George Garabandic DNV GL ESIE 2019 Beijing Rev 3

Energy Storage Project Experience in South East Asia George Garabandic DNV GL www.dnvgl.com BESS Investment Drivers Regulatory Environment Technical Requirement for (mandatory) inclusion of ESS Transactional Regulatory (Policy, Tariffs) for ESS Services 1 BESS Investment Drivers ESS Regulatory Transactional Regulatory for ESS Services, Policy Technical Requirement for (mandatory) inclusion of ESS Case Study: Regulatory Environment in the Philippines 2 Case Study: Philippines Ancillary Services Regulatory in the Philippines Wholesale Electricity Spot Market (WESM) Energy trading platform, Commercial op. since 2006 WESM Market Rules, Chapter 3.3, Ancillary Service Regulating Reserve Contingency Reserve Dispatchable Reserve… Ancillary Services in the Grid Code 2016, GO 6.6 Primary Reserve Secondary Reserve Tertial Reserve… Ancillary Service Procurement Plan, ERC, 2016 Primary Reserve Secondary Reserve Tertial Reserve… Case Study: Regulatory Environment in the Philippines 3 Case Study: Philippines Actual Ancillary Services Procurement Process Custom ASPA (Anc. Serv. Proc. Agr.) between Provider and National Grid Corp. Of Ph. (NGCP) To maintain transparency, contract must be Approval by ERC Example: BESS case ORDER No. 2018-010 RC Regulating Reserve! 5 year ASPA 20MW (-10MW…10MW) 24h/day 2.20 PhP (0.042USD) /kW/h; 0.05PhP (0.001USD) /kWh ASPA can override or augment requirements beyond the Grid Code or the Ancillary Service Procurement Plan INVESTEMENT RISK 4 BESS Investment Risk BESS Investment Risk Legal Risk Technical Risk 5y + ? ERC Holdup Service Compliance Check by NGCP Market Risk NGCP Leverage Provisions for SOC management No Performance standard for BESS Requirements by NGCP beyond code INVESTEMENT RISK REDUCTION 5 BESS Risk Management DNO Constraint Management Services Revenue via availability payments (Capacity market, TOU, Arbitrage, peak shifting) Revenue via energy payments Demand Charge Reductions, Imbalance Risk Hedging, Back up power, Outage mitigation Multiple revenue streams Ancillary Services (Frequency Response, Reserve Services) Energy Trading (Future, day-ahead, intra-day, OTC) PPA? Service Agreements? Delivery Auctions? Ramp Rate Control Time Shifting ORIGINAL RISK MANAGEMENT APPROACH Build the BESS plant on barges • The country is an archipelagos, move the BESS where there is opportunity • Ancillary Services • BESS + Diesel Generation • Solar Integration on Islands • Micro Grid Operation 6 Case Study: Philippines CONCLUSION 7 BESS Investment Drivers • High Risk is not always an obstacle to invest into BESS • Innovative Business Models • Innovative Risk Management Models 谢谢 Thanks for Your Time George Garabandic George.Garabandic@dnvgl.com +65-8299-7154