1. incoteco 1 What Can 1,000 MW of Battery as Distributed Storage do for UK? PROPOSAL Price Evolution has now made new build Distributed Electricity Storage economically feasible in UK

2. incoteco 2 Executive Summary UK electricity fundamentals are: Demand keeps growing Low cost generating capacity is shrinking The N. Sea gas bubble has gone and UK must now compete with World for access to international gas supplies......where other fundamentals will keep gas prices high …and daily peak demand will have to be met with high cost CCGTs 1000 MW of Batteries can supply part of this peak

3. incoteco 3 Recent Price History - SBP Nuclear & coal offpeak Peak supplied by CCGTs

4. incoteco 4 Recent Price History - SSP These differentials could not justify new storage investments – hence previous failure of Regenesys

5. incoteco 5 Differences between selling & buying price Buy Sell

6. incoteco 6 Are we seeing the future? Gas is now a global commodity Gas and oil reserves are concentrated in Russia and OPEC countries Gas prices are likely to converge with oil prices and any way......OPEC will cartelize OPEC’s gas production... Covertly supported by Russia and Norway Expect gas prices over $10/mmBtu for indefinite future

7. incoteco 7 What other Options? More nuclear capacity –Unavailable for 10 – 15 years Clean coal (with CCS) –Unavailable for 5 – 10 years Renewable energy? –Only supplying firm capacity with storage

8. incoteco 8 Storage Options More Pumped Hydro ? –Out of the question for environmental reasons Compressed air energy storage ? –Salt domes are needed to increase gas storage capacity Flow batteries –Only VRB can be realistically rolled out in immediate future –VRB owns Vanadium and Regenesys processes It looks like VRB

9. incoteco 9 VRB Demonstration Plants World-wide PlaceApplicationSpecificationStart date Kashima Kita PS, JapanLoad levelling200 kW x 4 h1996 Office building, OsakaLoad levelling demo100 kW x 8 h2000 Sanyo factoryVoltage sag, load levelling 3000 kW x 1.5 sec 1500 kW x 1 hour 2001 Wind power, HokkaidoStabilization wind turbine output 170 kW x 6 h2001 Dunlop Golf CoursePV hybrid, load levelling30 kW x 8 h2001 University, JapanLoad levelling500 kW x 10 h2001 Stellenbosch U, SALoad levelling250 kW x 2 h2001 EPRI, ItalyPeak shaving42 kW x 2 h2002 Pacific Corp, UtahEnd of line peak shaving250 kW x 8 h2004 King Island, AustraliaStabilization wind turbine250 kW x 8 h2004 Tomamae Wind farm, Hokkaido Stabilization wind turbine4000 kW x 2 h2005 Nine Years - no re-invention of wheel needed

10. incoteco 10 Large batteries are in daily use VRB battery at 30.6 MW Tomamae wind park, Hokkaido 4 MW, 6MW Pulse 6 MWh Smoothing spiky windfarm output

11. incoteco 11 0 Power rating 010s1 h2 h8 h 10 kW 100 kW 1 MW 10 MW 100 MW Storage inventory 1s1 min4 h30 min Power quality Un-interruptible power supplies Frequency control Voltage support VAR support Peak shaving Transmission stability Spinning and standby reserve Black start Load levelling/following Tariff trading Load factor increase Capacity deferral Integration of renewables Multi-Applications & Benefits

12. incoteco 12 Storage is Necessary for Development of Renewables Experience in Denmark & Germany shows: That the threshold capacity of intermittent renewables is very low before… …use of balancing capacity becomes significant When balancing capacity is fossil, fuel and CO 2 savings are reduced Nuclear and ”clean coal” cannot be cycled

13. incoteco 13 Storage is necessary for the development of off-shore wind - 1 Behaviour of wind farm offshore DK is certain offshore UK

14. incoteco 14 Storage is necessary for the development of off-shore wind - 2..in 8 months winter 2004 - 2005

15. incoteco 15 Preliminary Calculation (discounting other ancillary services) There seems to be a case!

16. incoteco 16 Next Steps 1.Agree technical feasibility 2.Agree economic feasibility 3.Agree presentation documents 4.Presentations to, dialogue with National Grid OFGEM DTI Potential Investors 5.“Go” – “No go”! 6.If “go” – develop early cases on fully commercial grounds In modules of at least 5 MW or larger