Energy Overview - Amazon S3...6,7 15,5 9,4 0,0 4,0 8,0 12,0 16,0 2015 2020 2025 Market Trend #2...

Energy Overview

Prepared for Intesa Sanpaolo Innovation Centre

August 2017

Market Highlights

1

Deployment of smart gas

meters

Regulation aimed at

increasing competition and

the establishment of new grid

connections are driving the

uptake of smart gas meters

Deployment of smart

electricity meters

Reducing non-technical

losses and integrating

renewable energy sources are

key factors behind the roll-out

of smart electricity meters

Advances in energy

storage

Thermal and other alternative

solutions are currently

experiencing the largest

capacity additions in the

energy storage market

Roll out of

microgrids

Technological developments,

price reductions and the

piloting of smart grid

technologies are accelerating

the deployment of micro grids

Advent of blockchain use

cases

Emerging energy-focused

start ups are leveraging

blockchain applications as a

means to address key

challenges in the sector

Growth in critical power

LED drivers and PV inverters

are underpinning expansion in

the critical power market

which continues to be

dominated by UPS solutions

Source: Frost & Sullivan

Market Trend #1Deployment of smart gas meters

• TBC

2

Regulation aimed at increasing competition and the establishment of new grid connections are driving the uptake of smart

gas meters; the EMEA market will generate over $1 billion in 2020 with a CAGR of 9.6% for the period 2015-25

Size and outlook

Re

ve

nu

e $

Bil

lio

ns

0,186

1,116

0,466

0,00

0,25

0,50

0,75

1,00

1,25

2015 2020 2025

9.6% CAGR

35%

17%16%

11%

6%

15%

Landis+Gyr Itron Elster

Pietro Meter Italia Others

Market participants

Note: All figures are rounded.

The base year is 2015. Source: Frost & Sullivan

6,7

15,5

9,4

0,0

4,0

8,0

12,0

16,0

2015 2020 2025

Market Trend #2Deployment of smart electricity meters

3

Reducing non-technical losses and integrating renewable energy sources are key factors behind the roll-out of smart

electricity meters; within Europe, the focus is shifting to the UK, France, Germany and, in the longer term, Italy

Un

it S

hip

me

nts

Mil

lio

ns

3.4% CAGR

Market participants



35%

21%

16%

3%

3%

22%

Sagemcom Landis+Gyr ZIV

ADD Sogemcom Others

Size and outlook

Market Trend #3Advances in energy storage

• TBC

4

Thermal and other alternative solutions are currently experiencing the largest capacity additions in the energy storage

market; overall, the market is growing at circa. 17% annually with 5.4GW of installed capacity globally in 2016

Total Installed Capacity is growing at

~17% annually

Alternative energy storage technologies'

installed capacity reached 5.4GW in 2016

with thermal storage constituting 56% of this

capacity, followed by flywheel at 37%

Size and outlook



Thermal Energy Storage is increasingly being used in

solar plants

Grid Integration of wind energy is driving the Flywheel

Energy Storage market

The transportation sector is using Supercapacitors for

Energy Storage

Compressed Air Energy Storage is finding new

applications in telecom towers

Key opportunities

4,1

12,3

0,0

4,0

8,0

12,0

16,0

2015 2022

Market Trend #4Roll out of microgrids

5

Technological developments, price reductions and the piloting of smart grid technologies are accelerating the deployment of

micro grids; the global microgrid market is expected to grow at a GAGR of 17.1% in revenue terms for 2015-2022

Re

ve

nu

e $

Bil

lio

ns

17.1% CAGR

Size and outlook Key opportunities

33%

30%

15%

8%

6%8%

Gensets Wind Solar

Fuel Cells Micro-turbines Others



Market Trend #5Advent of blockchain use cases

6

Emerging energy-focused start ups are leveraging blockchain applications as a means to address key challenges in the

sector; key concrete use cases include energy trade networks, solar credits and IoT data infrastructure solutions

Key use cases Market participants

Energy trade networks

Solar credits

IoT data infrastructure


Market Trend #6Growth in critical power

7

LED drivers and PV inverters are underpinning expansion in the critical power market which continues to be dominated by

UPS solutions; overall, the critical power market will grow at 9% globally in 2017 boosted by module level electronics

30,0 32,8

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

2016 2017

Re

ve

nu

e $

Bil

lio

ns

9.0% YoY

Size and outlook Key opportunities

Module Level Power Electronics

Non-traditional Cooling Technologies

Connected UPS; for IoT Platforms

Data Centers; Key End User Group



DEPLOYMENT OF SMART METERS

GAS

Regulation aimed at increasing competition and the establishment of new grid connections are

driving the uptake of smart gas meters (1/2)

9Source: Frost & Sullivan

Total Smart Gas Meter Market: Key Market Drivers, Global, 2016–2025

Drivers 1–2Years 3–4Years 5–10Years

1. Energy market regulators aim to increase market competition M M M

Smart meters will help to reduce and to finally end non-consumption-based gas billing and make it easier for consumers to change tariffs and

switch between suppliers, increasing market competition. The European Union has been progressively promoting a common market in natural

gas for 17 years in order to increase market competition and consumer choice. With its Third Energy Package, the EU aims to create new

business opportunities and more cross- border trade to achieve efficiency gains, competitive prices, higher standards of service and to contribute

to security of supply and sustainability

2. New gas connections are driven by population growth in less-developed countries and the

increasing number of single households in highly developed countriesM M L

The population of the developed world has reached a plateau, while populations in the developing world are increasing and are predicted to

surge ahead. Despite the decline overall, the number of households is increasing in highly developed countries due to the growing number of

single households. Hence, although the percentage share of connected and metered households will stay relatively constant over the next 10

years, the absolute number of connected and metered households around the world will increase

Impact Ratings: H = High M = Medium L = Low

Regulation aimed at increasing competition and the establishment of new grid connections are

driving the uptake of smart gas meters (2/2)


Total Smart Gas Meter Market: Key Market Drivers, Global, 2016–2025


3. Greater demand for energy efficiency drives the adoption of smart gas meters L M H

The global market for smart meters is expected to grow significantly in this decade, fuelled by UN climate target and the associated energy

efficiency measures. Efforts to cut fuel consumption of gas heating systems will foster demand for smart gas meters and a fully automated grid

4. Roll-outs of smart electricity meters lead to simultaneous smart gas meter roll-outs L M H

Simultaneous replacement of electricity and gas meters minimizes the cost of both smart meter roll-outs. A shared communication infrastructure

of electricity and gas meters is more economical. Luxembourg is currently conducting such a dual-fuel roll-out. Other dual-fuel roll-outs are

planned in Germany, Austria, Ireland and Belgium and have already undergone a successful pilot phase


Nonetheless, more widespread adoption is restrained by the relatively high costs, a lack of

standardization, and end-user scepticism


Total Smart Gas Meter Market: Key Market Restraints, Global, 2016–2025

Restraints 1–2Years 3–4Years 5–10Years

1. Lack of common protocols and interface standards slows the pace of development H H M

Lack of common protocols and interface standards as well as special courses concerning smart meter specifications make it impossible for many

meter manufacturers to market their products globally

2. Negative cost-benefit ratio—total costs of ownership for smart gas metering in many cases

are higher than the associated energy cost savingsH M L

Cost-benefit analyses indicated that domestic households would be unable to save enough energy to recoup the costs of installing and operating

smart gas meters. As a result, roll-out plans are frequently scaled back, postponed or cancelled

3. There is user scepticism about data security, meter accuracy, and technical security L L L

User concerns have been raised frequently in early adopter countries, about metering accuracy, data security, and granting remote control to

utilities. There are also apprehensions about electromagnetic radiation causing health impairments


Asia-Pacific will surpass North America in terms of smart meter sales by 2018

12

Total Smart Gas Meter Market: Revenue Forecast by Region, Global, 2015–2025



YearAPAC

($ Million)

China

($ Million)

EMEA

($ Million)

North America

($ Million)

South America

($ Million)

2015 82.4 17.5 186.1 153.8 1.3

2016 96.5 22.8 446.6 156.2 2.2

2017 147.7 30.3 714.7 160.1 3.1

2018 245.0 41.0 928.7 164.2 3.9

2019 424.8 56.6 1,079.6 171.0 4.7

2020 662.5 80.8 1,115.7 178.1 5.0

2021 843.9 117.1 930.7 181.2 5.2

2022 773.4 170.6 649.0 180.6 5.3

2023 649.0 247.0 517.8 178.0 5.4

2024 454.7 335.6 494.1 176.1 5.6

2025 420.7 459.2 465.8 174.6 5.7

CAGR (%) 17.7 38.6 9.6 1.3 15.8

EMEA is the largest and most mature market and will generate over $1 billion in 2020 with a

CAGR of 9.6% for the period 2015-25

13Note: All figures are rounded.


Key Takeaway: Roll-outs in several EU countries will let the EMEA market peak in 2020, provided that Germany

does not introduce smart meters for light consumers (<6,000 kWh) within the forecast period.

Smart Gas Meter Market: Unit Shipment and Revenue Forecast, EMEA, 2015–2025

Revenue CAGR 2015–25 = 9.6%, Unit Shipment CAGR 2015–25 = 11.0%

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

Revenue2015

186.1

2016

446.6

2017

714.7

2018

928.7

2019

1079.6

2020

1115.7

2021

930.7

2022

649.0

2023

517.8

2024

494.1

2025

465.8Units 2.2 5.0 8.4 11.9 14.5 15.0 12.1 7.9 6.4 6.3 6.1

Un

its

(M

illio

n)

Re

ve

nu

e (

$ M

illio

n)

Year

Landis+Gyr is the clear market leader (35%) in EMEA, ahead of Itron and Elster



Key Takeaway: Large-scale meter roll-outs are unattractive for small and medium-sized manufacturers, as meters

cannot be marketed over product features but mainly over price.

Smart Gas Meter Market: Per Cent Unit Breakdown, EMEA, 2015 Total Units: 2.2 Million

Landis+Gyr 35.0%

Itron 17.0%Elster 16.0%

Pietro Fiorentini 11.0%

Meter Italia 6.0%

AEM 4.0%

Apator 2.0% Sit Group 1.0%

Others* 2.0%Diehl 3.0%

Secure 3.0%

15

From technology perspective, ultrasonic Advanced Meter Infrastructure (AMI) systems are

leading growth globally with a CAGR of 20% (2016-22)

2016 2017 2018 2019 2020 2021 2022

AMI mechanical 3.547,7 5.414,0 7.141,5 8.127,8 8.326,8 7.383,1 6.935,9

AMI ultrasonic 3.659,8 4.043,6 5.080,5 6.753,3 9.148,9 22.264,3 10.872,8

AMR mechanical 1.839,1 211,4 253,7 3.060,9 3.793,4 4.187,9 3.983,3

AMR ultrasonic 2,5 1,9 1,2 0,6 0,2 0,2 0,2

Non-smart mechanical 20.536,3 20.104,5 19.736,3 19.287,9 18.846,0 18.621,5 18.581,5

Non-smart ultrasonic 283,3 141,6 14,2 14,0 14,0 14,0 14,0

0

10.000

20.000

30.000

40.000

50.000

60.000

12%

20%

14%

-34%

-2%

-39%

CAGR

Smart Gas Meter Market: Unit Shipment by Technology, ‘000s, Global, 2016–2022

Source: Frost & SullivanAMR = Automatic Meter Reading

DEPLOYMENT OF SMART METERS

ELECTRICITY

Reducing non-technical losses and integrating renewable energy sources are key factors

behind the roll-out of smart electricity meters (1/2)


Total Smart Electricity Meter Market: Key Market Drivers, Global, 2016–2025


1. Supportive government legislation drives rollouts in key geographicmarkets H H M/H

Without government pressure, utilities and distribution network operators are generally inclined towards a slow pace of implementation, as the

business case is not always strong enough. The EU Energy Efficiency Directive mandates that 80% of consumers in the member states need to

be equipped with smart meters by 2020, assuming a positive cost-benefit analysis. Whilst this has been negative in some key states, Germany

being the most important, it has led a number of states to plan and implement rollout programmes. It is forecast that Norway, Denmark, Estonia,

Spain, Ireland, and the Netherlands will have achieved 80% by 2020, with significant progress in Austria, France and the UK

2. High levels of non-technical losses provide a business case for electricity utilities to invest in

smartmeteringM M M

Smart meters have a strong role to play in reducing electricity theft, and the fact that they protect utility revenues acts as a powerful business

case. In markets where there is no smart meter rollout or supportive legislation, utilities are still prepared to install smart meters in areas of their

distribution networks where losses are high. An example is Bulgaria. The country has no plans for a smart meter rollout and low electricity prices

make it unattractive for major utilities; yet to prevent pure theft, it is installing meters at one Million households that are assessed as having the

highest rates of electricity loss


Reducing non-technical losses and integrating renewable energy sources are key factors

behind the roll-out of smart electricity meters (2/2)


Total Smart Electricity Meter Market: Key Market Drivers, Global, 2016–2025


3. Smart meters are the bedrock of a future smart grid L/M M M/H

Smart meters provide a base for the utilities and grid operators involved in smart meter development to establish the future smart grid. These

establish a link between the customers’ electricity consumption and the grid through real-time data. Smart meters, backed by the supporting

infrastructure, enable consumers to reduce their overall consumption. Backed by demand response technologies, they also encourage

consumers to shift consumption away from peak demand and peak pricing hours. This benefits the entire energy system, particularly by

eliminating the need for expensive peak plant capacity

4. Effective integration of renewable energy is only possible with smartmeters L/M M M

Smart metering enables the integration of renewable decentralised energy production, storage and usage by tracking the detailed inflow and

outflow of electricity in the system. It accounts for the surplus and unconsumed energy generated from solar and wind power that gets fed back to

the grid, enabling consumers to take advantage of feed-in tariffs. Smart meters result in continuous communications so that grid operators and

consumers can monitor them in real time during peak and off-peak intervals and enable the power grid to handle the uneven electricity

generation from solar and wind turbines


In many countries, end-users prefer basic meters and are unable to appreciate the business

case for switching without an external mandate


Total Smart Electricity Meter Market: Key Market Restraints, Global, 2016–2025

Restraints 1–2Years 3–4Years 5–10Years

1. Lack of a supportive business case if there is no mandate for smartmetering M/H M M/L

With no mandate, the business case for smart metering can be difficult, unless there are high levels of electricity theft. Smart meters and the

supporting communications and data analytics infrastructure cost considerably more than conventional metering, and consumers are reluctant to

pay. Usually, distribution system operators (DSOs) bear the cost, which is passed on to consumers as additional network charges

2. Preference for basic metering M M M/L

The cost of a basic electricity meter can be as low as $12-15 in some markets. In countries where metering of electricity occurs only partially,

installing basic meters is the quickest and easiest solution available

3. Uncertainty over choice of technology and the approval process M M/L L

There have been major technological changes in the past five years related to the communication and data analytics software that supports

smart metering. Moreover, as only a few countries have rolled out smart metering, the number of best-in-class examples is limited. This has

made many utilities hesitant to invest, as they are sceptical of making the wrong decision and selecting a technology that is soon superseded


Globally, the Russia and CIS market is growing very rapidly from a low base

20

Total Smart Electricity Meter Market: Revenue Forecast by Region, Global, 2015–2025


The base year is 2015. Source: Frost & Sullivan*Asia-Pacific includes India.

YearAfrica

($ Million)

Asia-Pacific

($ Million)

China

($ Million)

Europe

($ Million)

Middle East

($ Million)

North America

($ Million)

Russia & CIS

($ Million)

South America

($ Million)

2015 4.2 1,987.3 3,775.0 895.1 42.4 1,350.5 56.9 84.3

2016 9.0 2,192.7 2,774.6 853.8 38.1 1,097.2 70.1 76.4

2017 15.7 2,186.9 2,265.9 1,254.7 57.3 847.9 128.1 87.4

2018 20.9 2,383.1 1,776.5 1,785.0 68.3 807.1 212.8 101.9

2019 21.5 2,203.3 1,305.7 2,026.7 92.5 812.2 292.4 139.0

2020 42.4 2,069.8 1,279.6 2,374.2 98.6 879.0 380.8 182.0

2021 57.1 1,795.7 1,266.8 2,644.4 129.3 979.6 397.0 229.2

2022 79.8 1,870.9 1,254.1 2,378.5 189.6 1,025.7 422.1 285.1

2023 114.6 1,753.6 1,241.6 1,999.4 179.8 1,140.1 398.0 322.0

2024 143.9 1,490.3 1,229.2 2,110.3 171.5 1,240.6 415.9 331.6

2025 142.4 1,324.4 1,216.9 1,845.9 157.0 1,282.4 359.0 330.4

CAGR

(2015–2025)42.1% (4.0%) (10.7%) 7.5% 14.0% (0.5%) 20.2% 14.6%

Within Europe, Spain currently dominates the market, with the focus shifting to the UK,

France, Germany and, in the longer term, Italy



Key Takeaway: The Spanish rollout has now peaked; France will outpace Spain next year as the largest market in

Europe. Germany will roll out meters to several key customer groups and then gradually to the rest of the country.

Smart Electricity Meters Market: Unit Shipment Forecast by Region, Europe, 2015–2025

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025UK 0.8 0.5 1.2 2.8 3.0 3.5 4.0 3.8 3.0 3.0 1.5Spain 5.0 4.0 3.5 2.5 1.5 1.0 0.7 0.4 0.1 0.1 0.1Italy 0.2 0.2 0.2 0.3 0.5 1.0 1.5 2.0 2.5 4.0 4.0Germany 0.6 0.1 0.5 1.5 2.0 3.0 4.0 3.5 3.0 3.0 3.0France 0.1 2.3 4.5 6.0 7.0 7.0 7.5 4.0 2.0 1.5 0.8

Un

its

(M

illi

on

)

20.0

18.0

16.0

14.0

12.0

10.0

8.0

6.0

4.0

2.0

0.0

Year

Sagemcom with a 35% share outpaces Landis+Gyr to lead the EU market



Key Takeaway: Sagemcom and ZIV are both major suppliers to the Spanish rollout, which currently

dominates the European numbers.

Smart Electricity Meter Market: Per Cent of Smart Meter Units, Europe, 2015 Total Units: 9.3 Million

*Others include Secure, ZPA, EMH, Apator, Janz, AEM, Iskraemeco,

Elektromed, Makel. Viko, and Elgama

Sagemcom

35.0%

Aidon 2.0%

Orbis

2.0%

12.0%

Kamstrup 3.0%

Shenzhen Kaifa

3.0%

Sogemcom 3.0%

ADD 3.0%

ZIV 16.0%Landis+Gyr 21.0%

23

From technology perspective, demand for Automatic Meter Reading (AMR) systems is

declining very rapidly to the benefit of AMI solutions

2016 2017 2018 2019 2020 2021 2022

AMI 99.220,4 98.110,5 99.490,3 93.157,3 100.192,8 106.734,0 105.439,5

Static non-AMI 57.119,1 57.194,3 58.821,2 60.049,3 59.457,8 59.094,6 59.163,8

Electromechanic 3.746,1 3.077,4 1.999,7 1.389,4 1.006,9 734,5 368,3

Prepayment 10.797,9 10.365,2 10.001,3 9.754,8 9.452,4 9.159,6 8.834,3

ICG 11.054,9 11.029,5 11.227,7 11.095,2 10.672,6 11.206,8 11.423,0

AMR 13.994,8 9.544,5 2.601,3 2.304,3 1.874,3 1.221,0 1.146,0

0

50.000

100.000

150.000

200.000

250.000

1%

1%

-32%

-3%

1%

-34%

CAGR

Smart Electricity Meter Market: Unit Shipment by Technology, ‘000s, Global, 2016–2022

Source: Frost & SullivanAMI = Advanced Meter Infrastructure

ADVANCES IN ENERGY STORAGE

Battery Energy Storage (BES) has the highest growth potential, whilst Thermal Energy

Storage (TES), part of the broader Alternative Energy Storage (AES) segment, is currently

experiencing the largest capacity additions

25


The base year is 2015.

Source: DOE Global Energy Database; Frost & Sullivan

Energy Storage Industry: Total Installed Capacity by Technology, Global, 2016

*Note: Excludes India and China

0.0

0.5

1.0

1.5

2.0

2.5

North America

SouthAmerica

China India Asia-Pacific*

Europe RoW2016

6.53 GW

0.750.57

24.5%

0.58

51.8%

Ins

tall

ed

Ca

pa

cit

y(G

W)

0.14

0.5

17.3%

6.4%

2014

51.4%

32.7%

1.57

4.28 GW

2.42

13.0%11.2%

4.7%

Battery Energy Storage

Thermal Energy Storage

Supercapacitor

Flywheel + Compressed Air

The AES space is being shaped by a range of technology trends

26

Image Source:

scalesairlines.com

Image Source: maxwell.com

Image Source: utexas.edu

Image Source: hpac.com Thermal Energy Storage

TES technology is in its mature stage with more than 30 years of R&D. Approximately, 650 MW will be added across 9

projects globally in 2016. Solar power projects implementing molten salt TES are the most prominent among these

projects. New trends/applications for TES include smart thermal grid and solar thermal plants in microgrids. The US, India,

and Spain will be hotspots for TES in 2016.

Flywheel Energy Storage

Low-speed FES is a mature technology. Flywheels are used to smoothen power output, regulate frequency, and gain faster

response in wind turbines. Few research projects will be testing the feasibility of flywheel applications in microgrids in 2016.

Five projects are expected to be completed in 2016, adding 5MW of installed capacity to the grid. There is a push to develop

low-cost flywheels with high power density.

Supercapacitor Storage

Supercapacitors are known for their high efficiency and high power density. Two latest applications of supercapacitors

are in metro rail projects for energy storage during braking and in solar PV plants for power output smoothening.

Supercapacitors will be installed in South Korean metro stations in 2016. In California, a solar PV firming demonstration

project using supercapacitors is under construction and is expected to be completed 2016. The results of these projects

will open a new arena of application for supercapacitors in the next 5 years.

Compressed Air Energy Storage

CAES projects are in the demonstration phase. Modular CAES and isothermal CAES technologies are gaining

significance. Few projects are under construction in Germany, Canada, and Switzerland. Feasibility of the technology in

microgrids is being tested in a facility in the US. The impact of the CAES in the total energy storage market

is not expected to be significant in 2016.


TES solutions are notably finding greater traction in solar plants

27

Total Installed Capacity

Grows at 17.4%

Alternative energy storage technologies’

installed capacity will reach 5.4GW in 2016.

Thermal storage constitutes 56% of this

capacity, followed by flywheel at 37%.

TES and Supercapacitors are

Increasingly Being Used in Solar Plants

Need for a stable power supply from CSP plants will

drive the molten salt thermal storage systems.

Supercapacitors will increasingly be used with solar

PV plants for power output smoothening.

CAES Finds New Applications

in Telecom Towers

New applications for CAES are

being explored; this includes

microgrids and remote telecom

towers.

Grid Integration of Wind

Energy Drives the FES Market

Continued strong growth in the wind energy market

will boost the potential for FES. 2016 will see several

microgrid- connected wind energy hybrid systems

using FES for power stabilisation.

Transportation Sector Uses

Supercapacitors for Energy Storage

2016 will witness the completion of

supercapacitor braking energy

recuperation systems in metro rail

projects in South Korea.

Government Policies Drive

ESS Market

Most technologies are in the testing/developmental

stage. In 2016, the market will primarily be driven by

supporting government incentives, along with

continued piloting of utility scale projects.


Micro grids in Europe and North America are fast adopting Flywheel Energy Storage (FES)

solutions for wind turbine power output stabilisation

28

Energy Storage Industry: Energy Storage Growth Potential by Application and Region, Global, 2016

Application North America European Union Asia-Pacific Rest of World Key Takeaway

TES and FES are key

technologies adopted

globally.

FES is popularly used;

supercapacitor technology is

gathering significance.

TES is fast gaining

momentum in C&I

applications for power quality,

reliability, and energy

management.

CSP plants with TES and

wind power plants with FES

are gaining significance

globally.

Impact: Low HIghFES TES CAES Supercapacitors

Gri

d E

ne

rgy

Sto

rag

eT

ran

sp

ort

atio

nC

om

me

rcia

l &

Ind

ustr

ial (C

&I)

Mic

rog

rid

Image Sources: Bloomberg; Forbes;

NGK Insulators; treehugger.com Source: Frost & Sullivan

Smart Ice thermal storage systems capable of communicating with consumers through mobile apps to charge

and store ice in HVAC units remotely are becoming popular, which helps in peak load shifting and reduces the

carbon footprint. Molten silicon-based TES is being tested in Spain and will likely start replacing the molten salt

TES technology by 2018/2019.

TES

Amber Kinetics Inc has developed a multi-hour flywheel system with steel blades as its latest innovation which

can charge and discharge multiple cycles a day. This system is being tested on a Hawaiian island against grid

storage batteries. R&D on high-speed flywheels and flywheels with superconducting magnetic bearings is

being conducted to enhance the company’s application portfolio.

Flywheel Energy

Storage

The first non-carbon double layer supercapacitor has been designed and developed at MIT. This material

increases the power density of supercapacitors, which could make it feasible for grid storage and electric

vehicle (EV) applications. While carbon-based supercapacitors are inexpensive, the manufacturing process is

expensive. The material used in a non-carbon prototype is costly but the manufacturing process is simple.

Supercapacitor

The underwater compressed air storage method is being tested by Canadian start-up Hydrostor in Toronto. Air

balloons are filled with pressurised air and located on the ocean floor. When electricity is revoked, the system

operates reversely, and the water weight pushes air back to land to convert back to energy. This technique

can be used for peak demand shifting.

Compressed Air

Energy Storage

The next generation of molten silicon-based TES, high-speed flywheels and underwater

Compressed Air Energy Storage are being tested

Source: Frost & Sullivan 29

• ARES is a grid-scale energy storage methodology developed by ARES North America.

• The pilot test bed was initiated in 2016, and the mode of storage is gravitational potential energy.

Excessive energy in the grid is stored by ARES shuttle trains. An automated steel rail network

connects storage yards at different locations.

• Using grid power, motors drive the trains uphill against the force of gravity, stored as gravitational

potential energy. During peak hours in the grid, these trains are driven down the hill to the lower

storage yard, and the motors now operate as generators, reversing the process.

• Project scalability: 10 MW/20 MWh to 2 to 3 GW/16/24 GWh

• Key applications of this technique: ancillary services and renewables integration

• US patents: 8593012 and 8674541

• Storage method: gravitational potential energy

• Promised efficiency: 86%

• Advantages:

o Lower CAPEX: about 60% of that of pumped hydro storage

o Low operating expenditure (OPEX): lowest of the existing storage technologies

In the longer run, Advanced Rail Energy Storage (ARES) Energy storage solutions have

potential, promising scalability and 86% efficiency


From a geographical perspective, the markets for TES in Spain and France received a

combined 112MW of additional capacity in 2016

31

Markets Technology

Application Policies

• Transmission system services: Flywheel+battery technology system is to be

tested to support the stabilisation of transmission lines in Ireland.

• FES is popular in the region for grid stabilisation at wind energy integration

sites and in microgrids.

• Molten salt TES is being used for smoothening power output of CSP plants.

• In Germany, a €25-million scheme was announced for promoting self-

consumption of stored energy.

• German Development Bank subsidy for residential storage systems.

• Research Council UK (RCUK)-funded projects will evaluate and promote

grid scale storage.

112 MW of TES installed capacity will be added with CSP plant

projects in Spain and France in 2016.

CAES: Approximately, a 200 MW-capacity project is under

construction in Germany and is expected to be completed in 2016.

High-growth Segment (>20% YOY Growth)

Germany

France

Spain

Low-growth Segment (<10% YOY Growth)

Ireland

Switzerland

• TES

• CAES

• FES

• CAES


The BES space is being shaped by a range of technology trends

32

Image Source:

energystoragereport.info

Image Source:

electronicsnews.com.au

Image Source: greentechmedia.com

Image Source: wired.com

Lithium-ion to Dominate

Li-ion technology showed robust growth from 2009 to 2015. Due to the significant uptake in piloting of the technology,

most leading suppliers adopting the technology expected growth in behind-the-metre markets (key markets for Li-ion).

Manufacturing capacity being supported by growth in associated markets (such as EVs, hybrid electric vehicles (HEVs),

and wearables), the technology will represent the most significant percentage of growth in 2016.

Sodium-based to Grow Strongly in the Utility Sector

While healthy growth has been shown in Sulphur-based batteries for the 2009–2015 period, it has not reached the growth

rates of Li-ion batteries. With significant growth shown in 2014–2015, the technology can be expected to continue to represent

as a contender to Li-ion within its core energy-based functionalities (such as renewable energy time-shift/firming and reserve

capacity) in the utility sector.

Lead-acid to Lose Market Share

Lead-acid battery technology will find it increasingly difficult to compete, as it contends with strong technology growth in the above-mentioned battery technologies within its current core functions of renewable capacity firming, ramping, and frequency regulation. The advantage afforded to lead-acid batteries by their price differential is expected to be eroded by cost reductions in competing technologies. However, as the market becomes more commercialised, the environmental benefits of these systems will become more of a defining factor in technology selection, representing a key advantage for lead-acid batteries due to their high levels of recyclability.

Flow Batteries to Claim Niche Growth

Flow battery technology’s (VRFB and ZnBr) ability to achieve significantly longer discharge times will allow the technology

to achieve a niche market acceptance in the near term and flow over into other associative markets in the medium- to

long-term. The technology is expected to achieve a foothold in renewable energy time-shift, along with electric-energy

time shift. Due to its extended discharge duration and calendar life, the technology further represents an attractive

solution for the support of remotely distributed power, particularly in hard-to-reach areas

(such as developing countries).

*VRFB—Vanadium Redox Flow Battery; ZnBr—Zinc Bromide Source: Frost & Sullivan

Renewable power integration is notably driving up BES revenues

33

Renewable power integration,

from utility scale to residential

scale, will be the primary driver

for battery storage growth in

2016.

Innovation and growth in the EV

market will drive growth,

technological innovation, and

scaled production for high power

density battery systems, driving

the Li-ion market.

In 2016, the market will still

primarily be driven by supporting

government incentives, along

with continued piloting of utility

scale projects.

Residential and commercial

storage will be driven largely by

government subsidies in 2016,

primarily in Germany, Japan, and

the United States.

The total annual market size for

battery storage will amount to

$3.64 billion by 2016, largely

attributed to the large commercial

and industrial sectors.

Global BES Market Will Grow

at 38.4% CAGR During

2014–2016

Utility scale battery storage will

represent the primary growth

driver of revenues for battery

storage systems in the short term.

Utility Scale Grid Storage

Remains the Primary Driver

Renewable Power Integration

Drives BES Revenues

Residential and Commercial

Storage Will Witness Strong

Growth

Li-ion Will Remain the

Dominant Technology

Government Incentives Will

Drive Market Growth

Consumer Applications

Remain the Largest Revenue

Generator

Li-ion Batteries for EVs Will

Grow at 38.7%

Demand for for Li-ion batteries

from consumer electronics will

continue to remain strong due to

the growing penetration of

smartphones and tablets.

Li-ion battery technologies are

expected to represent the

predominant battery storage

technology in the market,

primarily in the residential space.

Image source: microgridmedia.com

Image Source: theregister.co.ukImage Source: Frost & Sullivan


The BES market demonstrated growth of 65.5% between 2015 and 2016 in MW terms, with

most of this stemming from the lithium-ion solutions

34

Grid Scale BES Market: Operational Market Size, Global, 2015 Grid Scale BES Market: Operational Market Size, Global, 2016

Grid Scale BES Market: Technology Share of

Operational Capacity, Global, 2015

Grid Scale BES Market: Technology Share of

Operational Capacity, Global, 2016

0 500 1000 1500 2000 2500

Installed Capacity (MW, MWh)MW MWh

1256

744

Annual Growth:65.5%

Annual Growth:97.0%

0 500 30001000 1500 2000 2500

Installed Capacity (MW, MWh)

MW MWh

1231

2474

Lithium-Ion

66.0%

Lead-acid

12.8%

Sodium- based

12.6%

Flow-based

8.1%

Nickle-based

0.5%

Lithium-ion

71.9%Lead-acid

7.6%

Sodium Based

13.0%

Flow

7.2%Nickle Based

0.3%


900

300250 180600

250200 1300

500

1.000

1.500

2010 2012 2017 2018 2020

Electric Vehicle Market: Lithium Ion Battery Pack Cost Ranges by Industry Player, 2015-16

Electric Vehicle Market: Lithium Ion Battery Pack Pricing Trend & Forecast, 2010-2020

Historical Forecasthigh

lowUS

D

Price ($/kWh)LG Chem BYD NEC Tesla

225-450 250-400 300-500 200-250

The price of lithium-ion batteries has decreased by ~50% in the last two years to an average of

$250-300/kwh for EVs and is expected to decrease further


• The chemistry of this flexible battery, called Softbattery, comprises zinc and manganese dioxide as electrodes and

zinc chloride as an electrolyte. All materials employed in the battery are compliant with the Restriction of

Hazardous Substance (RoHS) directive. Application areas are transdermal delivery patches to wireless (Bluetooth

low energy) sensor tags and low-power applications such as displays and light-emitting diodes (LEDs).

Zinc Manganese

Dioxide Flexible

Battery

• The Li-ion EV battery has twice the storage capacity at 30% of the cost, compared to EV batteries. Potential is in

the consumer electronics, energy-efficient cargo ships, locomotives, aerospace, and power grid markets. The

company aims to improve the size, weight, and runtime of everyday portable electronics and aims to ensure

minimal volume changes during battery operation.

SILA Energy

Storage

• Solid electrolytes comprise complex lithium salts combined with Li-ion-conducting polymers, such as polyethylene

oxide or ceramic electrolytes. Advantages include non-flammable, non-volatile, and stable cycling of lithium at high

temperatures Safer electrolytes help produce thinner Li-ion batteries and could be used for smartphones, drones,

EVs, and wearable devices.

Solid Electrolyte

for Anode-less

Batteries

• Prototype of an iron flow battery will provide cleaner and inexpensive power when generation from renewable

energy dwindles. The prototype can be customized to produce or store any range of power by increasing or

decreasing cells in stack and by varying the size of reactant tanks.

Flow

Battery

Prototype

2018

1

5

3

2

4

2018

1

5

3

2

4

20

17

1

5

3

2

4

2020

1

5

3

2

4

Enfucell Oy

Sila Nanotechnologies Inc

SolidEnergy Systems Inc

School of Engineering at Case Western Reserve University

New and emerging Battery Energy Storage technologies are being developed at a range of

European and North American universities and institutions


From a geographic perspective, the USA and Japan are the most mature markets for BES in

terms of developed capacity and supporting policies

37

BES Market: Attractiveness of Geographic Markets for BES, Global, 2016

CanadaThe Ontario government includes storage

technologies in its energy procurement processes by

the end of 2014. Initial 50 MW of storage technologies

will be installed to assist with renewable energy

integration and promote innovation. New feed-in-tariff

procurement process incorporate storage.

2014

2020 China

China provides financial support for pilot projects to assess

viability for large-scale roll-outs. There are no set BES targets,

but 200GW of wind is planned by 2020, along with 100GW of

solar, indicating significant opportunity for BES adoption. In

addition, there is a maximum emission reduction target of

45% in 2020 and 65% in 2030.

2014

2020

USA1.3GW storage has been mandated in

California. Compensation for frequency

regulation is based on response speed.

There are storage incentive subsidies in

California and New York, with significant

procurement through the American Recovery

and Reinvestment Act (ARRA) stimulus.

2014

2020

Japan

The government provides subsidisation for small-

scale PV-coupled storage for residential- and

commercial-scale storage. Public funding is also

provided for renewable-targeted storage systems.

2020

South KoreaThere is public funding of large-scale Li-ion

projects and ambitious targets for 2020.

The Korea Electric Power Corporation

(KEPCO) has targeted a development of

500MW of utility scale battery storage by 2017.2014

2020

Impact:Low HIgh

PolicySupport Market Maturity SupportingInfrastructure Demand Future Market Potential

European UnionThe EU Framework Research Programme (FP7) and

the co-funding of the stoRE project support storage for

high renewable energy integration. Germany offers

direct subsidisation incentive for small-scale PV-

coupled storage. Key countries include Germany,

Spain, Ireland, Austria, and Denmark.

2014

2020

2014


ROLL OUT OF MICROGRIDS

A microgrid is a discrete energy system consisting of distributed energy sources (including

generation, demand management and storage components) with loads capable of operating

in parallel with, or independently from, the main power grid

39

Energy Storage

Enables independent operation of

microgrids upon disconnecting from

the main grid or faults in microgrid

generation units, and self correcting

and managing features of the grid.

Comes into play during a sudden

shortage in power generation.

Distributed

Generation

Enables a particular

unit to operate by itself,

independent of the utility grid

for any given reason, such as

outages due to faults.

Sensors

Monitoring grid parameters

and collecting data from the

load and generation points,

reducing human

intervention to a great

extent and enabling

machine-to-machine

communication.

Power Electronics

Employed in the inversion

and the rectification points

of connection in the grid,

especially in storage

devices and distributed PV.

Data Management

Energy and load forecasting and scheduling of

loads. Predictive analysis is being developed to

make the grid more sophisticated and reliable.

Communication

Data security is an important focus area when it comes to communicating user data to the control centre and storing

the data. The Open Smart Grid Protocol of the European Telecommunication Standard Institute has been designed

specifically for efficient two-way communication in smart grids.

Image Source: CivicSolar Source: Frost & Sullivan

Microgrids can broadly be segmented into remote and grid-connected

Community/

Utility Grids

Rural & Islands

Military

Remote

Isolated Microgrids

Located far from the utility grid, such as on

islands or in rural communities.

No connection to the utility grid. Must have black

start capability, be located in remote areas, and

remain autonomous.

Usually operate connected to the grid with the

ability to island during fault and earn additional

value through trade of electricity and balancing

services.

Power supply, security, and reliability.

interruption causes high revenue loss or

compromises security. Industrial

Grids

Commercial/

Campus

Grid-Connected

Islandable Microgrids

Completely interconnected and can consume

and supply grid power while maintaining some

degree of service in times of utility outage.

Non-synchronous Microgrids

Not interconnected or synchronised to the grid,

but connected to utility power supplies. They

can consume power from the grid, but cannot

supply power.


S&C Electric has defined 6 microgrids based on their functionality

Description Infrastructure Microgrid Type

1. Basic functionality: transfer switch with standalone

generator, typically for emergency/backup power

Stand-alone generator, single load source,

transfer switchUtility: stand-alone facilities

2. Higher level of control: multiple loads and generation

sources; selection between RE and fossil fuel generation

Multiple generators, higher level of control

through simple data analytics

Utility, campus, and industrial: remote

electrification and remote industrial

facilities

3. Microgrid controller: continuously manages generation

and demand for base-level generation with ability to meet

average load

Microgrid controller, thermal assets, RE,

storage

Utility, commercial/campus, industrial,

military

4. Distribution automation, reconfiguration, and self-

healing capabilities

L3 microgrid controller, thermal assets, RE,

storage, DSR (load management)

Utility, commercial/campus, industrial,

military

5. Integrated weather forecasting, day-ahead pricing, fuel

price forecasting, autonomous buy/sell decisions made

by controller


storage, DSR (load management), predictive

analytics and forecasting

Utility, commercial, industrial

6. Operation of multiple microgrids simultaneously,

sharing resources for supply and balancing, and

economic and environmental efficiencies


storage, DSR (load management), predictive

analytics and forecasting, coordination and

optimal control systems

Utility

Source: S&C Electric, Frost & Sullivan 41

• In the IEA’s 2011 Energy for All report, it was estimated that - due to financial and geographical constraints - the needs of

30% of the global population without access to electricity would be best met through the extension of centralised grid

infrastructure. Of the remaining 70%, 52.5% would be better served through microgrids, and 17.5% through stand-

alone systems.

• The attractiveness of a microgrid solution is dependent on

– the unsubsidised electricity tariff for a community, versus;

– the size of the community, the density of the population, the distance from the national grid, the complexity of the

terrain, and the economic strength of its populace

• Tariffs for stand-alone generation are typically uncompetitive with grid tariffs in urban environments, but they become

increasingly competitive the more rural the population, and are the most competitive in very rural areas with small

populations (e.g., remote illages, individual houses).

• Microgrids show potential in locations where the population is large enough for microgrid generation to achieve

economies of scale above that of stand-alone systems, but small and remote enough so that it does not compete directly

with grid supply. This results in the majority of microgrid systems sitting in the range of 1MW to 5MW in size.

It is estimated that the financial and geographic conditions are such that ~37% of the global

population could be better served by micro- rather than centralised-grids


The pace of growth for micro grid systems will be accelerated through technological

development, price reductions, and the piloting of smart grid technologies in the pursuit of

reliable, efficient, and self-healing grids

43

Meter Data Management and Utility Software

Meter Data Analytics

Security, privacy, and reliability

issues appear at all levels

Grid Analytics

Analysis, Supervision

and Control

Predictive

Analytics

Descriptive

Analytics

What is

available?

What will

happen next?

What needs

to be done?

• Meter data management system

• Utility Software Application:

ADMS,SCADA, EMS

• Advanced grid management software for grid

optimization

• Feeder automation and substation

technology applications

• T&D asset management: analytics,

monitoring, and automation

o Software for integration of DERs

o Demand response software

platforms

2015

2020

Self-Healing

Grids

• Real-time data transfer and analytics

• Pattern recognition and prediction

• Customer profiling and accurate billing

• Demand response, feed-in tariffs

• Energy efficiency

• Strengthened customer relationship

• Innovation and transformation in business processes


Increasing focus on integrating renewables into the energy mix and improving efficiency and

reliability is driving the roll-out of micro grids

44

Driver Explanation

Increasing focus on

renewables and

DER integration

Increased variable RE generation into the grid increases the need for grid flexibility for balancing purposes. Microgrids hold the potential to both

limit the impact of RE integration through ring-fencing its generation (in a community/campus or industrial block) and provide a high degree of

control over the displaceability of this generation that utilities can use for grid balancing (e.g., frequency regulation, DSR).

Unreliable power quality and

power shortages

Industrial and large commercial facilities require a 24/7 supply of high-quality power in order to maintain production margins. In regions with an

unsecure power supply, microgrids offer end users the ability to ensure reliable supply.

Efficiency improvements

Microgrids of level 3 and above consist of a microgrid controller and smart grid infrastructure (e.g., SCADA, EMS, HEMs/BEMs) that

significantly reduces electricity consumption as a whole and allows for increased RE consumption as a percentage of total consumption,

significantly decreasing overhead costs to end users. Furthermore, new revenue streams are opened by empowering end users to trade

excess electricity generation with the central grid.

Governmental

support and policies

Higher-level microgrids are typically not commercially competitive for centralised grid tariffs and require government support (e.g., subsidies,

funding) to achieve commercial viability. Clear regulations and standards are required for microgrid development in order to allow efficient

interconnection and operation with the central grid and provide clarity on future market development for investors.

Rural/island

electrification

Rural and island markets are the most addressable for microgrid systems due to the significant cost requirements of central grid extension that

make microgrid investment a very clear and simple business case.


The lack of clear standards, government policies and available funding is acting as a

restraint on more widespread deployment

45

Restraint Explanation

Lack of

standardisation

Without a clear policy to ensure common protocols and specifications for microgrid operation, acceptance of microgrids by

governments and utilities are expected to be limited due to the potential risks they represent to grid security.

Availability of funding

The integration of distributed power, energy storage, control systems, and smart infrastructure as part of a microgid system carries

significant capital costs and typically results in end-user tariffs that are uncompetitive with central grid tariffs. In order to decrease

tariffs to competitive levels, utility involvement is often necessary to allow for cross-subsidisation, or government grants must be

awarded. Since pushback to microgrid development is still being experienced by many utilities in developed markets and utilities in

developing markets face funding shortfalls, it is largely up to the private sector or to communities themselves to drive microgrid

development supported by government grants, without which most developments would not be possible.

Policy restraintsLack of clear policies for the support and subsidisation of microgrid development, for both new builds and expansion

projects, represents a substantial restraint to investment in projects—particularly in developing markets.

Limited market

need/readiness

Some markets show a significant need for microgrid development, but where grid reliability is high, electricity tariffs are low, and

unplanned outages are not common, microgrid projects are in lower demand.


Total Microgrid Market: Revenue Forecast by Region, Global, 2015–2022

CAGR = 17.1%

4,083.0 4,510.25,182.2 5,970.9

7,119.7

8,518.2

10,225.4

12,314.8

Re

ven

ue

($

Mill

ion

)

Overall, the global microgrid market is expected to grow at a GAGR of 17.1% in revenue

terms 2015-2022, with APAC and the ROW leading the way


34% of micro grids globally are in the 1–5MW capacity range with diesel and gas gensets

the most widely used generation technology

47

With the rapid growth in renewable power and the decline in cost per kW, wind and solar technology have grown to account for 45% of projects.

They are typically used alongside gensets to allow for flexibility and, more recently, battery storage systems.

Technologies and installation sizes are not discussed independently in this

study. Note: All figures are rounded. The base year is 2015.

Total Microgrid Market: Segmentation by

Technology Type, Global, 2015

Total Microgrid Market: Segmentation by

Installation Size, Global, 2015

Fuel Cells

8.0%

Gensets

33.0%

Micro- turbines

6.0%

Other Non-

Renewables 4.0%

Wind

30.0%

Solar

15.0%

Other Renewables

4.0%Very Small

(≤ 50kW)

17.0%

Small

(≤ 500kW)

15.0%

Medium

(≤ 1MW)

15.0%

Large (≤

5MW)

34.0%

Very Large

(> 5MW)

19.0%


Italy is amongst the most attractive markets for micro grids in Europe

48Note: All figures are rounded. The base year is 2015.

Microgrid Market: Market Attractiveness, Europe, 2015

Smart meter penetration calculated only from countries that have a

percentage of smart meters installed.

Europe

25.7 0.7%0%

Utility-Scale Energy Storage MarketShare

Distributed Generation Market Share

Smart Meter Penetration

% of Population Unelectrified

GDP per Capita ($ thousand)

Economic Loss Due to Power Outage

Market Revenue

(2015): $0.53 B

Revenue CAGR

(2015–2022): 8.9%

Primary

Growth

Market

Secondary

Growth

Market

National

Growth

Markets

Primary

Growth

Market

Secondary

Growth

Market

National

Growth

Markets

Community Industrial

The European Union has a largely secure grid

infrastructure and generally ubiquitous electrification,

with key economies showing no economic loss due

to outage. The case for microgrid development is

limited. DSR solutions for balancing purposes are

expected to largely be through load or generation

aggregation into virtual power plants, with no

significant need for these to be islanded from the

central grid. The market, therefore, is primarily

expected to be driven by physical island markets, as

well as rural markets in eastern countries that still

suffer from grid reliability issues.

Rural Industrial

Eastern Europe and Central Asia face different

challenges than the European Union. The market

shows significant reliability issues, with an average of

1.2% of regional value lost due to electricity outage,

with Tajikistan showing as much as a 4.4% loss. Grid

independence of the industrial sector is, therefore, a

significant development driver. Russia’s size places

limits on electrification of its population via

centralised generation, with a significant proportion of

the population powered by distributed diesel and gas

gensets. Remote microgrids are expected to play a

significant role in the electrification of the country via

hybrid system (renewable + genset) development.

24%

37%

18%


Here, growth is strongest in the remote (rural/island) grid segment

49

Microgrid Market: Market Drivers and Restraints, Europe, 2016–2022

Increasing focus on renewables and DER integration

Unreliable power quality and power shortages

Rural/island electrifi cation

Efficiency impro vements

Go vernmentsupport andpolicies

High Growth

Markets (2015 –2018)

High Growth

Markets (2018 –2022)

Lack of stand ardisation

Policy restraints

Availability offunding

Limited market ne ed/ readin ess

1 5

1 5

1 5

1

2 3 4

2 3 4

2 3 4

2 3 4 5

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5

Dri vers Restr a ints2016 -2017

2018 -2019

2020 -2022

2020 -2022

2018 -2019

2016 -2017

Yea rs Yea rs

Impact: High L ow

Note: Driver and restraint impacts are region-specific and may not

correlate directly with country- specific ratings in subsequent slides.

Source: EUEI; Frost & Sullivan

There are four principal models for micro grid development

50

Key Micro Grid Models

• Private-sector development, ownership,

and maintenance.

• Private-sector investors’ role crucial due

to high investment capacity.

• Government incentives and support

through subsidies is important. Sound

economic benefit scheme is essential.

Community-

Based

Hybrid-Based

Private

Sector-

Based

Utility-

Based

• Typically, the ideal approach is a

hybrid business model.

• Community develops, owns, operates, and

maintains the grid.

• Suppliers form cooperatives, especially in

developing countries that are in charge of

electricity supply for the community.

• Medium-sized systems are

co-owned by municipalities.

• High potential in rural/remote areas.

• Financial resources, technical

competence, and government backing

crucial.

• Utilities are largely public companies in

developing nations with access to financing

mechanisms and cross- subsidies.

Microgrid

Models

Source: EUEI; Frost & Sullivan

Description

Pros

Cons

Model 2. Private/Utility/ Community 3. a. Private (unregulated) 3. b. Private (regulated)1. Utility 4. Community

Private players generate and utility

distributes electricity (or the

reverse), or private entity to

commercialise electricity generated

by and distributed through public

assets

Private company manages all

aspects in the absence of

government regulation

Private company manages all

aspects in a regulated environment

Government or parastatal utility

manages all aspects of microgrid

Community members organise to

manage generation and distribution

in a regulated environment, with

support and/or coordination from

an NGO or private company

• Different actors contribute their

strengths and technical and

management know-how

• Scalable, profitable

• Less conflict potential with

customers in case of distribution

by utility with cross-subsidised

tariffs

• Commercial sustainability for

long-term operation

• Ability to act fast without

government interference

• Profitability ideally allows for

scaling up of operations

• Scalability through private capital

• Technical know-how, high

reliability

• Profitability ideally allows scaling

up operations

• Legal security of regulated

market attracts private finance

• Can absorb funds easily

• Less regulation needed

• Connection of microgrid to

central grid can be easier

• Cross-subsidisation or tariffs,

thus affordability easier ensured

• Aim to fulfil national

electrification targets

• Self-managed public

infrastructure

• Less conflict potential with

customers and officials

• Creating assets and local

ownership

• Enabling self determination and

economic development

• Complex management,

feasibility of models depend on

regional /local context/structures

• Non-fulfilment of contracts due

to conflicts between business

partners

• Insolvency of one partner puts

full operator model at risk

• No financial support from public

obtainable

• Grid-interconnection

challenging/impossible

• Changes in regulation and fixed

tariffs can reduce profitability

• Conflicts with customers due to

monopoly

• Insufficient quality and safety

risks of service can occur if it is

not supervised, which can

contribute to a bad image of

microgrids

• Reliable regulation needed,

dependency on lengthy approval

procedures

• Debt financing needed for

scaling up

• Vulnerable to changes in

regulation, fixed tariffs, conflict

with customers,

• High transaction costs

• Potential risk: grid

interconnections

• Not the core business

• Unsuited company structure for

smaller projects

• Strain on limited budget

• Political interference

• Possibility of corruption in

procurement

• Insufficient local human capacity

(technical, managerial)

• Often unclear ownership

structure

• Usually high grants needed

• Tariffs not covering operation

and maintenance and

reinvestment costs

These differ depending on the natural environment, the local socioeconomic context, the

size of the micro grid, as well as the policy and regulatory environment

Source: EUEI; Frost & Sullivan 51

ABB, Siemens, Toshiba and GE/Alstom are among the largest suppliers

52

Company

Microgrid

Control &

Energy

Management

Modelling/

Feasibility

Analysis

BEMS/HEMS,

Automation

Switching

Protection,

Inverters, and

Grid Inter-

connectors

Energy

Storage

Storage

Management

Micro-

generation

Project

Development,

EPC,

Engineering

Services

ABB x x x

Siemens x x x x x x

Toshiba x x x x x

GE/Alstom x x x x x

S&C Electric x x x

Scheider Electric x x x

Honeywell x x x

Hitachi x x

Geli x x x

Blue Pillar x x

DNV-GL x x

etap x x

Greensmith x x

PowerAnalytics x x

SmarterGrid x x

Note: The above is not a complete list of suppliers but provides a breakdown of those with the most consolidated

service offering for microgrids.


ADVENT OF BLOCKCHAIN USE CASES

Timeline of FundingEcosystem Development

• It took several years for viable businesses to emerge from Bitcoin’s initial arrival in 2008.

• The biggest development platform for blockchain applications, Ethereum, was only fully launched in 2016.

• Applications built on the platforms within the Hyperledger umbrella from IBM and Intel have only seen a few full deployments to date.

• Undeniably there will be many failures in the years to come due to the crowded infrastructure space, but between the many innovative teams funded, world-changing businesses are expected to emerge in time.

• Investment in 2016 reached an all-time high of over $500 million, bringing total investment in blockchain technology startups to $1.5 billion.

• Venture funds such as Union Square Ventures, Kleiner Perkins Caulfield & Byers, andAndreesen Horowitz are joined by corporate venture arms such as CME Ventures, Goldman Sachs, Citi Ventures, and Santander InnoVentures.

• Several blockchain-focused investment funds have emerged including Boost VC, Digital Currency Group, Pantera Capital, and Coinsilium.

• This does not capture the significant investments made into internal innovation efforts, training, and the significant progress made in open source work.

Blockchain Startup Ecosystem: Funding by Year,

Global, 2012–2016

Investment in blockchain reached an all time high of over $500m in 2016 bringing the total

number up to $1.5b on a cumulative basis globally

Source: Outlier Ventures, Frost & Sullivan 54

• The largest category, Information and Communication, represents a combination of public chain infrastructure, hardware, and non-financial enterprise infrastructure. There are 585 companies alone in this category with the majority founded since 2013.

• Initially, the entire landscape consisted only of financial services businesses focused around Bitcoin. Cryptocurrency infrastructure from exchanges and investment products to payment services, commerce and more recently, compliance are included in this second category. However, back-end financial services platforms for banks that enable possibilities such as trading, asset tokenisation and clearing also feature in this 429 strong cohort.

• The third category, professional services, refers to a new type of business known as a “blockchain consulting and application development” business. These 62 businesses are both consulting houses and pivoted application teams who offer a solution to the resource and skill gap between demand and supply in the blockchain space. Like a traditional digital agency, they provide services from training to full-stack developmentof concept applications for clients.

• There has also been some movement towards vertical-industry focused companies in areas such as energy, healthcare and manufacturing. While there are not even a 100 companies between these 3 areas, more applications are being developed in-house at corporates or in partnership with a blockchain consulting house.

Startups have historically been concentrated at the platform level but industry focused

businesses are emerging including in the Energy space

Concentration by Vertical Vertical Development

Source: Outlier Ventures, Frost & Sullivan 55

Blockchains have the potential to address key challenges in the energy sector

56

The energy sector has seen significant changes over the past few decades across

generation, distribution, storage, and consumption.

• The energy sector continues to move away from centralized generation from fossil

fuel-based plants to renewables and distributed generation.

• Also, a shift is occurring from centrally-owned and operated power generation to

small-scale commercial generation and “prosumers” whose generation additions

require bidirectional flows.

• Both of these forces combine to create significant challenges for the electricity grid’s

design, with legacy infrastructure struggling to keep

up with the required flexibility.

The arrival of the Internet of Things and Smart Grids provide both solutions and new

challenges to these systems. A two-way distributed grid based on interactions between

billions of devices will require secure data infrastructure.

Blockchains can provide technology solutions to these challenges: data

coordination between a myriad devices; a low-friction, automated trading platform;

and open access for innovative products and services.


Use Case 1

Energy Trade Networks

57

Blockchains can create an open trade network for any type of asset that can be

digitized. In the case of a decentralized energy grid, this includes the ability to make

a peer-to-peer energy trade network. Blockchain technology creates the benefits of

a centrally organized market without the added cost or monopoly risk.

Energy

Trade

Networks

Generated units of energy could be logged on a blockchain as assets by each

producer and made available for trade by smart contracts. A combination of these

contracts from buyer and sellers would create an open market, completed at the

back-end by a smart delivery network tied into the blockchain.

Global energy decentralization has been progressing rapidly, but until now, a

technology solution to allow peer-to-peer trading was not available. Blockchains

could help support this decentralization and avoid the inefficiency and vulnerability

of legacy delivery or monopoly power.


• GridSingularity is a Vienna-based startup building a blockchain-

based data exchange. The team includes Ethcore developers Gavin

Wood and Jutta Steiner and energy market professionals. They are

working on a platform for decentralized energy data management

and exchange including:

o Data collection and analysis

o Smart grid management

o Renewable certificates

o Investment decision-making

o Energy trade and validation

• GridSingularity's Blockchain platform is designed with interoperable

applications, which should create cost and efficiency savings for the

industry. Existing systems require individual integrations for each

energy market system.

• The grand vision is that the reduced cost and complexity of the

system will attract more market participants and increase

competition and openness in the energy market.

Use Case 1

GridSingularity


Use Case 2

Digital Renewable Energy Credits

59

Another nexus between renewable energy generation and blockchain technology is

blockchains’ ability to create tokenized digital assets. A research paper has

proposed that a cryptocurrency could be used to replace the existing data

infrastructure behind Renewable Energy Credits (RECs).

Solar

Credits

RECs are awarded to producers for the delivery of renewable energy. The existing

infrastructure has long-term issues with oversupply and transparency that can be

simply solved with using cryptocurrencies which explicitly address these challenges.

Blockchain RECs incentivise renewable generation through direct reward.

Renewable-backed cryptocurrencies could improve the support of diverse

generation projects while simplifying accounting, feed-in tariffs, and complex rebate

arrangements.


https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1802166

• SolarCoin is a project building a cryptocurrency network backed by

the solar output of photovoltaic solar panels.

• SolarCoin is a rewards scheme for solar energy generation, being both publicly traded and given to solar energy producers in possession of Solar Renewable Energy Certificates (SRECs).

• The cryptocurrency is targeted at individual prosumers living in homes with solar energy panels and large solar electricity farm businesses.

• The non-profit project is hoping to offer support for and to incentivise renewable generation via a cheaper avenue than rebates and the opaque pricing offered by energy companies.

• ElectriCChain is a project supporting the development of open

standards and tools to publish and read public solar electricity

generation data on the SolarCoin blockchain and others.

• The initial focus is the verification and publishing of data from the

world’s 7 million solar energy generators.

Use Case 2

SolarCoin and ElectricChain


Use Case 3

IoT Data Infrastructure

61

A huge number of devices across the energy industry fall into the paradigm of the

Internet of Things (IoT), a vision for the future in which all objects are connected to

the Internet through embedded computer chips.

IoT Data

Infra-

structure

Existing data infrastructure is not equipped to handle the issues of privacy, security,

and decentralized business models. However, blockchains offer the necessary tools

for device identity, transparency, trade networks, and secure data permissions.

Several companies are building out blockchain data and coordination solutions

targeted at both industrial and consumer devices that make up the energy industry’s

IoT. These range from tracking and registry for industrial devices to energy trade

network infrastructure.


• Filament has created an Internet of Things (IoT) technology stack,

including blockchain technology, designed to enable autonomy and

secure tracking in distributed hardware systems.

• Its network technology allows for a departure from an exclusive reliance on Wi-Fi, cellular, or satellite signal, with real-time communication.

• Devices are granted high autonomy, including the capability to hold and exchange value directly by using cryptocurrencies for new economic models.

• Security and resilience across devices in Industrial IoT applications are heightened given the blockchain cryptography tools and decentralized architecture.

• Current challenges for IoT hardware across industrial energy and

utility installations can be addressed while laying the foundations for

the artificially intelligent and autonomous hardware of the future.

Use Case 2

Filament


GROWTH IN CRITICAL POWER

63

Critical power is used in vertical applications such as data centers and medical, industrial and

oil & gas settings to guard against a failure in the main power supply

64DC—Direct Current; AC—Alternating Current Source: Siemens, Frost & Sullivan

Uninterruptible Power Supplies (UPS) Inverters

AC-DC/DC-DC power supplies Power converters

Harmonic filters Voltage regulators

Switching power supplies Static Transfer Switches (STS)

DC power systems Racks

Data centers, hospitals, airports, sensitive industries and other critical installations have one thing in common;

interruption of the mains power supply can have serious consequences and must be avoided in any event.

Critical power supplies, therefore, have to be safe, reliable and efficient. The critical power industry includes

products such as;

Overall, the critical power market will grow at 9% in 2017, with UPS accounting for the highest

share of revenues and LED drivers and PV inverters driving expansion

65DC—Direct Current; AC—Alternating Current



Critical Power Market: Revenue Forecast, Global, 2016 and 2017

2016

$30.04 B

2017

$32.75 BUPS 32.6%

Programmable DC Power Supplies and Electronic Loads 2.0%

Programmable AC Power Supplies 0.3%

Harmonic Filters 2.3%DC Power

Systems 12.6%

Photovoltaic (PV)Inverters 22.2%

DIN Rail Power Supplies 1.1%

LED Drivers 19.6%

Non- renewable Inverters 7.3%

There are six key trends which are shaping the space

66MLPE—Module-level Power Electronics; UPS—Uninterruptible

Power Supply; IoT—Internet of Things Source: Frost & Sullivan

Non-traditional Cooling Technologies Connected UPS —IoT Platform

Data Centers—Key End User Modular Solutions Converged Power Solutions

Module Level Power Electronics

Strong growth

of 8.2% is

expected in

2017 as

awareness of the potential benefits

increase and newer additions take place

in Asia-Pacific (APAC) and North

America Image source: www.ev-power.eu

Traditional cooling

methods still

dominate market

revenues; however,

advanced cooling solutions are expected

to grow at a high rate of 15.7% in 2017.

Image source: www.grcooling.com

Image source: www.edgeconnex.com Image source: www.crystalasp.com

Image source: www.sanitytechnology.com.au

Image source: www.eltek.com

The global UPS market

is expected to continue

its slow growth in 2017.

IoT connectivity will

significantly improve opportunities for

manufacturers in the long term.

Data centers will

remain the key end

user for power

supply and power

quality equipment in 2017. Global

investment in the data center market will

be $202.9 billion in 2017, which is a 7.4%

growth over 2016.

The strong

momentum for

modular solutions

will continue in 2017,

driven by growth in modular data centers.

Modular UPS market revenue is expected

to reach $1,020.8 million in 2017.

2017 will be a

defining year for

converged power

solutions.

Key UPS participants will develop their

own converged power solution offerings.

Increasing global solar PV installations and the modernization of grid infrastructure capable of

accommodating Module-level Power Electronics will drive their uptake

67YoY—Year-over-year



$701.6 M

$999.7 M

0

$648.7 M

600

2016

2017

2020

Revenue ($ Million)

Ye

ar

DC to AC conversion takes place at a PV

module level. Micro-inverters allow the output

of each module to remain unaffected by other

modules in the system. These inverters

have the advantage of easy and quick

installation, and monitoring can be

conducted at a module level; therefore, any

faults can be easily identified and rectified.

DC optimizers are DC-to-DC converters

connected to each solar PV module or embedded by

manufacturers into the solar module.

These optimizers increase the power yield of

the module before sending the optimized

DC voltage to the central inverter.

The DC optimizer conducts maximum

power point tracking (MPPT) at the module.

MLPE Market: Revenue Forecast, Global, 2016, 2017, and 2020 MLPE Market: Unit Shipment Forecast, Global, 2016, 2017, and 2020

10.1 11.0

17.9

0.0

4.0

8.0

12.0

16.0

20.0

2016 2020

Un

its

(Millio

n)

2017Year

YoY Growth Rate,

2017 =8.2%

CAGR, 2016–2020 =

11.4%

CAGR, 2016–2020 = 15.4%

YoY GrowthRate, 2017 = 9.1%

MLPEMicro-inverter DC Optimizer

600 600 600 600 600

Non-traditional cooling technologies are expected to grow 2.5 times faster than traditional

solutions as end-users increasingly appreciate their superior capabilities



Revenue: 2017

Traditional

Cooling,

80.3%

High Density

Cooling,

13.7%

Other Non-

traditional

Cooling, 6.0%

Non-Traditional Cooling,

19.7%

Data Center Cooling Market: Revenue Forecast, Global,

2016, 2017, and 2020

Data Center Cooling Market: Percent Revenue Forecast by

Cooling Type, Global, 2017

Year

6,549.3

4,000.0

3,000.0

2,000.0

1,000.0

0.0

5,000.0

6,000.0

7,000.0

2016 2020

Reven

ue

($M

illio

n)

YoY Growth Rate,

2017 = 7.4%

CAGR (2016–2020) = 7.7%

5,218.44,858.8

2017

• Traditional cooling: $4,189.5 million

• Non-traditional cooling: $1,064.0 million

‒ High density cooling: $714.1 million

‒ Other non-traditional cooling: $314.7 million

68

Connected UPS systems gather information on UPS’ performance, allowing end-users to

better control energy infrastructure and leading to new IoT business models


Enhanced

Monitorin

g

Next-gen

Predictive

Maintenance

Wider

Applicat-

ions

Security

Concerns

Connected

UPS—IoT

Platform

• Connecting the UPS to IoT enables intelligent data

connections. Sensors embedded in the UPS gather

information on UPS functionality and the environment in

which it operates.

• This data can be used to analyze the current health of the

UPS and to analyse and extract trends in other power

anomalies over time.

• The inherent energy storage capacity of the UPS,

combined with the IoT platform, can benefit the site it

protects and benefit the wider power availability on the grid

itself.

• The energy stored within the batteries could be used as part

of the national grid demand response and energy storage

programmes.

• Connecting the UPS to an IoT platform increases the risk

of cyber security. If a UPS is hacked, it could potentially

compromise the safety of the entire infrastructure.

• Firewalls must be incorporated with integrated security

protocols.

• A connected UPS can interrogate itself and create actionsto mitigate the risk of failure. By analyzing the data obtained from the UPS, the end user can optimize the environment the UPS is protecting.

• Based on the results of data analysis, end users can deploy suitable solutions such as transformers, voltage stabilization, harmonic filtration, line filtration, and frequency attenuation to enhance the overall infrastructure.

Investment in data centers will grow by 7.4% globally, reaching $202.9 billion in 2017 and

making the segment a key end-user group for critical power applications



Data Center Market: Investment Forecast,

Global, 2015–2017

Data Center Market: Investment Forecast by Type,

Global, 2016 and 2017

174.7

188.9

202.9

0.0 40.0 200.0 240.0

2015

2016

2017

80.0 120.0 160.0

Ye

ar

YoY Growth

Rate = 7.4%

YoY Growth

Rate = 8.1%

Investment ($ Billion)

Inve

stm

en

t ($

Bil

lio

n)

Facility Infrastructure IT Optimization Outsourcing

0.0

40.0

80.0

120.0

160.0

200.0

240.0

YoY Growth Rate =

3.0%

YoY Growth Rate

= 2.2%

YoY Growth Rate =

20.3%

$188.9 B $202.9 B

83.2

57.2

62.5

2017

81.4

55.5

51.9

2016

Demand for modular UPS solutions from end-users seeking greater energy efficiency will be

strong, notably across the 50-100 kVA and 100-300 kVA power ranges

71KVA—Kilovolt Ampere



Modular UPS Market: Revenue Forecast,

Global, 2016 and 2017

Modular UPS Market: Product Life

Cycle Analysis, Global, 2017

YoY Growth Rate,

2016 = 9.5%

932.2

1,020.8

850 900 950

Revenue ($ Million)

1,000 1,050

2016

2017

Ye

ar

Introduction Growth Maturity Decline

Modular UPS is expected to grow rapidly over the next few years and is expected to be one of the most sought after UPS solutions in the medium and long terms.

• The global modular UPS market, which is in a growth stage, has the

potential to replace traditional UPS. High penetration is expected in

APAC, especially in China.

• The market has high penetration potential beyond 2017 because of

increasing end-user awareness levels and high demand for energy-

efficient UPS systems.

Leading manufacturers are introducing new products into their converged power solution

offerings making 2017 a make-or-break year for this business model

72VDC—Volts DC; VAC—Volts AC Source: Frost & Sullivan

Converged Power

Solution

The modular design allows

end users to swap out faulty

modules within a few minutes,

without disrupting the load.

The modular Lego®-style design

allows users to shape the power

system to fit into any available

space, including U- and L-shaped

layouts and a back-to-back layout.

The solution interfaces directly with

generators and main transformers,

avoiding a single point of failure and

providing an unmatched power

availability.

This solution converges all

the main elements of a data

center low voltage power

room into a single system.

The solution combines the

advantages of DC power while

meeting specific AC demands, thus

providing end users with the power

they need to grow their data center

business into the future.

Converged power packs more power in less space to cater to the increasing IT loads in existing facilities and provides significant space savings.

The scalable and modular

architecture allows end users to

achieve systematic growth and

enables vast scaling of IT services,

with zero downtime.

Converged power packs in power

conversion for all major VDC and

VAC voltages in the same unit will

optimize the input, distribution,

and output voltages to the mix of

customer applications in a given

location.

Converged Power

Solution

Company

Cannon, Excool and Eltek are three companies to watch

73Note: Logos are for illustrative purposes only. Source: company Web sites; Frost & Sullivan

Key Highlights/Achievements

Modular data center: Cannon Technologies Ltd launched its Stock Data Center

portfolio, with a vision to reduce client stress on design considerations, cut costs, and

fast track deployment time. Cannon Smart Space Cabinet, the integrated range of rack

door locks, and Cannon Free Form Infrastructure are some of the innovations aimed at

addressing customers’ unmet needs.

Data center cooling: Excool has pioneered the Indirect Adiabatic and Evaporative

technology and offers a technically superior product, complementing that product with

an added cost advantage. The product uses less water and is approximately 40%

smaller and about 45% lighter than similar offerings available in the market.

The company deploys non-ferrous materials in its products, enabling it to offer a

unique 20-year anti-corrosion warranty.

Data center power: Eltek has developed a highly innovative converged power

solution product that can converge all the main elements of a data center low

voltage power room into a single system. The product combines the advantages of

DC power while meeting specific AC demands, thus providing end users with the

power they need to grow their data center business into the future.

APPENDIX

Principal abbreviations

Abb Definition Abb Definition

AES Alternative Energy Storage IoT Internet of Things

AMI Advanced Meter Infrastructure LED Light-Emitting Diode

AMR Automatic Meter Reading MLPE Module-Level Power Electronics

APAC Asia Pacific MW Megawatt

ARES Advanced Rail Energy Storage MWh Megawatt Hour

BES Battery Energy Storage NGO Non-Governmental Organisation

CAES Compressed Air Energy Storage OPEX Operational Expenditure

CAGR Compound Average Growth Rate PV Potovoltaic

CAPEX Capital Expenditure R&D Research & Development

CSP Concentrated Solar Power RE Renewable Energy

EMEA Europe, Middle East & Africa REC Renewable Energy Credit

EU European Union RoHS Restriction of Hazardous Substances

EV Electric Vehicle TES Thermal Energy Storage

FES Flywheel Energy Storage UK United Kingdom

GW Gigawatt UPS Uninterruptible Power Supply

GWh Gigawatt Hour US United States

HEV Hybrid Electric Vehicle VRFB Vanadium Redox Flow Battery

HVAC Heating, Ventilation and Air Conditioning YOY Year On Year

75

Frost & Sullivan

www.frost.comFor further details on Frost & Sullivan’s coverage and services, please contact Livio Vaninetti, Director of Frost & Sullivan Italy, [email protected]

All rights reserved.

The partial or full reproduction, use, distribution, publication,

transmission, amendment or sale of all or part of these document

by any means and for any reason whatsoever is forbidden.

For any request please contact [email protected]

mailto:[email protected]

mailto:[email protected]

Energy Overview - Amazon S3...6,7 15,5 9,4 0,0 4,0 8,0 12,0 16,0 2015 2020 2025 Market Trend #2...

Documents

Transcript of Energy Overview - Amazon S3...6,7 15,5 9,4 0,0 4,0 8,0 12,0 16,0 2015 2020 2025 Market Trend #2...