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What Can 1,000 MW of Battery as Distributed Storage

do for UK?PROPOSAL

Price Evolution has now made new build Distributed Electricity Storage economically feasible in UK

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Executive SummaryUK electricity fundamentals are:• Demand keeps growing• Low cost generating capacity is shrinking• The N. Sea gas bubble has gone and UK must

now compete with World for access to international gas supplies...

• ...where other fundamentals will keep gas prices high

• …and daily peak demand will have to be met with high cost CCGTs

1000 MW of Batteries can supply part of this peak

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Recent Price History - SBPAVERAGE SYSTEM BUYING PRICE

November 2004 thro December 2005 - £/MWh

0

50

100

150

200

250

300

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48

Trading Period

September, 2004 October, 2004 November, 2004 December, 2004

January, 2005 February, 2005 March, 2005 April, 2005

May, 2005 June, 2005 July, 2005 August, 2005

September, 2005 October, 2005 November, 2005 December, 2005 (1st 13 days)

Nuclear & coal offpeak

Peak supplied by CCGTs

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Recent Price History - SSPAVERAGE SYSTEM SELLING PRICE

September 2004 thro December 2005 - £/MWh

0

20

40

60

80

100

120

140

160

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48

Trading Period

September, 2004 October, 2004 November, 2004 December, 2004

January, 2005 February, 2005 March, 2005 April, 2005

May, 2005 June, 2005 July, 2005 August, 2005

September, 2005 October, 2005 November, 2005 December, 2005 (1st 13 days)

These differentials could not justify new storage

investments – hence previous failure of Regenesys

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Differences between selling & buying price

Average Difference SBP vs SSP November 2004 thro December 2005 - £/MWh

0

10

20

30

40

50

60

70

80

90

100

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48

Trading Period

September, 2004 October, 2004 November, 2004 December, 2004

January, 2005 February, 2005 March, 2005 April, 2005

May, 2005 June, 2005 July, 2005 August, 2005

September, 2005 October, 2005 November, 2005 December, 2005 (1st 13 days)

Buy Buy

Sell Sell

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Are we seeing the future?

• Gas is now a global commodity• Gas and oil reserves are concentrated in

Russia and OPEC countries• Gas prices are likely to converge with oil

prices and any way...• ...OPEC will cartelize OPEC’s gas

production...• Covertly supported by Russia and Norway

Expect gas prices over $10/mmBtu for indefinite future

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What other Options?

• More nuclear capacity– Unavailable for 10 – 15 years

• Clean coal (with CCS)– Unavailable for 5 – 10 years

• Renewable energy?– Only supplying firm capacity with storage

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Storage Options

• More Pumped Hydro ?– Out of the question for environmental reasons

• Compressed air energy storage ?– Salt domes are needed to increase gas storage

capacity

• Flow batteries– Only VRB can be realistically rolled out in

immediate future– VRB owns Vanadium and Regenesys processes

It looks like VRB

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VRB Demonstration Plants World-widePlace Application Specification Start dateKashima Kita PS, Japan Load levelling 200 kW x 4 h 1996

Office building, Osaka Load levelling demo 100 kW x 8 h 2000

Sanyo factory Voltage sag,

load levelling

3000 kW x 1.5 sec

1500 kW x 1 hour

2001

Wind power, Hokkaido Stabilization wind turbine output

170 kW x 6 h 2001

Dunlop Golf Course PV hybrid, load levelling 30 kW x 8 h 2001

University, Japan Load levelling 500 kW x 10 h 2001

Stellenbosch U, SA Load levelling 250 kW x 2 h 2001

EPRI, Italy Peak shaving 42 kW x 2 h 2002

Pacific Corp, Utah End of line peak shaving 250 kW x 8 h 2004

King Island, Australia Stabilization wind turbine 250 kW x 8 h 2004

Tomamae Wind farm, Hokkaido

Stabilization wind turbine 4000 kW x 2 h 2005

Nine Years - no re-invention of wheel needed

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Large batteries are in daily use

VRB battery at 30.6 MW Tomamae wind

park, Hokkaido

4 MW, 6MW Pulse6 MWh

Smoothing spiky windfarm output

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0

Pow

er

rati

ng

0 10s 1 h 2 h 8 h

10 kW

100 kW

1 MW

10 MW

100 MW

Storage inventory

1s 1 min 4 h30 min

Power quality

Un-interruptiblepower supplies

Frequencycontrol

Voltagesupport

VAR support

Peak shaving

Transmission stability

Spinning and standby reserve

Black startLoad levelling/following

Tariff trading

Load factor increase Capacity deferral Integration of renewables

Multi-Applications & Benefits

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Storage is Necessary for Development of Renewables

Experience in Denmark & Germany shows:

• That the threshold capacity of intermittent renewables is very low before…

• …use of balancing capacity becomes significant

• When balancing capacity is fossil, fuel and CO2 savings are reduced

Nuclear and ”clean coal” cannot be cycled

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Storage is necessary for the development of off-shore wind - 1

5 Minute Ramping as % Capacity over 1080 hours

-50%-40%

-30%-20%

-10%0%

10%20%

30%40%

50%60%

Behaviour of wind farm offshore DK is certain offshore UK

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Storage is necessary for the development of off-shore wind - 2

Number of "5 minute" spiking incidentsat a 160 MW Offshore Wind Farm

66

167 5 2

48

7 4 2 0

304 304

0

50

100

150

200

250

300

350

>25 MW/5 min >50 MW/5 min >75 MW/5min >100MW/5 min >125MW/5 min >150 MW/5min

Change of Output in 5 minutes, MW

Ramping up Ramping down

16% capacity 31 % capacity 47 % capacity 63 % capacity 78 % capacity 94 % capacity

..in 8 months winter 2004 - 2005

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incotecoPreliminary Calculation(discounting other ancillary services)

1000 MW Storage Plant 365 days per year

AssumptionsOutput - Capacity of Plant MW 1,000 Storage capacity of plant MWh 8Round trip Efficiency 70%

Calculation assumptionsMWh of buyable storage 8,000 MWh of saleable storage 5,600 Primary & Secondary Reserve Power £ per MW per year 200,000 Reactive power £ per MW per year 10,000

Price AssumptionsAverage Peak Selling price £/MWh 60 80 100 120Average Offpeak Buying price £/MWh 30 30 30 30Selling price of battery, 8 hours storage £/MW 1,400,000 1,400,000 1,400,000 1,400,000

Arbitrage incomeDaily net income £/day 96,000 208,000 320,000 432,000 Daily net cost MWh 8,000 8,000 8,000 8,000 Specific O&M cost £/MWh 1 1 1 1 Net daily income, excluding staff £/day 88,000 200,000 312,000 424,000

Days of trading per year, say 350 350 350 350Annual income (arbitrage) £/year 33,600,000 72,800,000 112,000,000 151,200,000 Reserve power application £/MW/year 200,000,000 200,000,000 200,000,000 200,000,000 Other ancillary services (reactive power) 10,000,000 10,000,000 10,000,000 10,000,000 Total income £/MW/year 243,600,000 282,800,000 322,000,000 361,200,000 Upfront cost based on €2000/kW 1,400,000,000 1,400,000,000 1,400,000,000 1,400,000,000

Pay-off years 5.7 5.0 4.3 3.9

There seems to be a case!

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incotecoNext Steps

1. Agree technical feasibility

2. Agree economic feasibility

3. Agree presentation documents

4. Presentations to, dialogue with• National Grid• OFGEM• DTI• Potential Investors

5. “Go” – “No go”!

6. If “go” – develop early cases on fully commercial grounds

In modules of at least 5 MW or larger