商業企畫書：大規模能源儲存系統之軟體解決方案 - 政大學術集成

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(1)國立政治大學商學院國際經營管理英語碩士學位學程 International MBA Program College of Commerce National Chengchi University. 立. 政治大碩士論文. ‧. ‧ 國. 學. Master’s Thesis. Nat. y. 商業企畫書：大規模能源儲存系統之 er. io. sit. 軟體解決方案. n. a l Plan: Software Solutions Business iv. n U i e n g c hStorage for Large Scale Energy Systems. Ch. Student: Daniel Robinson Advisor: Professor Wen-Chieh Jack Wu. 中華民國一〇六年一月 January 2017.

(2) 商業企畫書：大規模能源儲存系統之軟體解決方案 Business Plan: Software Solutions for Large Scale Energy Storage Systems. 研究生：羅丹. Student: Daniel Robinson. 指導教授：吳文傑. 立. Advisor: Wen-Chieh Jack Wu. 政治大. ‧ 國. 學國立政治大學. ‧. 商學院國際經營管理英語碩士學位學程. y. A Thesis. n. a. er. io. sit. Nat. 碩士論文. v. i l to Submitted C International MBAnProgram. i U. h. e n g c hUniversity National Chengchi. in partial fulfilment of the Requirements for the degree of Master in Business Administration 中華民國一〇六年一月 January 2017.

(3) Acknowledgements As individuals we accomplish very little, but as teams, groups, and societies working together, humans have accomplished some of the world’s greatest feats. To that end, I would never have been able to walk on this journey without the unending encouragement of so many family and friends. My fiancé, Eling, has been a true partner the last year and a half in Taiwan. I can’t thank her enough for her willingness to move halfway around the world together and create a home in Taipei. The support of both of our families has also made our time in Taiwan possible. Completing the IMBA program at National Chengchi University has been a truly life-enriching experience. I’ve been able to learn from great professors, make new friends from across the. 政治大. world, and gain a new perspective on the systems that make our world work. Thank you so, so much to the IMBA staff that makes it all possible. Thank you to my advisor, Professor Jack. 立. Wu, and Chester Ho who was a great influence on me. Thank you to the people of Taiwan who. ‧. ‧ 國. 學. have made me feel welcome everyday spent on their incredible island.. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v.

(4) Executive Summary Business Plan: Software Solutions for Large Scale Energy Storage Systems By. Daniel Robinson The way the world creates and distributes energy is changing. In 2015 77% of the world’s new power generation installations were either wind or solar PV. These forms of energy are by their nature intermittent – the sun will never shine 24 hours a day. With the rise of these intermittent energy sources, the need to store the energy they create has also risen. Batteries are emerging as a popular choice to solve this problem, with some analysts predicting that by 2024 battery. 政治大. energy storage will reach a scale of 12.5 gigawatts and become an industry with $165 billion in annual revenue. The increase in electric vehicles has caused the average price of lithium-ion. 立. batteries to plummet in recent years with expectations of this trend continuing. Managing the. ‧ 國. 學. energy stored in many, distributed batteries is difficult, but when done right has numerous benefits. This business plan outlines the way Energy Max will provide a software platform to. ‧. manage battery energy storage.. y. Nat. Energy Max plans to sell its software directly to battery energy storage system manufacturers.. sit. The company will leverage its connections in Asia in order to focus on potential customers in. er. io. China and Taiwan. By pursuing this strategy, the company can become a trusted partner to. al. n. v i n C h will be required return for providing the software, customers e n g c h i U to pay a one-time integration fee. these manufacturers in helping them build a more complete solution to provide end-users. In as well as a $15/kWh fee for batteries utilizing the software.. This business plans assumes the first year of operations will be spent both building the product and developing Energy Max’s pipeline of future customers. In Year 2 the company will have two customers, but deployment of batteries with the software platform will still be low due to the likely cautious nature of customers. Under a normal growth scenario, the company will grow to Year 5 when Energy Max will attract 18 customers and have its software on 1% of worldwide Li-ion energy storage installations. Following this plan will require $3.5 million of outside funding and positive net income after tax in Year 4.. ii.

(5) Table of Contents Mission....................................................................................................................................... 1 Problems Related to Energy Storage ......................................................................................... 1 Demand Charge Management for Energy Customers and Transmission Management for Energy Producers ................................................................................................................... 1 Grid-scale Renewable Power Integration .............................................................................. 3 Distributed Generation ........................................................................................................... 3 Frequency Regulation ............................................................................................................ 5. 政治大. Market Analysis ......................................................................................................................... 5. 立. Total Market Growth ............................................................................................................. 6. ‧ 國. 學. Market Segments ................................................................................................................... 8 Regulatory Environment and Electricity Rate Design ......................................................... 10. ‧. Geographic Breakout: United States.................................................................................... 12. y. Nat. io. sit. Geographic Breakout: China ............................................................................................... 13. er. Geographic Breakout: India and Taiwan ............................................................................. 14. al. n. v i n Key Industry Players ................................................................................................................ 15 Ch engchi U. Tesla ..................................................................................................................................... 15 Sonnen ................................................................................................................................. 17 AES Energy Storage (AES) ................................................................................................. 18 Other Players........................................................................................................................ 19. Product Analysis ...................................................................................................................... 20 Energy Storage Value Chain................................................................................................ 20 Lithium-Ion & System Costs ............................................................................................... 22 Company Strategy.................................................................................................................... 23. iii.

(6) Management Team, Culture, and Organizational Structure ................................................ 23 Value Propositions and Product Overview .......................................................................... 25 Target Customers ................................................................................................................. 27 Sales and Marketing Strategy .............................................................................................. 29 Pricing .................................................................................................................................. 31 Competitive Analysis ........................................................................................................... 33 SWOT Analysis ................................................................................................................... 36 Financial Projections ................................................................................................................ 37. 政治大 Projected Income Statements ............................................................................................... 39 立 Sales and Revenue Assumptions ......................................................................................... 37. ‧ 國. 學. Projected Cash Flow Statements.......................................................................................... 41 Projected Balance Sheets ..................................................................................................... 42. ‧. Outside Funding ................................................................................................................... 42. Nat. n. al. er. io. sit. y. References ................................................................................................................................ 44. Ch. engchi. iv. i n U. v.

(7) Figures and Tables Figures Figure 1: Example scenario of excess power demand ............................................................... 2 Figure 2: Annual solar PV installations in the U.S. 2006-2016E .............................................. 4 Figure 3: Global energy storage and capacity and growth rate 2000-2015 ............................... 6 Figure 4: Global distribution of energy storage projects by capacity and number of projects end of 2015 ........................................................................................................................ 7 Figure 5: Example scenario of electric grid ramp up needed with renewables ......................... 9. 政治大. Figure 6: Lithium-ion battery cost reductions 2009 – 2013 .................................................... 22. 立. Figure 7: Organizational Chart ................................................................................................ 24. ‧ 國. 學. Figure 8: 2014 manufacturing costs and selling price for Li-ion battery manufacturers......... 33. ‧. Tables. y. Nat. sit. Table 1: Energy storage growth predictions by market type, geography, and research source . 8. n. al. er. io. Table 2: New Chinese energy storage market entrants 2015-2016Q2 .................................... 14. i n U. v. Table 3: Taipower electricity rate design and charges ............................................................. 15. Ch. engchi. Table 4: Tesla battery energy storage products ....................................................................... 17 Table 5: Sonnen battery energy storage products .................................................................... 18 Table 6: Summary of other energy storage companies and products ...................................... 20 Table 7: Hiring plan first 5 years ............................................................................................. 25 Table 8: Salary structure first 5 years ...................................................................................... 25 Table 9: Summary energy system manufacturers and potential customers ............................. 29 Table 10: Popular Asian based energy storage and renewable energy conferences ................ 31 Table 11: Revenue expectations and pricing structure ............................................................ 33 Table 12: Revenue expectations and pricing structure in a normal scenario ........................... 38. v.

(8) Table 13: Revenue expectations under slow growth scenario ................................................. 38 Table 14: Projected income statement normal scenario .......................................................... 39 Table 15: Income statement under slow growth scenario ........................................................ 40 Table 16: Projected cash flow statement normal scenario ....................................................... 41 Table 17: Projected cash flow statement slow growth scenario .............................................. 41 Table 18: Projected balance sheet normal scenario ................................................................. 42 Table 19: Projected balance sheet slow growth scenario......................................................... 42 Table 20: Projected cash flow statement with two rounds of outside financing ..................... 43. 政治大. Table 21: Projected balance sheet with two rounds of outside financing ................................ 43. 立. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. vi. i n U. v.

(9) Mission Our planet’s climate is changing. Regardless of one’s personal beliefs as to whether this change is manmade or part a natural cycle, it is happening. Because of this, the deployment of sustainable energy sources has skyrocketed in recent years. In the United States in 2015, wind energy was the largest source of new electricity generation, followed by natural gas and solar.1 These changes to the electricity generation landscape and the rise of intermittent energy sources present an opportunity.. Energy Max imagines a world where smart battery technology used for energy storage is as ubiquitous as a home water heater. We aim to provide every home and office in the world with this technology.. 立. 政治大. Our goals are of course to have healthy financial returns, but to also be a steward for. ‧ 國. 學. greenhouse gas reduction and a transition to a more sustainable energy system in the future.. ‧. Problems Related to Energy Storage. y. Nat. n. al. er. io. sit. Energy storage solutions are capable of solving four important use cases described below.. i n U. v. Demand Charge Management for Energy Customers and Transmission Management for Energy Producers. Ch. engchi. Battery energy storage has a similar use case for both energy customers and producers. This can be referred to either demand charge management for energy users or transmission management for energy producers.. Some energy customers pay a price for the maximum energy level they use during a given billing period or during what a utility decides is a “peak demand period.” These charges are called demand charges and energy storage can be used to lower these charges by saving energy in the battery during times of low demand, then discharging energy from the battery during times of peak demand, therefore reducing the highest amount of power the customer draws from the grid. Demand charges can vary largely by state, utility, and season. For 1. https://www.eia.gov/todayinenergy/detail.php?id=25492. 1.

(10) example, in Arizona alone one utility, Arizona Public Service, charges a $16.40/kW rate for demand charges in the summer and $11.50/kW in the winter for solar customers. Another Arizona utility, Salt River Project, implemented a $29.00/kW demand charge for solar energy users.2 It’s been estimated that 30 to 50 percent of a hotel’s energy bill is from demand charges.3 Even in Taiwan one statistic has estimated demand charges can amount to as much as 62 percent of a residential energy bill.4. An analysis done by McKinsey and Co. stated the break-even point for customers paying a demand charge is $9 per kilowatt - making energy storage for the Arizona customers described above a very worthwhile investment. The same report predicted this break-even point could fall to $4 or $5 per kilowatt based on the falling costs of lithium-ion batteries.5. 治政大 $15 per kilowatt, which is the case in 7 U.S. states currently. 立. However, GTM Research reports that the break-even point for demand charges is closer to 6. ‧ 國. 學. Energy producers refer to a similar concept as transmission management. It is essentially the same idea as demand management, but from the perspective of a utility company.. ‧. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. Figure 1: Example scenario of excess power demand Source: Energy Storage Benefits, energystorage.org. 2. https://www.greentechmedia.com/articles/read/New-APS-Rate-Case-Seeks-Mandatory-Demand-Charges https://www.greenbiz.com/article/how-hotel-industry-benefits-energy-storage 4 http://www.renewableenergyworld.com/articles/2016/01/one-good-year-deserves-another-energy-storage-in2016.html 5 http://www.mckinsey.com/business-functions/sustainability-and-resource-productivity/our-insights/the-neweconomics-of-energy-storage 6 https://www.greentechmedia.com/articles/read/sonnen-and-greensmith-enter-the-commercial-energy-storagefray 3. 2.

(11) Take for example the scenario presented in the figure above. The demand for power has exceeded the ability of a utility to meet demand. This scenario would result in a power blackout for some portion of a region, but in the real world a utility - through years of practice and experience - is likely to add capacity 1-2 years before this scenario happens. It is important to note that the investment in additional capacity has traditionally made more economic sense to do in large chunks. Typically, adding 30%-50% more capacity in a project. With the decreasing costs and increasing capacity of Li-ion storage, adding battery storage is becoming an option for utilities to management this demand. The benefits include: delaying equipment upgrades, freeing capital for other projects, and reducing risk associated with large capital lump investments.7 The (projected) largest energy storage project in the world at 37.5 MW is used for this problem in southern California.8. 立. 政治大. Grid-scale Renewable Power Integration. ‧ 國. 學. The increase of variable generation energy technologies such as large scale solar farms and wind farms have also created a need for battery energy storage. By the nature of these. ‧. technologies, the power produced is intermittent and needs to be smoothed out. Battery storage can reduce the variability. In the U.S., one of the largest wind battery installations is. sit. y. Nat. part of Hawaii’s Kahuku wind plant and consists of ten 1.5 MW/1.0-MWh batteries.9 Similarly, Tesla recently announced it powers nearly 100% of the power on the American. io. al. n. batteries.10. er. Samoa island of Ta’u with the combination of solar and 60 of their Li-ion Powerpack. Ch. engchi. i n U. v. Distributed Generation Distributed generation refers to battery use cases that involve providing power with the attempt to limit or completely remove the need to use electrical grid energy.. One such problem being solved by batteries is backup power in the case of emergencies. Traditionally, diesel generators have been used for such scenarios. However, despite a diesel generator retailing for around $2,500 USD and a home lithium-ion backup system retailing 7. http://energystorage.org/energy-storage/energy-storage-benefits/benefit-categories/grid-infrastructure-benefits http://www.utilitydive.com/news/inside-construction-of-the-worlds-largest-lithium-ion-battery-storagefaci/431765/ 9 http://www.nrel.gov/docs/fy16osti/64764.pdf 10 http://www.theverge.com/2016/11/22/13712750/tesla-microgrid-tau-samoa 8. 3.

(12) for at least double that (and sometimes much more), a representative from the battery system company Sonnen recently stated 90% of the home batteries they sell in the U.S. are being used for backup power. This was based on data indicating the method that customers chose to use their batteries post-purchase, not customer buying intention. “This is an emotional sell, totally an emotional sell,” said the representative Greg Smith, senior technical trainer.11. A very important use case for battery storage is being combined with smaller scale solar energy. In order to understand the market for smaller-scale energy storage, we must briefly look at the residential solar market. The PV solar installation market in the United States has been increasing rapidly in recent years. See graph below.. 立. 政治大. ‧. ‧ 國. 學 er. io. sit. y. Nat. Figure 2: Annual solar PV installations in the U.S. 2006-2016E. n. al. Ch. Source: GTM Research. engchi. i n U. v. The rise in solar installations is attributed to three things. First, the cost of solar panels has decreased significantly due to economies of scale in Chinese production. Next, new and innovative financing mechanisms offered by many solar installation companies have created strong demand for residential solar worldwide. These are mainly power purchase agreements and leasing options that require solar purchases to put no money down and pay for energy as they use it. Lastly, and most importantly for this business model, the proliferation of netmetering and feed-in-tariff government policies have allowed solar customers to make money from excess energy generated by their panels by selling it back into the grid at or above the cost they pay for energy. However, these laws are becoming very contentious. Many states in the U.S. have reached the maximum amount that solar customers are allowed to sell back to 11. https://www.greentechmedia.com/articles/read/how-to-sell-energy-storage-when-the-economics-dont-work. 4.

(13) the grid (in aggregate). Realizing that the goal of these policies to kick start the solar energy industry has been reached, many states are analyzing these policies and starting to opt to allow solar energy to compete on a subsidy-free basis. In fact, in 2015 Hawaii ended its netmetering program and Nevada has already agreed to cut net metering payments as of January 1, 2016. Many additional states are in the process of legislative battles.12. There are many intricacies of net metering regulations on a state-by-state level in the U.S., but the main point is that as solar customers are no longer able to make money by selling excess energy to the grid, they will need something to do with this excess energy. Hence, the demand for on-location battery storage will increase.. 治政大in power generation and The electric grid is in constant flux because of the imbalances 立 consumption. Any imbalance in the supply and demand of power puts a strain on grid Frequency Regulation. ‧ 國. 學. equipment and large deviations can affect the stability of the electric grid as a whole. Batteries are good solutions to this problem because they can respond very fast if power is. ‧. needed to be discharged (providing additional supply) or if excess power needs a place to go (providing additional demand). Traditionally, special gas or coal “peaker plants” have. y. Nat. sit. performed this activity. Batteries are able to respond quicker, but do not last as long. The. er. io. PJM grid operator now has about 110 MW of fast responding energy storage assets attached to it.13 In fact, in 2014 two-thirds of the energy storage installed in the U.S. was connected to. n. al. Ch. PJM for the purpose of frequency regulation.14. engchi. i n U. v. Market Analysis The time to enter the battery energy storage market is now. In a November 2015 report on the low carbon economy as a whole, Goldman Sachs stated, “While the policy debates often center on 2030 forecasts and 2050 targets, we expect the greatest market dislocations to occur. 12. http://climatenexus.org/net-metering-fight-understanding-latest-issue-nation%E2%80%99s-rapidly-changingelectricity-market 13 http://www.renewableenergyworld.com/articles/2016/02/fast-responding-energy-storage-digs-into-frequencyregulation-market.html 14 http://www.renewableenergyworld.com/articles/2016/01/one-good-year-deserves-another-energy-storage-in2016.html. 5.

(14) between 2015 and 2025.”15 This allows companies entering the market now to have advantages such as developing market share, establishing partner and supply networks, and creating customer relationships that cannot be ignored.. Total Market Growth Most importantly, the market for energy storage has been growing and this trend will continue. The below graph shows global battery energy storage capacity and growth rate from 2000 - 2015. At the end of 2015 there were 327 energy storage projects in operation for a total of 946.8 MW.16. 立. 政治大. ‧. ‧ 國. 學 er. io. sit. y. Nat. al. n. v i n C Energy Storage Alliance,Ucnesae.org Source: Chinah engchi. Figure 3: Global energy storage and capacity and growth rate 2000-2015. The geographic distribution of current energy storage projects is predominantly made up of the U.S., Japan, and China, with Europe and other countries combining to make up the rest. The global distribution is shown below.17. 15. http://www.goldmansachs.com/our-thinking/pages/new-energy-landscape-folder/report-the-low-carboneconomy/report.pdf 16 http://en.cnesa.org/featured-stories/2016/6/8/energy-storage-china-conference-2016-review-chinas-energystorage-market-to-reach-642-gw-by-2020 17 http://en.cnesa.org/featured-stories/2016/6/8/energy-storage-china-conference-2016-review-chinas-energystorage-market-to-reach-642-gw-by-2020. 6.

(15) 立. 政治大. Figure 4: Global distribution of energy storage projects by capacity and number of projects end of 2015. ‧ 國. 學. Source: Energy Storage Benefits, energystorage.org. In each geographic market, there are also various end use markets for battery energy storage. ‧. related to which of the 4 problems stated above that they are solving. Generally, larger scale battery installations would be referred to as “behind-the-meter” and smaller scale installations. y. Nat. sit. can be referred to as “front-of-the-meter.” These refer to if the battery installation is being. er. io. installed before grid energy reaches an end customer or after grid energy reaches an end. al. v i n must be employed to serve differentC types of customers and h e n g c h i Ubuying criteria. Additionally, different product solutions need to be developed for these two types of applications. Both of n. customer. In both of those types of situations different sales tactics and marketing strategies. strategies are discussed in future sections of this business plan, but forecasts for the type of markets are listed below:. Location. Type. Research Organization Source. Forecast. Distributed energy storage market. Navigant Research. 2024: Installations will reach 12.15 GW and $165B annual revenue. Grid-scale ancillary services market. Navigant Research. 2024: Installations will reach 20.8 GW and $68.5B annual. Global. 7.

(16) revenue Energy storage + renewables market. Navigant Research. 2025: Newly added installations will break 12.7 GW. Distributed solar + storage market. Navigant Research. 2024: Industry will reach scale of $23.1B. Microgrid market. GTM Research. 2018: U.S. microgrid capacity to reach 1.8 GW and $3B value. Customer-sited energy storage market. GTM Research. 2019: Will represent 45% of all energy storage projects. U.S.. 立. 政治大. Energy storage market. GTM Research. n. al. CNESA. 2020: Total installed capacity will reach 8.0 GW (55%). y er. io. Australia. 2020: Total installed capacity will reach 14.5 GW. sit. Nat. Distributed energy storage market. CNESA. ‧. ‧ 國. 學. 2021: Market size will reach $2.9B of which $1.6B (55%) will be behind-the-meter. Energy storage market China. 2021: Newly installed capacity will reach 2.118 GW. Energy storage market. Ch. v ni. GTM Research. engchi U. 2020: New installations will reach 244 MW. Distributed solar + storage market. KPMG India. 2023: solar + storage residential costs will be cheaper than grid coal costs. Energy storage market. GTM Research. 2024: New installations will reach 2.2 GW. Energy storage market. Yano Economic Research Institute. 2024: New installations will reach 2.2 GW. India. Japan. Table 1: Energy storage growth predictions by market type, geography, and research source. Market Segments The various market types for energy storage result in three main customer segments, which we can refer to as: utility customers, commercial customers, and residential customers.. 8.

(17) Utility customers are just that: large utility companies, although this segment can also contain something called a “grid operator” in the U.S., which is a little different than a utility company. The main problem that utilities look for energy storage to solve is transmission management problems and/or frequency regulation. Especially in regions where distributed solar energy is large, utilities are looking at battery energy storage to help with grid stability. This is because of what is now a “famous” curve called the duck curve. The below graph was released by a California grid operator which shows that with more solar energy, the grid will need to supply less during the middle of the day, but when the sun goes down a large ramp up problem will exist.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. Figure 5: Example scenario of electric grid ramp up needed with renewables Source: Inside Energy, http://insideenergy.org/2014/10/02/ie-questions-why-is-california-trying-to-behead-the-duck/. The sales cycles are relatively long, with many utilities requiring companies to go through a pilot project and/or information gathering phase. It is also predominantly a direct sales process which requires storage companies to go through the traditional process of hiring a sales team and building a pipeline, etc. Given the still nascent industry, utilities value energy storage companies that they can be assured will be in operation in the future.. Commercial storage is a growing segment of the energy storage market. As of September 2015, 6% of Fortune 500 companies had already decided to adopt an energy storage system. 9.

(18) and another 25% were actively considering it.18 These types of customers are likely to be retail companies, normally with many locations, and high users of energy. In the U.S., this would include companies like Wal-Mart, Macy’s, and Wells Fargo. Stem, a company discussed more below, has also sold a number of systems to hotels, which are high users of energy. These types of businesses are not likely to be well educated about what energy storage is and the full range of benefits of the solutions. Therefore, the sales process is likely to be longer and partly an education process as well. Some large retail companies will have a role in their company that is solely dedicated to energy and sustainability initiatives, which would be the initial point of contact.19. Customers in the residential energy storage market are likely to be existing solar energy. 治政大of who buys energy storage electricity rates (discussed below) will have a high correlation 立 products at this point. Only under these certain conditions will a residential energy storage. customers or actively considering a solar energy rooftop system. The local regulations and. ‧ 國. 學. system be cost effective, otherwise the customer is likely to have strong views regarding climate change and view the purchase as mitigating their climate footprint. However, as. ‧. mentioned before, Sonnen has stated it is selling their home Li-ion systems with the message that it is the best backup power system available. It’s likely we can loosely correlate potential. y. Nat. sit. residential storage customers to Tesla car purchases. Doing this we know that customers tend. n. al. er. io. to be wealthy with 75% of new Tesla Model S purchasers having a salary over $100,000.20. Ch. i n U. v. Lastly, the average American household uses about 30 kilowatt-hours per day. That varies. engchi. widely depending on location, climate and size of a household, but can used as a basis for the size of system needed for a single household.21. Regulatory Environment and Electricity Rate Design The regulatory environment is very important to the growing battery energy storage industry. Energy Max will be looking at two key regulatory frameworks to help in deciding on market entry strategies: policies and electricity rate design related to solar energy such as net-. 18. https://www.weforum.org/agenda/2015/09/why-fortune-500s-are-buying-into-energy-storage/ http://www.nytimes.com/2012/04/11/business/energy-environment/retailers-seek-to-conserve-energy-to-cutcosts.html 20 http://fortune.com/2015/07/29/tesla-millennials/ 21 https://www.eia.gov/tools/faqs/faq.cfm?id=97&t=3 19. 10.

(19) metering and demand charges, as well as any government mandates or subsidies directly in favor of the energy storage industry.. As previously described, locations where solar energy incentive policies are ending are strong choices for entering with battery storage products for distributed generation. The lack of ability to sell excess solar energy back to the grid provides strong demand for existing solar customers to buy battery storage. This was the case in the U.S. state of Hawaii which ended its net-metering policy in 2015 and then as of Q3 2016 was the state with the 2nd highest battery storage capacity installed (behind California).22 A similar effect has been seen in Germany as well. From 2013 - 2015 the largest utility in the U.S., Pacific Gas & Electric, increased demand charges by 30% providing incentive for customers to consider energy storage solutions.23. 立. 政治大. Furthermore, regulatory policies can exist that directly support battery storage. In 2016, the. ‧ 國. 學. United States Congress proposed two legislative bills that provide investment tax credits for energy storage (HR 5350 and S 3159). If passed, either of these bills would lower the cost for. ‧. installing energy storage. Specifically, HR 5350 would give a 30% investment tax credit to battery energy storage projects. Also in the U.S., state level policies can have strong impact. y. Nat. sit. on the battery storage industry. The New York state senate has introduced bill 7533 which. al. er. io. would establish procurement targets for utilities in the state, essentially forcing them to. n. purchase energy storage solutions. Similar bills are being debated in Minnesota, California,. Ch. i n U. v. and Massachusetts.24 In 2014, the California Public Utilities Commission (CPUC) approved a. engchi. decision that requires its three utilities to procure 1.3 GW of storage, largely causing the uptick in projects in the state.25. Overall, in Q2 of 2016 alone, 42 states and the District of Columbia took a combined 121 actions related to electricity rate design and/or legislation that would impact distributed electricity generation, which is key to battery storage.26 This shows that in the U.S. market. 22. “U.S. Energy Storage Monitor Q3 2016,” September 2016, GTM Research, www.greentechmedia.com https://www.weforum.org/agenda/2015/09/why-fortune-500s-are-buying-into-energy-storage/ 24 “U.S. Energy Storage Monitor Q3 2016,” September 2016, GTM Research, www.greentechmedia.com 25 https://www2.deloitte.com/content/dam/Deloitte/us/Documents/energy-resources/us-er-energy-storagetracking-technologies-transform-power-sector.pdf (Deloitte, 2015) 26 https://www.greentechmedia.com/articles/read/42-states-took-policy-action-on-distributed-solar-in-q2-2016 23. 11.

(20) these changes should be watched carefully as they can provide business opportunities that should not be missed.. The importance of regulation is of course not limited to the U.S. market. In 2015 China began its 13th Five Year Plan which included many energy storage related policies. Also in early 2016 the government released a report called “Guiding Opinions on Advancing ‘Internet + Smart Energy’ Development” that defined China’s target of building an energy internet. As China’s grid technology matures and improves there will be many opportunities for intelligent energy storage to emerge.27. Geographic Breakout: United States. 治政大currently the largest market in States market is an important market to investigate. It is also 立 terms of installed capacity. Due to the management team’s nationality, experience, and existing network, the United. ‧ 國. 學. The below figure shows the U.S. annual energy storage installations from 2012 - 2015 as well. ‧. as analyst expectations for 2016 - 2021. GTM Research has reported that Q4 2015 energy storage deployments in the U.S. were greater than all deployments in 2013 and 2014. y. Nat. sit. combined. In 2015, front-of-the-meter deployments were a stark minority, but as we can see. er. al. n. in future years.. io. below, the non-utility market is expected to gain increasing share of energy storage capacity. Ch. engchi. i n U. v. Figure X: U.S. Annual Energy Storage Deployments (2012-2021E). 27. “Energy Storage White Paper 2016,” China Energy Storage Alliance (CNESA), www.cnesa.org. 12.

(21) Geographic Breakout: China China is the world’s largest producer and consumer of energy and therefore is an important geographic market for all energy industry companies (along with almost all industries). As we saw above, China is responsible for 11% of the global energy market, however from 2010 - 2015 the growth rate (CAGR) of installed energy storage in China was 110%, which is over six times the global rate. This was mostly in the large-scale utility market.28. China is also integral to the manufacturing of Li-ion battery cells. At the end of 2015, the top two Li-ion battery manufacturers by installed capacity were Chinese companies. The company with the greatest installed capacity was A123 Systems, which actually is headquartered the U.S., but is a subsidiary of the Wanxiang Group of Hangzhou. The second. 治政 selling electric vehicles in addition to the manufacturing of大 batteries. They have already 立 launched a product ready to sell to customers. According to the Chinese Energy Storage. manufacturing company was BYD corporation, which has previous experience marketing and. ‧ 國. 學. Alliance, in the first half of 2016 Chinese manufacturers announced an increase of 120 GWh in production capacity for Li-ion batteries, which their analysts expect will result in greater. ‧. supply than demand.29. y. Nat. sit. Another important trend in the Chinese market is the creation of new companies by either. al. er. io. partnerships or existing companies extending operations into the energy storage market. New. n. market entrants between 2015 - 2016Q2 are summarized below.. Ch. engchi. i n U. v. Company. Details. Sungrow Power & Samsung SDI. This is a joint venture with greater than $170 million USD in investment to manufacturer energy storage equipment.. Shenzhen Clou Electronics Established a new joint venture with $3.5 million USD to & LG Chem manufacture and sell energy storage battery packs. EVE Lithium & Neovoltaic. EVE (Chinese manufacturer) purchased a 12.5% stake in Neovoltaic, which focuses on software services in Australian and German markets.. Trina Storage Co.. Trina Solar established a new energy storage company for industrial users, and is quickly expanding to utility and. 28 29. “Energy Storage White Paper 2016,” China Energy Storage Alliance (CNESA), www.cnesa.org http://en.cnesa.org/featured-stories/2016/9/27/nine-updates-on-chinas-2016-energy-storage-industry. 13.

(22) residential applications. Table 2: New Chinese energy storage market entrants 2015-2016Q2 Source: CNESA, www.cnesa.org. Geographic Breakout: India and Taiwan Although not an energy storage market currently, India should be watched carefully for the future. They are adding 25 GW of energy to their power system each year, which is greater than the entire power system of Austria and Belgium. Due to frequent outages and an unstable electrical grid, it’s estimated 100 million households in India already use some form batteries for backup energy. Usage of diesel backup generators are also popular, and if considering the price of fuel over the lifetime of a diesel generator, batteries can provide. 政治大. economical replacements. There is also a large portion of the population (43%) not connected to the electrical grid and strong policies are in place to bring electricity to these people via. 立. distributed renewable generation. Energy storage will likely play a large role in the. ‧ 國. 學. modernizing of the electricity industry.. ‧. Given the management team’s experience and connections in Taiwan, this market should be briefly analyzed. Currently, Taiwan is undergoing a governmental policy push for renewable. sit. y. Nat. energy and a reduction in the use of nuclear energy. Nuclear energy currently makes up. io. er. 12.5% of Taipower’s generation capacity.30 Taiwan also has a favorable rate structure for battery storage (shown below), but the electricity prices are very low making the payback. n. al. i n U. v. period for installing energy storage at a commercial or residential location very long. In 2016. Ch. engchi. customer electricity rates were in fact lowered.31 Furthermore, Taiwan offers a relatively generous feed-in-tariff (FiT). The rates will be finalized in January of 2017 (after completion of this business plan), but the proposed FiT rate for rooftop solar will be NT$6.02/kWh, which is much higher than the price consumers pay for electricity. At this high rate, a solar customer is more incentivized to sell excess electricity back to the grid as opposed to storing it for later use. If Taiwan government goals of more solar and wind with less nuclear power are to be met, there will certainly be a need for some type of energy storage system, though most likely at the utility scale at first. The market in Taiwan is in extreme infant stages, but should be watched over the next ~2-3 years.32 30. http://www.taipower.com.tw/e_content/content/wwd/wwd01-1.aspx?sid=8 http://www.chinapost.com.tw/taiwan-business/2016/03/16/460907/p1/Electricity-rates.htm 32 http://topics.amcham.com.tw/2016/11/taiwan-undertakes-power-market-reforms/ 31. 14.

(23) 立. 政治大. Table 3: Taipower electricity rate design and charges. ‧ 國. 學. Key Industry Players. ‧. io. sit. Nat. vindication that the market for energy storage solutions exists.. y. There are already many companies in the energy storage space. Energy Max sees this as. er. Tesla Tesla is a well-known brand worldwide with a strong image for innovation and a famous. al. n. v i n C hwell-known as anUelectric car company, they are CEO in Elon Musk. Despite being most engchi. aggressively pursuing the battery energy storage market. They have two product offerings for different market applications: the Powerwall for distributed and “front-of-the-meter” markets, and the Powerpack for utility-scale, “behind-the-meter” markets. They are well funded, have a strong partner network in the United States, and already have pilot projects with a number of strong customers.. They have a large project underway in California, which will be the largest lithium-ion energy storage project in the world when completed. Additionally, they have pilot projects with Amazon Web Services to aid in powering data centers, and the large U.S. retailer Target.33 Also important to note is Tesla’s partnership with Green Mountain Power (GMP) in 33. https://www.tesla.com/presskit/teslaenergy. 15.

(24) Vermont. GMP is a utility who is helping distribute the Powerwall product to customers as well as offering payment plans. An important aspect of Tesla’s strategy is to become a vertically integrated energy supplier. They recently completed a $2.6 billion USD acquisition of solar energy installer SolarCity. 34 They are one of the few energy storage companies who manufacture their own inverters, which also helps bring down pack costs. They are building a huge factory in Nevada known as the Gigafactory in order to build lithium-ion battery cells and packs in partnership with Panasonic. Tesla has stated that the Gigafactory itself will reach full capacity in 2018 and have a greater capacity than all other lithium batteries than were produced in the rest of the entire world in 2013. This aggressive move in taking advantage of economies of scale will. 政治大. certainly drive down battery pack costs. The cost of battery packs is generally proprietary information held by manufacturers, but Musk has stated he believes the price of a Li-ion. 立. battery from the Gigafactory could reach $100 per kWh by 2020.35 There are also reports of. ‧ 國. 學. current battery prices below $190 per kWh for Tesla.36 These are definitely some of the lowest Li-ion manufacturing costs in the market.. ‧. Tesla is relatively well spread out geographically, and enjoys a strong retail footprint. sit. y. Nat. advantage due to its electric car business. In a shareholder letter the company stated in Q1 of 2016 they sold 2,500 Powerwalls and nearly 100 Powerpacks in North America, Africa,. io. n. al. er. Europe, and Asia.37 They distribute their Powerwall product through solar installers, which. i n U. v. know intricacies of local markets and already have existing customer relationships. Tesla’s. Ch. engchi. distribution partner in the U.K., Solar Plants, stated the company emailed 3,000 solar customers about the battery. Out of the 1,500 who opened the email, 600 said they wanted one.38 Tesla’s vertical integration advantages are also some of the company’s disadvantages. It has invested large amounts of capital into both a distributed solar energy company and its Li-ion. 34. http://www.wsj.com/articles/tesla-motors-closes-solarcity-acquisition-1479742424 http://qz.com/745278/teslas-entire-future-depends-on-the-gigafactorys-success-and-elon-musk-is-doublingdown/ 36 http://www.fool.com/investing/general/2016/04/26/teslas-battery-pack-costs-are-cheaper-than-you-thi.aspx 37 https://electrek.co/2016/05/04/tesla-energy-delivered-over-2500-powerwalls-and-nearly-100-powerpacks-25mwh-total-to-4-continents-last-quarter/ 38 https://electrek.co/2016/02/05/first-tesla-powerwall-uk/ 35. 16.

(25) factory. Neither of these technologies are guaranteed success in the future. It’s possible other battery chemistries emerge that store more energy for a lower cost. It’s also possible that despite the success in recent years of distributed solar, other inexpensive forms such as shale gas and large scale wind become more prominent. Tesla has also in some ways tied the success of its energy storage product to the success of SolarCity’s distributed solar.. Product. Market Focus. Basic Details. Pricing. Tesla Powerwall 2. - Residential - 10-year warranty with capacity - Commercial and guarantees Industrial - 7 kW / 14kWh - Scales to max 9 Powerwalls. $5,500. Tesla Powerpack. - Utility - 50 kW / 210 kWh - Commercial and - Scales infinitely Industrial. 立. 政治大. $72,550. Table 4: Tesla battery energy storage products. ‧ 國. 學. Sonnen. ‧. Another large and important company in the energy storage market is a German company named Sonnen founded in 2008. Unlike Tesla, they are exclusively focused on the energy. Nat. sit. y. storage market. Despite approximately 66% of the company’s business coming from the. er. io. German market and a market-leading 40% market share, they are aggressively expanding internationally. In 2015 they launched in Italy and in early 2016 they launched into the. n. al. Ch. i n U. v. United States, followed by launching in the U.K. and Australia later in 2016. They are also active in the Czech Republic.. 39. engchi. Sonnen’s expansion is powered by two key strengths: financing and strategic partnerships. In 2016 they raised a Series D round of $85 million bringing their total financing to about $110 million. The CEO has recently said this will likely be the company’s last round of VC financing before filing for an I.P.O. Sonnen is not pursuing a strong vertical integration strategy like Tesla - in fact, Sonnen uses third-party manufactured battery packs from Sony and inverters from Outback - and the investors the company has attracted are also strategic partners. These include a Czech Republic utility called CEZ that is helping Sonnen deploy. 39. https://www.greentechmedia.com/articles/read/sonnen-raises-85m-to-scale-its-behind-the-meter-batterybusiness. 17.

(26) systems, Envision Energy, a Chinese wind turbine-maker and project developer, and lastly GE Ventures, the venture capital arm of GE.40. Sonnen is on the 8th generation of its energy storage product and has installed near 10,000 batteries, more than double that of Tesla. This has given the company greater time to learn customer habits and a significant knowledge advantage.41 Almost all of the company’s focus has been on the residential market to date. However, as of August 2016 they are moving towards the commercial and industrial market and introduced a new product line called SonnenBatterie pro. Unlike Tesla, Sonnen’s product line focuses on the software powering the battery as well. They have a sonnenCommunity product which allows customers to trade energy with one another. This is not a revenue generating addition, but a service on top of the. 政治大. hardware they sell.42. 立. Market Focus. Basic Details. Pricing. 學. ‧ 國. Product. - 10,000 cycle warranty - 18 kWh - Scales to 90 kWh. $37,154. SonnenBatterie eco compact. Residential. - 10,000 cycle warranty - 4 kWh - Scales to 16 kWh. $5,950. sit. y. ‧. Commercial and Industrial. Nat. SonnenBatterie pro. n. al. er. io. Table 5: Sonnen battery energy storage products. AES Energy Storage (AES). Ch. engchi. i n U. v. AES Energy Storage is a subsidiary of the AES Corporation, a Fortune 200 power company with 21,000 employees worldwide. AES Energy Storage is exclusively focused on the largescale utility market. To date, most of its energy storage projects have been in California or the Northeast U.S. with the goal of providing frequency regulation. It’s parent company already has an international footprint, and the energy storage arm is aggressively expanding internationally by establishing a strong partner network as of February 2016. It signed agreements with Mitsubishi and Eaton to market and sell its energy storage solutions; 40. https://www.greentechmedia.com/articles/read/sonnen-raises-85m-to-scale-its-behind-the-meter-batterybusiness 41 http://www.utilitydive.com/news/the-tesla-killer-sonnens-ceo-on-its-us-energy-storage-marketstrategy/416866/ 42 http://www.energy-storage.news/interviews/secrets-of-the-trade-insights-into-sonnens-pv-plus-storageenergy-trading-p. 18.

(27) Mitsubishi in Asia and Oceania, and Eaton will sell the products in Europe, the Middle East, and Africa.43 AES’s product is an integration of supplier products into a package. They even have what they call their Battery Integration Center in Indianapolis, where they source batteries from LG Chem and Samsung, as well as sourcing inverters from Parker Hannifin. They then pair this package with their own battery controller and software. AES’s latest product is called the Advancion 4, which was developed to lower balance-of-systems cost (the cost of entire solution - racks, enclosures, installation, etc.) and provide more flexibility to solve utility needs. The product is designed to remove the need for utilities to build costly “peaker plants” for times when electricity demand is high.44 Pricing information for the product was not. 政治大. readily available, and likely varies depending on the sales process.. 立. Other Players. ‧ 國. 學. The energy storage market has seen a large increase in additional competitors in recent years. In addition to the large players discussed above, the chart below aims to summarize a few of. Residential Commercial. Commercial. y Brief Notes. n. Stem. al. sit. LG Chem. Geographic Focus. io. Target Market. Cost. er. Nat. Company. ‧. the other important companies.. i n U. v. - Australia - Enter U.S. 2016. - 50% market share in Australia45 - Partnered with solar installer Sunrun in U.S. - Inverter sold separately - 6.5 kWh capacity. $4,000. - U.S. (CA and HI) - Looking at expansion to. - $68M VC Series C in 2016 - Focused on big data/software and uses batteries from Tesla, Samsung, and Panasonic46. Not readily available. Ch. engchi. 43. Offers zero. https://www.bloomberg.com/news/articles/2016-02-09/mitsubishi-and-eaton-to-sell-aes-storage-in-asia-andeurope 44 https://www.greentechmedia.com/articles/read/AES-Launches-Modular-Grid-Battery-Alternative-to-PeakerPlants 45 http://reneweconomy.com.au/lg-chem-unveils-new-battery-storage-adding-more-choice-for-solar-households67287/ 46 https://www.greentechmedia.com/articles/read/Stem-Wins-15M-Investment-From-Mithril-And-Grows-ItsEnergy-Storage-Portfol. 19.

(28) Texas, Germany and Ontario.. down financing. Orison. Residential. Not yet launched. - Simple, home-use battery. Ships to door and plug-in - $350,000 raised on Kickstarter - 2.2 kWh capacity. $1,600. Mercedes. Residential Commercial Utility. Germany Australia Belgium Netherlands South Africa U.S. U.K.. - 2.5 kWh capacity - Inverter not included - Hired former Sonnen U.S. CEO47. $9,000 including installation and inverter48. Nissan. Residential. Not yet launched, can pre-order only for Europe. - Developed from recycled car. $4,500 including installation. battery cells 政治 - 4.2 kWh 大capacity. China. Trina. Residential. - China - Looking at expansion to Australia, Germany, U.S.. Nat. y. ‧. ‧ 國. Utility Commercial. 學. BYD. sit. 立. al. er. io. Table 6: Summary of other energy storage companies and products. v. n. Source: http://www.businessinsider.com/home-battery-rival-tesla-powerwall-2-2016-10/. Ch. engchi. i n U. Product Analysis Like many products, to deliver a final energy storage product a value chain exists. This section will briefly explore the energy storage value chain and important aspects of an energy storage product.. Energy Storage Value Chain To create a battery energy storage product, the value chain can be explained by five categories: 47 48. https://www.greentechmedia.com/articles/read/mercedes-benz-launches-a-u.s.-energy-storage-company http://www.businessinsider.com/home-battery-rival-tesla-powerwall-2-2016-10. 20.

(29) 1. Materials/battery cell manufacturers At this stage of the value chain, companies are working with raw materials and/or mining companies to create battery cells. Battery cells use a cathode and an anode to store energy.. 2. Battery pack manufacturers Battery pack manufacturers take the cells and package them into a battery pack. The cells can be configured in a number of ways for a desired capacity, voltage, and other attributes. When looking at competitor and market prices, it is important to note whether cell prices or pack prices are being quoted.. 政治大. 3. Inverter/Support hardware suppliers. 立. There is additional hardware needed to make a final battery storage product such as. ‧ 國. 學. the case that holds the cells, an inverter, as well as controller. One of the most critical pieces of additional hardware is the inverter which is used to convert electricity from. ‧. a battery’s DC to the electrically used AC. Some energy storage systems will require a separate purchase in order to receive an inverter, whereas other battery pack. sit. y. Nat. manufacturers will include the inverter as part of the pack. In fact, Tesla’s first generation Powerwall did not include an inverter, whereas in their Powerwall 2. io. n. al. er. product the inverter was included.. Ch. engchi. 4. System integration and distributors. i n U. v. System integrators generally distribute and install the battery packs. Importantly, they integrate the battery with the grid during installations that are grid-connected (which are most).. 5. Technology service providers Technology service providers can provide services such advanced software solutions, aggregation management, and customer support. They sell these services either directly to customers, to the local distributors, or to manufacturers.. 21.

(30) Lithium-Ion & System Costs The core part of an energy storage system is the actual battery. There are many types of battery chemistries available such as lithium-ion, lead-acid, nickel-metal-hydride, nickelcadmium etc. However, in Q2 of 2016 lithium-ion (Li-ion) batteries accounted for 99% of energy storage deployments in the U.S., which was similar to the six previous quarters as well.49 Li-ion technology is clearly the market choice in terms of battery technology. Due to the emergence of electric vehicles, Li-ion battery costs have declined rapidly and are expected to continue to decline in future years, which will drive growth in the stationary battery storage industry.. According to the U.S. National Renewable Energy Laboratory, there was a total of 53. 治政大down. In June 2016, smart was utilized. This obviously is a big factor in bringing price 立 battery company Stem recently reported paying 70% less for lithium-ion batteries than it was gigawatt-hours of lithium-ion cell production capacity in 2015 - but only 40 percent of that 50. ‧ 國. 學. 18 months ago, and expects a similar drop in the next 18 months. An estimate from an energy storage industry analyst attributed the 70% drop partly due to the oversupply and partly due. ‧. to price advantages from bulk ordering.51 At this stage in the evolution of the battery storage market, there is a lot of focus on bringing costs down, and competing on cost.. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. Figure 6: Lithium-ion battery cost reductions 2009 – 2013 Source: Irena Battery Storage Report 2015, Irena.org 49. “U.S. Energy Storage Monitor Q3 2016 Executive Summary,” GTM Research, September 2016, greentechmedia.com 50 http://www.nrel.gov/docs/fy16osti/66086.pdf 51 https://www.greentechmedia.com/articles/read/stem-cto-weve-seen-battery-prices-fall-70-in-the-last-18months. 22.

(31) The dropping price of the lithium-ion cells will continue to be a major force in driving down the cost of an energy storage system. However, there are other costs to consider in an energy storage system in its entirety such as inverters, storage containers, and energy controllers.. Company Strategy From the market and key industry players’ analysis above, there are two key takeaways: (1) many well-resourced companies are currently entering all segments of the market with battery products and (2) competition is currently based on the greatest amount of energy storage that can be provided for the lowest cost. Eventually, companies will be able to. 政治大. provide a large enough amount of energy at a low enough cost that competition will shift to services that the batteries provide.52. 立. ‧ 國. 學. Due to this ongoing commoditization of the actual battery product, Energy Max will develop energy services software focusing on battery energy storage in order to provide value-added. ‧. services on top of smart batteries.. y. Nat. al. er. io. sit. The below sections detail how Energy Max plans to make this happen.. v i n Energy Max will be co-founded by C two former coworkers, Daniel Robinson serving as CEO hengchi U and Volodymyr Petrushkevych will serve as CTO. The two of them gained extensive n. Management Team, Culture, and Organizational Structure. experience in building large scale software systems capable of collecting and analyzing large amounts of data while working together at Recyclebank, a Kleiner Perkins VC backed startup in the recycling industry. Mr. Robinson served as a senior product manager there until leaving to receive a master’s degree in international business from National Chengchi University in Taiwan. Mr. Petrushkevych served as vice president of software engineering while at Recyclebank for four and a half years and received his master’s degree in computer science and applied mathematics from National University Ivan Franko in L’viv, Ukraine.. 52. https://www.greentechmedia.com/articles/read/what-really-matters-from-tesla-battery-powerwall-powerpack. 23.

(32) The company leadership team will strive to maintain a flat organization structure, with a maximum of three organizational levels while growing. This will promote a collective feeling in terms of decision making and will allow executive leadership to learn directly from team members who are closer to the bottom of the organization. The open flow of communication throughout the organization should create an environment of trust, integrity, and desire to help one another. Both co-founders also believe in the “lean methodology” of company building with a focus on meeting customer needs and being slow to hire new employees unless absolutely necessary. The team at launch will be the CEO, CTO, in-house developers, and outsourced developers. More details are given below.. 立. 政治大. ‧. ‧ 國. 學. io. sit. y. Nat. Figure 7: Organizational Chart. er. An important part of Energy Max’s philosophy will be believing in the benefits of a. al. n. v i n C hsoftware engineering developers for some of the company’s e n g c h i U needs, but Energy Max will have distributed team. Not only will the staffing strategy involve utilizing offshore software. no office space in the first 5 years of operation. Instead they will use co-working spaces and. encourage employees to do the same. Each employee will receive $300/month on top of their salary to either use towards shared office space where they live or to keep as a salary bonus. The company will also hire based on skill and not limit hiring criteria based on geography. While working together at Recyclebank, the two co-founders learned first-hand the advantages of software outsourcing and traveled to Ukraine together twice. They plan to use MalkosUA for these services, and both co-founders are very familiar with the working environment of this company already. Two key hires will be a leader of data & analytics as well as a dedicated sales person. A staffing plan and expenses are below.. 24.

(33) Table 7: Hiring plan first 5 years. 立. 政治大. ‧. ‧ 國. 學. n. al. er. io. sit. y. Nat Table 8: Salary structure first 5 years. Ch. engchi. Value Propositions and Product Overview. i n U. v. As stated above, Energy Max will make software for the energy storage market. The product will first be tailored to the residential and commercial segments, but a utility scale software solution will also be developed quickly.. Data intelligence will be extremely important to the success of the product. Using machine learning algorithms and many datasets, the goal of the software will be to enhance the existing services for battery energy storage across the value chain. With advanced software and updated data, Energy Max will be able to:. 1. Identify market opportunities and improve distribution and sales processes.. 25.

(34) Energy Max will maintain a database of what will be called “condition data.” This is data such as electricity rate designs and government incentives for a specific area, as well as weather patterns. This information can be combined with “variable data” such as battery storage system costs, system attributes (battery chemistry, system size, etc), and likely energy usage pattern to determine the right types of customers to target if you are a manufacturer or distributor. It can also be used to determine the right type of battery storage size to install. This data can be analyzed and then financial information such as net present value and pay-back period can easily be calculated and shown to potential customers.. 2. Using machine-learning and a cloud based platform to constantly enhance installed. 治政大 with software installed that Most smart battery systems today have a type of controller 立 allows the battery to power a home during hours of peak demand and lower demand systems.. ‧ 國. 學. costs. Very few systems have advanced automation that will learn the energy patterns of the customer who has installed the battery and combine it with weather. ‧. expectations. This will allow the battery system to predict how much energy will be needed the next day. With this predictive knowledge system, the software can analyze. y. Nat. n. al. er. io. user.. sit. how and when to charge/discharge the battery in the most profitable way for the end. Ch. i n U. v. Furthermore, electricity rate structures are regularly changing. By allowing the battery. engchi. system to communicate with the cloud in near real-time these can be adjusted and tweaked.. 3. Extending battery life This can be done by knowing the battery chemistry (not limited it to Li-ion) and by continuously monitoring the depth of charge, charging voltage, number of charging cycles, battery temperature, and other attributes. Having this data continuously updated on a cloud platform will allow potential problems to be preemptively handled and increase the useful life of the battery. This allows manufacturers to ensure they are meeting all warranty obligations.. 4. Create a network of battery customers 26.

(35) Energy Max’s software will be a cloud-based system that is capable of knowing current and predicted future conditions of all batteries on its network. By creating a network, these distributed batteries can act as a single resource in helping utility companies decrease load in times of high demand or take the place of a “peaker plant” when more energy is needed very quickly onto the grid. A large enough aggregated set of batteries acts as a “virtual power plant.” Battery systems would also be able to share power between each other, however there would be fees and certain limitations associated with transferring energy depending on local regulations.. 5. Ability to attract 3rd party financing The in-depth data that would be tracked as part of the Energy Max system allows for a. 治政 system. By having more granularity and certainty in大 the data, it opens up the 立 possibility for 3rd party financiers to help deploy these batteries with unique payment much more detailed and accessible view into energy savings attributed to a storage. ‧ 國. 學. plans. For example, a financier could pay for a fleet of batteries to be deployed at no upfront cost to the person who owns the location where the batteries would be. ‧. installed. Then, the site owner and financier could share the cost savings generated from storage system. This is only possible with data that can be trusted.. sit. y. Nat. al. er. io. In order to deliver these value propositions to customers, Energy Max will develop a cloud-. n. based software program. This program will communicate with the control systems that come. Ch. i n U. v. standard on most battery energy storage systems today. The battery’s control system will. engchi. connect to the cloud and send usage data to Energy Max’s platform. Energy Max will take in additional data such as weather patterns of the battery’s location, past charging/discharging characteristics of the installation location, and the electricity rates of the utility connected to the battery in order to provide an energy management analysis of the battery. Energy Max will then send back information from the cloud to the battery system providing it with an intelligent schedule to charge and discharge next. This communication should happen in intervals no longer than 15 seconds.. Target Customers Some of the companies offering a similar type of intelligent software product (discussed below) are targeting end users of battery storage systems. The initial target customers for. 27.

(36) Energy Max will be battery systems manufacturers looking to differentiate their storage products, move into new parts of the energy storage value chain, and expand to new markets. Building on the management team’s connections in the Asia-Pacific region, the density of manufacturing in the area, and lower competition among software providers, the target customers will be Asia-based companies.. Battery systems manufacturers that have indicated they are moving in a vertically integrated direction or already have a relationship in some form with end users represent strong first customers. There is already evidence that manufacturers are moving in this direction. GoodWe, a Chinese solar inverter manufacturer, announced in June 2016 that they would. 治政 Another U.S. based software provider called 1Energy was 大 acquired in July 2016 by Korean 立 firm Doosan Group, a power generation and equipment provider. Two manufacturers,. begin providing a smart energy management system focused on utility scale systems. 53 54. ‧ 國. 學. Samsung SDI and Dynapower, have joined forces to create an integrated battery storage product and have said “the integrated system is meant to flatten the supply chain” in order to. ‧. make a more complete product for partners that deliver the product to end-users.55 Below is a target list of potential first customers.. al. Key Insights. v i n Ningde, Fujian C h $290 millionU Operates 2 energy storage pilot engchi projects in Taiwan. Is China’s n. CatlBattery. 2015 Revenue USD (approx.). er. io. Headquarters. sit. y. Nat. Company Name. 2nd largest battery manufacturer.. BYD. Shenzhen, CN. $920 million (energy storage division). China’s largest battery manufacturer. Also sells electric buses.. Guoxuan. Nantong, CN. $230 million. Has set up an R&D alliance with a wind power equipment maker to explore application of storage + renewables.. Coslight. Haerbin, CN. $108 million. Has a strong presence in India,. 53. http://en.chinapower.com.cn/2016/06/17/content_3728.html http://www.1energysystems.com/ 55 https://www.greentechmedia.com/articles/read/Samsung-SDI-and-Dynapower-Team-Up 54. 28.

(37) including manufacturing. The parent company lists “Gain full access to solar system integration business” as a key research and development item.. Suzhou GCL Integrated Storage Technology Co. Hong Kong. N/A subsidiary of large co. ($1 billion+). Trina Energy Storage. Changzhou, CN. N/A subsidiary TrinaSolar (parent company) is of solar company a very consumer focused manufacturer.. Narada. Hangzhou, CN. $735 million. Simplo Technologies. Hsinchu, TW. Markets itself as green battery provider.. 學. ‧ 國. Amita Technologies. 政治大 Taoyuan, 立 TW N/A. Their R&D lists cloud-based energy management system as project in progress, and they claim to be “only manufacturer in China that can provide full energy storage system solutions.”56. $1 billion+. ‧. Provides batteries with firmware software for laptops and is looking to expand product offering.. Table 9: Summary energy system manufacturers and potential customers. sit. y. Nat. al. er. io. Sales and Marketing Strategy. v. n. In order to reach these customers, Energy Max will need to rely on business development,. Ch. networking, and a traditional sales process.. engchi. i n U. Seed Phase Most potential customers will want a vendor to have previous projects completed in order to demonstrate a proven history of the product and company. In this early stage of the company there is a large need to rely on existing connections. Therefore, Energy Max will search out smaller scale projects in New York City and Taiwan. In September 2016 New York City became the first city government in the U.S. to set an energy storage target goal. The city is aiming to have 100 MW of storage installed by 2020, and is doing so by easing the permitting. 56. http://en.naradapower.com/index.php/about/rd. 29.

(38) process and local tax policies.57 One of the first installations is set to be complete in January 2017 with 300 kW of batteries from LG Chem and an energy management system from Demand Energy at low income housing complex.58 Due to this support of the energy storage market, and more importantly the management team’s working experience in New York City within the sustainability industry, it makes sense to begin looking in the city for pilot projects in order to build the company’s project portfolio. Although Taiwan’s market is not mature enough for high demand of energy storage yet, in November 2016 they opened a green technology park in Tainan for emerging green technologies. The country also has many manufacturers of Li-ion batteries. This could also be a good opportunity to build on the CEO’s connections in Taiwan to build a proving ground for Energy Max.. 治政大through initial pilot projects, it After the technology is able to be successfully demonstrated 立 will need to aggressively shift to attracting customers. The product will be sold. Growth Phase. ‧ 國. 學. predominantly through a traditional sales cycle of developing and cultivating leads, meeting with potential clients and presenting proposals, and agreeing to terms. This will be done by. ‧. cultivating personal networks and attending industry events. Even in the growth stages of the company, there will not be a large need for a huge marketing effort and resources dedicated. y. Nat. sit. to building a brand. Company representatives will need to attend industry trade shows and. al. n. target trade shows below:. er. io. will also engage in content marketing in order to build awareness. Initially, Energy Max will. Ch. engchi. i n U. v. Location. Name and Description. Expected Next Date. Sydney, AT. AUSTRALIAN ENERGY STORAGE CONFERENCE & EXHIBITION Exhibition & conference dedicated energy storage. Australian Energy Storage Conference & Exhibition focuses on energy storage industry at all levels – for utilities, energy businesses, building management and the emerging electric vehicle markets. June 7-8, 2017. Shenzhen, CN. CIBF - CHINA INTERNATIONAL BATTERY FAIR. May 2018. 57. https://www.greentechmedia.com/articles/read/new-york-city-becomes-first-to-set-citywide-energy-storagetarget 58 https://www.greentechmedia.com/articles/read/new-york-grid-microgrid-bqdm-con-ed-peak 30.

(39) International Battery Trade Fair. CIBF is the the preferred meeting venue for battery manufacturers and users to exchange ideas on new technology, expand their markets and promote their products and services to customers in the worldwide marketplace Guangzhou, CN. CHINA (GUANGZHOU) INTERNATIONAL CHARGING EQUIPMENT AND BATTERY EXHIBITION International Charging Equipment and Battery Exhibition in China. Nov. 18-22, 2017. Tokyo, JP. WORLD SMART ENERGY WEEK - TOKYO The world’s largest-scale international B-to-B exhibition & conference covering a wide range of cutting-edge products & technologies from diverse energy industries. Mar. 1-3, 2017. Taipei, TW. 治政 TIGIS - TAIWAN INTERNATIONAL 大 GREEN INDUSTRY SHOW 立 Taiwan International Green Industry Show. The latest. Oct. 11-13, 2017. ‧. ‧ 國. 學. “Green Tech” products ranging from wind power, fuel cell, LED lighting, electrical vehicles, recycling, antipollution, green building materials, to water treatment and deep ocean water applications. Table 10: Popular Asian based energy storage and renewable energy conferences. sit. y. Nat. io. er. Marketing messaging will emphasize the ability of Energy Max’s product to distill an immense amount of data, smartly analyze the data, and output control signals that add value. n. al. Ch. i n U. v. to a battery system. Marketing should convey to manufacturers that the batteries they will sell. engchi. with Energy Max’s software will have greater value and be more plug-and-play for their distributors. This will allow distributors to focus on marketing and acquiring end-users as opposed to the details of a technical installation. The marketing should also emphasize the robustness of the software - it will have no downtime and will have security features to prevent any type of hacking.. Pricing Selling software to manufacturers that will be used by end-users of the product is complicated. Traditional software-as-a-service (SAAS) offerings would charge a licensing fee with a recurring periodic payment either monthly or annually. Building software is an ongoing process with constant updates and tweaks needed to ensure it stays up to date and working properly. Manufacturers sell a product and will likely not want to continue to pay 31.