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How Energy Storage

Will Help Cleantech


See More Green
Revenue Forecasts and
Unique Trend Analysis
Whitepaper
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For a decade, the renewable energy sectors double-digit growth
and headline grabbing global activity painted a rosy picture with
unlimited growth potential. Almost breathtaking. But in 2011,
the eyebrow-raising bankruptcies of a few high-profle cleantech
companies seemed overnight to dissuade government support,
frighten away skittish venture capitalists, and dampen public
sentiment about the very viability of this notion.
Witness: A 2012 Cleantech Group report, which found that between the third quarters of 2011 to 2012 venture
capital investment in cleantech dipped from $2.23 billion to $1.56 billion, validated market concerns about
renewable energy. (1) Had this turn in the market meant wed never escape our fossil fuels dependency?
While cleantech funding has indeed fallen dramatically over the last sixteen months, innovation across the entire
sector continues to soar. The development of green buildings, smart grid hardware and meters, hybrid electric
vehicles, buildings as batteries, and a litany of other cleantech breakthroughs are booming as never before.
In May of 2013 alone, the excitement over Tesla Motors frst-ever proftable quarter announcement was quickly
eclipsed by news of a high school students invention of a storage device that can charge a cell phone in 20-30
seconds. This affrms the only hurdle preventing renewable energy from becoming the primary source of electricity
in this centurys future is, perhaps, storage.
Arena Solutions, pioneer of cloud-based Product Lifecycle Management (PLM) solutions, believes the cleantech
sector is at an infexion point with its brightest days ahead. For 13 years, Arena Solutions has helped a diverse
range of leading cleantech companies, such as Sunlink, EnerVault, and SunPower, streamline their product
development processes across a globally distributed supply chain to reduce time to market and maximize product
release potential.
This whitepaper leverages third party market research and Arena Solutions deep manufacturing insights to inform
cleantech executives, investors, policymakers, and complementary technology stakeholders of the diverse types
of current and emerging storage technologies and the impact these innovations have across the entire renewable
energy sector. The paper also presents comprehensive growth forecasts across storages three main business
drivers (consumer electronics, electric transport, and large-scale grid) as well as examines rebounding global
investment trends.
Population growth, pollution, and limited natural resources have created an urgent need for innovative cleantech
solutions that are smarter, cleaner, and more effcient. But to date, energy storages high cost and technical
limitations have kept renewable energy providers from achieving large-scale, low-cost parity with traditional
energy suppliers.
As quickly as winds change direction, so shift the investment trends and technology paradigms in the dynamic
cleantech sector. New advancements in storage technologies are ushering in an era of rebirth and unlimited
possibilities in renewable energy. So ask yourself when opportunity in cleantech knocks will your business be
ready to scale when and where the market demands?
The Promise of Renewable Energy Depends
on Storage
When we learn how to
store electricity, we will
cease being apes ourselves.
Thomas Edison 1910
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Storage: The Foundation to an Effcient
Cleantech Ecosystem
Since Thomas Edison discovered electricity, the ability to store
massive amounts of energy has confounded scientists and
engineers alike even the The Father of Electricity, himself.
Without a storage component, the cleantech industry will not be
able to experience sustainable growth as price spikes, security
threats, instability and volatility remain ongoing challenges.
Energy storage systems can move energy through time, providing
it when and where it is needed to help balance variable renewable
sources, increase electric grid reliability and asset utilization, and
improve intermittency management and effciency. Storage allows
unused electricity to be stowed and in the case of wind and
solar energy used on breezeless, cloudy days.
As demand for renewable energy continues to expand, storage will play a multi-functional role in managing energy,
bridging power, and ensuring quality and reliability. Energy storage technologies provide a wide spectrum of
capabilities and applications benefting all parts of the dynamic cleantech sector, organized into the following
four groups:
Solar, thermal, wind, hydro and alternative fuels ofer an
improved and economical source of energy that removes
pressure on non-renewable resources (oil and gas) and
bolsters energy security.
Batteries, fuel cells, utility scale grid storage improve power
reliability, intermittency management by stowing unused
electricity for later use.
Building materials, lighting, demand response systems
reduce energy management operating costs, lower
maintenance costs, and extended equipment lives.
Smart grid hardware, smart meters, transmissions lower
waste, outage frequency and duration and distribution loss.

ENERGY GENERATION
ENERGY STORAGE
ENERGY EFFICIENCY
ENERGY INFRASTRUCTURE
BENEFITS GROUPS
+
0000
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Grids, Electronics & Electric Cars Drive
Demand for Storage
In the past, energy storage on a large scale had been limited to storage of fuels, such as large amounts of natural
gas and petroleum. That evolved to include electric energy stored in batteries that power automobiles and now a
great variety of portable appliances.
As the renewable industry scales with business models designed to meet the needs of a dynamic energy
marketplace, a similar transformation will take place with storage. While its hard to predict future storage business
models with precision, its clear that consumer electronics, electric transport and large-scale storage will continue
to drive demand for energy storage.
Lithium-ion batteries will dominate the consumer and automotive markets for a long time into the future due to
their high effciency and energy density, long cycle and calendar life, and low volatility. Further increase in energy
density is possible with lithium metal systems. But intrinsic problems with reversibility and the very safety of lithium
metal must be overcome to make the systems more viable.
This common battery may very well not only keep the Energizer Bunny going and going but humans, too, as we
strive to live sustainably on a more green planet.
Electric Transport Accelerating Need for Storage
Increasing the demand for renewable batteries is the introduction of the following battery-powered vehicles: the
Toyota Prius, a Hybrid Electric Vehicles (HEV); the Chevrolet Volt, a Plug-in Hybrid Electric Vehicles (PHEV); and
the all-electric Nissan Leaf, an Electric Vehicle (EV). Once nascent, these alternative vehicles are becoming more
mainstream.
Batteries Power Consumer Electronics
The lithium battery found in toys, laptops, mobile devices, and power tools
may soon become the primary energy source for cars and large-scale grids. This
diminutive battery is the Mighty Mouse of the consumer electronics sector the
most mature storage market with the lowest power requirements. According to
Global Industry Analysts (GIA), the consumer battery market across a gamut of
manufacturers ranging from Panasonic and Samsung to Maxell and others is
forecast to reach $55.4 billion by the year 2017. (2)
Lithium is a secondary battery, which means it is a rechargeable battery while
primary batteries are non-rechargeable. Secondary batteries account for only 10%
of all batteries by volume, but represent more than 60% of the global battery market
in terms of value. Secondary batteries also include lead-acid, nickel cadmium, nickel
metal-hydride, sodium sulfur, and fow batteries.
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According to a new report from Pike Research, annual worldwide
sales of HEVs, EVs, and PHEVs will collectively reach 3.8 million
by 2020. The report goes on to forecast that sales of plug-in EVs
will grow at a compound annual growth rate of nearly 40 percent
over the remainder of the decade, compared with the overall auto
market that will expand by only two percent a year. (3)
The economic business driver for the industry is the fundamental
formula that as the price of gasoline rises the more quickly an
alternative automobile reaches breakeven to pay off the upfront
additional battery costs.
An interesting fnding in a recent Lux Researchs Alternative Power
and Energy Storage Service report predicted that e-bikes and scooters not automobiles will drive the biggest
growth for these batteries in the next fve years. Europe and Asia Pacifc lead the way as harbingers of this trend.
The e-bike and scooter market is forecast to grow from a $6.4 billion market in 2010 to $10.9 billion in 2015. (4)
The report goes on to predict that the market for electric vehicle energy storage devices is expected to grow from
$7.7 billion in 2010 to $14.5 billion in 2015.
Part and parcel to the development of advanced batteries will be the development of battery management
systems (BMS). A BMS is any electronic system that manages a rechargeable battery (cell or battery pack),
including monitoring its state, calculating and reporting data, protecting the battery, and balancing and controlling
its environment.
The key function of BMS is safety and reliability, making it an important value-add in the battery equation.
Companies who can design and manufacture cells, packs and overall systems are better able to differentiate
themselves by adding more value than component manufacturing.
Electric transportation is a lightning rod in the cleantech industry. To reduce the worlds dependency on oil
while at the same time mitigating the environmental impact of the ever-increasing number of vehicles on the
road, governments and policy makers have begun relaxing regulations. As a result, some of the most signifcant
advancements in battery technologies have been for plug-in and electric vehicles.
Figure 1
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Grids High Storage Demand
Large-scale grid energy storage is used by utilities and other power industry participants for several purposes.
This segment has by far the most demanding technical requirements in terms of power, energy, and sheer scale.
Tremendous growth in renewable energy worldwide is furthering the need for grid-storage with existing mandates.
The beneft will include a better utilized grid while deferring signifcant Transmission & Distribution (T&D) investment.
Within the grid sector, hydroelectricity is by far the dominant player. As of March 2012, pumped-storage
hydroelectricity (PSH) was the largest capacity form of large-scale energy storage available. As testament to that
claim, PSH accounts for more than 98% of bulk storage capacity worldwide and its energy effciency varies in
practice between 70% - 75%.
GTM Research and Azure International forecast that pumped hydro storage capacity will absolutely double or
perhaps even triple by 2016 to reach 40-60 GW, while other storage technologies will rise from their current
insignifcant levels to over 700 MW installed by 2016. The addressable market is over $90 billion globally, growing
at over 12% annually over the next four years to become a $150 billion market by 2015. (5)
On a global scale, Japan (23 GW) and Western Europe (13 GW) lead the deployment of pumped hydropower. But
the greatest development in large-scale grid storage has come from China. Chinas electric grid is now the largest
in the world in terms of both installed generation capacity and electricity produced.
China also possesses the worlds largest installed wind power base and the worlds largest declared investment
in renewable energy. According to the GTM Research and Azure International report, China currently has just 4%
of the worlds energy storage but with strong government support and steadily improving technology the
countrys energy storage market is expected to grow to $500 million per year by 2016.
Despite last years bleak cleantech investment trends, the future for batteries looks bright. But a thriving cleantech
ecosystem for battery development whether for consumer devices, transportation or grid requires
collaboration among advanced battery technology entrepreneurs, research institutions and governments. The
need to provide policies and incentives to foster exploration of new storage technologies and unshackle go-to-
market regulatory approval processes is paramount for the U.S. to stay competitive with our friends oversees.
While some batteries, such as the lithium-ion, may be small in size, they will play a big role in unlocking the future
of renewable energys potential.
Lets look at the recent rebound in investment activity and identify the industrys main VC investors.
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Investment Trends (2012): A Dip Followed by
Sustained Growth
Despite misperceptions in the market, the cleantech sector is no more volatile than any other utility sector. Putting
2011s cleantech bankruptcies in perspective, consider that in 2012 two nuclear power plants in Georgia received
an $8.3 billion loan from the U.S. government. This loan was more than ten times the size of the Solyndra deal
and considering the long history of nuclear power plant public opposition, delays, closures and recent well-
documented disasters a much greater taxpayer risk.
The negative publicity surrounding several high-profle U.S. cleantech bankruptcies of 2011 overshadowed positive
trends in the industry that went unnoticed. For instance, Germany announced new plans to close its nuclear plants
by 2022 and, instead, has taken an abrupt about-face and will now expand investments in renewable energy. And
a number of noted investors, such as Google and Warren Buffetts MidAmerican Energy Holdings, have invested
billions of dollars in U.S. solar projects.
So, what has captured the attention of two of the worlds most shrewd investors? Lets frst look at the numbers.
The Cleantech Group reported that in Q3 2012 venture capital (VC) funding for cleantech startups dipped to
$1.56 billion, down 30% compared to the $2.23 billion invested in Q3 2011. In addition, the report points out that
corporate investment from companies, such as GE, BP, Shell, Siemens etc also dropped off signifcantly in
2012. Corporate investors put $31 million into cleantech startups in the fourth quarter of 2011, and that dropped to
$26 million in Q1 2012, $24 million in Q2 2012, $20 million in Q3 2012, and $18 million in Q4 2012.
The dip in 2012s venture capital investment in cleantech was mirrored by a similar drop in global VC investments
in energy storage. However between Q2 and Q3 2012 investment in storage steadily grew from 4% - to 7%
of total VC funding in clean technology. In November of 2012, an investment group, which includes Bill Gates and
Peter Thiel, the co-founder of PayPal, poured in $37.3 million dollars into LightSail Energy, an Oakland, California-
based energy storage company founded on the technology created by a 25-year-old Princeton dropout.
Figure 2
Source: Cleantech Group
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Over the last fve years, investments in U.S.-based energy storage
companies have come from a wide-range of venture capital frms,
including Draper Fisher Jurvetson, Kleiner Perkins Caufeld & Byers and
New Enterprise Associates. And while some of the other newcomers
names are somewhat less recognizable than the aforementioned blue-
chippers, when these entrants move around meaningful fractions of a
billion dollars, others sit up and take notice. The chart, titled Top VC
Investments in Energy Storage and Transportation (Figure 2), highlights
a cross section of cleantech storage and transportation companies that
received the most amount of money invested by VCs over the last fve
years. The chart, titled Key Investors Since 2001 (Figure 3), lists the top
VC energy storage/transportation investors over the last decade.
Having helped many cleantech companies accelerate business results,
Arena has witnessed that VCs evaluate investment opportunities based on
effcient processes and models for delivering products to market faster.
In the cleantech sector, leveraging cloud PLM to manage product data
from conception can give you the competitive edge when racing to be frst to market. You have to be faster than
the competition to beat them. First movers in this fast moving sector historically have a leg-up on capturing long-
term market share. Ranjan Prasad, VP, Operations & Supply Chain, SunLink Corporation
Government: Playing the Role of the Bank
In addition to VC funding, federal policy makers have become increasingly interested in promoting energy storage
technology as a key component to the successful development of broad electric power and transportation
sector objectives.
New U.S. government programs, such as Advanced Management and Protection of Energy Storage Devices
(AMPED) and Small Business Innovation Research (SBIR), are focusing on battery management and storage
to advance electric vehicle technologies, while improving the effciency and reliability of the electrical grid and
providing important energy security benefts.
Under the AMPED program, 19 research projects that span 14 states, are receiving $43 million to develop
advanced sensing and control technologies that might improve the safety, performance and longevity for grid-
scale and vehicle batteries.
Figure 3
Source: Cleantech Group
In the cleantech sector,
leveraging cloud PLM to manage
product data from conception
can give you the competitive
edge when racing to be first to
market. You have to be faster
than the competition to beat
them. First movers in this fast
moving sector historically have a
leg-up on capturing long-term
market share."
Ranjan Prasad
VP, Operations & Supply Chain
SunLink Corporation
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Unlike other Energy Department efforts to push the frontiers of battery chemistry, AMPED is focused on maximizing
the potential of existing battery chemistries. The SBIR program will provide $13 million in funding for enterprising small
businesses pursuing cutting-edge energy storage developments for stationary power and electric vehicles.
Federal policy makers recognize that energy storage will synchronize energy supply and demand, ensuring customers
will have the electrical power they seek at reasonable prices. And sources of power that fuctuate based on the natural
environment can be integrated successfully into this network.
Several of the geographies outside of the U.S. mentioned earlier, especially Asia, are expected to drive the storage
market fueled by faster economic growth and subsequent increase in electricity demand, greater use of renewable
energy, and increase need for T&D investments.
U.S. energy storage technology investments are expected to grow at an annual average rate between 20% - 30% over
the next fve years. Public and private sector investments, mainstream adoption of EVs, and the pace of smart grid
deployment will all play a role in the development of the U.S. energy storage market. Watch for the curve of the graph
to become a hockey-stick as the penny per watt threshold is breached.
Challenges Moving Forward
The market for energy storage is dynamic yet still immature. To date it has been the target of three criticisms: the
markets number of projects in motion has been exaggerated; energy storage is too expensive; and advanced storage
technologies are mostly dependent on government investment
and on-going support.

The energy storage industry has also faced few public relations setbacks, such as the bankruptcies of Beacon Power
bankruptcy and Ener1, which have generated concerns not only of storage but the overall potential of renewable
energy. In the California Public Utilities Commissions report Energy Storage Framework Staff Proposal of April 3,
2012 submitted in CPUC Energy Storage Proceeding R.10-12-007, nine adoption barriers to energy storage solutions
were listed: (6)
Lack of defnitive operational needs
Lack of cohesive regulatory framework
Evolving markets and market product defnition
Resource Adequacy accounting
Lack of cost-effectiveness evaluation methods
Lack of cost recovery policy
Lack of cost transparency and price signals at wholesale and retail levels
Lack of utility operating experience
Lack of well-defned interconnection processes
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Regardless of the criticisms and concerns about cleantech, according to
a new tracker report from Pike Research, the number of storage projects
deployed on a global basis continues to rise as technologies move at a variety
of speeds toward commercialization. The total number of energy storage
projects deployed and announced (including inactive projects) rose 8%, from
600 to 649 during the frst half of 2012, the tracker report fnds. The number
of deployed projects increased over those 6 months from 482 to 514. (7)
In the future, energy storage may take new forms. Virtual storage solutions
propose creating intelligent distributed energy effciency, while the building
as battery concept will harness the latent potential in building structures
and systems to dynamically modify building energy usage. Additionally, the
evolution of superconductor technology may soon leapfrog all other storage
technologies to be the singular most important breakthrough in cleantech.
According to Superconductor Weekly, University of Houstons superconductor
program recently received a $92 million in ARRA funding to reduce
superconductor magnetic energy storage (SMES) system costs and increase
power storage density. (8)
1.2 billion people still lack access to electricity, and 2.8 billion dont have access
to modern household fuels. Renewable energy accounts for only 18 percent of
the global energy mix.
the World Bank
Note: The benefts of PLM,
such as improved security
and ability to reduce time
to market and engineering
change order cycle times, are
attractive to venture capitalists.
Arena PLM enable cleantech
companies to provide
government funding groups
with an auditable design record
history, including requirements
documentation, drawings, and
test specifcations.
U.S. Energy Information Administration estimates that current renewable sources only account for 16-19% of the
worlds electricity generation; however, that number is expected to quickly jump to over 50% in the next 50 years.
(9) Because of these projections, more cleantech companies realize the need to think strategically to be successful.
A cloud-based, scalable PLM solution that can be implemented quickly to enable cash-strapped startups to ramp
production and ensure properly-designed products go to market faster all while securing data and improving
supply chain collaboration remain of interest to those creating change in this space. With the right PLM
solution in place, cleantech manufacturers will reduce time to market, reduce costly scrap and re-work, and allow
companies to bring innovative products to market quickly to capitalize on this dynamic industry.
The momentum propelling the development of renewable energy will be the driving force behind the advancements
in energy storage and vice versa. By supplying power when and where it is needed, energy storage will create a far
more responsive renewable energy market. Skeptics of cleantech should heed lessons learned from the locomotive
steam engine, which once considered Fultons Folly changed commerce forever. Through the collective
global effort of banks, energy sector players, federal government, private and venture investors, and technology
entrepreneurs alike, cleantech may fulfll the promise of being the dominant energy source of this century.
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Bibliography:
1) http://research.cleantech.com/
2) Global Industry Analysts http://www.strategyr.com/Consumer_Batteries_Market_Report.asp
3) Pike Research Electric Vehicle market Forecasts http://www.navigantresearch.com/research/electric-vehicle-
market-forecasts
4) Lux Research Emerging Technologies Power a $44 Billion Opportunity for Transportation and Grid
5) China Grid-scale Energy Storage: Technologies & Markets, 2012-2016
http://forms.greentechmedia.com/Extranet/95679/forms.aspx?msgid=klwg4cqnodkob5phbolk5uxf
6) California Public Utilities Commissions report Energy Storage Framework Staff Proposal of April 3, 2012
submitted in CPUC Energy Storage Proceeding R.10-12-007,
7) Pike Researchs Energy Storage Tracker
8) Superconductor Weekly
9) U.S. Energy Information Agency thttp://www.eia.gov/tools/faqs/faq.cfm?id=527&t=1
10) Figure 1, 2, 3, and 4: Cleantech Group
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About Arena
For over a decade, Arena has been redefning PLM with a suite
of cloud applications that enable engineering, manufacturing
and their extended supply chains to work better togetherfrom
frst prototype to full-scale production. Arena helps innovative
manufacturers bring better products to market faster with cloud
PLM offerings that speed prototyping, reduce scrap and help
manufacturers collaborate on product changes with strategic
partners worldwide.

Author
John Papageorge, the author of How Energy Will Help Cleantech See More
Green, has helped some of the biggest names in technology, including Oracle,
IBM, Hewlett Packard, Cisco, and Silicon Valley Bank, maximize their marketing
and lead generation strategies.
Contact
Arena Solutions
Foster City, CA 94404
P. 650.513.3500
F. 650.513.3511
2013.06.27.cleantech.wp
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