MEMO

TO: Paul Dollin, Suzanne Gendron, Fiachra O’Cleirigh, Frazer MacKay, Paul
Grota, Roger Blair, Guillermo Marquez, Sebastien Fecteau, Anna
Nordling, Stephen Green
FROM: Paul Williams
SUBJECT: Battery Storage
OUR REF: Global Power Strategy – briefing paper
DATE: 22 May 2018

This paper addresses the following in relation to battery storage:

— Scope of battery storage – what is it?

— Deployment types for battery storage

— Services

— Potential market for services

— Client feedback

— Capability

— Key points and next steps

It is an initial exploration of the service line and potential relevance for each of the regional
businesses across Asia Pacific, Middle East, Africa, Europe and the Americas.

Scope of Battery Storage

Battery storage, or storage, is a commonly used term for various technologies, including
suspended forms of energy (e.g. pumped hydro).
This paper looks at the application of chemical batteries, also termed electrical energy storage,
which by definition includes flywheels and supercapacitors. However, flywheels are not
covered in this analysis to focus on chemical battery storage and the associated demand for
relevant engineering services and how we position globally.

Deployment Types for Battery Storage

Batteries can be deployed by several methods depending on the need, size, purpose and cost.
Current market applications suggest:
1. Behind the meter for local/small energy users
2. Embedded generation purposed by network distribution and transmission purposes for
off-grid support or network support/efficiency

Level 15, 28 Freshwater Place

Southbank VIC 3006

Tel: +61 3 9861 1111

Fax: +61 3 9861 1144
www.wsp.com

WSP Australia Pty Limited ABN 80 078 004 798

3. Large-scale storage for generation organisations as part of the energy portfolio
management
4. Development of energy parks (asynchronous generation being the dominant feature) for
firming purposes
As such, the drivers for the application of battery storage could be many and varied where the
nature and size of the deployment results in varying support for engineering services.
These services can be further broken into the three main criteria that drive the type of battery
installation to date (this tends to be more relevant for items 2-4 above).

TYPE DRIVERS

Ancillary/voltage control Address short peaks for grid stability. Short

discharge capability
Quick, high intensity response
(typically minutes relief)

Medium response (typically 1-2 hours Address a couple of hours’ peak demand
relief)

Large capacity Address a longer-term demand requirement

and larger discharge capacity capability
Slow, longer duration response

The diagram below further illustrates the current value proposition and role that
electrochemical batteries (in blue) can play.

Source: The Climate Council’s paper, Powerful potential: Battery storage for renewable energy and electric cars

This paper does not address other markets or mobile forms of deployment, such as electric
cars, wider electric vehicle impact, etc.
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Services
Cradle-to-grave battery professional services are debatable in terms of effort and need given
the perceived simple method for applying the technology.
Experience and bids from the market to date suggest the following potential scenarios and fee
value for Battery only assignments:

SERVICE TYPE OUTCOME PRICING MARKET

POTENTIAL

Concept studies Options efficient and $25-50k (depending on To be confirmed

effective solution type Capex) per region

Feasibility Selection of efficient $50-100k (depending

and effective solution on Capex)
type

OE (Development and EPC selection and <$500k (based on solar

Construction) implementation experience)
assistance
Low level PM
assistance

Battery Operational Secondment or per hour

implementation familiarisation consultancy

Due diligence of other Assessment for 3rd <$100k

technical advisor work parties or independent
review

The service types above are based on an average charge out rate of ~AUD200/h. Effort can be
deduced for regional comparison purposes.
It is apparent that the current service offering is more that of the business case leading to
engineering support through deployment and commissioning expertise. There is very little
scope for detailed design (given the nature of the asset), complex geotechnical or civil
requirements, or complex electrical configuration, other than discharge management. The
Controls and Instrumentation aspects have not been identified as significantly different to
other generation projects or requiring specialist support.
Looking ahead, it appears unlikely these projects will exhibit the complexity, fees and, hence,
resource effort for that typically requested of many other Power projects – generation or
networks.

Potential Market for Services

The market demand has not been simple to quantify. Bloomberg Energy Finance has some
data on the future market but a good level of detail could not be made available for this paper.
The following information (by region as best representative of WSP Power regions) has been
sourced from TR GlobalData:

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 Global Demand by Rated Power
1200000

1000000

Rated Power (kW)

800000

600000

400000

200000

0
2018 2019 2020 2021 2022 2023
Commissioning Year

Global Demand by Number of Projects

70

60
Number of projects

50

40

30

20

10

0
2018 2019 2020 2021 2022 2023
Commissioning Year

Source: TR GlobalData

The demand profile is based on potential output and number of projects. The reason for the
two scenarios is that the potential plant output data is not consistent (zero data vs battery only
vs battery and generation).

Nonetheless, the trend exhibits cumulative growth but a relatively uncertain future in year on
year growth. This is likely to be impacted by numerous factors associated with investment
decision making, including speed of innovation, competing alternatives, energy policies, asset
portfolio management, potentially not capturing any large behind the meter customer
deployments, or other commercial drivers.

Of the publicly available Bloomberg information, it has a more aggressive prediction on

growth. The cumulative graph curve over the next 15 years shows steady year on year growth.
However, it is noted that 50% of the growth is ‘behind the meter’. The key growth countries
are on the left of the chart.

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Source: Reneweconomy, Australia to lead storage boom, as home batteries become “ubiquitous”

Client Feedback
This paper has not gauged global and targeted client feedback on expected services, capability
and capacity of this offering. From an Australian and New Zealand (ANZ) perspective, the
following was noted anecdotally when interacting with clients and, perhaps, replicated or
enhanced by other regions:

— Battery expertise is somewhat now perceived as a BAU requirement for a Power

professional services outfit where the expectation/need is more prevalent around large-
scale storage and development of energy parks services

— Unless the services are uniquely battery related, rare in ANZ cases, the
priority/risk/capital intensity profile of the battery portion is generally not high enough to
impact the bid decision criteria and decision

— The services are small and less complex in nature (where some could be provided
internally) that it does not warrant (at this point) a large service group/capacity – that is,
no client has commented that our presence is too small or more investment is required to
be recognised as a leader
This feedback should be placed in context: battery storage is new; the service may evolve
further and it does not consider future asset management needs.
ANZ is also starting to see signs of non-traditional power clients becoming active in this
technology – for example telecoms, data centres, etc. Thus, the client set has the potential and
is likely to expand.
Finally, many clients like to reiterate that battery storage is storage and not generation. Given
the focus of market rules and revenue is still predominantly placed on generation this too
plays a role in the priorities and importance of battery storage. The focus may change as the
rules mature around this technology.

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Capability
Globally, the power generation, storage and conveyance markets continue to change due to
innovation and disruption. It is important to have a market matched capability in battery
storage. Despite what is presented — the uncertain demand profile, lower end fee/resource
requirement and hence lower on the risk curve for clients — clients will expect WSP to be at
the forefront of technology changes. This need is even more apparent when a strategy point is
to be a leader in the renewables market.
Like all technology, clients seek experienced consultants to advise on projects in the capacity
above. Battery storage is a developing area. The capability and make up / development profile
of a battery specialist is not clear. ANZ has found, like other renewable projects, battery
specialists tend to favour consultants with an electrical/bio/aerospace engineering background.
It may also align with chemical/process engineers, but could be less likely as the complexity
and support needed from pure play engineering firms fits better with the former. We have
found, to an extent, that consultants have acquired experience from hands on experience and
self-learning – not always a dedicated training program or having worked for a manufacturer.
The value tends to be in how the technology is integrated with the overall Power/ Energy
system.
Our approach to a dedicated PAN for battery storage will also assist in shaping and
developing the expertise in this market sector.

Key points and next steps

The key points from this paper include:

— To remain a leader in the evolving Power and Energy marketplace, battery storage is part
of the energy mix that requires a presence (as appropriate for that region).

— Based on the typical services sought, WSP needs a presence, however, not at levels equal
to the capacity typically required for generation/networks projects. The skill set can be
developed by current (electrical) staff to bolster presence and capacity.

— Even taking the aggressive growth into consideration, the forward demand suggests a
careful, considered approach taking region and client drivers into account

— To support a leadership branding profile, WSP should continue to support a separate

service line (PAN) and marketing of capability and past projects.

— To better inform the global requirement further analysis is required by the regions to
understand an optimised approach and resourcing for this market.

Paul Williams
General Manager, Power ANZ

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