The Future of Energy: Latin America’s Path to …conferencias.cepal.org/futuro_energias/Pdf/S...

The Future of Energy:

Latin America’s Path to

Sustainability

Energy Storage and a Smarter

Grid for Latin America

S.Bernabei

Santiago, Agosto 2015

Enel Group today1

2

Global diversified player

Capacity: 2.1 GW

North America

Capacity: 17.4 GW

End users: 14.4 mn

Latin America

Capacity: 0.8GW

Mexico & Central America

Countries of presence2

Capacity: 66.5 GW

End users: 45.8 mn

Europe

Capacity: 0.1 GW

Africa

Capacity: 9.1 GW

Russia

1. Data as of 31st December 2014

2. Presence with operational assets

Ebitda1: ~ 15,8 BN Euros

Net installed capacity1: ~ 96 GW

3

2.1 GW in operation

0.4 GW in execution

North America

10 MW in operation

0.5 GW in execution

0.4 GW contracted

Africa

5.8 GW in operation

0.3 GW in execution

Europe

1.9 GW in operation

1.9 GW in execution

0.1 GW contracted

Latin America

Expertise across 5 technologies

Operations across 16 countries

Industry leading load factor at 40%

Highly efficient operations

Enel Green Power today

Global player with a diversified footprint

Ebitda1: ~ 1,9 BN Euros

Net installed capacity1: ~ 9,6 GW

1. Data as of 31st December 2014

EGP Chile today

+

Ollague Hybrid Off-Grid

Plant

206 kW Solar PV

30 kW Wind

752 kWh Battery

Storage and Renewables

Storage: Services and Applications

Market: status and forecast

Barriers/Opportunities for development in Latam

What is EGP doing to foster storage deployment

Agenda

Source: EPIA, GWEC, BNEF, IEA Medium Term Market Outlook, EGP Estimate for 2013; WEO 2013 New Policies scenario (2020 min); industry reports/McKinsey, EPIA (2020 max). Note: Investments based on

BNEF data except for hydro figures estimated assuming an average capex equal to 2.0 €/W; US$/€ fx rate assumed at 1.3.

By 2030, installed capacity Wind X 5 and Solar PV X 9 respect to 2013 (IRENA)

Storage as solution for increasing grid flexibility, especially in developed world

Storage as a solution for bringing electricity at affordable price in developing word

RES Energy Investments A key driver for Storage development

Installed

base

~1,645

~142

~12

~319

~ 1,092

~80

Installed

base

~1,535

~102

~12

~283

~ 1,063

~76

5.4%

11% 22%

8% 9%

3% 10%

4% 11%

3% 9%

Expected Growth

CAGR ‘13-’20

9.8%

2020

Max

110

1,111

1,030

579

330

~ 3,160

2020

Min

56

1,048

667

371

230

~2,371

Installed

base

27

+2%

628

+11%

529

+6%

275

+4%

185

+3%

~1,645

Investments

~86

~2

~60

~30

~10

~€188 bn

Additional

Capacity

2013

TOTAL

Solar

Geothermal

Wind

Hydro

Biomass

Technology

TOTAL

Africa

Asia

Europe

North

Americ

a

Latin

Americ

a

Area

By technology By geography

Expected

Growth

CAGR 2013-20

Installed

base

7.1%

39%

6%

12%

3%

6%

~109

+40

+1

+35

+29

+4

27

566

498

265

179

~1,535

2013 (GW) 2012 (GW) Min Max (GW) (GW) 2013 (GW)

5.4%

10%

7%

9%

3%

8%

9.8%

20%

13%

14%

3%

29%

Min Max 2013 (€bn) (GW) % 2012 (GW)

Additional

Capacity

2012

~111

+32

+1

+45

+28

+6

(GW)






Agenda

8

Flexibility in the electricity system

Storage and other resources

Dispatchable

plants Storage

Inter-

connection Demand Side

Mechanical Electro-

chemical Electrical

• CAES

• Flywheels

• Pumped Hydro

Storage

• Gravity Storage

• Capacitors

• SuperconductingMag

netic Energy Storage

• Lithium based batteries

• Nickel based batteries

• Zinc bades batteries

• Silicon based batteries

• Lead acid based batteries

• Redox flow batteries

• Hybrid flow batteries

• provides a wide range of services (energy and power services) • can be used for a wider range of applications (off-grids, grid-tied, large scale and HH) • is experimenting a dramatic improvement cost, performance, safety, subsidies

lithium-ion preferable to other

chemistries with respect to:

• energy and power density

• cycle and calendar life cost

ESS – Technology and service matrix

Wider range of Services provided by Electrochemical Systems

ESS – Price Evolution Li-ion batteries (lowest market price)

Source: Navigant Research ‘’Advanced Batteries for Utility-Scale Energy Storage

Storage Cost expected to decrease up to 50% in the next 5 years

Energy Transmission and

Distribution

VR

E S

mo

oth

ing

an

d E

nerg

y

Sh

ifting

Customer Energy Mgmt

(Household – PV, Commercial)

Off

Gri

d

Fast response (Ancillary

Services, Curve smoothing)

ESS – Services provided for different Applications

Electric energy

time-shift

(arbitrage)

Electric supply

capacity Regulation

Spinning, non-

spinning and

supplemental

reserves

Voltage support

Black Start

Transmission

upgrade

deferral

Transmission

congestion

relief

Distribution

Upgrade

Deferral

Power quality

Power reliability

Retail electric

energy time-

shift

Demand charge

management

Simultaneous use for multiple purpose that add value for customer or grid

Ramping






Agenda

Source: Navigant Research Database (April 2014); BENF (Energy Storage Market outlook 4Q 2013)

ESS – Forecast of global installed capacity

Share of global installed capacity, as of end 2013

Energy Storage System Electrochemical Energy Storage

PHS is dominating, but electromechanical storage has potential to increase share

• In the long run, PHS techs will more and more suffer for

limitation of suitable location

• CAES technology still not efficient, cost not expected to

decrease significantly

Battery storage market

Source: Navigant Research Database (April 2014)

As it is (apr. 2014) As it is expected to be (only Utility-Scale applications)

North America and Asia consolidating positions, Explosive development in Europe, Latam and Africa starting the deployment

Technology Maturity and Investments Is energy Storage entering into deployment phase?

Notes (y axis)

• Capital requirement, expression of the absolute value of investment in € (with no reference to the installed power, otherwise expressed in €/kW) , increases as technology maturity reaches a full proven stage, due to larger size of realized Storage Systems at that level.

• Risk related to investment in storage technologies decreases as well as technologies show full scale technical capabilities.

• Disinvestment by Venture Capitalist in ES

segment (~ -40% in 2011-2013) but…

• …Investment increase in Packaged Systems/

Battery Management (~ +100% in 2011-2013)

• Same signal experienced by Solar PV 7 years ago

• Wider EV adoption, opening new factories, Policy

initiatives (California, Germany, Japan)

• VC investor consider companies focused on taking

batteries from the lab to the real world depoyment

Battery technologies entering into the deployment phase, inflection point

Incentives and subsidies Boom experienced in 2013

ESS worldwide utility scale projects in 2014: 100 MW+ Commissioned (400 MW+ announced)

Market still largely policy driven (focus in regions with favorable regulatory framework):

• EMEA: after 2012-2013 period with several utility-scale pilot projects launched, market stagnated in 2014. Increase

in end-users market sales, mainly in Germany (10,000 system sold, fostered by the KFW subsidy program)

• Asia-Pacific: stable development in Japan and South Korea, Australia and India as emerging market

• Significant increase in USA (California, New York, New Jersey, Texas, Arizona, Washington and Hawaii)

Applications: market currently mainly oriented to grid support, Renewables integration still in development phase

Technologies: Li-Ion (LMO and NCA) currently appearing as most preferred, driven by EV market

Outlook:

• ESS Renewable applications to be facilitated by cost-reduction trend driven by EV volumes

• Public announcements of strategic partnerships (Tesla /Panasonic, Samsung/ for BMW , LGchem-Audi)

• Renewable/hybrid system with energy storage as emerging business for grid limited/growth markets

Storage Market evolution in 2014 Key facts






Agenda

Cost: need a further decrease (follow some examples)

Efficiency: need a further increase. Today for every 1 kWh stored, we recover ~ 70% in AC

Standardization: needed an international standard for testing, quality, manufacturing to ensure product data reliability

and transparency on parameters: Calendar and cycle life, DOD, Temp., Long/short charge/discharge, Efficiency, etc.

Market still largely policy driven (focus in regions with favorable regulatory framework)

Communication: general lack of industry/utility acceptance, lack of Knowledge about the real benefits and costs

Regulation:

• regulatory environment built around a legacy system of centralized generation and load-driven planning

• lack of monetary compensations schemes available for the benefits of battery storage systems

Financing: As all less established forms of technology, traditional project financing may be difficult or costly to obtain

Off-grids: Maintenance at competitive cost in remote areas

Disposal: how disposal is or will be regulated?

Latam: development of a Storage Market Main barriers…

20

Latam Benchmark

ESS - Regulatories barriers

ESS Services Regulation needs for ESS Chile Colombia Mexico Peru

Energy Management Services • Energy Time Shifting • Unbalances Limitation • Energy Peak Shaving • Advanced curtailment

management • T&D investment deferrals • VRE Smoothing • Power Quality

Who is the responsible for managing the ESS? Are

there any technical norm or procedures? X (next bill ?) X X X

Technologies and technical requirements X X X X

Criteria for economical dispatch X X X X

Variable costs for ESS X X X X

Capacity Payment methodology X X X X

Is ESS considered equal to any existing generation

technology?

Does it have a specific regulation?

X X X X

Will ESS pay grid fees? X X X X

Will ESS operation be associated to spot market

and/or to supply contract? X X X X

Ancillary Services

• Frequency Primary/Secondary/Tertiary Regulation

• Voltage Regulation • Spinning/non spinning

reserves • Black Start

Availability of monetary compensations schemes

for Ancillary Services X (AGC?) X X

Does it exist a market for Ancillary Services? X X X X

Off-Grids Services Does it exist regulation to build and operate a

micro-grid ? Partial ? ? Partial

Business case: 2-hour bulk energy arbitrage Cost and revenue analysis

A preliminary study done in Chile for a 2-hours bulk energy arbitrage, with a Li-ion battery, shows that the Required

Battery Revenue needed for profitability is much more higher that the Arbitrage Profit.

Sensitivity on further incomes Regulatory Scheme for Energy Arbitrage has been run.

Considering Capacity Payment incomes as per Hydro or Coal Technology, Required Battery Revenue needed for

profitability, is about 2,5-4 times the Arbitrage Profit.

Other sensitivities, considering for instance Incomes for Ancillary Service, or other Services provided by Storage,

could further reduce the gap toward Profitability

Case studies in the USA suggest that profitability has been reached for frequency regulation services (ie PJM, ERCOT,

NYSO), not yet for bulk energy arbitrage

Regulatory schemes, recognizing incomes for added value services, together with cost reduction and efficiency increase, could make profitable the ESS

Cost, Efficiency, Standardization: opportunities for the development of a local Industry and R&D, considering also

that 60% of the proven reserve of Litio are in Latam

Communication: develop a campaign involving Media, Universities, Associations, Private Company, Government.

Market: new business opportunities for applications grid-tied, off-grid, retail, in a continent where Solar and Wind

resource is excellent

Regulation

• Develop regulation scheme to compensate real benefits that ESS bring to the grid

• Develop a regulation to boost RES integration in the grid, within the reorganization of the System Operator.

Financing: opportunities for retail financing

Off-grids: 34 Million people without access to the electricity. Involvement of Communities in the maintenance

Disposal: development of a local industry and private/public partnerships for disposal management

Latam – development of a Storage Market Barriers…but also opportunities






Agenda

24

Market opportunity definition (regulatory/market conditions analysis) in EGP operating countries

Technical partnership agreements and test technology/business model with leading battery producers

Leverage on EGP competencies in Business Development, EPC, Energy Management, ICT

Main BESS services test with RES integration pilot projects:

• Ancillary services: enable RES to supply such services to the grid in order to limit variability and

uncertainty, meanwhile optimizing the overall electricity system cost

• Energy shift: shift electrical power load from peak to off-peak times, matching the demand and again

optimizes the electricity system cost

• Unbalance reduction: mitigate RES generation unbalance and reduce relevant penalties

• Off-Grids applications: explore hybrid system with storage coupled with microgrids

EGP approach to Storage Innovation

Italy

Latam

Africa

Catania 1 (PV – Italy, 10MW limited to 8MW) – in operation

- 1MW/2MWh Nickel Chloride Battery installed on December

2014, currently under commissioning

- Aim of the experimentation: focus on energy shifting and

ancillary services, while limiting unbalances

Potenza Pietragalla (Wind – Italy, 18MW)

- 2MW/2MWh Lithium Battery, to be installed by May 2015;

battery currently under construction

- Aim of the experimentation: focus on limiting unbalances and

ancillary services

Additional Wind Site

- 4MW/1MWh Lithium Titanate Battery, to be installed by Q3 2015;

battery currently ready for installation

- Aim of the experimentation: focus on limiting unbalances and ancillary

services by using high C-rate battery on state-of-art wind power plant

Grid Connected

RES Power Plants:

Ancillary services

(active grid

integration and

regulation)

Energy shift (price

arbitrage)

Unbalance

reduction

Pilot projects in Italy Catania PV, Potenza Pietragalla WIND

Chile, Off-grid Ollagüe project , in operation

26

Population: 200

Activities: mining, public services

Buildings: 151 PV

206 kWp

Storage

2NaCl-Ni ,752 kWh

Wind turbine

30 kW

Diesel

328 kW

TRINUM

Trinum

Chile, Off-grid Ollagüe project, in operation

How it works

Ollague Load Trend

Increase of 30% load after 3 month of operation 38% Solar, 7% Wind , 20% Battery, 35% Diesel

0

50

100

150

200

250

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

kW

Daily Production Ollagüe Hybrid Power Plant - June 10th, 2015

WIND SOLAR BATTERY GEN-SET

ESS + RES bring affordable electricity to off-grids area and leverage social development

28

Perú, Off-grid Marcona project – under study Project features

Hybrid system configuration

PV fix modules (crystalline): 63 kWp

Mini Wind system: 60 kW

Diesel generator: 2x72 kWel

Li-ion Storage system: 70kW/70kWh

Plant Management System

Good solar and wind power potential Daily load curve with two power levels (day/night)

Energy background

29

Electromechanical Storage: wider range of services and high potential for improvement.

Driver (so far): RES penetration, subsidies programs, grid stability, regulatory, EVs.

Driver (for the future): oldest + regulatory changes that realize full value of storage, new

electricity market structures, cost reduction, increasing performance, Demand Side Management.

Barriers but also Opportunities: along the value chain, Generation, Transmission, Distribution,

Consumption. New market involving several stakeholders: Industry, Media, Academic, Financing.

Off-grids + Storage: solution to bring electricity at affordable price in developing countries.

EGP leading the deployment: Off-Grids, ancillary systems, unbalance, energy shifting.

Conclusions

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