CESS Shenzhen Nov19 ROH

GERMANY: ENERGY TRANSITION REQUIRES ENERGY STORAGE Robert Herzner China Director robert.Herzner@gtai.de www.gtai.com/cn CESS 2019 © Germany Trade BPA, 2019; clean energy wire, 2019 © Germany Trade System Prices: BSW 2016; Model Calculation: Deutsche Bank 2010; Electricity Prices: BDEW 2017; Electricity Prices 2017- 2020: own estimate at 0.29 EUR/kWh. PV-energy is cheaper than socket price. Customers get 30-40% independent. PV+storage is cheaper than socket price. Customers get 60-80% independent. © Germany Trade ** anticipating 1C (1 MW = 1 MWh); usually 75% of the installed usable capacity is qualified for PCR Source: RWTH 2017, BSW 2017 Installed capacity of PV-battery systems (MWh*) Installed Batt. capacity for Primary Control Reserve (MWh**) 0 100 200 300 400 500 600 700 800 900 2013 2014 2015 2016 2017 2018 120k PV-battery systems by end of 2018. 0 100 200 300 400 500 600 700 800 900 2013 2014 2015 2016 2017 2018 Further projects already in pipeline for 2019. © Germany Trade Note: no claim for completeness; usually 75% of installed capacity is qualified for Primary Control Power Total large-scale batteries in Germany Installed power [MW] 11.5 26 54 172 371 00 50 100 150 200 250 300 350 400 00 50 100 150 200 250 2012-2015 2016 2017 2018 2 8 15 8.4 15 10 5 5 15 5 1.6 2 15 3 2 15 1515 13 10 48 11.5 20 22 6.4 9 Hybrid: Li-Ion + X Li-Ion Li-Ion second life Lead-acid 15 battery capacity in MW 9.6 2.5 15 0.8 10 12.5 7 1.6 1.4 2.5 1.5 1.2 © Germany Trade & Invest www.gtai.com 14 Public tenders for storage to stabilize the grid Batteries are suitable for 8 out of 12 kinds of grid services. 4 are publicly tendered today. Others are based on bilateral agreements. TSO‘s annual spendings for grid services in Germany Source: Federal Network Agency 2019 0 100 200 300 400 500 600 Black start capability Countertrading Disconnectable loads Tertiary Control Power Reactive Power Primary Control Power Secondary Control Power Reserve power plants (usage) Reserve power plants (provision) Redispatch Compensation of grid losses Curtailment of renewables 2017 2016 2015 NO YES NO NO YES YES YES YES YES NO YES Batteries suitable? NO NO NO NO YES YES NO YES NO NO YES Public tenders? Million EUR YES NO © Germany Trade & Invest www.gtai.com 15 Summary: Potential income per storage capacity PCR and Reduction of grid fees generate highest income Potential annual income for energy storage in 2016 (in EUR per Usable kWh, based on FITs, electricity prices and control reserve tenders from 2016) 0 20 40 60 80 100 120 140 Higher PV own-consumption, industry, w/o Feed-in tariff Higher PV own-consumption, private, w/o Feed-in tariff Higher PV own-consumption, industry Higher PV own-consumption, private Daily energy trading / Optimization of procurement Reduction of grid fees (Reduction of Pmax) Disconnectable Loads (Ordinance limited to 2022) Tertiary Control Power (negative) Tertiary Control Power (positive) Secondary Control Power (negative) Secondary Control Power (positive) Primary Control Power © Germany Trade & Invest www.gtai.com 16 Agenda 1.Energy Transition: Status and Plan 2.Business Opportunities in the Pioneering Energy Storage Market 3.How Germany Trade & Invest supports expansions into Germany © Germany Trade & Invest www.gtai.de 17 The Role of Germany Trade & Invest Close support throughout the entire investment process Example: Milestones of a typical manufacturing project European location analysis (long list) Detailed site evaluation Initial site visits Re-evaluation of site analysis (short list) In-depth site visit (LOIs) Incentive comparison Detailed incentives assessment Incentive calculation Approval of incentives Incentives application Negotiation of incentives (LOI) Meeting with financing partners Negotiation of Conditions (Term Sheet) Building and Environmental permit Discussion about infrastructure upgrades Detailed site matrix (plot analysis) Meeting with engineering companies Start of construction Utility prices and reliability comparison LOIs for utility supply Discussion of utility requirements Site Decision. MoU Advice on financial structure Financial agreement Site Selection Incentives Financing Utilities Engineering Months (est.): 0 2 4 6 8 T © Germany Trade & Invest www.gtai.de 18 Advantages of Setting up a GmbH in Germany Establishing a business Establishing a GmbH Improve market entry • Overcome obstacles by German customers • Ability to participate in calls Mitigate risks • Limited liability (25.000€) • Keep your contracts Limit complexity • GmbH facilitates administrative processes Gain access • Ability to set-up contracts, leasing agreements, etc. • Benefit from public grants, support programs Access grants • Ability to apply for grants (R&D) • Ability to apply for personal grants (investments, personal) Remain flexible • Ability to extent shareholder structure Minimize risks • Compliance e.g. with German data protection law • Mitigate currency risks Reduce costs • Share capital can be contributed in kind (e.g. patents or real estate) Signal Credibility • Good reputation of GmbH in Germany • GmbH signals commitment to German market © Germany Trade & Invest www.gtai.de 19 © Germany Trade & Invest www.gtai.de 20 © Germany Trade & Invest www.gtai.de 21 GTAI supports business expansion to Germany CATL production of Li-Ion battery technology, Thuringia Q4 2016 First contact in Shanghai, China 1 5 2 4 3 2016 - 2018 GTAI provided legal, tax, and financing information and supported CATL in the extensive site selection process Q2 2018 GTAI organized meeting for CATL with Chancellor s office and supported interactions with other Federal Ministries Q2 2017 Established contact to state officials of Thuringia and organized meetings with CEO in CATL HQ Q3 2018 CATL decision for Thuringia, Germany CATL’s €1.800m investment will result in the largest Li-Ion battery technology factories in Europe to date CATL focuses on R&D, production, and sales of EV battery and energy storage battery systems © Germany Trade & Invest www.gtai.de 22 Free support for your expansion – Contact Us! Germany Trade & Invest is the economic development agency of the Federal Republic of Germany. The company helps create and secure extra employment opportunities, strengthening Germany as a business location. With more than 50 offices in Germany and abroad and its network of partners throughout the world, Germany Trade & Invest supports German companies setting up in foreign markets, promotes Germany as a business location and assists foreign companies setting up in Germany. Supported by the Federal Ministry for Economic Affairs and Energy on the basis of a decision by the German Bundestag. © Germany Trade & Invest All market data provided is based on the most current market information available at the time of publication. Germany Trade & I es accepts no liability for the actuality, accuracy, or completeness of the information provided. Robert Herzner /何若白 China Director Shanghai M +86 135 6401 4693 robert.herzner@gtai.de www.gtai.com/cn