© 2016 Green Hedge Energy UK Limited

Opportunities for new solar PV and energy storage projects in Europe Intersolar, Munich, 22 June 2016

Ener

gy S

tora

ge

Back

up n

atur

al g

as g

ener

atio

n

Sola

r far

ms

© 2016 Green Hedge Energy UK Limited

A recent Green Hedge report showed the value of combining renewable energy with energy storage: in combination they can provide low cost, reliable/non-intermittent, low carbon electricity

2

Hal

f-hou

rly g

ener

atio

n in

MW

-1,500

0

1,500

3,000

4,500

6,000

Storage discharging Storage charging Solar PV WindBackup natural gas

Jan DecNovMar May Aug OctFeb Apr Jun Jul Sep

• A recent Green Hedge analysis (“Hinkley Point through the Looking Glass”) demonstrated how as of today a combination of wind and solar farms, energy storage and gas backup generators can generate baseload low carbon electricity in the UK for £75/MWh, i.e. 25% cheaper and 8 years faster than Hinkley Point C. This would save consumers across the UK £ 720 million p.a. for 35 years

• The system would also provide much-needed system stability through the energy storage supplying frequency response, allowing more renewable energy to be deployed

• Distributing the components and locating them close to energy demand reduces the strain on distribution and transmission networks (e.g., by maximising output rather than aiming for baseload in periods of maximum system demand)

• The full report is available for free on our website: http://www.green-hedge.com/news/

Simulation how a combination of solar, wind, storage and backup gas generation could generate a constant 3,200 MW over the course of a year

© 2016 Green Hedge Energy UK Limited

A challenging business case for new solar farms in Europe raises the question if Energy Storage Systems (ESS) can ride to the rescue of solar PV

3

EU Commission, DG Energy

• In many markets, the Merit Order Effect has depressed wholesale electricity prices to a level of about half the wholesale prices 2-3 years ago

• Many European market have reduced subsidies for solar PV and/or moved to competitive auctions for limited installation volumes

• Current wholesale prices are still below the levels needed to justify investment in new solar farms

- Example Germany: latest solar auction clearing price €74.10/MWh vs. wholesale price of €32.80/MWh

- Example UK: new solar does not qualify for CfD auctions, required solar price of £55/MWh is well above wholesale price of £32/MWh (May 16)

• Grid parity is closer in Southern Europe (Spain, Portugal, Italy, Greece, Malta, Cyprus) due to wholesale price premium and higher irradiation levels

© 2016 Green Hedge Energy UK Limited

There are two generic strategies for adding storage to solar PV generators

4

Load-shifting Balancing services

• Increase the revenue per kWh of solar generation using ESS to shift timing of exports or imports thus exploiting pricing differences

- Time-dependent transmission and distribution network charges

- Gap between end user price and wholesale price / increasing onsite usage of solar generation

- Arbitrage intra-day wholesale power prices between peak and off-peak periods

• Typically requires high energy (storage length >>1 hour) but not necessarily high ramp rates

• Adding storage to generators can provide additional income from providing balancing services to the system operator

• One example is frequency response, which battery storage systems can provide at competitive pricing

• ESS is typically more high power (shorter storage length), operating alongside (shared grid connection) but independently from solar generator

Hybrid models are possible (e.g., daytime load-shifting, nighttime providing balancing services)

© 2016 Green Hedge Energy UK Limited

-1200-1000 -800 -600 -400 -200 0 200 400 600

NPV private wire solar farm + ESS

Additional income from nighttime balancing services (NPV)

Uplift from wholesale price arbitrage (NPV)

Uplift from avoiding peak network charges (NPV)

Uplift from increasing onsite use to 95%

Cost of adding 3h ESS (capex and NPV of opex)

NPV private wire solar farm

Uplift from private wire supply @ £85 /MWh, 70% onsite use

NPV standalone solar farm

NPV of 30 year opex

NPV of 30 year revenues @ £32/MWh

Solar farm capex

Economics in £ / kW

Illustrative

Example Northern Europe (UK): how medium-sized solar farms can become viable with ESS in the UK

5

5 MW solar farm + 5 MW / 15 MWh ESS connected with private wire to a commercial/industrial user • End user price of £85/MWh for private wire supply is

sufficient for solar farm economics and gives end user a small discount to grid price plus long-term price certainty

• ESS ensures that generation exceeding onsite demand (e.g., summer weekends) is not spilled to the grid at low wholesale price (£32/MWh) but can be conserved for onsite use

• ESS saves end user costs by shifting import from grid away from periods with high network charges and policy costs

• Potential for additional income from balancing services

© 2016 Green Hedge Energy UK Limited

Example Southern Europe (Malta): how solar PV + ESS can meet existing electricity demand with cheap low carbon electricity

6

• ESS operation: ESS goes through two cycles per day, charging up at cheaper nighttime rate from the grid and during the day from excess solar generation

• Results: - Solar PV + ESS meets nearly 50% of onsite demand

- Substantial reduction in CO2 emissions (5,000 tons p.a.)

- Net cost saving of over 20% of total electricity bill without subsidies even after paying for capex incl. cost of capital

• Customer demand: anonymised client example Malta with average load of 1.5 MW over the year with seasonal variation (demand on third lower in winter than in summer due to air condition use)

• Installation of 6.66 MW solar PV and 2 MW/2.4 MWh ESS

• Solar PV yield: less volatile than Northern Europe (winter generation still half of summer generation) and better correlated to demand. Especially in summer excess is still exported to the grid

Winter day Summer day

© 2016 Green Hedge Energy UK Limited

NBE, BYD and Green Hedge are today entering into a strategic partnership to develop, finance and realise energy storage and solar PV projects in the UK and from 2017 across Europe

7

Green Hedge is a leading developer and operator of low carbon electricity generation and storage projects. The group’s developer arm has developed over  200 megawatts  of renewable energy projects to date (mostly in the UK but also in Germany, Turkey, Malta), with a focus on large-scale grid connected and on-site generation solar PV  systems. In the UK, we are currently developing one of t he l a rges t p ipe l i nes o f  e lec t r i c i t y storage  assets in the local market including the “Energy Barn©".   The group’s O&M b u s i n e s s p r o v i d e s  o p e r a t i o n a n d maintenance  services for 150 MW ground mounted solar farms.

Profile

Role in co-

ope-ration

Business development including binding contracts with customers and landlords Secure grid connections and planning consents Local regulation and accreditation Local partnerships (e.g., with installers/EPCs, energy suppliers) Propose contracting and bidding strategy for storage assets

Design high-quality, long-lifetime energy storage and solar PV products to meet market requirements at competitive costs Ensure technical compliance of products with local standards Ensure environmental compliance and end-of-life recycling of products

Data monitoring and analytics of operational performance Develop cutting-edge data systems/software for the optimal strategic and tactical management of the operational plants (especially ESS/commercial software to work with BYD’s BMS/PCS) Introductions to subsidiaries, significant investments and key suppliers of the NBE Associates Provide long-term financing for projects developed by the Parties

NBE was established in 2015 to facilitate and realise low carbon projects in China and internationally. It has strategic partnerships with China Resources Power Holdings, China Co-op Group, China National Petroleum Corporation, China National Offshore Oil Corporat ion, China Communicat ions Construct ion Co. and China Power Investment Corporation. It has a track record of 3 GWh ESS projects in China and 70 MWh in Europe. It focuses on grid-scale projects as well as integrated behind the meter projects for airports, ports, mining and other key infrastructure industries.

BYD (“Build Your Dreams”) was founded in 1995 and today employs 180,000 staff. It specialises in producing electric vehicles, solar panels and batteries. In 2015 it had $12.5 billion of revenues. In electric vehicles it is the global number one, in 2015 selling more electric vehicles than Tesla (60,000 vs. 50,000). It has a solar panel production capacity of 1.5 GW today and offers the longest guarantees and warranties in the industry. It has an energy storage production capacity of 14 GWh p.a. today, making it the global number 2. BYD counts Warren Buffet among its investors.