20190520 Opportunities Challenges ES Jamal Burki 更新

Opportunities human survival is at stake Pioneering a new industry Establishing new industry requires displacing incumbent solutions; change may not be in time for some New business models require value chain players to establish and validate proposition Traditional industry players must understand the changing landscape and adjust Emergence of industry Technology Viability Solution Viability Early Markets Mainstreaming Solar Storage 2005 - 2012 2012 - 2015 2013 - 2017 2018 Battery Tech. Utility Pilots DRM, PJM Utility RFP, PPA Opportunities most NA growth driven by federal and state incentives. Growth across all segments - Front of the meter storage IPP o Utility scale 100 MW - Behind the meter industrial - Residential Wood Mackenzie Opportunities – NA key markets Ontario Global Adjustment Massachusetts SMART New York VDER California DRM Utility Solar Storage Ontario, GA MA, SMART NY, VEDR CA, FTM Utility Solar Storage Whole Sale Market Timing Ec o n o m i c s 10-Year Cash Flows Comparison New York Market 9 Solar Only Solar Storage Payback 4.8 years 3.9 years 10-year IRR 15 17 6MWdc/4MWac PV 2MW/8MWh ESS Challenges Challenges – industry growth phase Revenue Cash Profit Capital cost of energy storage projects pose challenge for clearing financial hurdle Growing but relatively small industry with many competitors causing price erosion Limited differentiation opportunities resulting in price driven market; poses challenge for financial return for the participants Challenges – supply chain Commodity metals pricing and supply - demand imbalance can disrupt battery availability and price fluctuation ES demand priority conflicts with EV industry growth priority Large incentive in one market has affects felt in other markets Korean market incentive – US market demand Challenges – trade uncertainty The continued trade dispute could pause many projects or cancelled; detrimental to the industry growth in the short-term Diversification of supply is challenging for industry in infancy but is critical for sustained future growth Challenges – technology risk Technology risk requires balance sheet to back long-term warranty obligations; startup ventures and new technologies need insurance or partnerships Safety and environmental impact continues to be concern for community approval Regulatory and standards are evolving; adding to the cost and uncertainty Challenges – end of life obligation End of life management not well understood; poses unquantified risk for all participants High cost of recycling and redeployment poses future liability Regulatory framework must evolve to address stationary and EV market needs Closing Slow moving industry with high capital requirement Crowded landscape with minimal differentiation opportunities Opportunities for companies that can be flexible and work with technology, regulatory and financial risk Bright future with continued supply chain improvements and opportunities with more complex applications 谢谢 Thanks for Your Time