Storelectric

www.storelectric.com© 2018 Storelectric Ltd This presentation represents the current views and intentions of Storelectric at the time of writing.
Mark Howitt, Director
07910 020 686
mhowitt@storelectric.com
www.storelectric.com
Storelectric Ltd
Enabling Renewables
to Power the Grid

The Problem and Solution
The Problem
• Renewables are intermittent
• GW scale renewables need GW scale back-up
GW = Gigawatt, enough electricity to power a million people with their industry and infrastructure
The Solution
• Large scale, long duration storage
• Each plant stores more electricity than a year’s output of Elon Musk’s Gigafactory
• The UK has geological potential to power Europe for a week

Notes page for The Problem and Solution
The Problem
Renewables are intermittent
They generate when they want to, not when we need them
Therefore they need back-up – at the same scale
Fossil fueled power station operating inefficiently
£2bn p.a. to back up electricity now, doubling in ~5 years
GW scale renewables need GW scale back-up
Consider a windless winter night (a frequent occurrence) when renewables are powering all variable demand on the grid
There is a 5-hour peak in demand coming up, as happens every night
The peak is up to 30GW more demand than baseload generation, which is normal
Will 30-60 minute duration battery supply the 5-hour peak?
Will megawatt scale batteries satisfy gigawatt scale need?
The Solution
Large scale, long duration storage
Each installation can replace a power station
Complements batteries, interconnectors and other technologies
The UK has geological potential to power Europe for a week
Suitable geologies globally
Does not compete with batteries, except on the periphery. Consider the road system: side and feeder roads are needed to support trunk
roads and motorways; the latter are required to take the load off the former and enable them to work effectively. We are like the trunk
roads and motorways; they are like the side and feeder roads. All are needed, all are complementary – as with interconnectors, flywheels,
demand side response etc. With large scale long duration storage, the system works; without it, it fails.

The world’s biggest battery, using
just air, water, salt and equipment
Typical sizes:
40MW, 200-500MWh
500MW, 3-12GWh
Compressed Air
Energy Storage
using Thermal
Energy Storage
Storelectric’s
TES CAES

The world’s most efficient and cost-effective large scale electricity storage.
Round trip efficiency ~62-64% for 40MW, ~70% for 500MW (existing plants are 42-50%)
Almost as efficient as pumped hydro, less than 1/3 of the cost (depending in part on
location), much closer to both supply and demand
Capex for a 5 hour plant is comparable with capex of a half-hour battery of the same rating
Efficiency increases with scale, in contrast with batteries
Notes page for Storelectric’s TES CAES

Comparison with other CAES technologies

Compressed Air
Energy Storage
within a
Combined Cycle
Gas Turbine
power station
Grid,
Storelectric’s
CCGT CAES

Notes page for Storelectric’s TES CAES
Round trip efficiency ~60% (existing plants 42-50%; new versions aspire to 54%)
The only CAES technology that can be retro-fitted to CCGT or OCGT power
stations over the right geology
Gives new life to stranded power station assets:
• Almost halves emissions
• Adds storage related revenue streams
• As electricity price volatility increases (see a later slide), opex drops significantly
below that of the power station
Much cheaper than any other CAES technology – but can’t estimate costs
because that depends on what we’re retro-fitting. New, it costs only ~£10-15m
more than a CCGT.

A salt mine much smaller
than our caverns which
are ~300m tall
An Idea of Scale
Cavern Size
• Our small plants’ caverns
~2 x St Paul’s Cathedral
• Our large plants’ caverns
~25 x St Paul’s Cathedral
What is a Cavern?
• Drill a hole, pump in water, pump out brine,
what’s left is the cavern
• Cheap, well known technology
• ~1/3 of Europe’s natural gas reserve is
stored in salt caverns
• Naturally hermetic
• Pressure is determined by depth

Notes page for An Idea of Scale
Note: This is a mine, not a salt cavern. It’s shown only to illustrate scale: for our small
pilot plant (200MWh) we will use two caverns each almost as big as St Paul’s
Cathedral in London.
People and machines go down mines.
To make a cavern,
1.Drill a hole into the salt basin
2.Pump in water, pump out brine; what’s left is the cavern.
Salt caverns are naturally hermetic and self-healing in case cracks develop.
Approaching 1/3 of all natural gas storage in Europe is stored in such salt caverns.

The Market
Top-Down
• $1trn market to deliver dispatchable power
• And that’s just the capital cost of building them
• 3-6x more to deliver baseload
• 3-10x more to support de-carbonisation of transportation and industry
Bottom-Up
• Each 40MW plant delivers 12-15% IRR
• Each 500MW plant delivers 15+% IRR
• Whole project IRR – much greater if largely project financed
• IRR growing as renewables penetration grows

Notes page for The Market
In the UK the market is over 20GW.
The government’s TINA (Technology Innovation Needs Analysis) for Electricity Networks and Storage determined that the country needs a
median 27.4GW and 128GWh (i.e. 5 hours average duration) of new storage. https://www.carbontrust.com/media/168551/tina-electricity-
networks-storage-summary-report.pdf – see Chart 2.
• We can ignore their breakdown of technologies. Total new pumped hydro planning applications are 1.05GW, none of which looks to be
sufficiently cost-effective to be built.
• For batteries, 0.1GW are operational, 0.6GW in construction, 1.1GW planning approved, 1.7GW planning pending [total so far 3.4GW]
and a further 12GW with DNO applications outstanding (see https://auroraer.us11.list-
manage.com/track/click?u=095bcc5477fce868775bbbd67&id=ded62ab359&e=e8860559df) but most of which are unlikely to be built due
to:
1. The elimination of EFR (see Stage 1: Rationalisation p14 in https://www.nationalgrid.com/sites/default/files/documents/Product
Roadmap for Frequency Response and Reserve.pdf ),
2. The saturation of the Primary Frequency Response market (see https://utilityweek.co.uk/frequency-response-market-nearing-
saturation-industry-warned/ ) and
3. The heavy de-rating of batteries in the Capacity Market (see https://www.emrdeliverybody.com/Lists/Latest
News/Attachments/150/Duration Limited Storage De-Rating Factor Assessment - Final.pdf – table E1 p5).
Other analyses lead to similar conclusions: superimposing actual wind patterns on 2030 forecast wind generation yields a need for 30GW
storage; the National Infrastructure Planning document sees needs at a similar level, etc.
And that is just for peak smoothing, i.e. enabling renewables to deliver variable power. When baseload plants close (and few, if any, nuclear
plants will open in time) then we need 3-6 times as much storage to enable renewables to supply baseload. And much more is needed to
support the greening of heating (mainly via electrically driven heat pumps), transportation (electricity and hydrogen) and industry.

IP, Competition
Intellectual Property
• Patentable: thermal storage system
• Knowhow: system integration, trading, sites, partnerships
Competition
Storelectric
Adiabatic CAES
Existing CAES Isothermal CAES Status Quo
Efficiency 68-70% 50% Unsuccessful
(targeted 70%)
Power stations operate
very inefficiently
Emissions
(% of a power station)
0% 50-60% Scavenging heat
(large scale impossible)
>> 100%
Capex
150% 180% >> 200% 100%
Opex (2025 estimate)
60% 85% n/a 100%
CAES = Compressed Air Energy Storage

Notes page for IP, Competition
Intellectual Property
Patentable: thermal storage system
Over one-third more efficient than current technologies (~70% v 50%)
IP will keep us ahead of competitors – efficiency goes straight to profits
Knowhow: system integration, trading, sites, partnerships
Competition
Existing CAES
50% efficient – we are 68-70%
50-60% of emissions of a CCGT – ours are zero
More expensive capex than ours
The Status Quo
Balancing renewables using fossil fueled power stations, inefficient and high emissions
Isothermal CAES
Different technology from ours: isothermal rather than adiabatic
Adiabatic (us) balances heat over the whole cycle; isothermal (them) optimises compression
Fundamentally weak concept: 3 existing businesses folded / folding

The Team Partner Companies
Paul Davies, Chairman
Former Senior Partner, PwC Corporate
Finance Infrastructure; former Director,
HSBC infrastructure
Tallat Azad, Managing Director
Chartered Engineer; former Director,
Alstom Power – new technologies,
responsible for energy storage.
Mark Howitt, Chief Technical Officer
Inventor, Physicist, business experience
in both multinationals and consultancy,
3 start-up subsidiaries, IP experience
Jeff Draper, Chief Financial Officer
Accountant, Physicist, entrepreneur,
former partner in accounting firm

Notes page for The Team Partner Companies
Our partner companies provide all the capabilities we need.
Siemens – top-side equipment and control systems
Costain – engineering and civils
PwC – corporate finance and advisory
Maloney Metalcraft – thermal energy subsystem
Dentons – legal and advisory
Fortum – dynamic modelling and optimization support
KBB UT – rock mechanical analysis, cavern design and support
ERM – planning and environmental support
Oswald – the initial calculations and analyses of alternatives
Durham University – R&D on future technological developments
Shell Springboard awarded us our first money when we won their regional competition

The Ask: 4 investment opportunities – 1. Topco
1. Topco
Storelectric Ltd
• £1m at £10m valuation
• Develop new sites in preparation for setting up an SPV
• These SPVs will develop revenues in 6-12 months
• Develop capabilities in project management, plant operation, trading
• Already raised £550k at valuations up to £2.5m in previous rounds

Notes page for The Ask: 4 investment opportunities – 1. Topco
Topco
£1m at £10m valuation
IRR 15%, SEIS pre-approved, seeking EIS confirmation but this is far from guaranteed as Inland
Revenue’s rules changed.
Develop new sites (4-6 p.a. initially, increasing) using 2 technologies, to flip / spin off
Develop capabilities in project management, plant operation, trading
Will also develop new and hybrid technologies
Storelectric licenses TES CAES from TES CAES Technology Ltd, whose three main shareholders /
directors are common to both
Storelectric owns the other technology and future developments that are not specific to TES CAES
Already raised £400k at valuations up to £2.5m
Also raised £150k for IP company

The Ask: 4 investment opportunities – 2. Development
2 and 3. Plant Development SPVs (both types)
SPV = Special Purpose Vehicle / Company – a separate company from Storelectric
• 2. Distribution Connected Plant (up to 50MW)
• £2.5m at £4m valuation (60%)
• IRR 12-15%
• Develop a new plant to shovel ready, 1 year (local planning process)
• Exit by flipping – reinvest in next plants if EIS invested
• 3. Transmission Connected Plant (typically 500MW)
• £8m at £13.3m valuation (60%)
• IRR 15%+
• Develop a new plant to shovel ready, 3 years (NSIP planning process)
• Exit by flipping – reinvest in next plants if EIS invested

Notes page for The Ask: 4 investment opportunities – 2. Development
Plant Development
£2.5m at £4m valuation (60%)
Connected to the distribution grid
Typical size 40MW, 200MWh
IRR 12-15%
Develop a new plant to shovel ready, 1 year
Exit by flipping – reinvest in next plants if EIS invested
Note: EIS status is far from guaranteed as Inland Revenue rules exclude “generation”. Although we don’t generate (which we are
discussing with HMRC), storage is defined legally as consumption plus generation. Even so, this is project development which, if it
does not trade electricity (other than perhaps during commissioning) then it may be acceptable.
£8m at £13.3m valuation (60%)
Connected to the transmission grid
Typical size 500MW, 2.5GWh
IRR 15%+
Develop a new plant to shovel ready, 3 years
Exit by flipping – reinvest in next plants if EIS invested
Note: EIS status is far from guaranteed as Inland Revenue rules exclude “generation”. Although we don’t generate (which we are
discussing with HMRC), storage is defined legally as consumption plus generation. Even so, this is project development which, if it
does not trade electricity (other than perhaps during commissioning) then it may be acceptable.

The Ask: 4 investment opportunities – 4. Construction
4. Plant Construction SPV
SPV = Special Purpose Vehicle / Company – a separate company from Storelectric
• £50m
• IRR 12-15% at constant revenues and costs
• Revenues are forecast to grow strongly
• Operational costs are forecast to decrease strongly
• Highly flexible plant able to accommodate a rapidly
shifting regulatory landscape
• 5-hour storage is not de-rated for duration on the
Capacity Market, qualifies for Reserve revenue streams
• Develop a new plant from shovel ready to post-
commissioning, 2 years
• An infrastructure play
• Exit by either re-financing (e.g. 75% of the firm at 6%
leads to a return on equity of ~32%) or sale
~25% of revenues are from
arbitrage, following roughly
the top blue dotted line
~80% of opex is electricity
purchase costs, roughly the
bottom blue dotted line
~50% of revenues are
from balancing and
ancillary services

Notes page for The Ask: 4 investment opportunities – 4. Construction
The IRR is calculated on the assumption of constant trading conditions.
However, trading conditions are improving in almost all revenue
sources and in the main operational cost source, as per the graphs.
Therefore returns on investment should be considerably higher.

Mark Howitt, CTO
+44 (0) 7910 020 686
mhowitt@storelectric.com
Storelectric Ltd
Compressed Air Energy Storage
Enabling renewables to power the grid
Jeff Draper, CFO
+44 (0) 7919 536 551
jdraper@storelectric.com
Tallat Azad, MD
+44 (0) 7875 880 262
tallat.azad@storelectric.com
Paul Davies, Chairman
+44 (0) 7802 869 074
pdavies@storelectric.com

Storelectric

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