifying market opportunities and biz models
Micro-Grid: what?
What is a Microgrid?
The Microgrid Exchange Group defines a microgrid as:
“A microgrid is a group of interconnected loads and distributed energy
resources (DER) within clearly defined electrical boundaries that acts
as a single controllable entity with respect to the grid. A microgrid can
seamlessly connect and disconnect from the grid to enable it to operate in
both grid-connected or island-mode.”
5
Why Micro-Grid: renewable integration issues
Voltage out of range
6
Micro-Grid: challenges faced
Every microgrid faces a set of technical challenges similar to those that the
main grid encounters, including
•
•
•
•
•
•
7
Distributed Energy Resources (DER) Component Connection to Microgrid How do DER units join the microgrid and whose responsibility is it to figure out
how to make safe interconnections?
DER Component Output Balancing - How does the microgrid balance the
resources and technical operating constraints of different types of DER
components (e.g., solar, wind, fuel cells, microturbines, combined heat and power
generators, batteries, etc.)?
Facility Load Fluctuations - How does the microgrid accommodate highly
variable changes in the attached load?
System Electrical Stability - How does the microgrid balance loss of voltage and
frequency control?
Grid Interconnection & Islanding - How do the DER units communicate with the
microgrid during normal operation and when the main grid defaults (especially
when it shuts down) how do the DER units reconnect?
System Performance - How does the microgrid optimize the DER mix and the
energy output or environmental performance of each DER unit relative to external
conditions (e.g., weather conditions, electricity prices, environmental regulations)?
… but we will have a good answer to technical problems….  the issue is more: what are the economics?
Table of Contents
8
1.
Intro to Aster
2.
Why bother about Micro-Grid
3.
The Business Case
1.
Distributed Energy Storage
2.
Microgrid in remote areas - mining
4.
Drivers of Competitiveness
5.
Identifying market opportunities and biz models
Business case: reduce energy bills by reducing peaks
In the US, C&I customers are charged both for
energy and demand charge
Smooth the peaks to reduce monthly bill
High Demand Charges*:
3 largest Californian utilities
What solution?
15kW peak
reduction
$3k+ saved per
year
9
*charges are per 15min interval
What technology/service can provide
value here?
•
Racks of batteries and power
converters
•
Real-time measurement of the
electricity consumed
•
Software analytics to forecast the
peaks and control the batteries
Business case: reduce energy bills by reducing peaks
Business case: 2013
Economics 2016 - load shedding only
Economics 2013 - load shedding only
Hardware
GM%
0%
10%
20%
30%
Selling price
($/kW)
$
1 404
$
1 560
$
1 755
$
2 006
Revenues
($/kW/y)
$
230
$
230
$
230
$
230
Business case: 2016
65%
30%
0%
Payback with Payback with
Payback
SGIP
ITC
unsubsidized
2,1
4,3
6,1
2,4
4,7
6,8
2,9
5,3
7,6
4,0
6,1
8,7
Hardware
GM%
0%
10%
20%
30%
Example of business case of a battery integrator (1)
•
In California, there is a specific subsidy designed
to promote the use of distributed storage called
the Self Generation Investment Program (SGIP)
which covers up to 65% of the total cost of
distributed storage systems. This program is in
place through end of 2015
•
Other states have similar programs and
incentives
Reasonable ROI with incentives
10
Selling price
($/kW)
$
769
$
854
$
961
$
1 098
Revenues
($/kW/y)
$
259
$
259
$
259
$
259
65%
30%
0%
Payback with Payback with
Payback
SGIP
ITC
unsubsidized
1,0
2,1
3,0
1,2
2,3
3,3
1,3
2,6
3,7
1,5
3,0
4,2
Example of business case of a battery integrator (2)
•
By early 2016, this load shedding application
will result in a 3-year payback with the federal
30% tax credit or 4-5 years without any
incentives at all. This represents better
paybacks than solar system implementation
•
Including additional revenues streams and
financing structures / leasing plans paybacks
are even more interesting
Achievable 4-5 year pay-back without no
incentives (opportunity to self-finance)
Business case: reduce energy bills by reducing peaks
Distributed capacities can be aggregated to provide grid services
•
As soon as several MWs of localized distributed energy storage are deployed, they can
provide utilities and players in the wholesale market with services to optimize and balance
the distribution grid
•
Portfolio effect (not the same needs at the same time)
•
Existing market for demand response
•
Regulators pushing for the opening of wider grid services markets (ex. PJM):
• Capacity at peak (demand response) to match a peak in demand - $60 to $175/kW per year
• Energy arbitrage - $50 to $90/kW per year
• Ancillary services such as frequency regulation and non/spin reserves - $30 to $50/kW per year
Additional revenues, shorter paybacks
11
Table of Contents
12
1.
Intro to Aster
2.
Why bother about Micro-Grid
3.
The Business Case
1.
Distributed Energy Storage
2.
Microgrid in remote areas - mining
4.
Drivers of Competitiveness
5.
Identifying market opportunities and biz models
High level business cases
13
Remote Areas: case of mines
14
Remote Areas: the typical configuration
Typical Functioning
• Priority for solar power when available
• Diesel engine runs in variable speed mode to charge the battery and supply the load
• Battery management control included
• Engine management control included
• Provision for running the engine at constant speed mode to deliver three phase 415V, 50 Hz supply.
• The engine, the generator, battery monitoring system, engine management controller, 250 litre fuel tank – all in
an acoustic enclosure (less than 70dB at 1m)
• Maximum Power Point Tracking Solar Charge Controller
• High efficiency bidirectional inverter/charger
15
• Complete system wired and housed in a 20ft shipping container
Remote Mine: business case
Grid Stabilizer/Mgmt of load is key
BHP Billiton’s nickel mine in Western Australia is
the third-largest producer of nickel concentrate in
the world. Ore is extracted from 1,000 meters
underground with a large, electrically driven
winder, which at 8.5 megawatts (MW) of demand
shift over 120 seconds is a large cyclic load,
given the unit’s average power consumption is
just 2 MW. To upgrade the winder’s power supply,
BHP installed a 1 MW Grid stabilizer system,
which reduced the total demand shift to 6.5 MW
while adding 1 MW of spinning reserve to the
system.
Its flywheel-based energy storage system
provides peak lopping and overcomes transient
and cyclic loads on grid connected or isolated
systems. The mine was able to increase winder
production without affecting power system
reliability.
16
Table of Contents
17
1.
Intro to Aster
2.
Why bother about Micro-Grid
3.
The Business Case
1.
Distributed Energy Storage
2.
Microgrid in remote areas – mining
4.
Drivers of Competitiveness
5.
Identifying market opportunities and biz models
Distributed energy storage: Startup competitive landscape
Startup players
Potential new entrants
•
Providers of distributed energy storage
for load shedding, utility-controlled or
renewable integration
•
Battery manufacturers
Going downstream to keep value and find new
applications in this oversupply market
•
Mostly Product-push companies with
unclear business cases
•
UPS Providers
Having the technology and some markets
channels in hands
•
Energy Services Companies
Providing demand-side management services
•
BMS Providers and Software companies
Developing demand-management offers on top
of their BMS - Schneider Electric, Siemens,
Johnson Controls, Honeywell, BuildingIQ,
FirstFuel, SkyFoundry, Gridium, Viridity Energy
18
Key competitive advantages
How to maintain them?
Software analytics, Straightforward value
proposition, Product compactness, Initial
traction market traction
Business model innovation (developed in
the solar industry), Become market leader
and build a brand, Lock market channels
Table of Contents
19
1.
Intro to Aster
2.
Why bother about Micro-Grid
3.
The Business Case
1.
Distributed Energy Storage
2.
Microgrid in remote areas - mining
4.
Drivers of Competitiveness
5.
Identifying market opportunities and biz models
Distributed energy storage: Main drivers that will lead
expansion
20
Micro-grid in remote areas – mines: Market size and
opportunity
Driven largely by the falling price of solar photovoltaics, the global remote* microgrid
market was 349 megawatts (MW) of generation capacity in 2011, of which 215MW are
island microgrids. That will expand to over 1.1 gigawatts (GW) by 2017, an amount that at
least equals all other microgrid segments combined. The remote microgrid market is
expected to grow to $10.2 billion by 2017, and investors and suppliers are starting to take
notice.
This subsegment of the remote microgrid market is the least mature, but also boasts the
highest growth rates due to an expected upswing in interest in shifting to more sustainable
energy strategies for sites controlled by large multinationals. Globally, nearly 75% of
existing mines are remote operations, though very few deploy renewable energy
generation. At present, the total capacity of industrial remote mine systems is estimated to
be 35 MW. This remote microgrid subsegment boasts the highest CAGR in the average
scenario - 40.0% - and represents corresponding revenue of $1.8 billion by 2017
21
*remote means: not connected or with very weak links to the Grid
Annexes
22
Remote Micro-Grid – Differenting Offering
Exemplificatory
Increasing more value drivers
Customized vs. standardization/commoditization
23
Unit economics
As of today, 4 year payback in California
Costs 2013
$
PowerStore hardware (18kW)
PowerMonitor hardware
Ancillary hardware
Installation cost (fixed)
Installation cost (per PowerStore)
Cost to Stem
$
24 168
$
1 032
$
630
$
900
$
250
54 kW and kWh unit
Nb
$
$
$
$
$
Cost per kW
3
1
1
1
3
Cost to Stem
$
72 504
$
1 032
$
630
$
900
$
750
$
PowerBlades
Battery Cells (1 kWh)
Battery BMS+ (1 kWh)
Other Components
1 404
Economics 2013 - load shedding only
Hardware
GM%
0%
10%
20%
30%
Selling price
($/kW)
$
1 404
$
1 560
$
1 755
$
2 006
65%
Revenues
Payback with
($/kW/y)
SGIP
$
230
2,1
$
230
2,4
$
230
2,9
$
230
4,0
30%
0%
Payback with
Payback
ITC
unsubsidized
4,3
6,1
4,7
6,8
5,3
7,6
6,1
8,7
By 2016, 3-year target despite reduced incentives
24
Payback based including 30% gross margin, Stem
$
$
$
$
1 500
525
251
1 200

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