Eye on the Market | November 21, 2011 J.P Morgan Topic: The quixotic search for energy solutions There’s no room to go through the complexities of the storage technologies shown below. Here are a couple of generalizations: e Less expensive options like pumped hydro and compressed air storage require favorable sites with the right geology, which are rare in nature and expensive to build from scratch (and often not located near electricity demand centers), and in the case of compressed air, require co-located gas turbines for compression e Many battery-based technologies suffer from high upfront capital or operating costs; low energy storage volumes; delayed response times; safety issues (such as zine bromine); or short lives (limited number of recharge cycles) I had a meeting a few weeks ago which was notable for its The cost of electricity storage options optimism and enthusiasm. I met with the managers of Eos Range of levelized costs, $ perkWh Energy Storage, which is working on a zinc air battery solution $0.60 which aims to conquer all of the obstacles outlined in the second bullet point above. If the Eos projections bear out, they will offer $0.50 battery storage at a capital cost of ~$160 per kWh, in the form of a 1 MW battery that is the size of a 40 foot shipping container (for 6 MWh of storage). As with the table on page 2, the concept —g9.40 L of “levelized cost” synthesizes upfront costs, financing costs, useful life, fuel costs and ongoing maintenance expenses. Rather L than looking projections of capital costs per kWh, levelized cost $0.30 comparisons are more useful. As shown, Eos aims to be the i cheapest option that can be scaled, and flexibly and safely located 55.30 = L | | where needed. Note as well that they expect to be cheaper than natural gas peaking plants. This is a relevant benchmark, since oa] L [| most utilities rely on natural gas peaking plants to meet daily $0.10 peak load requirements and to compensate for intermittent fst 2 8B gs 6 §&