2. Clean Energy Financing Advisory Council:
Energy Storage
April 12, 2016
Ryan Carney & Brian Breckin
3. Today’s Program
• Welcome
• Program updates: CHEEF REEL and SGIP
• Mark Perutz, DBL Partners
• Amanda Li, Generate Capital
• Katherine Ryzhaya, Advanced Microgrid Solutions
• Robert Sanders, Clean Energy Group
• Panel Q&A 11:04 AM
• Break 11:35 AM
• Networking 11:40 AM-12:00 PM
11. Financing Finder
• Searchable database of
financing options
• Filtered by zip code & city
• Filtered by property type
• Financing is organized
according to type (secured,
unsecured, PACE, etc.)
• Vendor profile pages
12. Financing Concierge System (FCS) Tool
• Decision-making software to
help consumers understand
how they prioritize financing
decisions
• Marketing report provides
insight into what is important
to them
• Data system cross references
preferences against loan
products in the database to
rank order the loan products
13. My Action Plan
• Quick questions
to customize a
virtual
assessment
• Personalized to
reach your goals
• Informs the
Finance
Concierge
14. Clean Energy Financing Advisory Council:
Energy Storage
Mark Perutz
Partner, DBL Partners
25. What is Project Finance?
If you googled it:
Project finance is the long-term financing of infrastructure and industrial projects
based upon the projected cash flows of the project rather than the balance sheets of
its sponsors.
What it breaks down to:
• Owning a real asset or lending against a real asset’s cash flows
• Investing in a developer’s projects - not in the developer (it’s not VC)
• Mitigating risk so that projected economics are actual economics
2
26. Project financing enables customers to purchase infrastructure “as-a-
service” with zero upfront investment
Profit Distributions
FINANCE CO
(e.g., Generate)
Cash Investment
Monthly payments
CUSTOMER
(e.g., Hotel X)
Energy savings from
storage system
PROJECT
COMPANY
Profit Distributions
and Fees
BATTERY
Asset Management and DEVELOPER /
O&M Services VENDOR
3
27. There are four major types of risk to mitigate when
evaluating storage projects for project finance
1
2
3
4
Regulatory Changes
Regulatory
Rebate Reliance
Product Performance
Technology
Warranty Coverage
Servicing
Operations
System Optimization
Customer Credit
4
28. Energy storage is a growing market with opportunities
for product maturity and scale
• Driven by government mandates and federal rulings, utilities and
ISOs/RTOs are increasing their procurement of storage and allowing
storage to participate in wholesale energy markets
• Competition among experienced technology OEMs drives down costs,
reduces technology risk and yields new business models
• Project finance drives standardization of products, contracts, and
operations and allows for developers to scale
• Software providers are enabling the optimization of system revenue
streams and degradation curves
5
29. Project finance drove the solar and wind industry - and
has the opportunity to do the same for storage
New Investments in Clean Energy by Asset Class - Q1 2004 - Q3 2015 [$BN]
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30. About Generate Capital
WHO WE ARE Generate Capital, Inc. is a specialty finance company that builds, owns, operates, and finances infrastructure
assets involving the world's critical resources: energy, water, agriculture and basic materials.
We believe the world's fourth industrial revolution -- a "resource revolution" -- is underway, where the world is
finding new, profitable ways to do more with less of our precious or constrained natural resources. Unlike
traditional capital sources, Generate Capital has the people, systems, and flexibility that make us the trusted
capital partner for technology manufacturers, project developers and contractors driving this resource
revolution.
WHAT WE DO Generate Capital partners with project developers and solution providers to finance resource-related projects.
We have developed a financing product enabling end customers to use their technologies in a pay-as-you-go
model we call Infrastructure-as-a-Service™. Our financing options provide our Partners easy access to capital,
which shortens sale cycles and enables higher sales volumes. Generate Capital offers shorter and longer-term
equity and debt capital.
BENEFITS TO 1. Substantially increase revenue by using a ‘zero down’ offering to raise closing rates with end users and
PARTNERS reduce the closing timeline.
2. Having a true capital partner for growth
• Flexible financing solutions to meet evolving developer and customer needs over time
• Industry expertise enabling rapid feedback and efficient underwriting
• Extensive transaction experience provides standardized documents and processes which creates
streamlining and reduces costs
BENEFITS TO 1. No upfront expense - Customer recognizes benefits (i.e., energy savings) over time, as they accrue, without
CUSTOMERS making a large expenditure on an uncertain technology or pay-back proposition
2. No Risk - Generate Capital and the solution provider take the risk on the economic benefits of the solution
CONTACT Jigar Shah
jigar@generatecapital.com
http://www.generatecapital.com
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31. Clean Energy Financing Advisory Council:
Energy Storage
Katherine Ryzhaya
Chief Commercial Officer, Advanced Microgrid Solutions
34. WHO IS ADVANCED MICROGRID SOLUTIONS?
AMS INSTALLS ADVAN
THAT LOWER ENERGY
AND PROVIDE CLEAN
TO ELECTRIC UTILITIES
• Owner and operator of onsite energy storage
• Purveyor of Storage-as-a-Service - zero upfront cost plus
guaranteed energy bill savings
• Developer of Hybrid Electric Building hardware/software platform
• Technology partnership with Tesla to procure 500 MWh of Powerpacks
35. FAST FACTS
• BEHIND THE METER (BTM) ENERGY STORAGE
DEPLOYMENTS INCREASED BY 405% IN 2015
• TOTAL ENERGY STORAGE DEPLOYMENTS WERE
UP 243% IN 2015 (UTILITY, C&I, RESIDENTIAL)
• TOTAL MWs DEPLOYED EXPECTED TO GROW
FROM 221 IN 2015 TO 1,662 BY 2020
ENERGY STORAGE GROWTH
36. EVOLUTION OF ENERGY STORAGE PROJECT FINANCE
DOES THIS LOOK FAMILIAR?
• PAST
o Heavily reliant on incentives
o Operating revenues depend exclusively on demand charge management
o Premium charged for relatively ill-understood technology (lithium ion)
o Cost of capital in the mid to high teens
• PRESENT
o Additional operating revenues from utility contracts
o Project economics still reliant on incentives but improving quickly
o Lithium ion batteries increasingly seen as safe and bankable, while other energy
storage technologies remain challenging to finance
o Cost of capital in the high single digits to mid teens
• FUTURE
o Further monetization of the stacked benefits of storage
o Project economics stand on their own without incentives
o Additional energy storage technologies may become bankable as deployment
grows (alternatively, Li-ion economies of scale may prevent significant penetration
by other technologies)
o Cost of capital in the mid to high single digits
37. FINANCING BEHIND THE METER ENERGY STORAGE
IMPORTANCE OF CASH FLOW CERTAINTY
• UTILITY CONTRACTS
o Fixed payments from high credit counterparties are low risk and thus
bankable (e.g., AMS’ capacity contract with SCE)
o Numerous other utilities preparing behind the meter energy storage
procurements
• INCENTIVE CERTAINTY
o SGIP has been essential in establishing CA as the leading behind-the-
meter energy storage market
o ITC extension should be a huge boon to storage (solar + storage)
• STANDARDIZED HOST AGREEMENTS
o 10+ year contracts
o Fixed payments from host à increases percentage of capital stack that
can be contributed by debt, reducing the overall cost of capital
o Asset management and O&M agreements provide security that projects
will perform as promised
o Termination provisions that don’t encumber utility contracts
38. INCREASING ENERGY STORAGE RETURNS
MONETIZATION OF NEW PRODUCTS
OVER TIME IT WILL BE CRITICAL FOR MARKETS TO RECOGNIZE THE STACKED
BENEFITS OF ENERGY STORAGE
• HOST CUSTOMERS
o Time of use bill management
o Backup power
o Increased PV self-consumption à especially valuable as net metering rates decline
• UTILITIES
o Capacity
o Distribution deferral
o Transmission deferral
• ENERGY MARKETS
o Frequency regulation
o Voltage support
o Spinning / non-spinning reserves
o Energy arbitrage
POLICY FRAMEWORKS ARE BEING CREATED TO UNLOCK THESE NEW PRODUCTS
40. STORAGE AS A SERVICE
AMS INSTALLS, OWNS AND OPERATES
ENERGY STORAGE SYSTEMS AT HOST
CUSTOMER SITES
HOST CUSTOMERS RECEIVE ENERGY
AND DEMAND CHARGE SAVINGS ON
THEIR BILLS IN ADDITION TO
OPERATIONAL EFFICIENCIES
AMS FINANCES THE SYSTEMS WITH A
COMBINATION OF SHARED SAVINGS,
UTILITY REVENUES AND INCENTIVES
HOST CUSTOMERS CAPTURE
ADDITIONAL BENEFITS INCLUDING
MULTI-RESOURCE INTEGRATION,
REDUCED GHG EMISSIONS, BACKUP
POWER CAPABILITIES AND
ENHANCED DEMAND RESPONSE
Energy Services
Savings Fee
Host Customer
Own &
Operate
Battery Storage
AMS
Utility
Contract
Utility
ECONOMIC MODEL
41. UP TO
1 DEMAND CHARGE REDUCTION
Forecasting software predicts demand
spikes and seamlessly switches
buildings from grid to battery power,
thereby avoiding large peak charges
40%
REDUCTION IN
DEMAND COSTS
ENERGY COST SAVINGS
2 TIME OF USE RATE ARBITRAGE
Battery storage systems charge
overnight when the cost of grid power
is low and discharge during peak hours
when it’s more expensive, displacing
costly on-peak electricity
UP TO
15%
REDUCTION IN
ENERGY COSTS
43. THE AMS ADVANTAGE
WE INSTALL LARGE ENERGY STORAGE SYSTEMS THAT GENERATE
MEANINGFUL ENERGY BILL SAVINGS FOR HOST CUSTOMERS
AVERAGE
SYSTEM SIZE
FUNCTION
ANNUAL
SAVINGS
STORAGE PROVIDER A
18-36 kW
Peak Shaving
$500-$10,000
AMS
250-1,000 kW
Load Shifting &
Demand Reduction
$50,000-$200,000
45. CASE STUDY 01
IRVINE COMPANY
• 26 commercial office buildings
• 25% peak demand reduction
• 10 MW of firm, disptachable
capacity to the utility
• 8% reduction in energy costs
to the building owner
(~$900,000 annually)
• Zero emissions
• No distribution upgrades
46. CASE STUDY 02
INLAND EMPIRE
UTILITIES AGENCY
• 6 regional water recycling &
pumping facilities
• 14% peak demand reduction
• Powered from the grid and
onsite generation assets
o 3.75 MW energy storage (AMS)
o 3.5 MW solar
o 1 MW wind
o 2.8 MW fuel cell
• 5-10% reduction in annual
energy costs(~$550,000)
47. ENERGY STORAGE, SOLAR PV AND SMART GRID TECHNOLOGIES
EXPERIENCED INCREDIBLE GROWTH IN 2015, AND WE EXPECT THAT THEY
WILL PLAY AN INCREASINGLY IMPORTANT ROLE IN REACHING THE NATION’S
CLIMATE AND CLEAN ENERGY GOALS IN THE COMING YEARS.
DAVID DANIELSON
US DEPARTMENT OF ENERGY
48. Clean Energy Financing Advisory Council:
Energy Storage
Robert Sanders
Senior Finance Director, Clean Energy Group
51. Resilient Power Project
• Increase public/private investment in clean, resilient power systems
• Engage city officials to develop resilient power policies/programs
• Protect low-income and vulnerable communities
• Focus on affordable housing and critical public facilities
• Advocate for state and federal supportive policies and programs
• Technical assistance for pre-development costs to help agencies/project
developers get deals done
• See www.resilient-power.org for reports, newsletters, webinar recordings
56. Energy Storage Early Adopters
• Energy storage companies
have largely targeted C&I
customers to reduce utility
bills (not for resilience).
• It’s important to bend the
technology trend for
solar+storage systems to
also meet public needs, such
as affordable housing and
other essential services in
low-income communities.
57. Resilient Power Projects – Housing
• TA Fund: grants pay for 3rd party TA
to determine project feasibility,
design resilient solar+storage systems
• Demonstrate viability of clean energy
+ storage in affordable housing
• Working with project developers in
CA, NYC, Chicago, DC, Newark, Austin
• Via Verde (Bronx) – could be 1st
solar+storage project for resilient
power applied to affordable housing
58. Resilient Power Projects –
Community Facilities
• Demonstrate viability of clean energy +
storage in critical community facilities
– MA DOER – 3 rounds of state funding for
the deployment of municipal-led systems in
its Community Clean Energy Resiliency
Initiative (CCERI).
– 28 critical facilities - including
schools/shelters, communications centers,
first responder facilities and hospitals - will
have resilient power.
• Working with municipalities to develop
resilient power plan for critical facilities
• Municipal solar+storage project planning
underway in San Francisco, Baltimore, Salt
Lake City, Los Angeles, Duluth, DC
59.
60. Resilience for Free - Findings
• Analysis of project economics in different markets
• Findings:
• Solar+storage can reduce operating costs
• Financing can be repaid with electricity market revenues
• Energy storage can improve economics of stand-alone solar
• In certain markets, resilient solar+storage can be developed at
little to no net cost over the life of the project
– Essentially resilience for free
• Similar analysis is now being done for CA affordable
housing
61. How Solar+Storage Projects are Financed Today
• Utilities - direct ownership or third-party ownership
under long term contract for services (rate based)
– Green Mountain Power - 4 MW of battery storage, 2.5 MW
of solar PV, provides resilient power to a school
community emergency shelter
– PSE&G – Hopewell Valley High School (community
emergency shelter)
• Large energy services companies - access to capital
markets targeting specific sectors
– (Schneider Electric, municipal water/sewer treatment
facilities, MUSH)
• New solar+storage companies - using project finance
funds, venture capital & private equity
– Green Charge Networks, Stem, AF Mensah
62. How Solar+Storage Projects are Financed Today
• State incentives for demonstration projects
– MA DOER
– MD Energy Administration
• Federal tax credits
– ITCs
– For affordable housing, can be combined with LIHTCs to
fully fund projects
• Bond financing for municipal projects, schools, large
nonprofit institutions
• Solar+storage systems are increasingly structured with
third-party ownership and leased to customers.
63. Integrated Approach is Needed
• Getting the market rules right is
a big facilitator for project
financing.
– Important to be able to stack
multiple cost savings and
revenue streams
• Investment in resilient power in
community projects won’t get
traction without an adequate
policy & regulatory framework,
access to experienced technical
services, data collection &
analysis, and information sharing
63
64. Sign up for the RPP e-Distribution List to get notices of
future webinars and the monthly Resilient Power
Project Newsletter: http://bit.ly/RPPNews-Sign-UP
More information about the Resilient Power Project, its
reports, webinar recordings, and other resources can
be found at www.resilient-power.org.
68. Networking Round Robin
1. Name
2. Job Title & Organization
3. What is hindering your efforts to advance
clean energy?
4. What do you need to increase your
contribution to clean energy?
