CPUC Storage Workshop (R ) – Station Power May 2, 2016 Aloke Gupta Senior Director, Market Development & Policy

© 2016 Imergy Power Systems, Inc. Imergy Company Overview vanadium redox flowLeading developer of energy storage solutions based on vanadium redox flow battery technology Scalable solutions: 5 kW to multi - MW  Low cost, long duration, very long life (no capacity degrade)  Non-flammable, non-explosive  Unlimited cycles, resilient in harsh environment / high temperatures  Proprietary process for utilizing low-grade vanadium from waste Growing sales in India, Africa, Europe, US  Over 100 units deployed (with over three years field experience) and growing backlog  Microgrids (off / weak grid, military, etc), islands, customer-side, utility applications  High volume production line established with a large contract manufacturer & proven logistics & supply chain Extensive IP portfolio with over 20 patents

© 2016 Imergy Power Systems, Inc. Energy Consumption at Energy Storage Plant (ESP)* 3 Efficiency losses Resistive losses Self-discharge Pump (flow battery) PCS (power conversion system) losses Transformer losses Controller (BMS) Cooling IT, comms, lighting, ventilation, safety, etc. Types of Consumption 1. Efficiency losses 2. Auxiliary loads 3. End-use loads *Based on Electro-Chemical Battery Technology

© 2016 Imergy Power Systems, Inc. ESP* Energy Consumption Categorized 4 Efficiency losses  Resistive  Self-discharge  Pump (flow battery)  PCS  Transformer Non-discretionary (“auxiliary”) loads required with ES unit operation  Controller (BMS)  Cooling  … Discretionary (“end-use”) loads not directly related to ES unit operation  IT, comms, lighting, ventilation, safety, etc. $Retail $Wholesale $?? *Based on Electro-Chemical Battery Technology

© 2016 Imergy Power Systems, Inc. ES Plant Architecture 5 Transformer AC – DC DC – DC Battery The Grid ES Unit PCS

© 2016 Imergy Power Systems, Inc. ES Plant Architecture 6 Transformer AC – DC DC – DC Battery [pump] Efficiency Losses The Grid PCS ES Unit

© 2016 Imergy Power Systems, Inc. ES Plant Architecture 7 Transformer AC – DC DC – DC Battery [pump] Cooling BMS Efficiency Losses The Grid Aux Loads (non-discretionary) PCS ES Unit

© 2016 Imergy Power Systems, Inc. ES Plant Architecture 8 Transformer AC – DC DC – DC Battery [pump] Cooling BMS Efficiency Losses The Grid IT Heating Ventilation Etc. Aux Loads (non-discretionary) End Use Loads (discretionary) meter PCS ES Unit

© 2016 Imergy Power Systems, Inc. ES Plant Architecture 9 Transformer AC – DC DC – DC Battery [pump] Cooling BMS Efficiency Losses The Grid IT Heating Ventilation Etc. Aux Loads (non-discretionary) End Use Loads (discretionary) meter PCS ES Unit

© 2016 Imergy Power Systems, Inc. Key Points 10 Transformer, PCS, Pump losses:  are conceptually no different from resistive / self-discharge losses and  should be included in aggregate efficiency loss of ES unit Energy “consumption” via ES unit’s efficiency losses is different from energy consumption via ES unit’s auxiliary load All components of efficiency losses should be treated as wholesale at all times  No rate distinction should be made between efficiency losses while charging / discharging vs. efficiency losses while not charging / discharging

© 2016 Imergy Power Systems, Inc. Efficiency Losses vs. Aux Loads Explained 11 Transformer, PCS, Pump losses conceptually no different from resistive / self-discharge losses (all should be included in aggregate efficiency loss)  Unintended loss: inherent, unavoidable, byproduct, occurs at all times (cannot ever be “turned off” while energy storage unit in operation)  Provides no useful function (thus not a load or end use)  Cannot be metered separately from charge / discharge energy  From grid/market perspective, not meaningful to distinguish from underlying battery ESU’s “aux loads” different from “efficiency losses”  Intended energy consumption (could be turned off short-term)  Provide useful functions that enable ESU operations  Could be metered separately, but not clear if necessary  Are essential to ES unit operations  Utilized directly (and only) in “furtherance of a wholesale transaction”

© 2016 Imergy Power Systems, Inc. Generic Commodity Trading 12 Purchase (to resell) 100u Sell 95u Day 1Day 2 Lost 5u Purchase with intent to resell ~ wholesale  Although some portion is lost permanently Sell with intent to repurchase ~ wholesale (to repurchase)

© 2016 Imergy Power Systems, Inc. Efficiency Losses ~ Wholesale 13 Purchase (charge) 100u Sell (discharge) 95u Day 1Day 2 Lost 5u Efficiency losses during charge / discharge should be treated as wholesale  All of 100u (electrical energy) purchased with intent to resell (wholesale), even though some portion expected to be lost permanently SCE’s recommendation* differs slightly …  Retail rates should apply to “end use load” typically comprised of inverter / transformer loads when storage unit is not charging / discharging  Above “baseline end-use load” applies in all hours regardless of operation Counter: Baseline losses in inverter / transformer…  Similar to baseline losses in T or D grid  Arbitrary distinction from the baseline losses in underlying battery (presumably still wholesale)…could introduce arbitrary economic distortions  Not really “end use load” – no useful function  Appears not consistent with current concept of station load (per CAISO SPP):  “Energy for operating electric equipment … used exclusively for the production of Energy … by the Generating Unit”  “Energy for operating electric equipment … used exclusively for the charging (absorbing) / discharging / storing Energy … by the Energy Storage Unit *SCE’s Opening Comments, p.18.

© 2016 Imergy Power Systems, Inc. “Standby” Consumption at Which Rate? 14 Purchase (charge) 95u Purchase 1u Sell (discharge) 95u Day 1Day 2Day 3Day 4Day 5Day 6Day 7 Lost 1u SDG&E / LS Power recommendation* (paraphrase): Energy withdrawn from grid when ES unit is neither charging / discharging (= “standby”) is end-use (station) load subject to retail rates Thus, 5u (Day 2 – 6) charged at retail If this recommendation applies to…  (discretionary) end-use loads: agree  (non-discretionary) aux loads: no comment  efficiency losses: counter “Standby Period” *SDG&E’s Opening Comments, p.8, LS Power’s Opening Comments, p.3.

© 2016 Imergy Power Systems, Inc. “Standby” Efficiency Losses (Purchases) ~ Wholesale 15 Purchase (charge) 95u Purchase 1u Sell (discharge) 95u Day 1Day 2Day 3Day 4Day 5Day 6Day 7 Lost 1u Purchase (charge) 100u Sell (discharge) 95u Day 1Day 2 Lost 5u All of 100u purchased with intent to resell (thus, wholesale), even though some portion expected to be lost permanently To do otherwise (i.e. treat 5u as retail) leads to issues:  Administratively problematic (how to determine when ES unit is not charging / discharging)  Introduces arbitrary economic distortions between different scenarios of wholesale transactions  Lacks justification as there is no extra/different burden (associated with 1u x 5) on UDC  No clear policy benefit for the arbitrariness, added complexity, & distortions Conclusion… All components of efficiency losses (as defined here) at all times ~ wholesale

© 2016 Imergy Power Systems, Inc. Summary What rules or guidelines are needed…?  Proposed three categories of energy consumption associated with Energy Storage Plant  Efficiency losses include transformer, PCS, pump, self-discharge, resistive…  Several guidelines (tests) proposed to distinguish “efficiency losses” from “aux loads” (non-discretionary) and “end-use loads” (discretionary)  All components of efficiency losses (as defined here) at all times treated as wholesale  TBD: treatment of aux loads (as defined here) 2. Are there any rules/guidelines required outside of … CAISO?  See above 3. What are rate implications for station power in the context of ES?  Discretionary end-use loads classified as station power with no difference in rate implications vs. status quo (i.e. still subject to retail rates)

17 Thank you Aloke Gupta Senior Director, Market Development & Policy