CPUC Storage Workshop R 15 03 011 Station

CPUC Storage Workshop (R. 15. 03. 011) – Station Power May 2, 2016 Aloke Gupta Senior Director, Market Development & Policy Aloke. Gupta@imergy. com

Imergy Company Overview • Leading developer of energy storage solutions based on vanadium redox flow battery technology • Scalable solutions: 5 k. W to multi - MW § Low cost, long duration, very long life (no capacity degrade) § Non-flammable, non-explosive § Unlimited cycles, resilient in harsh environment / high temperatures § Proprietary process for utilizing low-grade vanadium from waste • Growing sales in India, Africa, Europe, US § Over 100 units deployed (with over three years field experience) and growing backlog § Microgrids (off / weak grid, military, etc), islands, customer-side, utility applications § High volume production line established with a large contract manufacturer & proven logistics & supply chain • Extensive IP portfolio with over 20 patents © 2016 Imergy Power Systems, Inc.

Energy Consumption at Energy Storage Plant (ESP)* • Efficiency losses • Resistive losses • Self-discharge • Pump (flow battery) • PCS (power conversion system) losses • Transformer losses • Controller (BMS) • Cooling • IT, comms, lighting, ventilation, safety, etc. Types of Consumption 1. Efficiency losses 2. Auxiliary loads 3. End-use loads *Based on Electro-Chemical Battery Technology © 2016 Imergy Power Systems, Inc. 3

ESP* Energy Consumption Categorized • Efficiency losses § § § Resistive Self-discharge Pump (flow battery) PCS Transformer $Wholesale • Non-discretionary (“auxiliary”) loads required with ES unit operation Controller (BMS) § Cooling § … § $? ? • Discretionary (“end-use”) loads not directly related to ES unit operation § IT, comms, lighting, ventilation, safety, etc. *Based on Electro-Chemical Battery Technology © 2016 Imergy Power Systems, Inc. $Retail 4

ES Plant Architecture The Grid Transformer AC – DC PCS DC – DC Battery ES Unit © 2016 Imergy Power Systems, Inc. 5

ES Plant Architecture The Grid Transformer AC – DC PCS DC – DC Battery [pump] Efficiency Losses © 2016 Imergy Power Systems, Inc. ES Unit 6

ES Plant Architecture The Grid Transformer AC – DC PCS DC – DC Cooling BMS Battery [pump] Aux Loads (non-discretionary) © 2016 Imergy Power Systems, Inc. Efficiency Losses ES Unit 7

ES Plant Architecture The Grid Transformer AC – DC meter PCS DC – DC IT Heating Ventilation Etc. Cooling BMS Battery [pump] Aux Loads (non-discretionary) End Use Loads (discretionary) © 2016 Imergy Power Systems, Inc. Efficiency Losses ES Unit 8

ES Plant Architecture The Grid Transformer AC – DC meter PCS DC – DC IT Heating Ventilation Etc. Cooling BMS Battery [pump] Aux Loads (non-discretionary) End Use Loads (discretionary) © 2016 Imergy Power Systems, Inc. Efficiency Losses ES Unit 9

Key Points • Transformer, PCS, Pump losses: are conceptually no different from resistive / self-discharge losses and § should be included in aggregate efficiency loss of ES unit § • Energy “consumption” via ES unit’s efficiency losses is different from energy consumption via ES unit’s auxiliary load • All components of efficiency losses should be treated as wholesale at all times § No rate distinction should be made between efficiency losses while charging / discharging vs. efficiency losses while not charging / discharging © 2016 Imergy Power Systems, Inc. 10

Efficiency Losses vs. Aux Loads Explained • Transformer, PCS, Pump losses conceptually no different from resistive / self-discharge losses (all should be included in aggregate efficiency loss) § Unintended loss: inherent, unavoidable, byproduct, occurs at all times (cannot ever be “turned off” while energy storage unit in operation) § Provides no useful function (thus not a load or end use) § Cannot be metered separately from charge / discharge energy § From grid/market perspective, not meaningful to distinguish from underlying battery • ESU’s “aux loads” different from “efficiency losses” § Intended energy consumption (could be turned off short-term) § Provide useful functions that enable ESU operations § Could be metered separately, but not clear if necessary § Are essential to ES unit operations § Utilized directly (and only) in “furtherance of a wholesale transaction” © 2016 Imergy Power Systems, Inc. 11

Generic Commodity Trading Purchase (to resell) 100 u Sell (to repurchase) 95 u • Purchase with intent to resell ~ wholesale § Although some portion is lost permanently • Sell with intent to repurchase ~ wholesale Lost 5 u Day 1 Day 2 © 2016 Imergy Power Systems, Inc. 12

Efficiency Losses ~ Wholesale Purchase (charge) 100 u Sell (discharge) 95 u Lost 5 u Day 1 Day 2 • Efficiency losses during charge / discharge should be treated as wholesale § All of 100 u (electrical energy) purchased with intent to resell (wholesale), even though some portion expected to be lost permanently • SCE’s recommendation* differs slightly … § Retail rates should apply to “end use load” typically comprised of inverter / transformer loads when storage unit is not charging / discharging § Above “baseline end-use load” applies in all hours regardless of operation • Counter: Baseline losses in inverter / transformer… § Similar to baseline losses in T or D grid § Arbitrary distinction from the baseline losses in underlying battery (presumably still wholesale)…could introduce arbitrary economic distortions § Not really “end use load” – no useful function § Appears not consistent with current concept of station load (per CAISO SPP): Ø “Energy for operating electric equipment … used exclusively for the production of Energy … by the Generating Unit” Ø “Energy for operating electric equipment … used exclusively for the charging (absorbing) / discharging / storing Energy … by the Energy Storage Unit *SCE’s Opening Comments, p. 18. © 2016 Imergy Power Systems, Inc. 13

“Standby” Consumption at Which Rate? “Standby Period” Purchase (charge) 95 u Day 1 Purchase 1 u Purchase 1 u Lost 1 u Lost 1 u Day 2 Day 3 Day 4 Day 5 Day 6 Sell (discharge) 95 u Day 7 SDG&E / LS Power recommendation* (paraphrase): • Energy withdrawn from grid when ES unit is neither charging / discharging (= “standby”) is end-use (station) load subject to retail rates • Thus, 5 u (Day 2 – 6) charged at retail • If this recommendation applies to… § (discretionary) end-use loads: § (non-discretionary) aux loads: § efficiency losses: © 2016 Imergy Power Systems, Inc. agree no comment counter *SDG&E’s Opening Comments, p. 8, LS Power’s Opening Comments, p. 3. 14

“Standby” Efficiency Losses (Purchases) ~ Wholesale Purchase (charge) 95 u Purchase 1 u Day 1 Purchase 1 u Lost 1 u Lost 1 u Day 2 Day 3 Day 4 Day 5 Day 6 Sell (discharge) 95 u Day 7 • All of 100 u purchased with intent to resell (thus, wholesale), even Purchase (charge) 100 u Sell (discharge) 95 u • To do otherwise (i. e. treat 5 u as retail) leads to issues: § Administratively problematic (how to determine when ES unit is not charging / discharging) § Introduces arbitrary economic distortions between different scenarios of wholesale Lost 5 u Day 1 though some portion expected to be lost permanently transactions Day 2 § Lacks justification as there is no extra/different burden (associated with 1 u x 5) on UDC § No clear policy benefit for the arbitrariness, added complexity, & distortions • Conclusion… © 2016 Imergy Power Systems, Inc. All components of efficiency losses (as defined here) at all times ~ wholesale 15

Summary 1. What rules or guidelines are needed…? § § § Proposed three categories of energy consumption associated with Energy Storage Plant Efficiency losses include transformer, PCS, pump, self-discharge, resistive… Several guidelines (tests) proposed to distinguish “efficiency losses” from “aux loads” (nondiscretionary) and “end-use loads” (discretionary) All components of efficiency losses (as defined here) at all times treated as wholesale TBD: treatment of aux loads (as defined here) 2. Are there any rules/guidelines required outside of … CAISO? § See above 3. What are rate implications for station power in the context of ES? § Discretionary end-use loads classified as station power with no difference in rate implications vs. status quo (i. e. still subject to retail rates) © 2016 Imergy Power Systems, Inc. 16

Thank you Aloke Gupta Senior Director, Market Development & Policy Aloke. Gupta@imergy. com 17