Utility-Scale Energy Storage Systems Integrators Assessment of Strategy and Execution for 14 Energy Storage Systems Integrators

RESEARCH REPORT

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators Assessment of Strategy and Execution for 14 Energy Storage Systems Integrators

Published 3Q 2016

Alex Eller Research Analyst

Anissa Dehamna Principal Research Analyst

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Section 1 EXECUTIVE SUMMARY

1.1 Market Introduction The energy storage systems integration (ESSI) market has grown increasingly competitive and crowded over the past year. The role of systems integrators has been a focal point for innovation in a rapidly growing storage industry in need of technical expertise and reputable vendors. Although the utility-scale energy storage industry has grown substantially in the past 2 years, expectations for the industry over the coming decade will dwarf previous developments. Worldwide, the industry is expected to generate $1.6 billion in revenue in 2016. This is anticipated to grow to $18.3 billion in annual revenue by 2025. Market growth and technological innovation is occurring much faster in the leading markets of North America, Western Europe, and Asia Pacific.

While there are a number of competing storage technologies with differing characteristics matched for certain applications, battery energy storage systems (BESSs) are emerging as the leading technology worldwide. Thus, this Leaderboard Report is focused on battery technologies. According to Navigant Research’s Energy Storage for the Grid and Ancillary Services report, these technologies are expected to account for 75.3% of revenue from 2016 to 2025 in the global utility-scale energy storage market. The leading companies profiled in this study all specialize in the integration of BESSs.

As the energy storage industry continues to develop, the role of the systems integrator is becoming increasingly important. Integrators are responsible for maximizing the value of a system by enabling all available revenue streams to be captured, ensuring constant availability, and maximizing system life. This balancing act requires substantial expertise, as the overall ROI of a project relies heavily on the systems integrator. Energy storage systems (ESSs) will increasingly be asked to provide the flexibility to serve a number of different applications ranging from short-duration and high-power ancillary services to long- duration time shifting of energy. Energy storage systems integrators (ESSIs) are responsible for managing this complexity by designing and optimizing systems that can provide the maximum value to both the grid and the system owners.

An emerging trend in the ESSI space is the growing diversity of the backgrounds of leading players. In this study, there are companies with backgrounds in renewable project development, utility ownership, electrical grid equipment and services, battery manufacturing, civil and electrical engineering services, and developing innovative energy management systems (EMSs). This diversity is driving competition in the industry; companies emerging as Leaders have leveraged their backgrounds to provide a range of flexible solutions that include full turnkey project development. This model allows for a more open approach to meeting the needs of various customers and is expected to allow a company’s business to scale rapidly.

©2016 Navigant Consulting, Inc. Notice: No material in this publication may be reproduced, stored in a retrieval system, or transmitted by any means, in whole or in part, without the express written permission of Navigant Consulting, Inc.

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

The companies included in this study each offer a mix of products and solutions, but are all considered systems integrators due to the services they provide. Systems integration services include a number of technical functions, system design, and follow-on services that transform hardware and software into an intelligent storage-based solution that delivers maximum ROI. This may include providing or procuring core technologies, power electronics, software and controls, and communications systems. Additionally, integrators are typically responsible for optimizing ESSs for safety and thermal management, securing interconnections, and providing or procuring engineering, procurement, and construction (EPC) services. This may include offering warranties and performance guarantees to reduce the investment risk taken on by customers. These companies have been actively offering storage integration services for a minimum of 2 years.

The criteria by which ESSIs are compared in this Navigant Research Leaderboard Report include:

• Vision

• Go-to-Market Strategy

• Partners

• Production Strategy

• Technology

• Geographic Reach

• Sales, Marketing, and Distribution

• Product Performance

• Product Quality and Reliability

• Product Portfolio

• Pricing

• Staying Power

Detailed descriptions of each criterion are provided in the “Criteria Definitions” section of this report.

1.2 The Navigant Research Leaderboard Grid The utility-scale energy storage market is expected to increasingly demand flexible systems capable of serving multiple applications and capturing a number of different revenue streams. The Leaders in this space will be companies with flexible offerings suited for a number of different grid services and customer types. The ESSI space is seeing a growing number of large corporations hoping to capitalize on the growth of energy storage, their technical expertise, and a strong presence in the utility industry. While some of these companies have only developed a handful of projects to date, they have the resources and

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

expertise to rapidly gain market share and are putting pressure on smaller firms to continue innovating.

As shown in Chart 1.1, the vast majority of companies competing in this space fall in the Contenders category. While select Leaders have emerged from the pack, a growing number of companies are demonstrating the capability to become Leaders over the coming years. The Leaders have distinguished themselves by developing projects in multiple world regions targeting different applications and customers while having the resources and expertise required to evolve with the market’s demands.

Chart 1.1 The Navigant Research Leaderboard Grid

FOLLOWERS CHALLENGERS CONTENDERS LEADERS

AES Energy Storage

NEC Energy Solutions RES Greensmith S&C Electric Siemens Invenergy LG CNS GE Energy ABB Younicos Storage Leclanché NextEra Energy Resources Doosan Grid Tech

Execution (1Energy Systems)

Strategy (Source: Navigant Research)

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Section 2 MARKET OVERVIEW

2.1 Introduction Navigant Research defines energy storage systems integration (ESSI) as:

“Software and controls-based integration of core energy storage technology into complete, intelligent systems that deliver the performance required by the customer while ensuring the overall profitability of the system.”

This section introduces the energy storage market landscape and defines market drivers, barriers, and trends that affect the widespread deployment of energy storage for grid and ancillary services (ESGAS).

2.2 Market Overview The global energy storage market can be broadly separated into two comprehensive segments: distributed and utility-scale. The main differences are the customer types, the physical location of the installation, the size of systems, ownership models, and applications/tasks the system will be performing in its environment. These factors will determine the complexity of a system in terms of grid interconnection, operating constraints, and daily tasks, which systems integrators must optimize for the end user. This report is exclusively focused on utility-scale energy storage systems (ESSs). The utility- scale storage sector has been gaining momentum in the past several years and is expected to continue growing rapidly over the coming decade.

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

As shown in Chart 2.1, the industry is expected to generate $1.6 billion in global revenue in 2016. This is anticipated to grow to $18.3 billion in annual revenue by 2025.

Chart 2.1 Annual Installed Utility-Scale Energy Storage Revenue by Region, World Markets: 2016-2025

$20,000 North America $18,000 Western Europe $16,000 Eastern Europe Asia Pacific $14,000 Latin America $12,000 Middle East Africa $10,000

$8,000

($ Millions) $6,000

$4,000

$2,000

$- 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

(Source: Navigant Research)

Utility-scale energy storage refers to several applications for energy storage situated on the utility side of the meter. The primary services that energy storage is providing to the grid can be broadly grouped into four main categories based on the function being served. These categories are electricity cost optimization, load serving, grid operations support, and renewables integration. Customers for utility-scale storage are primarily utilities and independent power producers (IPPs). The vast majority of utility-scale energy storage has traditionally come from pumped hydro storage systems; however, this dynamic is changing with the rapid improvement of advanced batteries and utility-scale flywheels. Although many ESSs being deployed today are designed to provide only a single service to the grid (e.g., frequency regulation), it is important to note that a single ESS is often capable of serving multiple applications. This will add complexity to the industry. Over time, it will likely become common for an individual ESS to serve various applications.

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

The competencies and services included in the value chain of utility-scale energy storage include a number of technical function, system design, and follow-on services that transform hardware and software into an intelligent storage-based solution that delivers maximum ROI. As a result of these services, systems integrators can be active in all upstream segments of the energy storage value chain, as shown in Figure 2.1.

Figure 2.1 Energy Storage Value Chain: Upstream Segment Energy Storage Value Chain: Upstream Segment

Storage Power Thermal Software & Systems Technology Conversion Management Controls Integrator Manufacturer Manufacturer Manufacturer Provider

(Source: Navigant Research)

The upstream portion of the value chain is primarily focused on technology. Typical activities may include component manufacturing and testing, software and controls algorithm development, communications systems between utilities or markets, and component- and system-level modeling, design, and testing. Though there are some straightforward aspects to systems integration such as hiring experienced engineering, procurement, and construction (EPC) firms for local installations, other aspects are highly specialized and rely on experience or technical differentiators such as system design and the system-level software and controls. Systems integrators may be active in all downstream energy storage value chain roles, as shown in Figure 2.2.

Figure 2.2 Energy Storage Value Chain: Downstream Segment Energy Storage Value Chain: Downstream Segment

Project EPC Financier Owner Maintenance Developer Contractor

(Source: Navigant Research)

The downstream portion of the value chain is primarily focused on services. Typical activities include site selection and permitting, arranging project level finance, contracting with storage system end user, site preparation, installation, and commissioning, operations, and ongoing maintenance.

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

2.3 Market Drivers Synergy exists between renewable generation and energy storage, and consequently, the factors driving variable generation (VG) also drive the energy storage market. The growing penetration of renewable power generation is one of the most significant drivers for energy storage globally. Intermittency associated with non-baseload renewable assets calls for technologies like storage to maintain the stability of the grid and ensure power is utilized efficiently. Wind and solar PV, the two most rapidly growing renewable technologies, are highly variable in output and present new challenges for grid operators working to optimally integrate these technologies. As these resources begin to capture a greater portion of baseload generation, the need for energy storage will be more apparent.

It is important to note that traditional renewable developers are now offering storage systems in their product portfolios. Unlike renewable generating assets—which have benefitted from financing structures that have predictable payouts and cost escalators— storage technologies can be used to provide various services from a single project, allowing for multiple revenue streams. Renewable developers recognize this increased flexibility as a way to help optimize a project’s value over its lifetime. As project bankability is paramount in financing, lenders require developers to certify the design, contracting, construction, integration, and performance of new projects.

An effort to modernize and upgrade the existing electrical grid similarly plays a role in the adoption of energy storage. This is a challenge for countries facing aging infrastructure. According to a 2014 International Energy Agency report, the US grid alone will require $2.1 trillion in investments by 2035 to modernize and ensure continued reliability. Simultaneously, the grid in developing economies is expanding to serve rapidly growing populations and bring power to the estimated 30% of the global population without access to electricity. Energy storage is set to play a key role in these investments, enabling better utilization of both new and existing resources as well as strengthening the grid from diverse threats, including natural disasters and physical attacks.

As a result of these trends, grid operators and regulators are beginning to recognize the value of ESSs for multiple services. Utilities have been including ESSs in resource planning processes as falling systems costs have made storage an attractive alternative to certain infrastructure investments. The increased interest in ESGAS from utilities and grid operators is due in part to the rapidly falling systems costs, particularly for battery energy storage systems (BESSs). As deployed systems continue to meet expectations, standardized contracts are becoming the norm, which results in more predictable revenue streams. Due to this maturation of the industry, the financial community is growing more comfortable with investments in energy storage, further lowering the cost to deploy systems and accelerating growth in the industry.

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

2.4 Market Barriers While high capital costs are often cited as the leading barrier to energy storage development, many complex issues limit the industry’s growth. A lack of understanding of storage technologies and their benefits, high capital costs, competing resources (such as demand response [DR]), and energy markets unable to account for the value storage can provide to multiple stakeholders continue to pose major obstacles for mass energy storage adoption. Many barriers stem from utilities’ slow adoption of new technologies and regulations. The slow progress in updating ESS-related regulations is due in part to the complexity of these issues; stakeholders have varying and sometimes competing interests.

The differences in rules and overall grid characteristics across regions also pose a significant issue. Each regional market has its own system characteristics, stakeholders, regulations, and market designs. As a result, separate analyses by developers are required for each market to determine the regulatory outlook, market requirements, and profit potential, resulting in longer project lead times and higher costs. This issue is evident in North America, where large regulated utilities control the vast majority of the market and have substantial influence over market structure and interconnection policies for distributed energy resources (DER).

While energy storage can provide unique benefits to the grid, in the eyes of grid operators, there is competition from several other resources—namely natural gas. Gas-powered generation is much more flexible than other conventional power sources, allowing utilities to cycle plants up or down depending on demand, consequently negating some need for energy storage. Additionally, DR programs that allow the grid to shed non-essential loads at times of high demand compete with costlier energy storage that can provide similar benefits. Advanced battery energy storage must also compete with legacy pumped hydro storage plants, which utilities are more comfortable with and have provided reliable energy storage at a relatively low cost for decades.

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

2.5 Market Trends Navigant Research believes that four different models of systems integrators are currently represented in the marketplace. While some companies fit well within a given category, others have a broader approach with aspects of each main focus area. These models are explained in Table 2.1.

Table 2.1 Systems Integrator Business Model Focus Areas Renewables Development-Focused Grid Equipment/Technology-Focused • These companies offer inverters and other • Business is chiefly focused on deployment grid/utility equipment/services with existing of new, (typically) large-scale generation solution offerings facilities • e.g., ABB, General Electric, Siemens, S&C • e.g., Invenergy, RES, NextEra Electric Software Platform-Focused Utility Ownership-Focused • Software is focused on asset management • Solution offerings and integration services and optimization, flexible fleet management, are designed and owned by large-scale and balance of systems integration generators and/or IPPs • e.g., Doosan GridTech, Younicos, • e.g., AES Energy Storage, NextEra Greensmith (Source: Navigant Research)

Several of the companies profiled in this report also have EPC backgrounds, which is considered an important differentiator by some storage customers. Companies that operate in several parts of the energy storage value chain and help eliminate multiple players for a single project could see increased marketplace success. Combining multiple value chain pieces within a single entity can translate to increased customer savings.

Another important trend is the continuing innovation in ESS software and controls. Many leading systems integrators evaluated in this report provide customized software platforms designed in-house that manage the daily operation of an ESS and its interaction with the grid. These platforms play a major role in the overall economics of an ESS, as there are multiple applications and value streams a single system can tap into. The software platform must weigh the economic returns of various applications with the storage system’s state of charge, lifecycle, and a number of other factors. In addition to the daily operations of an ESS, some systems integrators use software platforms to model the operation of an ESS virtually, allowing customers to understand the optimal system design and configuration before a physical system is deployed. This also allows for detailed economic calculations to be performed to determine the optimal power and energy capacity for an ESS depending on the applications it will be performing. The importance of system software and controls will only increase over the coming years.

Thus far, many utility-scale energy storage customers have been sensitive to pricing differences. Several utilities that have conducted competitive energy storage solicitations report a wide range of prices offered by leading vendors, with significant variations in

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

expected operating expenses on an annual and lifetime basis. Given the early stage of this industry, many storage customers are looking first to better understand the operating characteristics of the technology and become more comfortable before investing in the highest quality systems. As a result, often bids are awarded to value based project developers with limited storage experience that pull together components and services from different players. This highlights a potential disconnect between customers and some systems integrators that are pushing highly advanced storage solutions for which the market may not be ready. As customers become more familiar with storage technologies, they will demand higher quality systems from vendors offering a full-service approach.

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Section 3 THE NAVIGANT RESEARCH LEADERBOARD

3.1 The Navigant Research Leaderboard Categories Navigant Research scored the vendors in this Navigant Research Leaderboard Report according to four categories: Leaders, Contenders, Challengers, and Followers. These categories are defined below.

3.1.1 Leaders Leaders are vendors that scored 75 or above in both Strategy and Execution. These companies have differentiated themselves from the competition through exceptional project development, compelling offers for customers, outstanding track records, strong supplier relationships, and scalable business models. Leaders are currently in the strongest position for long-term success in the ESSI market.

3.1.2 Contenders Contenders are vendors that scored between 50 and 75 in both Strategy and Execution. While these companies have a solid foundation for growth and long-term success, they have not attained a superior position in the market. They are well-positioned to become Leaders, but have not yet fully executed their strategy. These companies may need to differentiate themselves via software and controls technology or cost breakthroughs, may be seeing weaker-than-expected demand, or may have limited market penetration.

3.1.3 Challengers Challengers are vendors that scored higher than 25 in Strategy and Execution but are not yet contenders for market leadership. While the vendors in this category are fundamentally sound, they face challenges stemming from a lack of strategic vision or risks to successful potential Execution. Challengers may also be early in their commercial product launch, resulting in Execution scores that are based on small numbers of projects. Companies with this ranking would lack the scalability and staying power of Leaders or Contenders in the market. Navigant Research identified no vendors in the Challengers category for this Leaderboard Report. However, in the next 18 months, this perspective could change radically as the industry moves apace.

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

3.1.4 Followers Followers are vendors that have failed to distinguish themselves and scored below 25 in Strategy and Execution. These companies are not currently expected to challenge the Leaders unless they can substantially alter their go-to-market strategy and develop sounder partnerships. Their long-term viability is in doubt unless systemic changes are made within the organization. Navigant Research identified no vendors in the Followers category for this Leaderboard Report.

3.2 The Navigant Research Leaderboard Grid AES Energy Storage and Renewable Energy Systems (RES) are differentiating themselves as Leaders in the ESSI space. For the second year in a row, AES has scored the highest in this Leaderboard Report, with the strongest scores for both Strategy and Execution. Both companies have demonstrated the ability to offer flexible solutions that serve multiple applications for different types of customers through numerous projects. That flexibility and market leadership will be essential as this industry matures and becomes increasingly competitive.

The Contenders field is crowded, with companies bringing a diverse set of backgrounds to the market. While several companies have thus far found more success in the market than others, all Contenders have the resources and expertise to be successful long term. A number of new projects and growth could move any company in this category into the Leaders group. Contenders include companies with a wide range of scores for all criteria. Several narrowly qualified for inclusion in the Contenders category. While there is significant differentiation between the Leaders and lower-ranked Contenders, all ranked vendors are competitive and have scores over 50 for either Strategy or Execution; there are no Challengers or Followers.

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Chart 3.1 The Navigant Research Leaderboard Grid

FOLLOWERS CHALLENGERS CONTENDERS LEADERS

AES Energy Storage

NEC Energy Solutions RES Greensmith S&C Electric Siemens Invenergy LG CNS GE Energy ABB Younicos Storage Leclanché NextEra Energy Resources Doosan Grid Tech

Execution (1Energy Systems)

Strategy (Source: Navigant Research)

Overall scores for each of the 14 companies included in this study are provided in Table 3.1. While certain companies have strengths in either Strategy or Execution at the current time, a firm that is strong in one area is typically also strong in the other. Much of the differentiation between companies stems from the number and capacity of projects with which the company is involved. However, there are a number of other factors being considered as well.

The highest weighted criteria in this report is the go-to-market strategy. Leaders in this market have demonstrated a well-defined yet multifaceted strategy that allows them to offer solutions for multiple types of customers and applications. This often includes the ability to provide financing solutions and flexible ownership models for customers.

Factors such as a company’s geographic reach, complementary product/ service offerings, staying power, and established partnerships are also considered. Although all companies in this study have been providing ESSI services for at least 2 years, several players are

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

relatively new to the market. This industry is expected to grow increasingly competitive over the coming years as the volume of new projects increases and larger companies with utility-sector experience continue to refine storage solutions.

Table 3.1 The Navigant Research Leaderboard Overall Scores Rank Company Score 1 AES Energy Storage 87.0 2 RES 80.5 3 S&C Electric 74.3 4 Siemens 74.0 5 NEC Energy Solutions 72.9 6 Greensmith 68.9 7 LG CNS 68.0 8 Invenergy 67.9 9 GE Energy Storage 67.8 10 ABB 60.6 11 Younicos 60.4 12 NextEra Energy Resources 60.2 13 Leclanché 56.6 14 Doosan Grid Tech (1Energy Systems) 52.7 (Source: Navigant Research)

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Section 4 COMPANY RANKINGS

4.1 Leaders Companies in the Leaders category scored a 75 or higher in both Strategy and Execution. There are two vendors that have emerged as Leaders in this space: AES Energy Storage and RES. These companies have significant portfolios of commissioned and developing projects serving various applications in several world regions. Both have demonstrated the flexibility to provide solutions for different types of customers including financing offerings. Notably, both companies serve primarily as full project developers that also have in-house systems integration and software and controls expertise, which is a model Navigant Research believes offers great scalability.

4.1.1 AES Energy Storage Overall Score: 87.0

Strategy: 88.8

Execution: 85.3

AES Energy Storage has been an early Leader in the utility-scale storage industry, with a number of large-scale projects being developed in multiple regions worldwide. The company benefits from the stability, access to capital, and geographic reach that comes with its well-placed parent, AES Corp. The corporation—founded in 1981 and based in Arlington, Virginia—employs around 21,000, posted revenue of $15.0 billion for 2015, and operates in 17 countries including all major power markets in North America and Latin America. Overall, AES offers complete and integrated solutions in the utility-scale storage market, including design, build, operations and maintenance, and decommissioning. These offerings have been supported by the in-house technical expertise and market knowledge that the corporation has through various sister companies including large utilities. This has allowed the company to develop solutions that resonate with utility-scale storage customers.

AES’ primary value is its market knowledge, technical experience, and its Advancion platform—a unique node-based ESS architecture with integrated hardware and proprietary software that controls independent units of batteries and power conversion equipment. The company has partnered with a number of leading battery and component vendors to pre- certify products for integration with its Advancion platform, a fully integrated, grid-scale energy storage solution with a market tested controls platform capable of providing multiple services including: reserve capacity, DR, renewables integration, transmission deferral, and ancillary services. The platform is designed to easily scale with minimal modifications; power output levels can range from 100 kW to 1,000 MW and durations from 15 minutes to over 4 hours. The company has a broad geographic presence, including partnerships to

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

sell its solutions through Mitsubishi in Asia Pacific and Eaton in Europe and the Middle East & Africa. To date, AES has 136 MW of storage systems in operation, with over 250 MW in construction or late-stage development.

AES Energy Storage has emerged as the top ranked company in this report for the second year in a row. The company’s continued dedication to advancing its storage platform to enable a flexible, reliable, scalable, and cost-effective ESS solution has resulted in numerous new project wins around the world. AES targets multiple customer types and has the ability to offer a number of ownership models with systems providing a wide variety of grid services. Perhaps the company’s current greatest strength is its geographic reach. While several companies in this study are multinational corporations with businesses operation worldwide, AES has been successfully leveraging its corporate footprint to be one of the first storage systems integrators in a number of markets. The company is developing projects in potentially high growth markets including India, the Philippines, Jordan, and the Caribbean alongside many of the more developed storage markets. Backed by the vast financial resources and commitment to the industry from its parent company, AES Energy Storage is likely to remain a Leader as the industry matures.

www.aesenergystorage.com

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Chart 4.1 AES Energy Storage Strategy and Execution Scores

- 10 20 30 40 50 60 70 80 90 100

Vision

Go-to-Market Strategy

Partners

Strategy Production Strategy

Technology

Geographic Reach

Sales, Marketing, and Distribution

Product Performance

Product Quality and Reliability

Product Portfolio Execution Execution

Pricing

Staying Power

(Source: Navigant Research)

4.1.2 RES Overall Score: 80.5

Strategy: 81.5

Execution: 79.5

RES is a global renewable energy and grid infrastructure developer based in Kings Langley, United Kingdom that has been active in the electric grid industry for over 30 years since it was founded in 1982. The company has been developing energy storage projects for a number of years and boasts a portfolio of 13 storage projects accounting for 108.6 MW of capacity. A background in both transmission system and renewable generation development provides RES with several advantages in the utility-scale energy storage space. Experience working closely with IPPs and utilities allows for a deep understanding of systems integration requirements, and the company’s in-house civil and electrical inspection teams manage a comprehensive safety program for the entire

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

organization. Having developed over 1,000 miles of transmission lines and 10 GW of renewable generation, RES’s existing asset management capabilities including a 24-hour control center allow ESSs to be closely monitored through development and operations. The company has recently announced several key milestones in its energy storage business including a contract with UK grid operator National Grid to develop the country’s first sub-second frequency response project. In early 2016, RES completed two ESSs in the United States that were developed with non-resource debt financing, a first for a utility- scale project in North America which helped provide validation for the industry and technology.

The company offers full turnkey project development, including EPC services and a variety of financing and ownership models for utility-scale ESSs. RES has a technology-agnostic approach and has worked closely to develop systems utilizing products from 5 battery vendors and 10 power conversion vendors. The company’s approach is to handle as many aspects of a project in-house as possible, which minimizes the possibility for communication issues throughout the development process and reduces the sharing of profit margins between partners. RES also offers a proprietary software and controls platform built on its experience integrating renewables into existing grid infrastructure and utility SCADA systems. The platform optimizes storage systems for multiple applications depending on market conditions while aiming to improve asset life and reduce operating costs. While RES has been the most active developing projects in the United States and United Kingdom, it also has dedicated storage teams in Ireland, Germany, Canada, Australia, and Japan.

RES continues to be a Leader in this space on the strength of its go-to-market strategy and vision. The company positions itself as a full-service project developer capable of handing the entire value chain for a number of different customer types. This flexibility has served the company well and has resulted in projects of various sizes for numerous applications throughout the United States, as well as in Canada, the United Kingdom, and Germany. As a well-established, privately held company, RES has the staying power to develop forward- looking storage solutions while withstanding any market volatility or downturns.

www.res-group.com

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Chart 4.2 RES Strategy and Execution Scores

- 10 20 30 40 50 60 70 80 90 100

Vision

Go-to-Market Strategy

Partners

Strategy Production Strategy

Technology

Geographic Reach

Sales, Marketing, and Distribution

Product Performance

Product Quality and Reliability

Product Portfolio Execution Execution

Pricing

Staying Power

(Source: Navigant Research)

4.2 Contenders The Contenders category in this market is quite crowded and includes 12 of the 14 total companies profiled in this study. This category includes companies with diverse backgrounds in the industry that have shaped their offerings and approach to the market. Most vendors fall into this category because while they do not consistently set themselves apart within the Strategy and Execution criteria, their efforts are consistent with the industry and the market. Companies in this category are generally well-positioned to find success as the market matures and potentially emerge as Leaders over the coming years.

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

4.2.1 S&C Electric Overall Score: 74.3

Strategy: 73.8

Execution: 74.8

S&C Electric is a Chicago, Illinois-based provider of switching, protection, and control solutions for electric power systems and offers a variety of services depending on the market and need of its partners. The company, founded in 1911, employs roughly 2,500 worldwide and has been active in the energy storage space for over a decade. S&C’s reputation for quality and innovation with a number of related grid products positions it well to capitalize on opportunities in the growing storage industry. The company offers a number of hardware and software solutions to support grid modernization including automated controls, switching equipment, and reclosers, as well as integrated distribution automation solutions. S&C also has an in-house consulting and analytical services group that works with utilities and IPPs to help with grid expansion and modernization studies including identifying the optimal integration of energy storage. These products and services combined with strong industry relationships have allowed the company to become a major player in the utility-scale storage space.

The company’s early focus in this industry has been on helping customers improve the reliability of their network using energy storage and automation solutions. This is a natural extension of S&C’s core offerings, allowing it to sell a complete grid reliability solution including integrated ESSs, other necessary components, and the EPC services to ensure optimal integration. Thus far S&C has commissioned storage projects located on four continents utilizing five different battery chemistries serving a wide variety of use cases. The company also manufactures its own power conversion and ESS software and control system, known as the PureWave Storage Management System. These complimentary offerings allow S&C to provide a fully integrated solution ensuring close coordination between the various hardware and software components. Additionally, S&C provides full warranty and performance guarantees depending on its customers’ needs. The company’s solutions have been utilized in a number of settings including commercial and industrial (C&I) storage and microgrids, which S&C sees as strengths and growth opportunities moving forward.

S&C has emerged as a top Contender in this market for a number of reasons. Key strengths in go-to-market strategy, product portfolio, and staying power will allow the company to evolve with the changing technological requirements in the industry. An additional differentiation for the company is experience deploying systems that serve a variety of applications and grid services including frequency regulation, renewables integration, grid reliability support, transmission and distribution (T&D) deferral, spinning reserves, and microgrids. The company has integrated ESS offerings into its product portfolio to provide solutions for utilities that seamlessly pair energy storage with other grid

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

automation and modernization systems. A reputation for quality and long-standing connections throughout the electricity industry should allow the company to emerge as a top choice for many customers who are looking for solutions backed by solid warranties and performance guarantees.

www.sandc.com

Chart 4.3 S&C Electric Strategy and Execution Scores

- 10 20 30 40 50 60 70 80 90 100

Vision

Go-to-Market Strategy

Partners

Strategy Production Strategy

Technology

Geographic Reach

Sales, Marketing, and Distribution

Product Performance

Product Quality and Reliability

Product Portfolio Execution Execution

Pricing

Staying Power

(Source: Navigant Research)

4.2.2 Siemens Overall Score: 74.0

Strategy: 75.8

Execution: 72.3

Siemens AG—founded in 1847 and based in Munich, Germany—is a multinational engineering and manufacturing company focused broadly on electrification, automation, and digitization. The company’s Energy division develops products and solutions for fossil

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

power generation, wind and solar power, transmission, distribution, and the smart grid, providing associated services in all areas. Siemens has been working with utilities and power generators for decades, providing combustion turbines, power plant development, and other grid infrastructure solutions as both a manufacturer and systems integrator. This industry experience provides the foundation for the firm’s energy storage business, which leverages technical and market knowledge from related business segments. The company is a leading provider of microgrid and virtual power plant controls as well as associated power electronics including inverters, transformers, and switchgear. Siemens has been active in the grid energy storage industry for a number of years, with its first system deployed in 2012. It now has over 25 utility-scale storage systems in operation or late- stage development worldwide. Siemens also provides a variety of financing solutions through its financial services group, offering flexible options that can be tailored to customer needs. This includes providing complete warranties and performance guarantees backed by the company’s balance sheet.

Siemens has thus far developed ESSs in several western European countries, North America, and Latin America, with a number of other markets in the pipeline. Systems installed to date have been providing various services including renewables integration, time shifting, microgrid/islanding, grid support (frequency regulation, etc.), and black-start. Siemens has primarily used lithium ion (Li-ion) batteries for its storage projects; it has tested numerous chemistries in-house and is in process of deploying some early stage technologies. A key strength for the company is its energy management software, which is built off the same platform used to control thermal generation plants and virtual power plants. The software is installed at over 3,000 sites globally and leverages intelligence on grid operations and the technical requirements of various markets. This software platform is able to manage all assets on the grid including generation and storage to optimize performance and determine ideal system sizing and specifications. The company’s software expertise is also leveraged in microgrid offerings, where it is a leading provider of control systems, often incorporating energy storage, seen as a major growth opportunity for the business.

Siemens sits near the top of the Contenders category for this report. While operating relatively under the radar, the company has been devoting substantial resources to its energy storage business which fits naturally with other offerings and is considered a priority for the broader organization. The company has an in-house research and development staff with over 11,000 employees that are increasingly focused on supporting development of the Distributed Energy Systems business. While Siemens has been somewhat less active deploying systems in multiple markets than the Leaders in this report, it has the expertise and resources to quickly become a leading systems integrator. The significant financial resources, geographic footprint, technical resources, and industry connections provide Siemens with an edge over many smaller competitors in this space and position it well to capitalize on the growing storage industry.

www.siemens.com

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Chart 4.4 Siemens Strategy and Execution Scores

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(Source: Navigant Research)

4.2.3 NEC Energy Solutions Overall Score: 72.9

Strategy: 71.3

Execution: 74.5

NEC Energy Solutions, a subsidiary of Tokyo, Japan-based NEC Corp., develops and manufactures advanced grid-scale ESSs as well as Li-ion batteries. The Westborough, Massachusetts-based firm was an early grid-scale energy storage pioneer with systems in continual operation since 2008. The grid and commercial energy systems division of the former A123 Systems, the group was acquired by NEC in May 2014. The company has since developed projects for diverse clients including utilities and IPPs in North America, Asia Pacific, and Western Europe, establishing partnerships across a large geographic footprint. NEC Energy Solutions specializes in grid-scale storage with projects designed to provide frequency regulation, spinning reserves, renewables integration, and T&D

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

reinforcement. It focuses on providing turnkey project development and integration services for these systems utilizing its fully integrated, containerized storage systems.

The company’s product portfolio is divided into two main classes, the High Rate (HR) and Long Duration (LD) systems designed for either power or energy dense applications respectively. Both systems come fully containerized to facilitate easier installation, with integrated controls, protection, and thermal management systems. NEC’s HR system provides up to 2 MW/575 kWh of capacity per container and targets high-power applications such as frequency regulation. The LD systems support up to 4 MW/4 MWh of capacity per container for longer duration, energy intensive applications such as peak shifting. NEC provides a proprietary software and controls platform, known as AEROS, to manage the daily operations of each system. While all projects to date have utilized conventional Li-ion batteries, the company is working several providers of next-generation storage technologies to bring those products to market. NEC has established agreements with Eos Energy Storage for its zinc hybrid cathode battery chemistry and 24M to integrate its semisolid Li-ion cells.

NEC Energy Solutions continues to be a top Contender in this market with a variety of new projects being developed worldwide. Its flexible market approach is expected to serve it well as the industry matures and it can capitalize on a wide corporate geographic reach and reputation for quality systems. However, the company lacks some of the synergistic businesses that Leaders in this market are leveraging. This includes EPC services, power plant development, and technical consulting services for grid operators.

www.neces.com

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Chart 4.5 NEC Energy Solutions Strategy and Execution Scores

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(Source: Navigant Research)

4.2.4 Greensmith Overall Score: 68.9

Strategy: 65.8

Execution: 72.0

Greensmith Energy is a leading provider of ESS integration and development services focused on advanced software solutions to maximize the value of ESSs. Founded in 2008, the Herndon, Virginia-based company’s strategy is to be a battery- and component- agnostic developer of complete systems, choosing to focus on helping its customers solve problems rather than improving hardware. Greensmith has found success providing both turnkey project development as well as solely licensing its software and providing ongoing monitoring/system management services. The company’s growth has been supported by funding from some major utility players including American Electric Power and E.ON. These investments have allowed Greensmith to gain a deeper knowledge of the utility

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

space. The partnerships with E.ON in particular have provided Greensmith an entry into the European market, where it is currently conducting pilot projects and identifying opportunities for ESS development with grid operators.

Greensmith established roots in grid-scale ESSs, and in 2011 introduced its intelligent storage control and analytics software known as GEMS. Through close integration with the underlying BMS, GEMS runs algorithms to determine optimal charging/discharging profiles and maintain an optimum state of charge to keep systems efficiently operating and not risk premature degradation. The platform, currently in its fifth iteration, is built on open architecture and is technology-agnostic, allowing greater flexibility for hardware and component choice. An important aspect of the software is its fleet management capability, which allows a large number of distributed systems to be operated as a single unit. This structure provides greater reliability for grid operators while maximizing revenue for system owners. The company’s flexibility to provide a range of services has allowed Greensmith to offer solutions for a wide variety of customers, including developers, IPPs, utilities, and C&I end users.

Greensmith continues to be a strong Contender in this market with its flexible approach to project development and systems integration resulting in a solid list of commissioned systems and pipeline projects. Moving forward, the company faces risk as competitors continue to develop in-house software and controls systems, potentially limiting the need for a third party software provider such as Greensmith. Although the company has expressed a commitment to offering turnkey project development, many projects to date have seen the company solely providing software solutions.

www.greensmithenergy.com

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Chart 4.6 Greensmith Strategy and Execution Scores

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(Source: Navigant Research)

4.2.5 LG CNS Overall Score: 68.0

Strategy: 67.8

Execution: 68.3

LG CNS, founded in 1987, is a major IT service provider involved in optimizing numerous large-scale infrastructure projects in industries including manufacturing, transportation, government and energy. It is an affiliate of the multinational LG Group based in Seoul, South Korea that employs over 9,000 worldwide. Being a part of the LG Group provides several key advantages, including close relationships with leading Li-ion battery manufacturer LG Chem as well as power electronics and solar PV manufacturer LG Electronics. Since starting in the energy business with a solar power plant over 10 years ago, the company has grown, focusing on waste-to-energy, biomass, wind power, fuel cells, and stationary ESSs. LG CNS has also been providing advanced metering

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

infrastructure integration and management services to utilities worldwide for a number of years. This experience has allowed LG CNS to develop data management and integration solutions specifically for distributed and renewable power generation systems.

Within the energy storage space, LG CNS’s offerings revolve around how to effectively integrate storage and renewable generation for utility-scale renewables and microgrids. While many projects have been supplied by its sister companies within LG, the company integrates ESS components from various suppliers into containerized systems, and provides the controlling software platform to manage operations and grid coordination. LG CNS enjoys a close relationship with Korea’s dominant energy provider, the Korea Electric Power Company (KEPCO), and has won several contracts to develop ESSs for the utility. With KEPCO and other groups, the company has constructed or contracted for 89 MW of utility-scale ESSs. Several of these projects are microgrid systems which the company views as one of its specialties, offering system modeling and consulting services in addition to project development. Though the company is a market leader in Korea and has found success in neighboring Japan, growth outside its home region has been slower to develop. Projects are currently being developed in Guam and the United States.

LG CNS fits in the middle of the crowded Contenders category in this Leaderboard Report. The company’s key strengths in staying power (financial resources), partnerships, and product portfolio have positioned it well to capitalize on the fast-growing Asia Pacific energy storage market. Though the company is active in multiple global regions and is a clear leader in its home region, development in other markets has been slower, leading to an average score for geographic reach. Moving forward, LG CNS is expected to continue as a major Contender in this market given its complementary offerings in energy system development and in-house engineering expertise.

www.lgcns.com

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Chart 4.7 LG CNS Strategy and Execution Scores

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(Source: Navigant Research)

4.2.6 Invenergy Overall Score: 67.9

Strategy: 67.0

Execution: 68.8

Chicago, Illinois-based Invenergy, founded in 2001, is an independent company that develops, owns, and operates power generation and energy storage facilities. To date, the company has developed over 13 GW of assets, of which wind power is the leading resource, followed by natural gas generation, solar PV, and energy storage. Invenergy’s energy storage business has been focused primarily on deploying Li-ion based ESSs in the United States. It is evaluating other battery technologies and pursuing storage projects in the United Kingdom, Mexico, Japan, and Latin America. Invenergy’s expertise and background in developing large-scale generation facilities has provided a foundation for

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

growing its storage business through industry connections, technical expertise, and direct project opportunities.

While the company primarily looks to own and operate energy storage assets as it does with other generation plants, Invenergy is also actively responding to utility requests for proposals (RFPs) for storage systems and can offer multiple ownership models to customers. The company acts as a pure systems integrator by procuring technology components from various preferred vendors depending on the needs of each customer, and integrating the system into the grid utilizing its in-house software and controls platform which provides daily system management and interconnection. Invenergy has seen significant success in the PJM market in North America where it has 67.5 MW deployed through four storage facilities. These systems are reported to have some of the highest performance scores in PJM’s competitive frequency regulation market. Moving forward, the company sees increasing opportunities to deploy storage systems for T&D deferral as well as renewables integration. Renewables integration in particular is seen as a strength for the company given its experience developing and owning renewable generation and knowledge of energy markets.

Invenergy ranks in the middle of a crowded Contenders category for this report. Demonstrated by the significant capacity of operating systems and newly announced projects, the company has key strengths in vision, go-to-market strategy, and product performance. Invenergy’s management has identified energy storage as a natural growth progression for the company and a key priority moving forward, providing the staying power required to withstand market volatility. In order to compete with Leaders in this market, Invenergy must continue to actively expand its storage business into new international markets with high growth potential, and develop systems capturing a more diverse set of revenue streams aside from frequency regulation.

www.invenergyllc.com

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Chart 4.8 Invenergy Strategy and Execution Scores

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(Source: Navigant Research)

4.2.7 GE Energy Storage Overall Score: 67.8

Strategy: 69.0

Execution: 66.5

GE Energy Storage is a subsidiary of the multinational General Electric Corp. The company, founded in 1892, is currently moving its headquarters from Fairfield, Connecticut to Boston, Massachusetts and has around 305,000 employees worldwide and posted $117.4 billion in revenue in 2015. GE has been involved in the power generation and distribution industry since it was first conceived, and has been involved in energy storage as a provider of hydro turbines and controls for over 50 years. The strong financial backing and technical experience of GE has allowed the firm’s energy storage subsidiary to provide turnkey solutions and leverage existing relationships with utilities and grid operators around the world. The company has been involved in the battery energy storage market since the

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

early 1990s and deployed some of the early grid-scale battery systems. From 1994 to 1996 GE commissioned 19 MWh of lead-acid battery systems to provide ancillary services.

Currently GE Energy Storage operates primarily as a fully project developer, focusing on bringing an economical value proposition to its customers through customized ESS solutions using proven components. The company manufactures power electronics— including inverters—and integrates its proprietary software and controls platform that shares functionality with similar systems for wind, hydro, and conventional power plants. A major project for the company was announced in late 2015, a 30 MW Li-ion-based system to provide reserve capacity and help integrate local solar PV for the Imperial Irrigation District in California. The company’s experience and reputation throughout the industry as a provider of power electronics, thermal generation systems, wind turbines and solar equipment provide a strong foundation for growth in the battery ESS market. The company’s recent acquisition of major utility provider Alstom provides access to an electrical distribution software platform already in use by independent systems operators globally that can be readily integrated with GE’s energy storage solutions.

While GE Energy Storage has the potential to emerge as a Leader in this space over the coming years, it is unclear if utility-scale energy storage is a top priority for the company. The firm is relatively new to the market, while Leaders in this space have had systems operating in multiple regions for a number of years. Recent competitive project wins have highlighted potential for the company to be a major player in the market given its strengths in product portfolio, industry knowledge, and reputation, as well as corporate staying power and geographic reach.

www.gerenewablenergy.com

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Chart 4.9 GE Energy Storage Strategy and Execution Scores

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(Source: Navigant Research)

4.2.8 ABB Overall Score: 60.6

Strategy: 60.5

Execution: 60.8

ABB is one of the largest global suppliers of power grid equipment and systems, and has been active in the utility-scale energy storage space for several decades. ABB, founded in 1988, is a publicly traded company based in Zurich, Switzerland, and has close to 150,000 employees. ABB entered the energy storage market in the 1980s by providing frequency converters and systems integration for pumped hydro facilities. It has strong ties to utilities and grid operators in global markets and a strong reputation for providing quality products and services. In 2011, it acquired Powercorp, Australia’s leading flywheel manufacturer, which added the PowerStore product to ABB’s offering. PowerStore is an integrated unit

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

combining flywheel storage with power conversion, software, and controls within a shipping container and designed to provide voltage support and frequency regulation.

The company is now focusing more on the battery energy storage space, where it has been providing inverters and other system components for a number of years. It has specialized experience in the field of microgrids and renewable energy integration, most notably with its EssPro series of battery power conditioning systems. These systems include ABB inverters, designed specifically for applications such as solar PV, energy storage, and off-grid systems. ABB offers customized ESSs on a turnkey basis as well as systems integration services and components including inverters. ABB’s Energy Storage Module portfolio offers a range of modular products that improve the reliability and efficiency of the grid through storage. In addition to complete ESSs, ABB can provide battery enclosures and Connection Equipment Modules as separate components. It also offers consultancy services to ensure that ESSs are well suited to provide the services that customers require. ABB has established a strategic partnership with battery manufacturer BYD, positioning itself well in the growing Asia Pacific energy storage market.

While ABB currently sits near the bottom of the Contenders category in this report, the company has the resources to emerge as a leading player. The vast corporate footprint for the company provides a strong geographic reach and more than enough staying power to allow the market to mature. Its experience providing power conversion systems (PCSs) and other power electronics in the storage industry provide a wealth of industry connections and a reputation for high quality. Overall, the company may struggle to compete with more agile players focused solely on innovation in the utility-scale battery energy storage space. As the company is focused on more traditional grid systems and services, it could be pushed out by competitors with a complete commitment to this industry.

www.abb.com

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Chart 4.10 ABB Strategy and Execution Scores

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(Source: Navigant Research)

4.2.9 Younicos Overall Score: 60.4

Strategy: 60.8

Execution: 60.0

Berlin, Germany-based firm Younicos is a privately held company, founded in 2005, specializing in energy storage and microgrid software and control systems. In April 2014, Younicos acquired the assets of grid battery startup Xtreme Power, providing an entry into the North American market and a base of installed systems to optimize with its software. The company focuses on effective integration between storage systems and electrical grid networks. Its products are designed to be technology-agnostic and are able to integrate a variety of batteries, inverters, and balance of system components in either grid-connected or island-able microgrid configurations. Younicos benefits from its in-house multi-megawatt

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

technology center that allows for real-time testing of ESSs in actual grid conditions. This allows the company to explore various hardware and software design options.

Younicos offers the full scope of solutions around energy storage from pre-sale consulting services to turnkey systems for utility-scale, microgrid, and C&I applications. Its plug-and- play Y.Cube modular storage solution is configurable for both behind-the-meter and front- of-meter systems using various battery chemistries, while the larger Y.Station solution is deployed for larger ESSs housed in standalone buildings. The company has solutions optimized for multiple battery chemistries, including Li-ion, flow batteries, sodium sulfur, and advanced lead-acid. This allows for flexibility to design systems tailored to customer needs, utilizing the most appropriate technology. Younicos has developed three software components that are key to its offerings in the energy storage sector. The Intelligent Power Management software enables grids to handle larger percentages of VG through coordinated operations, even without energy storage. The Battery Power Plant Management software manages the integration of ESSs into both island and continental grids. Finally, Younicos’ Energy Management System optimizes the operation of individual storage systems as well as other generation assets that may be included in microgrids.

Younicos sits in the bottom half of the Contenders category. It seeks to transition to more of a full project development model. Most recent projects have been smaller scale or have seen Younicos primarily provide only the software platform. The company’s strengths in software and system design for ESS and microgrids are threatened by a growing list of competitors providing increasingly sophisticated software and controls. To become a Leader, Younicos will need to expand its geographic reach, possibly through partnerships and licensing, and demonstrate the ability to win and develop projects consistently. It must also demonstrate the ability to provide full project development and integration services as well as software platforms.

www.younicos.com

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Chart 4.11 Younicos Strategy and Execution Scores

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(Source: Navigant Research)

4.2.10 NextEra Energy Resources Overall Score: 60.2

Strategy: 62.0

Execution: 58.3

NextEra Energy Resources (NER), founded in 1985, is a wholesale electricity supplier based in Juno Beach, Florida. It is a subsidiary of NextEra Energy, a Fortune 200 company with roughly 13,800 employees including its other main subsidiary Florida Power & Light, a regulated utility with around 4.8 million customers. NER builds, owns, and operates various electricity generation facilities including solar PV, wind, natural gas, nuclear, and oil-fueled. It is one of the largest owners of wind and solar generating assets, with 85 wind facilities in 17 US states and 3 Canadian provinces. NER has been developing its offerings and increasing its presence in the ESSI space since 2014. The company’s early ESS projects

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

have been built for its wind and solar facilities to explore opportunities for storage to ease renewables integration and improve overall value of wind and solar plants.

To date, NER has operated with a low profile in the ESSI space, mainly developing smaller systems at its renewable plants, with a focus on battery technologies. NER acts primarily as a full project developer that also provides integration services supported by extensive in-house expertise in EPC and grid infrastructure. Several recent publicly announced projects have highlighted NER’s position and growing competitiveness in the market. In November 2015, the company was awarded two separate projects (each 2 MW capacity) by the Ontario Independent Electricity System Operator in a competitive solicitation. NER’s largest announced project was awarded through Pacific Gas & Electric’s competitive solicitation in December 2015. The 30 MW Golden Hills project will be located alongside the company’s wind farm near Livermore, California. Although limited details on this project have been made available, it will utilize Li-ion batteries to firm the output from the wind farm, help shift energy production to align with grid demand, and defer upgrades to nearby utility infrastructure.

Although NER has the potential to become a leading player in the space, the company currently falls at the bottom of the Contender category in this report. Its strengths lie in its overall grid systems expertise (supporting its production strategy), staying power through corporate stability, and pricing, as demonstrated by several recent wins in competitive solicitations. NER may struggle to compete with more agile players that have developed comprehensive storage offerings including software and controls platforms that are tailored to various customer types and grid services. To date, the majority of NER’s storage projects have been built for its own purposes. The company’s geographic reach is limited to North America; although it does have deep experience with project development, a lack of presence in other high growth storage markets may limit overall competitiveness. If NER is able to continuing securing projects through competitive solicitations, develop solutions for a variety of customers, and establish itself in key international markets it could emerge as a leading ESSI in the coming years.

www.nexteraenergyresources.com

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Chart 4.12 NextEra Energy Resources Strategy and Execution Scores

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(Source: Navigant Research)

4.2.11 Leclanché Overall Score: 56.6

Strategy: 55.3

Execution: 58.0

Yverdon-les-Bains, Switzerland-based Leclanché is a manufacturer of Li-ion batteries that has been actively expanding its business to offer complete ESS solutions for customers. The company, founded in 1909, transitioned to focus exclusively on Li-ion technology in 2006 and has since evolved its offerings through acquisitions to provide battery storage solutions for transportation, utility, C&I, and residential applications. The company’s historical products are lithium titanate oxide (LTO) cells designed for high-power applications that require a large number of cycles. Leclanché’s products are manufactured in Germany at one of Europe’s largest Li-ion cell production facilities. Leclanché also produces lithium nickel manganese cobalt (NMC) cells with greater energy density, and a

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

hybrid system combining the best attributes of both the LTO and NMC chemistries. Key partnerships include Enel, E.ON, and Siemens, which have worked with Leclanché to install and test ESSs for ancillary services on the European grid and renewable energy integration with great results.

Although the company has provided several smaller ESSs on a turnkey basis over the past 2 years, it has recently dedicated resources to expand its offerings as a full-service ESSI and project developer. The company works with various PCS and power electronics vendors to pre-certify products that will be integrated with its battery systems, simplifying onsite integration work and ensuring proper technology alignment. This allows Leclanché to bring integrated alternating current and direct current blocks along with sophisticated battery and asset management systems to projects and can provide the EPC services to commission a system. While the company does have an in-house software and controls system for ESSs, it has primarily worked with third party partners to provide that component. Two major projects for the company have demonstrated its expertise as both a battery manufacturer and systems integrator. Leclanché is acting as the turnkey provider for the ESS enabled microgrid on the island of Graciosa in the Portuguese Azores. The company provided integrated battery modules and EPC work including integration, working with partner Younicos which provided the project’s energy management system (EMS). Leclanché is also developing a project in Ontario through a similar arrangement with partner Greensmith providing the EMS.

As a relative newcomer in the ESSI space, Leclanché falls near the bottom of the crowded Contenders category. Although several large projects will help the company establish its presence as both a battery vendor and systems integrator, it may struggle to compete with leading ESSIs that have more robust and reputable offerings for complete projects. As the company continues to develop its offerings, it should work toward diversifying its integrated ESS solutions to resonate with a variety of customers including both utilities and IPPs.

www.leclanche.com

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Chart 4.13 Leclanché Strategy and Execution Scores

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(Source: Navigant Research)

4.2.12 Doosan GridTech (1Energy Systems) Overall Score: 52.7

Strategy: 55.8

Execution: 49.5

Seattle, Washington-based Doosan GridTech was officially formed in July 2016 when Doosan Heavy Industries acquired energy storage and grid software startup 1Energy Systems. Doosan Heavy Industries is part of the Doosan Group, a South Korean conglomerate and Fortune 500 company with over 41,000 employees worldwide. The acquisition is part of the conglomerate’s push to expand its presence in the energy and utility industries. Doosan Heavy Industries manufactures components for and constructs thermal and nuclear power plants among other offerings. The new Doosan GridTech will leverage expertise from both sides of the acquisition and will provide the former 1Energy

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Systems with access to significant capital, EPC expertise, and knowledge of and connections in the Asian market.

The new company’s vision is to offer multi-tiered software platforms that enable dynamic decision-making for various grid resources that can help eliminate technology silos within utilities. Since its inception in 2010, 1Energy Systems has focused on delivering open standards-based software for intelligent electric power systems. Its management and optimization software supports multivendor solutions for ESSs and other electrical energy assets. The company is a founding member of the recently formed MESA Standards Alliance. MESA is an open, non-proprietary set of specifications and standards developed by an industry consortium of electric utilities and technology suppliers.

Doosan GridTech’s primary product offering is the energy storage Intelligent Controller solution. This provides safe, secure monitoring and control of ESS components and the interface for communications between the ESS and remote operators. The controller can multitask operating modes to ensure that batteries and other assets deliver the most valuable services to the grid at any given time. More recently, the company launched its Distributed Energy Resource Optimizer software, a distributed energy resource management system that offers secure grid-aware aggregation and optimization of the value of ESSs and other DER. Doosan acquires a portfolio of deployed utility-scale ESSs, including its current project with Austin Energy that involves delivering a complete distributed energy control platform designed to integrate high levels of distributed solar PV into the city grid. The project includes up to 4 MW of solar PV and over 3 MW of energy storage both in front of and behind the meter, as well as smart inverters, forecasting tools, and communications—all managed by the company’s optimization platform.

Despite the significant growth potential post-acquisition, the company sits at the bottom of the Contenders category. While the group has made significant progress in this highly competitive space, the number and diversity of systems deployed lags far behind Leaders. However, the acquisition positions the company to capitalize on its strengths and become a Leader. The access to capital, new markets, and project development expertise could be a game changer for the young company to bring its innovative technology offering to a greater number of customers around the world. As a result of the acquisition, Doosan has higher scores for strategy; its ability to execute is yet to be determined. To compete with Leaders in this space, it will need to take advantage of acquired corporate synergies to establish new geographic markets, continue developing its standards-based software, and expand offerings to provide full turnkey ESS solutions for a variety of customers.

www.doosangridtech.com

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Chart 4.14 Doosan GridTech (1Energy Systems) Strategy and Execution Scores

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(Source: Navigant Research)

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Section 5 ACRONYM AND ABBREVIATION LIST

BESS ...... Battery Energy Storage System

C&I ...... Commercial and Industrial

DER ...... Distributed Energy Resources

DR ...... Demand Response

EMS ...... Energy Management System

EPC ...... Engineering, Procurement, and Construction

ESGAS ...... Energy Storage for the Grid and Ancillary Services

ESS ...... Energy Storage System

ESSI ...... Energy Storage Systems Integrator/Integration

GW ...... Gigawatt

HR ...... High Rate

IPP ...... Independent Power Producer

LD ...... Long Duration

Li-ion ...... Lithium Ion

LTO ...... Lithium Titanate Oxide

MWh ...... Megawatt-Hour

NER ...... NextEra Energy Resources

NMC ...... Lithium Nickel Manganese Cobalt

OEM ...... Original Equipment Manufacturer

PCS ...... Power Conversion System

RES ...... Renewable Energy Systems

RFP ...... Request for Proposals

ROI ...... Return on Investment

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

SCADA ...... Supervisory Control and Data Acquisition

T&D ...... Transmission and Distribution

UK ...... United Kingdom

US ...... United States

VG ...... Variable Generation

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Section 6 TABLE OF CONTENTS

Section 1 ...... 1

Executive Summary ...... 1

1.1 Market Introduction ...... 1

1.2 The Navigant Research Leaderboard Grid ...... 2

Section 2 ...... 4

Market Overview ...... 4

2.1 Introduction ...... 4

2.2 Market Overview ...... 4

2.3 Market Drivers ...... 7

2.4 Market Barriers ...... 8

2.5 Market Trends ...... 9

Section 3 ...... 11

The Navigant Research Leaderboard ...... 11

3.1 The Navigant Research Leaderboard Categories ...... 11

3.1.1 Leaders ...... 11

3.1.2 Contenders ...... 11

3.1.3 Challengers ...... 11

3.1.4 Followers ...... 12

3.2 The Navigant Research Leaderboard Grid ...... 12

Section 4 ...... 15

Company Rankings ...... 15

4.1 Leaders ...... 15

4.1.1 AES Energy Storage ...... 15

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

4.1.2 RES ...... 17

4.2 Contenders ...... 19

4.2.1 S&C Electric ...... 20

4.2.2 Siemens ...... 21

4.2.3 NEC Energy Solutions ...... 23

4.2.4 Greensmith ...... 25

4.2.5 LG CNS ...... 27

4.2.6 Invenergy ...... 29

4.2.7 GE Energy Storage ...... 31

4.2.8 ABB ...... 33

4.2.9 Younicos ...... 35

4.2.10 NextEra Energy Resources ...... 37

4.2.11 Leclanché ...... 39

4.2.12 Doosan GridTech (1Energy Systems) ...... 41

Section 5 ...... 44

Acronym and Abbreviation List ...... 44

Section 6 ...... 46

Table of Contents ...... 46

Section 7 ...... 49

Table of Charts and Figures...... 49

Section 8 ...... 50

Scope of Study and Methodology ...... 50

8.1 Scope of Study ...... 50

8.2 Sources and Methodology ...... 50

8.2.1 Vendor Selection ...... 51

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

8.2.2 Ratings Scale ...... 51

8.2.2.1 Score Calculations ...... 51

8.2.3 Criteria Definitions ...... 52

8.2.3.1 Strategy...... 52

8.2.3.2 Execution ...... 53

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Section 7 TABLE OF CHARTS AND FIGURES

Chart 1.1 The Navigant Research Leaderboard Grid ...... 3

Chart 2.1 Annual Installed Utility-Scale Energy Storage Revenue by Region, World Markets: 2016-2025 ...... 5

Chart 3.1 The Navigant Research Leaderboard Grid ...... 13

Chart 4.1 AES Energy Storage Strategy and Execution Scores ...... 17

Chart 4.2 RES Strategy and Execution Scores ...... 19

Chart 4.3 S&C Electric Strategy and Execution Scores ...... 21

Chart 4.4 Siemens Strategy and Execution Scores ...... 23

Chart 4.5 NEC Energy Solutions Strategy and Execution Scores ...... 25

Chart 4.6 Greensmith Strategy and Execution Scores ...... 27

Chart 4.7 LG CNS Strategy and Execution Scores ...... 29

Chart 4.8 Invenergy Strategy and Execution Scores ...... 31

Chart 4.9 GE Energy Storage Strategy and Execution Scores ...... 33

Chart 4.10 ABB Strategy and Execution Scores ...... 35

Chart 4.11 Younicos Strategy and Execution Scores ...... 37

Chart 4.12 NextEra Energy Resources Strategy and Execution Scores ...... 39

Chart 4.13 Leclanché Strategy and Execution Scores...... 41

Chart 4.14 Doosan GridTech (1Energy Systems) Strategy and Execution Scores ...... 43

Figure 2.1 Energy Storage Value Chain: Upstream Segment ...... 6

Figure 2.2 Energy Storage Value Chain: Downstream Segment ...... 6

Table 2.1 Systems Integrator Business Model Focus Areas ...... 9

Table 3.1 The Navigant Research Leaderboard Overall Scores ...... 14

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Section 8 SCOPE OF STUDY AND METHODOLOGY

8.1 Scope of Study The scope of this report is limited to the Strategy and Execution associated with leaders in the global market for ESSI. Companies included in this report are approaching the market with various backgrounds and offerings, ranging from IPPs and equipment OEMs to pure- play software vendors. However, all companies offer fully integrated and customizable ESSs to customers, with some level of automation and control platform included. Unlike previous versions, this report only ranks firms active specifically in the utility-scale ESS market. This excludes companies focused on providing ESS solutions located behind the meter for commercial, industrial, and residential customers.

Note that company rankings capture the vendor’s standing at the time of the report and are not a retrospective of past accomplishments or an indication of future success. The ratings may change rapidly as this market matures and business models continue to evolve. Moreover, the report is not exhaustive, as there are other global and smaller market players that were not included because of specific focus on one aspect of the market or lack of geographic reach.

8.2 Sources and Methodology Navigant Research’s industry analysts utilize a variety of research sources in preparing Research Reports. The key component of Navigant Research’s analysis is primary research gained from phone and in-person interviews with industry leaders including executives, engineers, and marketing professionals. Analysts are diligent in ensuring that they speak with representatives from every part of the value chain, including but not limited to technology companies, utilities and other service providers, industry associations, government agencies, and the investment community.

Additional analysis includes secondary research conducted by Navigant Research’s analysts and its staff of research assistants. Where applicable, all secondary research sources are appropriately cited within this report.

These primary and secondary research sources, combined with the analyst’s industry expertise, are synthesized into the qualitative and quantitative analysis presented in Navigant Research’s reports. Great care is taken in ensuring that all analysis is well- supported by facts, but where the facts are unknown and assumptions must be made, analysts document their assumptions and are prepared to explain their methodology, both within the body of a report and in direct conversations with clients.

Navigant Research is a market research group whose goal is to present an objective, unbiased view of market opportunities within its coverage areas. Navigant Research is not beholden to any special interests and is thus able to offer clear, actionable advice to help

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

clients succeed in the industry, unfettered by technology hype, political agendas, or emotional factors that are inherent in cleantech markets.

8.2.1 Vendor Selection Vendors were selected based on market presence, commercial activity, and unique expertise related to ESSI. Pure-play component integrators are not included because such firms do not contribute the integration expertise required to deliver an intelligent storage system to the customer. Companies purely offering project development services and not specifically involved in the design, installation, commissioning, and operation of a system are not included. Another key differentiator for the set of companies included in this Leaderboard Report is profitability—all of the companies profiled are charged with ensuring that a storage system functions properly on a technical level, but they are also tasked with ensuring the profitability of the system for the customer. Some firms in the space were excluded due to imperfect information. This does not reflect a lack of market activity, but rather, a deficit of information at the time of publication.

This report is intended to identify leaders in this market; therefore, only the more established and experienced companies are being evaluated. There are a number of smaller firms with promising offerings that are newer to the market that have been excluded from this report.

8.2.2 Ratings Scale Companies are rated relative to each other using the following point system. The ratings are a snapshot in time, showing the current state of the company. These scores are likely to be fluid as new competitors enter the market and customer requirements evolve.

• Very Strong 91 – 100 • Strong 76 – 90 • Strong Moderate 56 – 75 • Moderate 36 – 55 • Weak Moderate 21 – 35 • Weak 11 – 20 • Very Weak 1 – 10

8.2.2.1 Score Calculations The scores for Strategy and Execution are weighted averages based on the subcategories. The overall score is calculated based on the root mean square of the Strategy and Execution scores.

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

8.2.3 Criteria Definitions 8.2.3.1 Strategy • Vision: Measures the company's stated goals in designing market solutions against the actual needs of customers based on the entire environment in which they will operate. Clear and compelling visions that are effectively communicated to the industry result in higher scores. Is the company forward-looking and building a business that can scale and has the agility to evolve with the market?

• Go-to-Market Strategy: Evaluates the company's strategy for reaching the target market, including the sales and marketing channels to be used, as well as the processes established for informing the target market about brand differentiation and unique product value. Scores are judged not just according to investment and marketing, but also in terms of the prudent timing of go-to-market initiatives. Do companies offer solutions for multiple customer types, applications, and ownership models?

• Partners: Measures the company's established partnerships with key organizations that will provide an advantage in financial backing, sales, business, and product development. Affiliations with well-known battery manufacturers and other established vendors in the supply chain, as well as a track record of financial strength through fundraising or profitable product sales, positively affect scores in this Navigant Research Leaderboard Report.

• Production Strategy: Evaluates the long-term competitiveness of the product/project development plan as an effective solution that satisfies market requirements and meets market capacity needs. A too ambitious product/project development strategy— one which reduces available capital without adding significantly to revenue—is penalized in the scoring of this criterion. Are companies able to provide all aspects of systems integration and development, or do they rely on third parties for certain things?

• Technology: Evaluates whether the company has developed and/or patented technology that provides a significant business advantage over competitors that is likely to have an enduring impact on its success. Higher scores are given if the company's technology is already a proven market success or delivers unique product attributes. For this report, the technology criterion primarily evaluates any software and controls systems being offered as well as technical integration expertise.

• Geographic Reach: An evaluation of companies’ ability or plans to reach national and international customers through networks of partners/affiliates. Scores are lower if the company does not have a sales strategy suitable for sales in multiple regions.

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

8.2.3.2 Execution • Sales, Marketing, and Distribution: Evaluates the company’s marketing and sales performance and current distribution channel. Higher scores are given to companies with a large global network with access and support for current product. This is measured based on deployed and announced projects for each company, which demonstrate their success in this area.

• Product Performance: Evaluates the competitive performance of the storage offerings. Higher scores are given to companies that provide more competitive performance profiles or guarantees and that delivered products that are reliable.

• Product Quality and Reliability: Evaluates the quality and reliability of the storage offers delivered to customers, the company’s strategy to develop quality products for the market, and its track record on quality with the current product line. Safety records and plans to manage risks are an important aspect of this criteria.

• Product Portfolio: Addresses the products' relative competitiveness in and suitability to the market. This includes whether a company offers various technologies and product offerings targeted to different market needs (for example high-power/short- duration vs. long-duration energy systems). Higher scores are given to companies with a variety of products to meet different customer needs; this may include various storage technologies. This criterion also takes into consideration complementary products offered by companies such as: power electronics, EPC services, power plant development, etc.

• Pricing: Determines the suitability of product pricing based on its feature set, including whether products are available at multiple price points and how pricing compares to that of competitor products. This includes options for system financing and partnerships with financial institutions that can support project development.

• Staying Power: Evaluates whether the company has the financial resources to withstand weak or variable markets and price-based assaults by competitors. Also measures the company’s likelihood to continue to pursue storage products in the event of market softening. Higher scores are given to companies with better financial performance and greater capability to survive market downturns. For larger corporations, in addition to available capital, this criterion is judged also by the prioritization that the battery division has been given within the corporate hierarchy.

Navigant Research Leaderboard Report: Utility-Scale Energy Storage Systems Integrators

Published 3Q 2016

Navigant Consulting, Inc. (Navigant) has provided the information in this publication for informational purposes only. The information has been obtained from sources believed to be reliable; however, Navigant does not make any express or implied warranty or representation concerning such information. Any market forecasts or predictions contained in the publication reflect Navigant’s current expectations based on market data and trend analysis. Market predictions and expectations are inherently uncertain and actual results may differ materially from those contained in the publication. Navigant and its subsidiaries and affiliates hereby disclaim liability for any loss or damage caused by errors or omissions in this publication.

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Note: Editing of this report was closed on August 26, 2016.