Day 2 Woodmac Spotlight

November 10
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Energy Storage Summit 2020 - Wood Mac Research Spotlight woodmac.com
Storage costs and supply chain trends: a
tale of falling prices
Mitalee Gupta
Senior Analyst
mitalee.gupta@woodmac.com
@MitaleeGupta

6
Source: Wood Mackenzie
Global storage system pricing varies across different markets
< $1,000/kW
> $1,000/kW
Front-of-the-meter storage system price for 2-hour duration systems 2020 (US$/kW)

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Covid-19 lockdowns pose risk to the global storage supply
chain
Europe
The European Battery Alliance is
still progressing strongly with
more investment finalised and
manufacturing factories planned.
The European Green Deal plans
to legislate a sustainable battery
supply chain to ringfence a chunk
of this global market.
China
Battery manufacturing is
recovering fairly well and
more vendors are looking at
storage market due to less
order for electric vehicles; we
don’t expect there to be much
of a shortfall this year.
US
Moderate impact on
battery manufacturing in
Q2. More downstream
impact arising due to
construction and
permitting delays.
Germany
Slight impact on inverter
supply chain due to
previous lockdowns across
Europe.
High risk
Moderate risk
Low risk
South Korea
Battery manufacturing was
minimally impacted.
Chinese vendors recovered swiftly, while EU and US are making progress in localizing battery supply chain

8
Covid-19 will have a profound impact on storage system
costsThe downside in market demand will bring down system costs faster than previously expected
-16% -16%
-25%
-24%
-10%
-6%
-8%
-7% -7%
-6% -6%
-6%
-5%
-10%
-9%
-5%
-30%
-25%
-20%
-15%
-10%
-5%
0%
2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E 2024E 2025E
YOYdeclineinsystemcosts(%)
YoY Decline (Base Case) YoY Decline (Covid-19 Case)
Faster price decline phase Transitional phase Recovery phase Steady phase
The fallout from the
coronavirus pandemic,
plunging oil prices and
imminent global
recession is expected to
bring down storage
system costs faster than
previously forecast.
Once the coronavirus pandemic is
contained and the global economy
begins to recover, system costs will
resume their previously forecasted pace
of steady year-over-year decline.

9
woodmac.comTrusted intelligence
Battery price declines are levelling off

10
Lithium-ion dominates the U.S. market, accounting for 98.6%
share in Q2 2020
“Other” includes flywheel and unidentified energy storage technologies.
Source: Wood Mackenzie/ESA, U.S. energy storage monitor: Q3 2020 full report, September 2020
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
Q12019
Q22019
Q32019
Q42019
Q12020
Q22020
Energystoragedeploymentsbytechnology(MW)
Lithium Ion Lead Acid Sodium Chemistries Flow - Vanadium Flow - Zinc Other

11
In comparison to EVs, ESS market is a small fish in a big
pond
2020
2030
Portable Electronics
Electric Vehicles
Energy Storage Systems
Electric vehicles will continue to make the lion’s share of global lithium-ion battery demand over the next 10
years. Demand from portable electronics will see a significant drop from 26% in 2020 to 6% in 2030, as both
EVs and ESS markets begin to take off.

12
Divergence between batteries for EVs and ESS is on the
horizon
2010 2015 2020 2025 2030
Batteries for EVs and ESS
EV market
ESS market
ESS market has heavily relied on EV batteries in the past, but changing
performance requirements will lead to evolution of separate markets

13
Over the next 10 years, LFP will steal the show for ESS
applications
LFP made a comeback in energy storage market in 2018, and this time they are here to stay
NMC
LFP
NCA
Others
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015 2020 2025 2030
Marketshare(%storagedeployments)
NMC LFP NCA Others
Property ESS requirements EV requirements
Power/energy density Medium High
Cycle life
High – typically over
1000 cycles
Medium – typically 500
to 1000 cycles
Lifespan 10 year minimum 5 years minimum
Safety High High
Cost Low Low
Discharge rate Slow to medium Medium

14
Global Li-ion battery manufacturing capacity pipeline to
exceed 1,000 GWh within next five years
333
1,216
-
200
400
600
800
1,000
1,200
1,400
2019 2020 2021 2022 2023 2024 2025
Annualbatterymanufacturingcapacity(GWh)
Announced operational year
APAC Europe Americas Unknown

15
$90
$34
$100
$218 $200$40
$60
$65
$170
$100
$233
$45
$80
$70
$20
$20
$8
$-
$100
$200
$300
$400
$500
$600
Pre-2017 2017 2018 2019 H1 2020
Investments(USD,millions)
More than US$380 million was invested in advanced lithium-
ion technologies in H1 2020
Investor
Target
company
The ongoing investments in advanced
lithium-ion technologies are geared
towards improvements in the cost and
energy density of batteries
Undisclosed
Undisclosed
& others
Undisclosed
solid-state
technology
Undisclosed
& others
& others
Undisclosed
Undisclosed
Investor
Target
company
Investor
Target
company
Investor
Target
company
Investor
Target
company
Undisclosed
& others

16
Balance of system costs are taking over system price
reductions

17
To AC-couple or DC-couple?
AC-coupled solar-plus-storage will continue to dominate, but DC-coupling will gain traction
DC-DC
converter
AC-coupled solar-plus-storage DC-coupled solar-plus-storage
Storage inverter
PV inverter PV inverter

18
System designs are evolving as the market moves away
from bespoke projects to standardization
Cabinet based lithium-ion energy storage systemContainerized lithium-ion energy storage system

19
System price forecast

20
Alternatives to NMC batteries will drive future reductions in
system prices
Turnkey system price forecast for 4-hour duration system, NMC vs
LFP, 2020E - 2025E ($/kW)
Turnkey system price forecast for 2-hour duration system, NMC vs
LFP, 2020E - 2025E ($/kW)
$500
$550
$600
$650
$700
$750
$800
2020E 2021E 2022E 2023E 2024E 2025E
Turnkeysystemprice($/kW)
NMC LFP
$500
$600
$700
$800
$900
$1,000
$1,100
$1,200
$1,300
$1,400
$1,500
2020E 2021E 2022E 2023E 2024E 2025E
NMC LFP

21
UK leads the way with most competitive all-in storage
system costs across Europe
$500
$550
$600
$650
$700
$750
$800
$850
$900
$950
$1,000
2020E 2021E 2022E 2023E 2024E 2025E
UK Germany
Turnkey system price forecast for 2-hour duration system in Europe, 2020E - 2025E ($/kW)

22
APAC countries will see a faster decline in system prices
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
2020E 2021E 2022E 2023E 2024E 2025E
Australia
$-
$100
$200
$300
$400
$500
$600
2020E 2021E 2022E 2023E 2024E 2025E
China
Turnkey system price forecast for 2-hour duration LFP system in
China, 2020E - 2025E ($/kW)
Turnkey system price forecast for 2-hour duration NMC system in
Australia, 2020E - 2025E ($/kW)

23
Thank You!
Mitalee Gupta
Senior Analyst
mitalee.gupta@woodmac.com

Day 2 Woodmac Spotlight

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