Storage system prices have declined by more than 60% since 2012 and are expected to decline by another 30% over the next five years. Historically battery prices drove the bulk of system price declines, but in the future both battery prices and non-battery components like inverters, software & controls, and design, engineering and construction services will drive system price reductions. Where will the market see most savings? How will the vendor landscape evolve over the course of the next five years, as the storage industry collectively targets bringing down system prices further.

1. woodmac.comTrusted intelligence
Battery and Non-Battery Cost Trends:
Where’s the Floor?
Mitalee Gupta
Analyst, Energy Storage
@MitaleeGupta

2. woodmac.comTrusted intelligence
Presentation Overview
• Storage System Price Trends
• Road to $100/kWh battery prices and technology trends
• Balance of System cost trends – what are the drivers?

3. woodmac.comTrusted intelligence
U.S. Energy Storage Annual Deployments will reach 3.9 GW by 2023
Source: Wood Mackenzie Power & Renewables
83 46 65
227 231 215
338
3,856
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2012 2013 2014 2015 2016 2017 2018E 2019E 2020E 2021E 2022E 2023E
Energystoragedeploymentsbysegment
(MW)
Residential Non-Residential Front-of-the-Meter

4. woodmac.comTrusted intelligence
-16% -16%
-29%
-26%
-15%
-30%
-25%
-20%
-15%
-10%
-5%
0%
2013 2014 2015 2016 2017
Annualsystempricedecline(%)
Storage system prices have declined by more than 60% in the last
six years
Source: Wood Mackenzie Power & Renewables
43%
50%
58%
57%
50%
42%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
30-minute
System
2-hour
System
4-hour
System
2018EStorageSystem
PriceStack(%)
Battery price BOS cost

5. woodmac.comTrusted intelligence
Pace of battery price decline and BOS cost reductions will slow down
in the future
Source: Wood Mackenzie Power & Renewables
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
2013 2014 2015 2016 2017 2018E 2019E 2020E 2021E 2022E 2023E
YoYpricedecline(%)
Battery price BOS cost
Phase 1: Battery
price reductions
were the primary
driver for system
price declines
Phase 2: Extreme
reductions in BOS
costs drove down
system prices by more
than 25%
Phase 3: Continued reductions in battery prices
and BOS costs are driven by production ramp-
up, growing competition and improvements in
system design and engineering
Phase 4: As the storage market
matures, both battery prices and
BOS costs will continue to decline
but the rate will be lower post-
2020, with improvements arising
from experience

6. woodmac.comTrusted intelligence
Battery Prices and Technology Trends

7. woodmac.comTrusted intelligence
Lithium-ion batteries are leading the pack today
Source: Wood Mackenzie Power & Renewables
$-
$200
$400
$600
$800
$1,000
$1,200
0 200 400 600 800 1000 1200
Technologycost($/kWh)
Cumulative U.S. installed capacity as of Q2 2018 (MW)
Lithium Ion Lead Acid Sodium Chemistries Flywheel Flow

8. woodmac.comTrusted intelligence
Battery price forecast: Getting to $100/kWh mark by 2027
Source: Wood Mackenzie Power & Renewables
$219
$39
$0
$50
$100
$150
$200
$250
$/kWh
$100/kWh

9. woodmac.comTrusted intelligence
0
100
200
300
400
500
600
2017 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E
CellManufacturing(GWh)
China Germany France Hungary Japan Poland
South Korea Sweden USA Turkey Australia Unknown
How will we get there?
1. Ramping up global battery production
Source: Wood Mackenzie Power & Renewables

10. woodmac.comTrusted intelligence
NMC
1:1:1
NMC
6:2:2
NMC
8:1:1
Li-S
Solid
State
100
150
200
250
300
350
400
450
500
2014 2019 2024 2029 2034 2039
EnergyDensity(Wh/kg)
Next generation
catches, anodes
and electrolytes
Low cobalt cathodes
How will we get there?
2. Improving energy density
Source: Wood Mackenzie Power & Renewables
 Low cobalt/High nickel cathodes  Solid state electrolytes & Non-graphite anodes

11. woodmac.comTrusted intelligence
Balance-of-system Cost Trends

12. woodmac.comTrusted intelligence

13. woodmac.comTrusted intelligence
Energy storage BOS vendor ecosystem is becoming increasingly crowded
Source: Wood Mackenzie Power & Renewables
Power Electronics
Vendors
Energy Storage
Management System
Vendors
Energy Storage System
Vendors
Energy Storage System
Project Developers
Non-
Residential
Segment
Utility-Scale
Segment
Containerization
Vendors
Energy Storage System
EPC Vendors
Residential
Segment

14. woodmac.comTrusted intelligence
$-
$20
$40
$60
$80
$100
$120
2018E 2019E 2020E 2021E 2022E 2023E
InverterCost($)
Central Inverter DC-DC Converter Multi-port Hybrid Inverter
Storage Inverter costs will significantly drive BOS cost reductions in the future
Source: Wood Mackenzie Power & Renewables

15. woodmac.comTrusted intelligence
Storage system design and architectures are evolving
Source: Wood Mackenzie Power & Renewables
0.0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2018E 2019E 2020E 2021E 2022E 2023E
Deployments(MW)
Solar-plus-storage deployments Other storage deployments
PV Inverter
Storage Inverter
AC-Coupled
DC-DC
Converter
PV Inverter
DC-Coupled

16. woodmac.comTrusted intelligence
Software is the “Alfred” of energy storage
Source: Wood Mackenzie Power & Renewables
$-
$5
$10
$15
$20
$25
$30
$35
2018E 2019E 2020E 2021E 2022E 2023E
EnergyStorageManagementSoftwareCost
($/kW)

17. woodmac.comTrusted intelligence
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
2.5 MWh 5 MWh 10 MWh 15 MWh 20MWh 25MWh 30MWh
2018EBOSCost($/kW)
Concrete Enclosure Metal Enclosure
Are we moving towards more centralized storage systems?
The differential between turnkey BOS costs for systems with concrete enclosures versus metal enclosures
increases with energy capacity of the system
Source: Wood Mackenzie Power & Renewables

18. woodmac.comTrusted intelligence
Low- $1,200
Low - $850
High - $1,675
High - $1,450
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Front-of-the-meter (2-hour)
Q4 2018
Front-of-the-meter (2-hour)
2020E
Q42018systempriceranges($/kW)
Front-of-the-meter storage system price forecast
Source: Wood Mackenzie Power & Renewables
Low - $1,700
Low - $1,375
High - $2,600
High - $2,200
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Front-of-the-meter (4-hour) Q4
2018
Front-of-the-meter (4-hour)
2020E
Q42018systempriceranges($/kW)

19. woodmac.comTrusted intelligence
Behind-the-meter system prices have a significant room for soft cost
reductions
Source: Wood Mackenzie Power & Renewables
Low - $2,050
Low - $1,450
High - $3,800
High - $2,750
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
Residential Non-Residential
Q42018systempriceranges($/kW)

20. woodmac.comTrusted intelligence
Thank You!
Questions?
Mitalee Gupta
Analyst, Energy Storage
Mitalee.gupta@woodmac.com