Global Energy

Storage Outlook
Presentation for Macquarie Group

Mark Wehling, mwehling1@bloomberg.net

Allen Tom Abraham, aabraham65@bloomberg.net

August 11, 2021

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1 August 11, 2021

BNEF
coverage
Strategies for a cleaner,
more competitive future

2 August 11, 2021

 Industry
Supporting
leading
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Energy and Finance

resources

The logos listed do not represent a full client list. They are illustrative of the organizations BNEF has worked with in the past.

3 August 11, 2021

Global Energy Storage
Outlook

4 August 11, 2021

Renewables are the cheapest source of
new electricity in most of the world
Cheapest source of new power generation, 1H 2021
Levelized costs in $ / MWh

Germany
$53

U.K.
$48

U.S. Japan
$37 $78

Onshore wind China

Mexico $36
Offshore wind
$45
Solar – fixed axis India
Solar – tracking Brazil $27
$22
Natural Gas – CCGT
Chile
Coal $35
Not covered South Africa Australia
$47 $48
Source: BloombergNEF. Note: CCGT = combined-cycle gas turbine, a type of power plant. ‘Tracking’ means solar panels rotate to follow the sun, unlike ‘fixed-axis’.

5 August 11, 2021

Innovation and scale have driven down
the costs of renewable technology
Solar module price and cumulative Onshore wind turbine price and Lithium-ion battery pack price and
installed capacity cumulative installed capacity demand
$/W (2020 real) TW $m/MW (2020 real) GW $/kWh (2020 real) GWh

2.0 1.0 2.0 750 1,400 700

1.8 14% learning 1,200 600
1.6 0.8 1.6 rate 600
29% learning 1,000 500
1.4 18% learning
rate
1.2 0.6 1.2 450 rate
800 400
1.0 0.74
600 300
0.8 0.4 0.8 300
0.6 400 200
0.23
0.4 0.2 0.4 150 137
200 100
0.2
0.0 0.0 0.0 0 0 0
2010 13 16 19 2010 13 16 19 2010 13 16 19
Source: BloombergNEF

6 August 11, 2021

5.5GW/10.8GWh of storage projects were
added in 2020
Global energy storage build

GW GWh 10.8
Rest of the World
Latin America
5.5
7.7 India
6.8 SE Asia

3.5 3.5 Australia

Japan
3.2 South Korea
1.8
2.1 Europe
1.2 1.6
0.8 China
United States

2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
Source: BloombergNEF

7 August 11, 2021

5.5GW/10.8GWh of storage projects were
added in 2020
Global energy storage build

GW GWh 10.8
Rest of the World
Latin America
5.5
7.7 India
6.8 SE Asia

3.5 3.5 Australia

Japan
3.2 South Korea
1.8
2.1 Europe
1.2 1.6
0.8 China
United States

2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
Source: BloombergNEF

8 August 11, 2021

5.5GW/10.8GWh of storage projects were
added in 2020
Global energy storage build

GW GWh 10.8

5.5
7.7
6.8
Other
3.5 3.5
Residential
Commercial
3.2
1.8 Utility-scale
1.2 2.1
1.6
0.8

2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
Source: BloombergNEF

9 August 11, 2021

Projects are getting bigger

Biggest energy storage project being commissioned in respective year

MW / MWh
1,400

1,200

1,000

800

600

400

200

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: BloombergNEF

10 August 11, 2021

Tesla and Fluence lead energy storage
deployment currently
Cumulative capacity from 2012 to 2021 by energy storage provider
GWh
8
7 Tesla

6 Fluence

5 Powin

4 Sungrow
3 BYD
2 Wartsila
1 FlexGen
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021e
Source: BloombergNEF, Energy Storage Database Note: We estimated Tesla’s capacity based on quarterly deployments disclosed in company filings minus
residential Powerwall deployments.

11 August 11, 2021

Companies are expanding across the
value chain to stay competitive
Hardware Software Services
Battery Energy System Project
Project
Battery cell
Battery cell Battery rack PCS
PCS BMS
BMS EMS
EMS Energy trading Integration O&M
O&M EPC
EPC
rack trading integration develop.
develop.

Legend: Not active Limited/ Reduce Active Grow Expand

Source: BloombergNEF. Note: For simplification purposes the coloring of company’s activities in each part of the value chain is binary, but activity may vary by geography. “Limited/
Reduce” refers to when a company is not fully active in the segment and/or reducing activity in the segment. “Grow” refers to when a company is already active in the value chain, but
the segment is growth area in terms of business strategy. “Expand" refers to when company is new to the value chain. *For Lockheed Martin battery cell and rack refers to their activity
developing their own flow technology.

12 August 11, 2021

Major applications are evolving
Application mix of commissioned energy storage projects based on power output
5% 4% 3% 2% 6% 3%
9% Other
15% 15% 14%
22% 21% 21%
17% 22% 22% Residential
2% 28% 6% 8%
29% 7% 16% 30% Commercial
4% 14% 4%
8% Distribution
4% 5% 4%
38% 24% 19% 6%
24% Transmission
5% 29% 48%
11% Energy shifting
31% 32% 33%
10%
4% Peaking capacity
2% 32% 35% 30%
1% 3%
23% 20% 7% Ancillary services
15% 14% 13% 8%
2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: BloombergNEF. Note: Excludes pumped hydro and compressed air energy storage projects. If multiple applications are selected, the capacity is divided
equally amongst them. This chart includes behind-the-meter + utility-scale capacity.

13 August 11, 2021

Technology-wise, lithium-ion batteries dominate
Technology mix of commissioned utility-scale storage projects based on power output
4% 3% 6% 8%
5% 7% 10%
20% 21% Other /
6% unknown
25% 17%
9% 7% 5% Flywheels
7%
23% 9% Flow batteries

96% 92% 92%

89% Sodium sulfur
82%
69% 71%
56% Lead-based
47%

Lithium-ion

2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: BloombergNEF. Note: Excludes pumped hydro and compressed air energy storage projects. If multiple applications are selected, the capacity is divided
equally amongst them.

14 August 11, 2021

Chinese battery manufactures are growing
fast in the stationary storage market
Battery supplier country of origin for stationary storage systems in BNEF survey

1%

9% 4% 3%
17%

U.S. 22% U.S.

China China
2019 2020 Korea
39% Korea
Japan Japan
35% Europe
69%

Source: BloombergNEF Note: This is based on the 2020 Energy Storage System Cost Survey.

15 August 11, 2021

But Japanese and Korean battery makers
rank high on bankability
BloombergNEF battery bankability results, 2020

% of responses
LG Chem 100%
Panasonic 100%
Samsung SDI 100%
Tesla 91% 9%
CATL 90% 10%
BYD 80% 10% 10% Yes
Toshiba 73% 18% 9%
SK Innovation 70% 30% No
GS Yuasa 44% 56%
Guoxuan High-Tech 20% 10% 70%
Eve Energy 20% 80% Never heard
Optimum Battery 11% 89%
Wanxiang 33% 67%
Envision Energy 100%
Microvast 100%
Guangzhou Great Power 100%

Source: BloombergNEF Note: This is based on the 2020 Energy Storage System Cost Survey.

16 August 11, 2021

Battery pack prices fell 89% over the past
decade
Lithium-ion battery price survey results (volume-weighted average)

Battery pack price (real 2020 $/kWh)

1,191

924
a
726
668
592

384 13%
295
221 181 157 137

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: BloombergNEF Note: This is based on the 2020 Battery Price Survey.

17 August 11, 2021

Battery prices vary greatly by sector

Volume-weighted average lithium-ion battery price

real 2020 $/kWh

359
329

193 Pack
186
177
126 56
105
26 Cell
16
143 152
100 121
89

E-bus & commercial BEV Stationary storage E-bus & commercial PHEV
(China) (ex. China)
Source: BloombergNEF Note: This is based on the 2020 Battery Price Survey.

18 August 11, 2021

Lithium-ion battery price drops will
continue going forward
Lithium-ion battery price outlook
Lithium-ion battery pack price (real 2020 $/kWh)
1,200

1,000
Observed
800 prices

600

2024 implied 18% learning

400 2030 implied 2035 implied
price $92/kWh rate
price $58/kWh price $45/kWh
200

0
2010 2015 2020 2025 2030 2035
Source: BloombergNEF Note: This is based on the 2020 Battery Price Survey.

19 August 11, 2021

Stationary storage system costs halve
during the next decade
Capital costs for a fully installed large four-hour duration AC energy storage system, usable basis

Real 2020 $/kWh

333
19 299
11 279
39 17 Developer margin
11 16 259
21 31 10 15 239 Developer overheads
30 10 14 221
14 19 209 EPC*
6 18 30 10 199
29 10 189 181
35 11 17 10 174 167 System integrator margin
35 10 15 29 10
28 9 9
30 14 28 28 9 Transformer
29 9 12 12 27 9
27 11 27 26
26 8 11 10 Energy management system
25 8 10
25 25 8
176 165 24 24 PCS
149 24
135 122 109 101 93 Balance of System
86 80 74 69
Battery rack

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Source: BloombergNEF. Note: Excludes warranty costs and do not explicitly include any taxes, although due to a lack of transparency in the market, some may be
included and excludes grid connection costs. We consider a large project to be over 100MWh. Excludes warranty costs, which are often paid annually rather than as
part of the initial capital expenditure. Includes a 5% EPC margin. 2019 figures adjusted for inflation to convert to real 2020 $.

20 August 11, 2021

Stationary storage installations surge in
the near-term
Near-term forecasts based on Global energy storage build by market

Stationary energy storage projects GW 26 Rest of the World

announced in various markets 24 Latin America
21 India
Policies and regulations 5 SE Asia
16 4
3 Japan
11 8 South Korea
Targets announced by utilities and 2 7
independent power producers 6 Australia
2 5 Europe
5
3
Behind-the-meter forecasts based 8 9 China
1 6 8
on historical uptake 1 5 United States
1
2020 2021 2022 2023 2024 2025

Source: BloombergNEF.

21 August 11, 2021

U.S. – policy makers are setting targets
for storage deployment
U.S. states with energy storage targets

Nevada approved New York set a Maine

a 1GW target by 3GW target by approved a
2030 2030 700MW target
by 2030

Massachusetts
set a 1GWh
target by 2025
Oregon
Connecticut
10MWh
For map 0.0 15.0 20.0 approved 1GW
target
colouring 0 0 0 target by 2030
California set
Virginia approved New Jersey
1.8GW target
3.1GW target by approved 2GW
by 2024
2035 target by 2030

Source: BloombergNEF.

22 August 11, 2021

Co-located renewables-plus-storage is a
relatively recent development
U.S. renewable PPAs, by operation year ($/MWh)

Source: FERC, BloombergNEF

23 August 11, 2021

Early U.S. hybrid projects were located in
Hawaii, and were expensive
U.S. renewable PPAs, by operation year ($/MWh)
These were so
exciting!

Source: FERC, BloombergNEF

24 August 11, 2021

PV-plus-storage is now commonplace, and
competitive across the U.S.
U.S. renewable PPAs, by operation year ($/MWh)
These were so
exciting!

And then these

came along…!

Source: FERC, BloombergNEF

25 August 11, 2021

Germany and U.K. will lead deployment in
Europe
Energy storage build in EMEA by market and application

GW 5.6 GW 5.6

4.4 Other 4.4

Other
3.7 SSA 3.7
MENA
Residential
2.7 Other Europe 2.7
2.1 Iberia 2.1
Commercial
France
1.3 1.3 1.3 1.3
Italy
0.5 0.7 Germany 0.5 0.7 Utility-scale

U.K.
2017 2019 2021 2023 2025 2017 2019 2021 2023 2025

Source: BloombergNEF.

26 August 11, 2021

Over half of the storage projects in the
U.K. are owned by investment funds
U.K. operational battery market by company group U.K. utility-scale battery storage portfolios of investment
funds
MW
Investment funds Gresham House 425 275

2% 10% Gore Street 210 190

Utilities, IPPs and
Green Investment Group 187
developers Commissioned
1.1 GW SUSI Partners 30 60
54%
Grid operators Under
34% Foresight/JLEN 100 construction

Downing 50
Others
TRIG 20
Source: BloombergNEF, Various. Note: Assumes GIG's projects are 1 hour duration. Under construction figures also includes fully acquired or committed projects that
BNEF expects to be commissioned within the next 18 months. Some capacity for Gore Street's and Downing's projects are co-funded or co-owned by other investors.

27 August 11, 2021

In Germany, small-scale storage
deployments drove the market until 2020
German residential storage build (cumulative)
MW
1,400

1,200

1,000

800

600

400

200

0
2013 2014 2015 2016 2017 2018 2019 2020
Source: BloombergNEF.

28 August 11, 2021

Hybrid renewable projects are also
coming up in Europe

Source: Energy Storage News

29 August 11, 2021

In APAC, China will lead deployment

Energy storage build in EMEA by market and application

GW 11.0 GW 11.0
10.3 10.3
Other
8.7 8.7
South Korea Other
6.9 6.9
India
Residential
SE Asia
4.5 4.5
Japan
3.0 3.0 Commercial
2.3 Australia 2.3
1.7 1.7
0.9 China 0.9 Utility-scale

2017 2019 2021 2023 2025 2017 2019 2021 2023 2025
Source: BloombergNEF.

30 August 11, 2021

Australian batteries play heavily into the
ancillary services markets
Australia battery revenues

Source: BloombergNEF Australia Power Market Revenue Tracker (web | terminal)

31 August 11, 2021

Stationary storage projects are being
proposed in other markets as well

Source: Live mint (India), CNN Philippines

32 August 11, 2021

Long-term: falling renewables and battery
costs open up more applications
Utility-scale PV-plus-storage
China India Onshore wind-plus-storage
$/MWh (2020 real) $/MWh (2020 real) Natural Gas – CCGT
125 Coal
175
150 Configuration for renewables-
100 plus-storage
125 Low: 100% RE + 25% storage
100 75 with four hours
Mid: 100% RE + 50% storage with
75 50 four hours
50 High: 100% RE + 100% storage
25 with four hours
25 Example Mid: 100MW PV +
0 50MW storage with four hours
0
2021 25 30 35 40 45 50 2021 25 30 35 40 45 50
Source: BloombergNEF. Note: All LCOE calculations are unsubsidized and exclude curtailment. The range of the LCOE represents the range of costs and capacity
factors for thermal plants. In the case of renewable-plus-battery, we assume four-hour storage systems, and the range is a combination of capacity factors and
capacity ratios between battery and the power generating asset (25% to 100%). The middle line denotes a paired system where the power output of battery is sized
at 50% of the companion renewable asset (eg, 10MW PV, 5MW batteries with four storage hours). Our LCOEs for coal and gas include a carbon price in China, see
carbon prices section in Appendix.

33 August 11, 2021

Long-term: solar and wind form 58% of the
installed capacity in 2050
Global cumulative installed capacity: BNEF Economic Transition Scenario
GW
Small-scale batteries
25,000 Utility-scale batteries
Other
Solar thermal
20,000
Small-scale PV
Utility-scale PV
Offshore wind
15,000
Onshore wind
Biomass
10,000 Geothermal
Pumped hydro
Hydro
5,000 Nuclear
Oil
Peaker gas
0 Combined-cycle gas
2012 2020 2025 2030 2035 2040 2045 2050 Coal

Source: BloombergNEF.

34 August 11, 2021

Long-term outlook: global storage
capacity to reach 1,676GW by 2050
Global cumulative energy storage installations
GW
1,800 Rest of World
Other EMEA
1,600 Sub-Saharan Africa
U.K. EMEA
1,400 Italy
Iberia
1,200 Germany
Other AMER
1,000 Chile
Canada
800 Brazil AMER
Mexico
600 United States
Southeast Asia
400 South Korea
Japan
200 Australia APAC
India
China
2015 2020 2025 2030 2035 2040 2045 2050
Source: BloombergNEF. Note: Long-term Energy Storage Market Outlook 2020

35 August 11, 2021

Electric vehicle demand drives majority of
demand for batteries
Annual lithium-ion battery demand by application
GWh/year
5,000
E-buses

4,000 Consumer electronics

Stationary storage
3,000
Electric two-and three-
2,000 wheelers
Commercial EVs

1,000
Passenger EVs

0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Source: BloombergNEF

36 August 11, 2021

More ambitious climate commitments can
further boost demand
Projected renewable shortfall for RE100 members
TWh
400
350
300
250
200 199 224
154 176
92 112 132
150 35 54 73
19 27
100 5
48
50
0
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Wind (contracted) Solar (contracted) Certificate purchases
Onsite generation Renewable shortfall Electricity demand
Renewable electricity demand

Source: BloombergNEF, Bloomberg Terminal, The Climate Group, company sustainability reports Note: Certificate purchases are assumed to step down 10% each
year. Onsite generation and contracted wind and solar purchases remain flat through 2030. Regional breakdown of shortfall estimated based on each company’s
share of revenue by region. Electricity demand and renewable electricity demand don’t intersect in 2030, as some companies have targets extending out past 2030.

37 August 11, 2021

 More ambitious climate commitments can
further boost demand

EU

Which parties have

a net-zero target?
As at June 30, 2021
Legislated
Government position but not legislated
In legislative process
Under discussion
No target
Source: Governments, BloombergNEF

38 August 11, 2021

Thank you

Email :
Allen Tom Abraham – aabraham65@bloomberg.net
Mark Wehling – mwehling1@bloomberg.net

39 August 11, 2021

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