1. Archie DeBunker & Dennis Witmer

3.  Grid environment— ◦ Renewables Firming (Wind and PV) ◦ Frequency Stabilization ◦ Energy Arbitrage (buy low, sell high) ◦ Transmission upgrade deferral (GVEA BESS)  Alaska ◦ Save Diesel  Allow very high penetration of wind (much greater than 100% of peak demand)  Diesels off operation  Load shifting to save fuel after wind event  Alaska needs are different—but our market isn’t big enough to drive product development

4.  Ends of the scale don’t require much investment risk— ideas are cheap, commercial products can produce profits to support incremental R&D  “Pre-Commercial” phase is especially dangerous for energy products—requires significant capital investment at high risk.  Different than software development ◦ Real hardware needs to be developed—good engineering skills required—and you limited by chemistry and physics ◦ Must compete with existing commercial products (electrical grids, diesel generators)  Inventors turn to capital markets for investment  Customers are important to convince investors that there is a real market, but customers are not the source of sufficient funding to drive product development.

5.  Commercial products have: ◦ Fixed Price ◦ Fixed delivery date ◦ Fixed specifications ◦ Warrantee  If product lacks any of the above, it is not a commercial product  Commercial products are cheap and they work  Most energy storage devices are not real commercial products yet  A brochure describing technical specs can be made in Adobe InDesign—it does not mean that a real product exists—specifications may be more aspirational than real  There is almost always a gap between the hype and the hardware in pre-commercial products

6.  If cheap, reliable energy storage is possible, Alaska needs it  Product developers need to understand our needs so their products will work here—but will be developing products for larger markets  Pre-commercial products are very likely not to work as well as advertised  Product failures must be expected— ◦ Failure to deliver on purchase order ◦ Failure to meet initial specifications ◦ Rapid degradation or other failures in the field  This is research—the product we get is information about the energy storage systems  Funding should be intended for R&D—not from operations.  Recognize that suppliers are more interested in investors than in customers—we really aren’t that important to them now  Supplier independent thinking—it’s the job of the developer to provide us with a product that works, and if they can’t, we try another supplier— or another technology.  A number of large utilities in the lower 48 are following storage for grid applications—Duke, SMUD, EPRI—perhaps worth visiting.

7.  How much is energy storage worth? ◦ How much diesel fuel can be saved? (modeling?) ◦ How long will storage system last? (Need testing data)  Back of envelope calculations—show that many energy storage systems are too expensive for load shifting applications  More sophisticated modeling is needed to assess value for stabilization applications  Electrochemical systems often degrade more rapidly under high current density conditions  Modeling can be used as a screening tool to properly size systems, and screen out systems that are unlikely to be economical  Cannot answer basic questions about hardware—need to find other sources of information on systems.

9.  Energy storage is becoming part of the US grid market ◦ Recent changes to FERC rules that allow third parties to provide frequency stabilization services and bill for them.  Dozens of companies are developing products for this market  Many of the companies are small, and are chasing capital.  Money is flowing—about $600 M in investment across the industry, mostly in past few years

10.  Pumped Hydro  Compressed Air ◦ Underground ◦ Above ground—SustainX Isothermal Storage  Flywheels ◦ Beacon Power had failures, went bankrupt, is back under new management ◦ Powercorp has flywheel system, but appears to be tentative about marketing unit  Batteries

11.  NGK Sodium Sulfur battery appears dead ◦ Two fires, appear to be preparing to shut down and recall all batteries in the field  Lead Acid and Advanced Lead Acid ◦ Xtreme Power  Appears to be using advanced lead acid battery technology developed for automotive applications ◦ Ecoult Lead Carbon battery  Appears to have much better deep discharge and partial charge performance—but high quality graphite can be expensive

12.  Still appear to be quite expensive and may suffer from relatively rapid degradation  A123, Altairnano, and numerous other suppliers exist  Automotive applications are main driving force—but stationary applications might be able to use reconditioned automotive batteries  Use in peak shaving applications, not for load shifting

13.  Prudent Energy ◦ Vanadium has become quite expensive, but major cost of small systems (UAF sized) is in balance of plant ◦ Larger system being demonstrated in California at onion processing plant  ZBB appears active but emphasized power electronics rather than battery technology  Redflow gave initial results from a community based demonstration, but gave no economics  Premium Power attended, but did not present  Numerous new companies are attempting to develop flow battery technologies

14.  Zinc Air ◦ Nice presentation, but apparently unchanged from past three years  Aquion ◦ Appears to be the darling of the VC crowd ◦ Some slippage in schedules, but appears to be aiming for demonstration later this year  MIT liquid metal battery ◦ Lots of interest, but still keeping fairly low profile.

17.  Recent change in ownership of company ◦ New investors are putting $60M into company ◦ Deal completed October 2011 ◦ Previous management is gone  Battery shipped to Kotzebue is currently being described as a “mistake” ◦ Transflow 2000 difficult to work on in field ◦ Fittings that loosened during shipping are impossible to access ◦ Lack of requested plastic shrink wrap around unit allowed salt water intrusion during shipping—may lead to electrical problems ◦ Issues between old management and new management were brought to a head over discussions on how to support the unit

18.  Discussions with Premium Power reps at ESA meeting, and with KEA in May—PP wants the unit back.  Company is stepping back from product, focusing current work on basic understanding of technology ◦ Have hired a flock of consultants to help with product development ◦ Running stacks to failure, and conducting FMA ◦ Discovering issues at deep discharge levels, high current densities ◦ Admitted that promised storage levels on Transflow 2000 had never been verified (FAT showed about half of 2.8 MW-hr capacity) ◦ Backing away from trailer mounted system to smaller 125 kW Conex based systems ◦ Will not be shipping any product from factory before end of 2012 ◦ Proposed shipping a 125 kW stack to Kotzebue in 2013, balance in 2014 ◦ Promise that their units will meet specs, whatever they turn out to be