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, SANDIA REPORT SAND97-1275/1 UC-1350 Unlimited Release Printed July 1997 Battery Energy Storage Market Feasibility Study

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Page 1: Battery Energy Storage Market Feasibility Study - …prod.sandia.gov/techlib/access-control.cgi/1997/971275-1.pdf · CONTENTS BATTERY ENERGY STORAGE MARKET FEASIBILITY STUDY ... CONTENTS

, SANDIA REPORTSAND97-1275/1 ● UC-1350Unlimited ReleasePrinted July 1997

Battery Energy Storage Market FeasibilityStudy

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Issued by Sandia National Laboratories, operated for the United StatesDepartment of Energy by Sandia Corporation.NOTICE: This report was prepared as an account of work sponsored by anagency of the United States Government. Neither the United States Govern-ment nor any agency thereof, nor any of their employees, nor any of theircontractors, subcontractors, or their employees, makes any warranty,express or implied, or assumes any legal liability or responsibility for theaccuracy, completeness, or usefulness of any information, apparatus, prod-uct, or process disclosed, or represents that its use would not infringe pri-vately owned rights. Reference herein to any specific commercial product,process, or service by trade name, trademark, manufacturer, or otherwise,does not necessarily constitute or imply its endorsement, recommendation,or favoring by the United States Government, any agency thereof, or any oftheir contractors or subcontractors. The views and opinions expressedherein do not necessarily state or reflect those of the United States Govern-ment, any agency thereof, or any of their contractors.

Printed in the United States of America. This report has been reproduceddirectly from the best available copy.

Available to DOE and DOE contractors fromOffice of Scientific and Technical InformationP.O. Box 62Oak Ridge, TN 37831

Prices available from (615) 576-8401, FTS 626-8401

Available to the public fromNational Technical Information ServiceU.S. Department of Commerce5285 Port Royal RdSpringfield, VA 22161

NTIS price codesPrinted Copy: A03Microfiche copy: AO1

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SAND97-1275/lUnlimited ReleasePrinted July 1997

DistributionCategory UC-1350

Battery Energy StorageMarket Feasibility Study

Steve KraftFrost & Sullivan

2525 Charleston RoadMountain View, California 94043

Abbas AkhilEnergy Storage Systems Analysis and Development Department

Sandia National LaboratoriesP.O. BOX 5800

Albuquerque, New Mexico 87185-0613

Abstract

Under the sponsorship of the Department of Energy’s Office of Utility Technologies, theEnergy Storage Systems Analysis and Development Department at Sandia NationalLaboratories (SNL) contracted Frost& Sullivan to conduct a market feasibility study of .energy storage systems. The study was designed specifically to quantify the energy storagemarket for utility applications. This study was based on the SNL Opportunities Analysisperformed earlier. Many of groups surveyed, which included electricity providers, batteryenergy storage vendors, regulators, consultants, and technology advocates, viewed energystorage as an important enabling technology to enable increased use of renewable energy andas a means to solve power quality and asset utilization issues. There are two versions of thedocument available, an expanded version (approximately 200 pages, SAND97-1275/2) and ashort version (approximately 25 pages, SAND97-1275/1).

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CONTENTS BATTERY ENERGY STORAGE MARKET FEASIBILITY STUDY

Acknowledgments

Sandia National Laboratories would like to acknowledge and thank the U.S. Department of Energy’s Office of UtilityTechnologies for their support and funding for this work, and all of the contributing utilities, electricity providers,product suppliers, regulators, industry advocates, and professional and academic associations who responded to thesurvey.

The principal investigator on this study was Steve Kraft from Frost& Sullivan. The Frost& Sullivan team includedDavid Coleman and Ken Herbert.

We also wish to thank the following individuals for participating in a review panel that provided valuable technicalcomment before the final study was published.

Individual Contributors and Companies

Mr. Mike Hinga Mr. Bob FlemingDelphi Energy and Engine Management AC Battery CorporationSystems

Mr. Gene Cook Mr. George HuntYuasa-Exide GNB Battery Technologies

Dr. Rajat Sen Mr. Paul KlimasR.K. Sen and Associates, Inc. Sandia National Laboratories

Dr. Philip C. Symons Mr. Howard LowittSymons/EECl Energetic, Inc.

Mr. Steve Eckroad Mr. Carl ParkerElectric Power Research Institute (EPRI) International Lead Zinc Research Organization,

Inc. (ILZRO)

Mr. Richard Schweinberg Ms. Denise ZurnSouthern California Edison Northern States Power

Mr. Bradley Johnson Mr. Jon HurwitchPotomac Electric Power Company (PEPCO) Switch Technologies

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BA7’TERYENERGY STORAGE MARKET FEASIBILITY STUDY CONTENTS

Contents

Project Ovetiew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................................. 1Gods of Smdy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................................. 1Study Pmme&m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................. 1Selection of Respondents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............... 2Surveying Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..........................2Writing and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......................4Assumptions and Risk Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...4

&onomic Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .............4Deregulation of the Electric Power Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...4Netw;rk Reliability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................4Electricity End-User Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Summary of Major Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..............7Perceptions of BES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........................ 7

Electricity Provider Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7BES Supplier Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......9Other Industry Perspectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10

BES Market Opportunities and Forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10BES Market Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....10BES Market Penetration Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Primary Market Drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........ 11

Conclusions and Raomendatiom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 13Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................................. 13

BES Cost Reductions Desird . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13BES Performance Improvements Desird . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13BES Market Targeting and Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .BES Educational Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... ;2Bias Toward Generation Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Organizational Obstacles to BES Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Communications in the BES Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Need for More BES Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........................ 15Improving BES Economics, Storage, and Energy Density . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Improving Communications Within the BES Community . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Strengthening Industry Ownerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Focusing on BES Applications and Product Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Performing Additional Market Resemh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Market Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................16

v

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CONTENTS BATTERY ENERGY STORAGE MARKET FEASIBILITY STUDY

Figure

Figure 1. Applications Identified by Electricity Providers (30 Companies), 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Tables

1 BES Market: Organizations Contacted By Type (U.S.), 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...2

2 BES MarkeC Individuals Contacted by Utility Type and Job TMe (U.S.), 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3 Applications Identified by Electricity Providers (30 Companies), 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

4 BES Market Statistics Among Electricity Providers (U.S.), 2000,2005, and 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

5 BES Market Statistics Among Electricity End Users (U.S.), 2000,2005, and 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

vi

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BA7TERYENERGY STORAGE MARKET FEASIBILITY STUDY CONTENTS

Acronyms and Abbreviations

BES

CAES

DOE

ESA

ESS

IOU

IPP

NUG

R&D

SMES

SNL

T&D

UPs

VAR

battery energy storage

compressed-air energy storage

U.S. Depamnent of Energy

Energy Storage Association

Energy Storage Systems

investor-owned utility

independent power producer

nonutility generator

research and development

request for proposal

superconducting magnetic energy storage

Sandia National Laboratories

transmission and distribution

uninterruptible power supply

volt-amp reactive

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CONTENTS BA1’TERY ENERGY STORAGE MARKET FEASIBILITY STUDY

Intentionally Left Blank

. . .Vul

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BATZ??RYENERGYSTORAGE MARKET FEASIBIL.ITY STUDY PROJECT OVERVIEW

ProjectBattery energy storage (BES) consists of modembattery and electronics technologies. BES is nowbeing applied to the needs of the electric powerindustry. In these applications, BES can be used toincrease system reliability, improve power quality,defer capital investments, and improve the economicsof power generation and energy consumption.Currently, the BES market is in a developmentalstage, as are some of the battery and powerconditioning subsystems integrated into BES systems.

Sandia National Laboratories (SNL) and the U.S.Department of Energy (DOE) are both developingBES technology and encouraging itscommercialization. This study is a part of thosedevelopment and commercialization efforts.

To better orient BES development andcommercialization efforts to the needs of the BESmarketplace, SNL began developing the request forproposal (RFP) for this study in 1995, coordinatingRFP development with the Energy StorageAssociation (ESA). Release of the RFP to the publicoccurred in Fall 1995.

Among the bidders on the RFP distribution list wasFrost & Sullivan, a market research and consultingcompany. In March 1996, Frost & Sullivan wasofficially retained by SNL to conduct this study, withresearch commencing in May 1996.

Goals of Study

SNL had three principal goals in conducting thisstudy. The first was to gather BES industryperceptions, especially among utilities and nonutilitygenerators (NUGs), referred to in this report as“electricity providers.” Additionrd perspectives werealso gathered from BES suppliers and suppliers ofBES components, utility regulatory agencies, andelectric power industry trade and advocacy groups.The perceptions gathered were to include informationon desired product features, comparisons of BES withother electricity storage and supply options, and manymore qualitative topics. ‘Ile qualitative findingsprovide the most interesting results of this study.

The second major goal of this study was to generatean estimate of the electricity provider BES marketthrough 2010. Specifically, this forecast was to

Overviewinclude estimates of BES market activity for the years2000, 2005, and 2010. These forecasts were derivedfrom information gathered from the electricityprovider sample and are year-on estimates (asopposed to cumulative) for 2000, 2005, and 2010only. Therefore, these estimates do not measure anymarket activity occuming in years other than 2000,2005, and 2010.

The third major goal was to provide SNL and theDOE with valuable input into its Energy StorageSystems (ES) program efforts. The ESS Rogramstrives to improve its market and customerorientation, and the results of thk study wereexpected to be of significant aid in that direction.

Study Parameters

This study was limited to the estimation of the BESmarket at the electricity provider level. Because ofresource limitations, a more thorough research of theBES market among end users of eledric power, suchas large industrial and commercial custome~, was notundertaken.

End-user estimates are included in the study, butthese are based on BES supplier organizations’perceptions. A market study of BES demand at theelectricity end-user level may be undertaken in thefuture, and such a study is recommended to SNL laterin this report.

The study forecast period is another importantparameter. The decision was made during the writingof the RFP that this study should provide BES marketestimates through 2010. This would give SNL andthe rest of the BES industry a chance to reviewforecasts in time to develop the technologies,organizations, and infrastructure needed to serve andimprove forecast future BES demand. The RFP forthis stmdy requested year-on BES market estimates,not cumulative estimates.

An additionrd parameter was the number ofinterviews that could be completed using allocatedresources. For this study, 60 to 80 interviews withmember organizations within the BES communitywere expected, and 68 were completed.

1

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PROJECT OVERVIEW BATTERY ENERGY STORAGE MARKET FEASIBILITY STUDY

Geographically, this study was limited to the U.S.BES market. All of the organizations contacted forthis study were asked about their activities in the U.S.market. Their operations outside of the United Statesare excluded. The market penetration estimates givenlater in this study include only activity in the UnitedStates and its territories, such as Puerto Rico. Theydo not include any figures for BES export from theUnited States to foreign markets.

Selection of Respondents

SNL and Frost & Sullivan decided through mutualconsultation on the organizations to be contacted forthis study. As stated earlier, these organizationsincluded utilities, NUGS, BES suppliers, regulatoryagencies, and other organizations whose actionsinfluence the BES market. Table 1 shows thebreakdown of the 68 organizations that wereultimately contacted. More specific information onthe organizations included can be found in a laterchapter of this report.

Table 2 shows the individuals contacted at electricityprovider companies for this study by job title andtype of electricity provider. Table 2 shows that theelectricity provider sample is relatively “engineering-

heavy.” ‘Ilk is partly due to the nature of theinterviewing process. Many of the electricityproviders interviewed had existing contacts with SNLor the ESA, and these people provided the initialpoint of contact for Frost & Sullivan in its researchefforts. Because BES is a developing technology,and SNL is a research and development organization,most of these existing contacts tended to fit intotechnical vocations such as engineering.

Efforts were also made during the study to draw inputfrom other departments within the electricity providerorganizations. These contacts account for the numberof planning and marketing personnel in the sample.

Surveying Process

Frost & Sullivan relies on primary research to gatherthe data for its reports. The BES study was noexception. This report was based on informationgained from primary research contacts made duringthe surveying process or in other activities related tothe production of the report. Secondary research ofpreexisting information sources provided little morethan answers to technical questions related to BESand battery technologies.

Table 1. 13ES Market: Organizations Contacted By Type (U.S.), 1996

Organization Type Number Contacted

Electricity Providera 38

Investor-owned Utilities (IOUS) 24

Independent Power Producers (IPPs) 5

Municipais 2

Cooperatives 3

Federal, State, or District Utiliiies 4

BES Suppliers 11

BES Consultants 7

Regulatory Bodies 6

Electric Power Industry Groups 6

TOTAL 106

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BATTERY ENERGY STORAGE MARKET FEASIBILITY STUDY PROJECT OVERVIEW

Table 2. BES Market: Individuals Contacted by UtilityType and Job Title (U.S.), 1996

utility Job Title Number ContactedIous: Chemist (1)

Engineer (5)Engineer (Manager) (1)Engineer (Senior) (5)Engineer (Senior Research) (2)Integrated Resource Planner (3)Manager of Advanced Market (1)

DevelopmentManager of Conservation (1)Power Quality (1)Product Development Manager (2)Technical Analyst Coordinator (2)

Municipal Utilities: General Manager (1)Mechanical Engineering (1)

Electric Cooperatives Assistant Manager (1)Engineer (1)Engineer (Planning) (1)

Federal, State, and District Assistant Head, Planning and (1)Utilities: Research Division

Engineer (Principal) (1)Manager of Electric (1)

TransportationProject Specialist (1)

IPPS: Director of Technology (1)Research and Development

Manager of Power Systems (1)Project Marketing Manager (1)Vice President (1)

Power Marketer and IPP: Development Director (1)

Specifically, the surveying process for the studyentailed Frost & Sullivan analysts contactingorganizations that had been placed on the contact liston the basis of consultations with SNL and the ESA.In the case of most of these companies, an initialindividual contact had been identified based on thatindividual’s past involvement with BES or with SNL.

Once contacted, these individuals were apprised ofthe nature of this study and asked who at theirorganization would be best able to provide a responsethat could be used in the preparation of this report. Inmany cases, the initist contact provided a response,

but, in other cases, the contact refemd the researchteam to another contact or group of contacts. Thisprocess continued until a viable respondent wasreached at each organization.

At this time, the respondent was faxed the properquestionnaire or interviewed over the telephone.Three basic questionnaires were developed, aimed atthree distinct groups within the BES industry: BESsuppliers and consultants, electricity providers, andregulatory bodies and industry groups. Thequestionnaires were developed by Frost& Sullivan inconjunction with SNL.

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PROJECT OVERVIEW BA17ERY ENERGY STORAGE MARKET FEASIBILITY STUDY

Writing and Analysis

Upon receipt of the interview results, transcription ofthe results was performed if necessary. Atiertranscription, the results were collated and analyzedby Frost & Sullivan analysts. At that point, thewriting of the report began.

Assumptions and RiskAssessment

All market research or forecast studies contain someform of assumption, whether implicit or explicit.Because these assumptions can have a dramatic effecton the outcome of a study, they should becommunicated to the reading audience if possible.

Additionally, assumptions are affected by factors thatare dit%cult or impossible to predict. In this repo~these factors are referred to as “risk assessment”items. This section of the report describes both theassumptions and the risk assessment items for thisstudy.

Economic Assumptions

The three principal economic assumptions used inthis study are normal economic cycles will continue,normal load growth patterns will apply, and per-kilowatt BES costs will continue decreasing.

Frost & Sullivan defines normal economic cycles asperiods of economic expansion punctuated byoccasional recessions or periods of stagnation. Thisis the historical pattern of the U.S. economy over thelast 50 years, with expansions lasting 3 or more yearsand recessions lasting 18 or fewer months.

The second major assumption is the continuation ofhistorical levels of load growth. In times ofexpansion, load growth is roughly 1.570 per year. Ifthis number were to increase or decreasesignificantly, a corresponding effect on the need forBES would OCCIM.

Decreasing per-kilowatt BES costs constitute the lastmajor assumption of this report. This assumption isfound in the parameters Frost & Sullivan used toframe the questions asked in the electricity providerquestionnaire. (This questionnaire is included asAppendix A in an expanded version of this report.)In shoz Frost & Sullivan and SNL expect the

per-kilowatt price of BES to decrease in constant1996 dollars from between $700 and $1,100 in 2000to between $400 and $600 in 2010.

Not every organization in the BES industry agreeswith this assumption. However, during the course ofthe study, Frost & Sullivan found evidence that pricereductions of this magnitude are already under way.

Deregulation of the Electric PowerIndustry

The biggest vwiable affecting the electric powerindustry in the United States is the advent ofderegulation. Currently, deregulation is occurring inisolated states with high electric costs. Even thoughsome of these states are very large, most of the U.S.electricity market is still regulated.

This may change rapidly. Not only are individualstates in the United States examining deregulation,but national deregulation bills have been introducedin the U.S. Congress. If pending national legislationwere passed, the entire U.S. electric power marketwould be deregulated by 2003.

The effects of deregulation depend on myvariables, including the recovery of stranded costsand the success the current group of electricityproviders has in making the transition into aderegulated environment. The outcome of theseissues should influence the BES market in the newderegulated environment.

Frost & Sullivan received much conflictinginformation on the specific effects of deregulation onthe BES market. Some respondents said thatderegulation would force expensive BES systems outof the market. Others stated that a greaterappreciation for customer service and storage-basedeconomic opportunitiesattractiveness.

Network Reliability

would enhance BES’S

Another impact of deregulation has been the concernover the reliability of the transmission anddistribution grid in the United States., Two seriousdisruptions of the western grid in the summer and fallof 1996 caused significant economic side effects andraised some public safety concerns. Fortunately, theworst of these disruptions happened on a weekend,which reduced the potential losses and associatedrisks.

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BA7773RYENERGYSTORAGE MARKETFEASIBILITY STUDY PROJECT OVERVIEW

If disruptions continue or increase, more pressure will Sullivan incorporated BES supplier estimates of thelikely be placed on electricity end users and providers end-user market into the market penetration estimatesto implement technologies to improve power quality. found in the Market Opportunities and ForecastsIn such a case, BES demand will likely increase to section of this report.meet power quality needs.

Electricity End-User Markets

As previously stated, electricity end-user marketswere not included in this study. Despite thisexclusion, BES suppliers view electricity end users astheir major existing market. To reflect this, Frost &

J

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PROJECT OVERVIEW BA7’TERYENERGY STORAGE MARKET FEASIBMJTY STUDY

Intentionally Left Blank

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BA7ZERY ENERGY STORAGE MARKET FEASIBILITY STUDY SUMMARY OF MAJOR FINDINGS

Summary of Major Findings

Perceptions of BES

The perceptions of the present and future roles forBES differ significantly depending on the group ororganization. This section covers the variousperspectives provided by the three distinct BESindustry groups surveyed for this study: electricityproviders, BES suppliers and consultants, andindustry groups and regulators.

Electricity Provider Perspective

The electricity providers’ perspective can be bestcategorized as cautiously optimistic. On the whole,electricity providers see roles for BES, especially indistributed generation and power quality, but theyexpressed significant concerns about BES costs, lifespan, maintenance, and energy density.

In the future, electricity providers expect to increasetheir use of BES, but they would like to see theshortcomings of the technology addressed and believethis is necessary before widespread deployment ofBES becomes possible. As a result of concerns aboutthe technology’s shortcomings, BES is not currentlyviewed as competitive with most generationtechnologies. In particular, electricity providersexpect combustion turbines to provide betterfunctionality over time than BES. Interest in fuelcells was high, and batteries received considerablesupport because of their modularity, responsiveness,and especially their environmental friendliness.

BES fares favorably when compared with mostplanned and existing storage technologies, although itis not viewed by the sample as a central stationtechnology. Central station storage technologies,such as pumped hydro and compressed-air energystorage (CAES), were viewed as too environmentallydestructive or too geographically limited. However,respondents with existing pumped hydro units do notsee BES replacing those units. Also, some electricityproviders viewed their current amount of storage asadequate because of their existing pumped hydroresources.

Compared with advanced storage technologies, BESis viewed favorably as well. BES has a greaterstorage capacity in terms of hours of storage thansuperconducting magnetic energy storage (SMES) or

flywheels. SMES and flywheels are also lessdeveloped than BES, making potential customersmore hesitant to support these technologies. Someelectricity providers in the sample, however, viewedflywheels as a lower-cost option over the long term.

During the survey process, respondents werequestioned four times on the potential applications forwhich they might use BES. Table 3 and F@e 1illustrate some of the responses to this question. Theresponses are arranged alphabetically in the figure,but an examination of the chart shows that powerquality and reliability were the most commonly citedapplications for BES.

Additionally, electricity providers were asked aboutthe use of BES to provide the ancillary servicesnecessary to maintain power system reliability on anongoing basis. However, no significant responseswere received on this subject. Deregulation appearsnot to have advanced enough to create more than anacademic interest in the provision of ancillaryservices. Furthermore, a few respondents seemed tofeel that the provision of these services has neverbeen a problem in the past and is unlikely to becomeso in the future.

The final issue addressed was that of organizationalstructure and BES procurement. Respondents wereasked which departments within their organizationswere responsible for BES procurement. The resultsare as follows:

. Investor-Owned Utilities (IOUS):- Generation

- Energy Supply Planning- Fhwncial Studies- Fossil Generation- FossiVHydro- Integrated Resource Planning

Mechanical EngineeringPower Supply PlanningResearch and Development (R&D)

Transmission and Distribution- Customer Services- Distribution Engineering

Energy Services Company (ESCO)(for pertinent IOU)

- EngineeringGrid Customer Services

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SUMMARY OF MAJOR FINDINGS BATTERY ENERGY STORAGE MARKET FEASIBILITY STUDY

Table 3. Applications Identified by Electricity Providers (30 Companies), 1996

Times ApplicationApplication Mentioned

Area/Frequency Control 3Black Start 1Customer Demand Peak Reduction 5Distribution Facility Deferral 6Emergency Shutdown Power 1Frequency Control 1

Frequency Regulation 2Generation Capacity Deferral 5Generation Dispatching 4Load Conditioning 1Load Following 1Load Leveling 10Out of Step Prevention 1P e a k R e d u c t i o n 2Power Quality 14Reliability 12Renewable 5Spinning Reserve 8Transmission Facility Deferral 5Transmission Line Stability . 2Transmission Stability Enhancement 2Transmission Volt-Amp Reactive (VAR) 2

supportUninterruptible Power Supply (UPS) 10Voltage Regulation 7

Times Application Mentioned

&sm I

Area/Frequermy Cmtml

Cuatcmer Demand Peak ReducticmOistributlon Faciiii Merr@

Emergency Shutdeu.n PowerFrequency C.xtrol

Frequerwy RegulationGeneratkm Capacity Oeferral

Generatii DkpalcMngLoad ConrJMning

Load FollowingLoad Levelhg

out d step PreventiiPeak Reduclii

Power QldiiReliibimy

ReiwwebiesSpinnhg Resewe

Transmission Facilily OeferrelTranemieatca Stebility Enhancement

$%$3 I I I ITranamissbn VAR SUpporl

Unkttemptible Pewer Su@y (UPS)VotteW Rquletion

o 2 4 6 8 10 12 14

Figure 1. Applications Identifkd by Ehxricity Providers (30 Companies), 19%.

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BAITERYENERGY STORAGE MARKET FEASIBILITY STUDY SUMMARY OF MAJOR FINDINGS

- Marketing Commercial/IndustrialDepartments

- Substation Engineering- Technical and Construction Services- Transmission and DMxibution

(T&D)- Transmission Engineering

. Municipal Utilities:- Board of Directors- Bulk Power Business Unit- City Council- Generation Business Unit

. Electric Cooperatives:- Board of Directors- Engineering- General Management- Production

. Federal, State, and District Utilities:- Distribution Planning– Operations and Finance Senior Execu-

tives– Planning– Planning and Research Division- Power Operations- Power Quality- R & D

Transmission and Power Supply

. Independent Power Producers (IPPs):- Executive Department- Contracts Department

● Power Marketer and IPP:- Development Department- Engineering Department

Respondents were also asked how deregulation oftheir utility might affect departmental responsibilitiesfor BES procurement. Responses indicated muchinterest in deregulation as an economic event butshowed little appreciation or awareness of possibleorganizational changes that might result.

BES Supplier Perspective

In addkion to electricity providers, BES suppliers andconsultants working in the BES industry werecontacted to obtain their views on the BES market.In particular, they were questioned on their view ofexisting BES projects and which markets they serve.

Currently, BES products in the marketplace are basedon either flooded lead-acid or valve-regulated lead-acid battery technologies. In the near future, through2000, most BES suppliers do not expect to move todifferent battery technologies, although they expect toiimt.her refine their power conversion technologies.

Also, no true BES integrators currently exist in themarketplace. This is a disadvantage because it placesmore pressure on BES customers to obtain theintegration services they need or perform them in-house. Few BES suppliers contacted in this studybelieved they would make the transition to full-service integrator by 2000. Instead, most companiesviewed themselves as suppliers of components ordevelopers of BES technologies.

The competitive structure of the BES industry isfairly rigid. Most of the BES suppliers contactedwere divisions, subsidiaries, or business units of largebattery and electrotechnology manufactm’m. Assuch, these organizations have a great deal ofpotential resources behind them although they do notoperate in a core business of their parentorganization.

The remaining small, independent companies aretechnology developers, not BES suppliers. Thesecompanies are not marketing organizations and do notmaintain extensive contacts with potential BEScustomers.

Supplier and consultant perceptions of the BESmarket were mixed. Depending on the organizationcontacted, perceptions of the market varied fromfairly positive to very negative. Patterns weredifficult to detect, although BES manufacturers weremore positive about the industry than most consultingorganizations.

Perceptions of BES technology also varied widelybetween those that felt that existing BES technologywas adequate and those that felt it was inadequate.As expected, those that supported existing BEStechnology tended to be organizations that were notaggressively developing advanced batteries andpower conditioning equipment. Most respondentsagreed that further advances in power conditioningand utility connection equipment could be made.

BES suppliers and consultants also provided Frost&Sullivan with their estimates of the BES market in2000, 2005, and 2010. These estimates are discussedin more detail in the Market Opportunities andForecasts section of this report.

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SUMMARY OF MAJOR FINDINGS BA?TERY ENERGY STORAGE MARKET FEASIBILITY STUDY

Other Industry Perspectives

Regulatory agencies and industry groups provided theother industry perspectives in this study. Input fromboth types of organizations provides importantsupporting information to the conclusions reached inthis study.

The responses received from regulatory agenciesindicate that they do not have an established positionon BES. Regulatory agencies receive littleinformation or feedback from utilities, BES suppliers,or other organizations and do not view BES as amajor issue. When they do receive information, it isprimarily about combustion turbine and renewabletechnologies.

Moreover, the regulatory agencies stated that as thepower industry deregulates, they will likely stopsupporting BES technology to the extent that theyhave in the past. They will probably hesitate in thetimre to encourage utilities to deploy specifictechnologies and participate in particular programs.Instead, market-based solutions focusing on economiccosts and benefits will likely prevail, and theprospects of regulatory agencies using their influenceto champion BES deployment are minimal.

The other industry groups that Frost & Sullivancontacted during this study were variousorganizations with an interest in the electric powerindustry and the use of BES. Examples of suchorganizations are the National Rural ElectricCooperative Association, the Environmental DefenseFund, and the National Association of UtilityRegulatory Commissioners. These industry groupshad more specific perceptions of BES than theregulatory agencies.

Many of the groups viewed BES as an importantenabling technology to facilitate the use of renewableenergy or to deal with power quality and assetutilization issues. These groups tended to be morefocused on BES and maintained personnel thatattempted to keep track of developments in BESmarkets and technologies.

IBES Market Oppotiunities andForecasts

BES Market Definiticms

As stated earlier, thk report was restricted to a studyof the U.S. market for BES. For purposes of this

study, the U.S. market consists of the 50 states andPuerto Rico. In addition, this is a study of the BESmarket among electricity providers, with informationon electricity end-user BES markets provided by BESsuppliers and consultants.

In all, 21 electricity providers returned enoughinformation for Frost & Sullivan to use theirresponses in estimating BES market penetration andactivity in 2000, 2005, and 2010. These 21electricity providers represent between 27 and 33percent of the U.S. electric power industry’s 1994capacity in terms of megawatt-hours sold, megawatt-hours generated, revenues born electricity sales, andgenerating capacity. Thus, even though the numberof utilities may seem smrdl compared to the industryas a whole, these companies make up a largeproportion of the U.S. electric power industry.

The responses from the 21 utilities were compiledand extrapolated to the U.S. industry as a whole. Theextrapolation used a formula based on thepercentages of industry output and capacity. l%eseresults were then deflated to counteract the naturaltendency of respondents to exaggerate futurebehavior. Such exaggeration has been encounteredby Frost & Sullivan in the past and is especiallyprevalent in studies such as this, with long forecastperiods.

A similar extrapolation method was used to compilethe electricity end-user BES demand estimates thatFrost & Sullivan received from BES suppliers andconsultants. These figures are presented with theelectricity provider estimates (Tables 4 and 5) to givea clearer picture of the entire BES market in a givenyear.

BES Market Penetration Estimates

Table 4 shows the estimated penetration of BES inthe electricity provider industry. Sales are projectedto climb from about $24 million in 2000 to about$287 million in 2010.

Table 5 shows the estimated penetration of BES forelectricity end users. These results are based onprojections given to Frost & Sullivan by BESsuppliers. BES revenues in this segment are forecastto be about $372 million in 20Q0 and about $434million in 2010.

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BA17ERY ENERGY STORAGE MARKET FEASIBILITY STUDY SUMMARY OF MAJOR FINDINGS

Table 4. BES Market Statistics Among ElectricityProviders (U.S.), 2000,2005, and 2010

Year MW ($ Million)2000 27 242005 215 1292010 573 287

Note: All fiaures are rounded.

Table 5. BES Market Statistics Among ElectricityEnd Users (U.S.), 2000,2005, and 2010

Year MW ($ Million)

2000 496 3722005 605 4432010 965 434

Note All figures are rounded.

Primary Market Drivers

The principal drivers of the growth anticipated inBES market penetration among electricity providersand end users include the following:

0

Power55 thewill probably become even more important aselectronics are increasingly used in businesses andglobal competition places a greater emphasis onavoiding downtime. BES is already used in thisapplication in the form of existing uninterruptiblepower supply (UPS) systems and serial powersystems.

Power qualityDistributed generationTechnological advances in BESImproving customer focus of electricityprovidersEnvironmental benefits of BESFuel supply issuesIncreasing use of renewable

quality was already identified by respondentsmajor application for BES. This application

Distributed generation is another driver of the BESmarket. BES’S modularity makes it more appropriatefor deployment in distributed sites. Although notmany distributed generation projects are cmentlybeing conducted, the number of these projects shouldincrease in the future.

Respondents expect technological advances to occurin BES. Addressing some or all of the technology’scurrent shortcomings should make BES moreattractive compared to other options.

Currently, most electricity providers function in aregulated monopoly environment in which customersare allotted by geographic location. This is differentfrom the future deregulated environment whereelectricity providers will probably have to be morecustomer-focused to survive. This customer focusshould include efforts to address local power qualityand reliability issues, areas in which BES can serve aconstructive role.

BES is a technology that does not produce noise orhartrtfil emissions. It can be used in settings andenvironments where current generation technologieswould be dMicult or impossible to site. Electricity

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SUMMARY OF MAJOR FINDINGS BA7773RYENERGY STORAGE MARKET FEASIBILITY STUDY

providers cited these benefits as some of the major Growth in the use of renewable energy should alsoadvantages of BES. drive the BES market. BES can be used in

conjunction with renewable energy sources to “firm”Another advantage of BES cited by electricity electric power delivery from these sources. Forproviders is the elimination of fuel supply issues example, BES could store power generated from solarassociated with generation technologies. This is generation to maintain a constant power output evenbecause BES, by definition, does not require fuel. at night.

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BAITERYENERGY STORAGE MARKET FI?Z4SIBILlTY STUDY CONCLUSIONS AND RECOh4iUENDA170NS

Conclusions and Recommendations

Conclusions

Frost & Sullivan has based the following conclusionson the responses obtained from organizations andindividuals interviewed for this study and frominteractions with the BES comrnuNty related to thisstudy.

BES Cost Reductions Desired

The fmt and foremost conclusion of this study is thatan overwhelming consensus exists among theelectricity providers surveyed that significantreductions in BES cost profiles are needed.

In particular, issues pertaining to the capital cost ofBES are considered paramount. Currently availableper-kilowatt BES costs run two to three times the per-kilowatt cost of combustion turbines. Although thetwo technologies are not directly comparable, theyare similar enough in the minds of electricityproviders that the disparity in cost reduces marketinterest in deploying BES systems.

Maintenance costs are also of interest to electricityproviders. These costs include not only the actualcosts of maintaining a BES system but the perceivedcosts as well. These perceived costs can best bethought of as the “headaches” that respondents expectfrom a BES system. For example, several electricityproviders said in their responses that even though theorganizations had no direct experience with BES,they had heard that the maintenance issues associatedwith maintaining the batteries in a BES system madethe cost prohibitive.

As stated earlier, significant BES cost reductions areone of the assumptions of this study. Although alarge proportion of the BES supplier community doesnot share SNL’s expectation that these cost reductionscan be realistically delivered, evidence uncovered inthe study indicates that significant downward pressureon BES prices has already begun.

BES Performance ImprovementsDesired

The results of the survey also show that electricityproviders desire improvements in BES energydensity, maintenance characteristics, and life span.

These technical issues are secondary to BES costissues, although they are important in their own right.Energy density affects capital cost and the use of BESin some applications and sites. Maintenance issuescenter on improvements in BES battery technology.To better offset high capital costs and be morecompetitive with other distributed generationtechnologies, current expected BES life spans of 6 to10 yr must be improved.

BES Market Targeting andSegmentation

Results of this study indicate that potential BESmarkets are not currently targeted or segmented. Thisaffects both product and technology development.The BES industry seems to be trying to develop BESmarkets across a wide range of applications eventhough markets may not actually exist.

The area of ancillary services demonstrates thisdynamic. Responses to queries about the need forBES in ancillary services indicate that the electricityprovider sample views ancillary services neither as anarea of concern nor as a potential market for BES.Almost no feedback was received from electricityproviders on ancillary services, even when they weredirectly questioned on the subject. Despite this, theBES community is expending considerableintellectual energy on this area.

Despite the lack of responses, it cannot be assumedthat utilities have not given any thought to theancillary services issue. This is especially true giventhat many of the electricity providers surveyed areindustry leaders within the U.S. electric powerindustry. As such, their opinions on this subject arelikely based on sound data and cannot be dismissed.

On the product side, the lack of targeting spreadsBES marketing efforts thinly over a broad array of

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CONCLUSIONS AND RECOMMENDATIONS BA17ERY ENERGY STORAGE MARKET FEASIBILITY STUDY

applications and prevents BES from betterpenetrating applications where it has been moresuccessful. The only truly targeted product availablein the BES market is AC Battery’s PQ2000 system,designed to provide cheap, short-term, backup powerto ride customers through a 10- to 15-second outage.Other products still suffer from wing to be all thingsto all people, therefore pleasing nobody.

BES Educational Effofts

Despite the fact that this study concentrated onelectricity providers, organizations, and individualswith past involvement in BES projects or forums, thesurvey of the BES-related educational level of theorganizations revealed that respondents were notentirely knowledgeable on recent developments inBES.

An example of the level of education is shown by thehigh number of individuals that mentioned loadleveling as a BES application in Table 3. Studiesconducted over the past several years have shown thatload leveling is a marginal BES application at best.clearly, educational efforts within the BEScommunity must be enhanced.

Bias Toward GenerationTechnologies

A significant bias toward generation technologies wasalso found within the electricity provider industry.Often, respondents made comments that equated BESto generation technologies, usually leading tonegative perceptions of BES compmed to thesetechnologies. In reality, BES is not a generationtechnology but a complementary storage technology.This bias toward generation technology is largely aneducational issue. However, other dynamics are atwork.

Electricity providers were questioned on what theirpreferred electricity supply options might be in thefuture and what would happen if BES were to matchthe cost of these preferred options. Even in thissituation, some respondents stated that they wouldcontinue to favor more “familiar” options over BES.However, other respondents expressed a dramaticallyheightened interest in BES under such circumstances.

Organizational Obstacles to BESProcurement

The organizational structures of both elecrncityproviders and BES suppliers create some barriers toBES market penetration.

On the utility side, the need to coordinate and fundBES purchases among disparate customer service,transmission, distribution, genem.ion, a n dengineering business functions creates seriousproblems for BES manufacturers and technologydevelopers. Developers and suppliers must identifyand contact key decision makers and then developand maintain relations over the sales or developmentcycle. These are extremely difficult tasks given theopaque nature of many utility organizations.

On the BES supplier side, the existing group ofsuppiiers is largely made up of large battery andelectrotechnology companies that receive a minuteportion of their revenues from the BES market. TheBES units of these companies compete for resourceswith other company units that are more related to thecore business of those firms. This makes large BESdevelopment expenditures difilcult to justify andleads to a situation in which BES suppliers try tomake existing products and technologies fit the newBES market, often without success.

Communications in the BES Industry

The results of this study indicate that communicationswithin the BES industry are inadequate on severallevels. Specifically, the low level of BES knowiedgeand education exhibited in many of the responsesgathered during this study shows that educationalcommunications within the BES community need tobe improved.

Also, significant impediments to clear andunderstandable communication between BESsuppliers and developers and electricity providersexist. This is probably more important than theeducational issue because it significantly affects thefundamental way in which many industry partiesrelate to and perceive each other. Thesecommunications dit%culties may be hindering theproper development of the BES market.

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BA27ERYENERGY STORAGE MARKET FE4S1BILITY STUDY CONCLUSIONS AND RECOMMENDATIONS

Need for More BES Innovation

The BES industry suffers from a lack of innovation interms of products, marketing, communications,educational efforts, and technology. Results of thisstudy show that marketing and product developmentefforts need to be more tightly focused; educationaland communications efforts need to be expanded andimproved; and new technologies need to bedeveloped, especially on the battery side of theindustry.

Some BES projects have been successful. The PuertoRico Electric Power Authority (PREPA) system isforemost among them. The PREPA system wasactually chosen over combustion turbines, whichseem to be the greatest threat to BES’S success.However, even in the PREPA case, the utility itselfhad to perform the project integration, usingequipment from several manufacturers, includingsome that will not offer those products in the future.

The result is a successful system, but one that no BESsupplier is likely to provide to customem. Becausenobody but PREPA has “ownership” of the product inuse at PREPA, no organization is marketing it. Thisis the case even though the PREPA frequencyregulation/spinning-reserve application is one thatmany utilities in the United States need and might beinterested in.

Both SNL and the ESA are being more aggressive inexpanding their industry outreach for bothcommunications and educational efforts. BES pricesare falling, and some promising developments invarious advanced battery technologies have beenmade. More effort must be undertaken, but progressis being made on many fronts.

Recommendations

Improving BES Economics, Storage,and Energy Density

Lked in this section are the major issues thatelectricity providers raised when discussing theirmisgivings about BES. Frost& Sullivan recommendsthat every effort be made to upgrade batteryperformance in terms of hours of storage and energydensity. Also, reducing capital and maintenance costsis a major issue that should affect BES purchases atthe utility level. Applications for current BES

technology exist but the costs are too high to take _, . . . .advantage of most of them. Frost & Sullivan expectsthat meeting the full demands of the electricityprovider industry will probably entail developing anew generation of BES technologies. Therefore, BESdevelopers and suppliers should examine thefeasibility of such development and whether theywant to be a part of such an effort.

Improving Communications Withinthe BES Community

The previously discussed communications problemswithin the BES industry are complex and stem fromthe rivalry between various vendors and developersand the technologies they are backing. Alsocontributing to some of these problems are the natureand organization of the utility industry and of BESsuppliers.

While realizing the constraints, Frost & Sullivanrecommends that SNL make greater efforts to expandthe level of communication within the industry anddiscourage some of the dissonance and acrimonyOccurnng in some parts. With a developingtechnology such as BES, the dissonant environmentmay confuse and alienate potentiaI customers andother important parties.

Strengthening Industry Partnerships

Frost & Sullivan recommends that SNL strengthen itsindustry partnerships to achieve the long-term goalsthat SNL has identified for itself. Past BES projectshave been affected by the partners havingincompatible or unidentified goals.

The decommissioning of Southern California Edison’sChino facility left much of the electricity providerindustry with a negative perception of BES. Hadgreater efforts been made to synchronize goals amongthe various parties with stakes in the Chino facility,the results might have been more positive for the BESindustry.

In the future, Frost& Sullivan recommends that SNLspend more time and effort identifying andsynchronizing its goals with those of its partners.This should limit some of the negative consequencesstemming from projects such as the Chino project.

15

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CONCLUSIONS AND RECOMMENDATIONS BAWERY ENERGY STORAGE MARKET FEASIBILITY STUDY

Focusing on BES Applications andProduct Development

Current BES marketing and development efforts aretoo broad in focus. Marketing and development needto be more narrowly focused to gain betterefficiencies and produce better results. Frost &Sullivan recommends that SNL accurately identify theapplications that need to be served by BES anddevelop technologies and programs needed to servethose applications. In addition, SNL should selectand encourage partners to take advantage of thosetechnologies and programs in the development offocused products for the BES industry.

Petiorming Additional MarketResearch

Commercializing a developing technology is dif%cult.In the case of BES, this difficulty is heightened by theturmoil within the U.S. electric power industry andthe pressure for results that many important BESresearch and development organizations, includingSNL, are experiencing. Given these factors, Frost&Sullivan recommends that SNL and its partnersperform additional research to understand the market.

The following topics seem promising areas for marketresearch:

● BES demand in electric cooperatives

● BES demand among electricity end users

e Identification of high-priority BES applica-tions

. Identification of project opportunities for theplacement of BES systems

e Identification of key decision makers attarget companies

. Identification of desired BES productfeatures

In particular, the studies of the electricity end userand possibly the cooperative markets appear to bevaluable. However, there also appears to be noshortage of potential research topics.

Market Summa~

The BES market is currently developmental, andbecause of the factors that have been discussed in thisrepo~ the industry faces significant challenges.Nonetheless, the results of this study indicate that amarket for BES at the electricity provider level doesexist. ‘1’hs market is currentiy self-perpetuating at thenational level, but at a lower than desired level ofactivity.

Projects such as those currently planned in PuertoRico and Alaska should continue into the foreseeablefuture. With the development of better BEStechnologies and the resolution of concerns andissues, the BES mtuket has the potential to besignificantly larger.

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ABB Power T&D Co., Inc.Attn: P. Danfors16250 West Glendale DriveNew Berlin, WI 53151

AC Battery CorporationAttn: R. Flernrning2080 Energy DriveP.O. BOX 325East Troy, WI 53120

American Electric Power Service Corp.Attn: C. Shih1 Riverside PlazaColumbus, OH 43215

Anchorage Municipal Light & PowerAttn: M. Aslarn1200 East 1” AvenueAnchorage, AK 99501

BechtelAttn: W. StolteP.O. Box 193965San Francisco, CA 94119-3965

Argonne National Laboratories (2)Attn: W. DeLuca

G. HenriksenCTD, Building 2059700 South Cass AvenueArgonne, IL 60439

Arizona Public Service (2)Attn: R. Hobbs

Herb HaydenP.O. Box 5399Phoenix, AZ 85072

Lucent TechnologiesAttn: K. Bullock3000 Skyline DriveMesquite, TX 75149

AVO InternationalAttn: Gary Markle510 Township Line Rd.Blue Bell, PA 19422

Babcock & WilcoxAttn: Glem CampbellP.O. 130x 785Lynchburg, VA 24505

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Berliner Kraft und Licht (BEWAG) California State Air Resources Board

Attn: K. Kramer Attn: J. Holmes

Stauffenbergstrasse 26 Research Division

1000 Berlin 30 P.O. Box 2815

GERMANY Sacramento, CA 95812

Business Mmagement ConsultingAttn: S. Jabbour24704 Voorhees DriveLos Altos Hills, CA 94022

C&D Charter Power Systems, Inc. (2)Attn: Dr. Sudhan S. MisraAttn: Dr. L.HoldenWashington & Cherry Sts.Conshohocken, PA 19428

Delphi Energy and EngineManagement Systems (2)Attn: J. Michael Hinga

R. RiderP.O. BOX 502650Indianapolis, IN 46250

International Energy Systems, Ltd.Attn: G. BarkerChester High RoadNestor, South WirralL64 UE UKUNITED KINGDOM

Calpine Corp.Attn: R. Boucher50 W. San Fernando, Ste. 550San Jose, CA 95113

Chugach Electric Association, Inc. (2)Attn: T. LOVaS

J. CooleyP.O. Box 196300Anchorage, AK 99519-6300

Consolidated Edison (2)Attn: M. Lebow

N. Tai4 Irving PlaceNew York, NY 10003

Corn Belt Electric CooperativeAttn: R. StackP.O. Box 816Bloomington, IL 61702

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EA Technology, Ltd.Attn: J. BakerChester CH1 6ESCapenhurst, EnglandUNITED KllNGDOM

Eagle-Picher IndustriesAttn: J. DeGrusonC & Porter StreetJoplin, MO 64802

ElectrosourcesAttn: Michael DodgeP.O. Box7115Loveland, CO 80537

Eltech Research CorporationAttn: Dr. E. Rudd625 East StreetFairport Harbor, OH 44077

Energetic, Inc. (4)Attn: J. Badin

H. LowittP. TaylorL. Charles

7164 Columbia Gateway DriveColurnbi~ MD 21046

East Penn Manufacturing Co., Inc.Attn: M. StantonDeka RoadLyon Station, PA 19536

Electric Power Research Institute (3)Attn: S. Chapel

S. EckroadR. Schainker

P. O. Box 10412Palo Alto, CA 94303-0813

Electrochemical Engineering Consultants, Inc.Attn: P. Symons1295 Kelly Park CircleMorgan Hill, CA 95037

Electrochemical Energy Storage Systems, Inc.Attn: D. Feder35 Ridgedale AvenueMadison, NJ 07940

Energy Systems ConsultingAttn: A. Pivec41 Springbrook RoadLivingston, NJ 07039

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Energetic, Inc. (2) Firing Circuits, Inc.

Attn: M. Farber Attn: J. Mills

R. Scheer P.O. Box 2007

501 School St. SW, Suite 501 Norwalk, CT 06852-2007

Washington, DC 20024

Energy and Environmental Economics, Inc.Attn: Greg J. Ball353 Sacramento St., Suite 1540San Francisco, CA 94111

GE Industrial& Power ServicesAttn: Bob Zrebiec640 Freedom Business CenterKing of Prussi% PA 19046

Giner, Inc.Attn: A. LaConti14 Spring StreetWaltham, MA 02254-9147

Golden Valley Electric Association, Inc.Attn: S. Haagensen130x 71249758 Illinois StreetFairbanks, AK 99701

General Electric CompanyAttn: N. MillerBuilding 2, Room 6051 River RoadSchenectady, NY 12345

General Electric Drive SystemsAttn: D. Daly1501 Roanoke Blvd.Salem, VA 24153

GNB TechnologiesWorld HeadquartersAttn: S. Deshpande’375 Northridge RoadAtIan@ GA 30350

Hawaii Electric Light Co.Attn: C. NagataP.O. BOX 1027Hilo, HI 96720

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GNB Technologies (3)Industrial Battery CompanyAttn: G. Hunt

J. SzymborskiR. Maresca

Woodlake Corporate Park829 Parkview Blvd.Lombard, IL 60148-3249

Kenetech/Wind Power (2)Attn: Michael Behnke

W. Erdman6952 Preston AvenueLivermore, CA 94550

Lawrence Berkeley Laboratory (3)Attn: E. Cairns

K. KinoshitaF. McLarnon

University of CaliforniaOne Cyclotron RoadBerkeley, CA 94720

Longitude 122 WestAttn: S. Schoenung1241 Hobart St.Menlo Park, CA 94025

Lucas Controls, Inc.Attn: Donald J. Lucas10925 Miller Rd., Ste. ADallas, TX 75355-1848

ILZRO (3)Attn: J. Cole

P, MoseleyC. Parker

P.O. BOX 12036Research Triangle Park, NC 27709

Imperial Oil Resources, Ltd.Attn: R. Myers3535 Research Rd NWCalgary, AlbertaCANADA T2L 2K8

Innovative Power SourcesAw. Ken Belfer1419 Via Jon Jose RoadAlarno, CA 94507

J. MeglenP.O. Box 3232Oakton, VA 22124

Metlakatla Power C% LightAttn: H. AchenbachP.O. Box 359Metlakatl% AK 99926

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National Renewable Energy Laboratory (5) Micron CorporationAttn: R. McConnell Attn: D. Nowack

L. Flowers 158 Orchard LaneJ. Green Winchester, TN 37398S. HockR. DeBlasio

1617 Cole Blvd.Golden, CO 80401-3393

New York Power AuthorityAttn: B. Chezar1633 BroadwayNew York, NY 10019

Northern States PowerAttn: D. Zurn414 Nicollet MallMinneapolis, MN 55401

NPA TechnologyAttn: Jack BrownSuite 700, Two University PlaceDurham, NC 27707

Oak Ridge National Laboratory (3)Attn: B. Hawsey, Bldg. 3025, MS-6040

J. Stoval, Bldg. 3147, MS-6070J. VanCoevering, Bldg. 3147, MS-6070

P.O. BOX 2008Oak Ridge, TN 37831

ZBB, LTD.Attn: Robert J. ParryP.O. Box 1410, West PerthWestern Australia 6872

Oglethorpe Power CompanyAttn: C. Ward2100 E. Exchange PlaceP.O. Box 1349Tucker, GA 30085-1349

Omnion Power Engineering CorporationAttn: H. Meyer2010 Energy DriveP.O. BOX 879East Troy, WI 53120

Orion Energy Corp.Attn: Doug Danley10087 Tyler Place #5Ijamsville, MD 21754

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PEPCOAttn: John Young1900 Pennsylvania NW, Room 842Washington, DC 20068

Power Engineers, Inc. (2)Attn: Timothy Osterrneter

S. SostromP.O. Box 1066Hailey, ID 83333

Power Technologies, Inc.Attn: P. Prabhakara1482 Erie Blvd.P.O. BOX 1058Schenectady, NY 12301

Power Technologies, Inc.Attn: H. Clark775 Sunrise Ave.Suite 210Roseville, CA 95661

Powercell CorporationAttn: Reznor L Orr10 Rogers StreetCambridge, MA 02142

Endecon EngineeringAttn: Rick WinterResearch Engineer2500 Old Crow Canyon Rd., Suite 220San Rarnon, CA 94583

Pacific Gas & ElectricAttn: B. Norris2303 Carnino Ramon, Suite 200San Rarnon, CA 94583

Pacific Northwest Laboratory (2)Attn: J. DeSteese, K5-02

D. BrownBattelle Blvd.Richland, WA 99352

Puerto Rico Electric Power AuthorityAttn: W. TorresG.P.O. BOX 4267San Juan, Puerto Rico 00936-426

Raytheon Engineers and ConstructorsAttn: A. Randall700 South Ash St.P.O. BOX 5888Denver, CO 80217

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Public Utility Commission of Texas R&D AssociatesAttn: D. Jaussaud Attn: J. Thompson7800 Shoal Creek Blvd. 2100 Washington Blvd.Austin, TX 78757 Arlington, VA 22204-5706

RMS CompanyAttn: K. Ferris87 Martling Ave.Pleasantville, NY 10570

Sacramento Municipal Utility DistrictAttn: Robert P. WichertP.O. BOX 15830Sacramento, CA 95817

SAFT Research& Dev. Ctr.Attn: Guy Chagnon107 Beaver CourtCockeysville, MD 21030

Salt River Project (2)Attn: H. Lundstrom

G.E. “Ernie” Palomino, P.E,MS PAB 357, BOX 52025Phoenix, AZ 85072-2025

Sentech, Inc. (3)Attn: R. Sen

S. SwaminathanK. Khmder

4733 Bethesda Avenue, Suite 608Bethesd~ MD 20814

Sentech, Inc.Attn: Robert Reeves9 Eaton RoadTroy, NY 12180

Santa Clara UniversityAttn: Charles Feinstein, Ph.D.Department of Decision and Information SciencesLeavey School of Business and AdministrationSanta Clar% CA 95053

SEIA (2)Attn: S. Sldar

Clay Aldrich122 C Street NW4* FloorWashington, DC 20001-2104

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State of AlaskaDept. of Community& Regional AffairsAttn: Afkal H. Khan333 W. 4th Avenue, Suite 220Anchorage, AK 99501-2341

Soft Switching TechnologiesAttn: D. Divan2224 Evergreen Rd., Ste. 6Middleton, WI 53562

SolarexAttn: G. Braun630 Solarex CourtFrederick, MD 21701

Southern California Edison (3)Attn: R. N. Schweinberg

J. LeeperN. Pinsky

6070 N. Irwindale Ave., Suite IIrwindale, CA 91702

U.S. Department of EnergyAttn: A. LandgrebeOffIce of Transportation TechnologiesEE-32 FORSTLWashington, DC 20585

SRI InternationalAttm C. Seitz333 Ravenswood Ave.Menlo Park, CA 94025

Stored Energy EngineeringAttn: George Zink7601 E 88* PlaceIndianapolis, IN 46256

Stuart Kuritzky347 Madison AvenueNew York, NY 10017

Superconductivity, Inc. (2)Attn: Jennifer Billman

Michael GravelyP.O. BOX 56074Madison, WI 53705-4374

Switch TechnologiesAttn: J. Hurwitch4733 Bethesda Ave., Ste. 608Bethesdq MD 20814

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U.S. Department of EnergyAttn: R. BrewerOffIce of Energy ManagementEE-12 FORSTLWashington, DC 20585

U.S. Department of EnergyAttn: N. RossmeisslOffIce of Energy ManagementEE-12 FORSTLWashington, DC 20585

U.S. Department of EnergyAttn: J. P. ArchibaldEE FORSTLWashington, DC 20585

U.S. Department of EnergyAttn: M. B. GinsbergEE FORSTLWashington, DC 20585

U.S. Department of EnergyAttn.: G. BuckingharnAlbuquerque Operations OffIceEnergy Technologies Division, P.O. Box 5400Albuquerque, NM 87115

U.S. Department of EnergyAttn: P. PatilOffIce of Transportation TechnologiesEE-32 FORSTLWashington, DC 20585

U.S. Department of EnergyAttn: T. DuongOffice of Transportation TechnologiesEE-32 FORSTLWashington, DC 20585

U.S. Dep~ent of EnergyAttn: J. DaleyOffIce of Energy ManagementEE-12 FORSTLWashington, DC 20585

U.S. Department of EnergyAttn: A. JelacicOffice of Energy ManagementEE-12 FORSTLWashington, DC 20585

U.S. Department of EnergyAttn: A. G. CrawleyEE FORSTLWashington, DC 20585

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TU ElectricR&D ProgramsAttn: James Fangue1601 Bryan St., Rm 19030Dallas, TX 75201

University of Missouri - RollsAttn: M. Anderson112 Electrical Engineering BuildingRoll% MO 65401-0249

U.S. Department of EnergyAttn: R. EynonNuclear and Electrical Analysis BranchEI-821 FORSTLWashington, DC 20585

U.S. Department of EnergyAttn: A. Hol%nanOffIce of Utility TechnologiesEE-10 FORSTLWashington, DC 20585

f,

U.S. Department of EnergyAttn: R. Eaton IIIGolden Field Office1617 Cole Blvd.Building 17Golden, CO 80401

U.S. Department of EnergAttn: P. N. OverholtEE-141 FORSTLWashington, DC 20585

U.S. Department of Ener~Attn: D.A. SanchezKirtland Area OftlceP. O. Box 5400Albuquerque, NM 87185-5400

U.S. Department of EnergyAttn.: D. Eckelkamp-BakerAlbuquerque Operations OffIceEnergy Technologies Division, P.O. Box 5400Albuquerque, NM 87115

Virginia PowerAttn: Gary VernoInnsbrook Technical Center5000 Dominion BoulevardGlen Ellen, VA 23233

Walt Disney World Design and Eng’g.Attn: Randy BevinP.O. Box 10,000Lake Buena Vistzq FL 32830-1000

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U.S. Department of EnergyAttm C. PlattOffIce of Energy ManagementEE-12 FORSTLWashington, DC 20585

WestinghouseAttn: Tom MattyP.O. BOX 17230Baltimore, MD 21023

Westinghouse STCAttn.: H. Saunders1310 Beulah RoadPittsburgh, PA 15235

W. R. Grace& CompanyAttn.: S. Strzempko62 Whittemore AvenueCambridge, MA 02140

Yuasa-Exide, Inc.Attn: W. Baurnann32 Allen LaneMt. KiSCO, NY 10549

R. Weaver777 Wildwood LanePalo Alto, CA 94303

Yuasa-Exide, Inc. (3)Attn: N. Magnani

F. TarantinoG. Cook

2400 Bemville RoadReading, PA 19605

The Technology Group, Inc.Attn: Tom Anyos63 Linden Ave.Atherton, CA 94027-2161

Zaininger Engineering Co., Inc.Attn.: H. Zaininger1590 Oakland Road, Suite B2111San Jose, CA 95131

ZBB Battery Technologies, Inc.Attn: P. Eidler11607 West DearbornWauwatos~ WI 53226-3961

.

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Crescent EMCAttn: R. B. SloanExecutive Vice PresidentP.O. BOX 1831Statesville, NC 28687

HL&P Energy ServicesAttn: George H. Nolin, CEM, P.E.Product Manager Premium Power ServicesP.O. Box 4300Houston, TX 77210-4300

UFTOAttn: Edward Beardsworth951 Lincoln Ave.palo Alto CA 94301-3041

Distributed Utilities AssociatesAttn: Joseph Ianucci3470 Crow Canyon Suite 140San Rarnon, CA 94583

SAFT America Inc.Attn: Ole VigerstolNational Sales Manager711 Industrial Blvd.Valdos@ GA 13601

Public Utility Commission of TexasAttn: Danielle JaussaudCompetitive Issues Division7800 Shoal Creek BoulevardAustin, TX 78757

ECG Consulting Group Inc.Attn: Daniel R. BruckSenior Associate55-6 Woodlake RoadAlbany, NY 12203

Westinghouse Electric CorporationAttn: Gerald J. KeaneManager, Venture DevelopmentEnergy Management Division4400 Alafaya TrailOrlando, FL 32826-2399

The Brattle GroupAttn: Thomas J. Jenkin44 Brattle StreetCambridge, MA 02138-3736

Exide ElectronicsAttn: John BreckenridgeDirector, Federal Systems Division8609 Six Forks RoadRaleigh, NC 27615

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American Superconductor Corporation Northern States Power CompanyAttn: S. Arnanda Chiu, P.E. Attn: Gary G. Karn, P.E.Manager, Strategic Marketing Consultant Electric ServicesTwo Technology Drive 1518 Chestnut Avenue NorthWestborough,MA01581 Minneapolis, MN 55403

University of Texas at AustinAttn: John H. PriceResearch AssociateCenter for ElectromechanicsJ. J. Pickel Research CampusMail Code R7000Austin, TX 78712

U.S. Department of EnergyAttn: J. E. RannelsPhotovoltaic DivisionEE-11 FORSTLWashington, DC 20585

U.S. Department of EnergyAttn: W. ButlerPA-3 FORSTLWashington, DC 20585

U.S. Department of EnergyAttn: J. A. MazerPhotovoltaic DivisionEE-11 FORSTLWashington, DC 20585

Frost & Sullivan (2)Attn: Steven Kraft

Dave Coleman2525 Charleston RoadMountain View, CA 94043

C&D PowercomAttn: Larry S. MeisnerManager Product Marketing1400 Union Meeting RoadP.O. Box 3053Blue Bell, PA 19422-0858

Tampa Electric CompanyAttn: Terri Hensley, EngineerP.O. Box 111Tampa, FL 33601-0111

U.S. Department of EnergyAttn: R. J. KingPhotovoltaic DivisionEE-11 FORSTLWashington, DC 20585

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i

VEDCO EnergyAttn: Rick Ub~di12 Agatha LaneWayne, New Jersey 07470

Intercon Limited (2)Attn: David Warar6865 Lincoln AvenueLincolnwood, IL 60646

U.S. Department of EnergyAttn: A. O. BulawkaPhotovoltaic DivisionEE-11 FORSTLWashington, DC 20585

U.S. Department of EnergyAttn: D. T. TonPhotovoltaic DivisionEE-11 FORSTLWashington, DC 20585

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MS-0513, R. Eagan (1000)MS-0953, W. Alzheimer (1500)MS-0702, D. Arvizu (6200)MS-0212, A. Phillips, (10230)MS-0340, J.Braithwaite(1832)MS-0343, W. Ciesiak (1832)MS-0953, J. T. Cutchen (1501)MS-0613, A. Akhil (1525)MS-0613, D. Doughty (1521)MS-0614, E. Binasiewicz (1522)MS-0613, G. Corey (1525)MS-0614, G.P. Rodriguez, (1 523)MS-0613, I. Francis (1525)MS-0614, T. Crow (1523)MS-0614, T. Unkelhaeuser (1523)MS-0614, D. Mitchell (1522)MS-0614, K. Grothaus (1523)MS-0613, N. Clark (1525)MS-0613 R. Jungst (1521)MS-0704, P. Klimas (6201)MS-0708, H. Dodd (6214)MS-0752, M. Tatro (6219)MS-0753, C. Cameron (6218)MS-0753, R. Bonn (6218)MS-0753, T. Hund (6218)MS-0753, W. Bower (6218)MS-1 193, D. Rovang (1231)MS-0613, P. Butler (1525) (20)MS-0619, Review & Approval Desk For DOE/OSTI (12690) (2)MS-0899, Technical Library (4916) (5)MS-9018, Central Technical Files (8940-2)