Colin Smith and Dan Finn-Foley

woodmac.comTrusted intelligence
Research Presentation:
GTM Briefing: The New Paradigm: Solar + Storage’s
Role in the Energy Transition
Colin Smith
Senior Analyst
Colin.Smith@woodmac.com
Dan Finn-Foley
Principal Analyst
Daniel.Finn-Foley@woodmac.com

Wood Mackenzie offices Wood Mackenzie Power & Renewables offices
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Market evolutions and technology
revolutions have disrupted legacy
business models, creating a new
energy landscape
The Power Market of the Past
A top-down, flow from supply to demand
Dispatchable
Generation
Transmission Distribution
End
Customers
Tomorrow’s Decarbonized and Decentralized Power Market
A bi-directional energy network with new technologies and actors at every node reshaping power market planning and operations
Dispatchable
Generation
Transmission Distribution End Customers
Intermittent
Generation
Energy
Storage
Advanced Metering
Infrastructure
Distributed
Generation
Electric
Vehicles
Connected
Devices
Demand Side
Management

The solar trends shaping the
solar-plus-storage market

2,858
3,922
4,268
10,807
6,351 6,163
7,786
10,003 10,383
8,655 8,638
9,287
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
2,000
4,000
6,000
8,000
10,000
12,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Capacity(MWdc)
Installations (MWdc) Market Share (%)
Utility PV Market Outlook, 2019-2024
The bulk of new procurement is targeting 2021
Source: Wood Mackenzie Power & Renewables
U.S. Utility PV Installation Forecast, 2014-2024E

$0.00
$25.00
$50.00
$75.00
$100.00
$125.00
$150.00
$175.00
$200.00
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
PPAPrice($/MWh)
PPA Contract Execution Date
PPA prices by contract execution date
Utility PV PPA price is consistently below the price of new build CC natural gas
• Pricing for power purchase
agreements has ranged between
$25 and $45/MWh for contracts
signed over the past 18 months
• Opening up new origination
opportunities beyond
procurement to meet Renewable
Portfolio Standards
Price of CC Natural Gas

• Of the 24 gigawatts of utility solar
in development, Over 80% has
been procured outside statewide
renewable energy mandates.
• Following the introduction of
tariffs, utility solar procurement
has seen a record level of
procurement…13.2 GWdc of utility
solar PPAs signed in 2018.
U.S. utility solar demand landscape
Cost competitive utility solar is expanding the universe of customers and origination opportunities
MT
WY
ID
WA
OR
NV
UT
CA
AZ
ND
SD
NE
CO
NM
TX
OK
KS
AR
LA
MO
IA
MN
WI
IL IN
KY
TN
MS AL GA
FL
SC
NC
VA
WV
OH
MI
NY
PA
MD
DE
NJ
CT
RI
MA
MEVT
NH
Utility PV in Development by State as of Jan 2019
n 0-20
n 20-100
n 100-500
n > 500
MW in
Development

Utility PV drivers, PPAs signed in 2018
16.8 1.3
5.6 21.1 1.1
3.4 23.4 0.7
2.6 25.3 3.0
1.6 23.8
0
5
10
15
20
25
30
35
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
Changestocontractedpipeline
(MWdc)
Contracted Pipeline Capacity Installed
New Capacity Contracted
11%
1%
65%
21%
2%
RPS
PURPA
Voluntary Procurement
Corporate Procurement
CCA
U.S. utility solar demand landscape
Cost competitive utility solar is expanding the universe of customers and origination opportunities
Utility PV Contracted Pipeline, Q4 2017-Q4 2018

Solar is becoming competitive with wind
Wind and solar are converging and both are competitive with natural gas CC and coal on an
LCOE basis but now solar is beating wind in several top states
2.0
0.0x
0.5
3.0x
1.0
1.5
2.5
’19e ’21e’20e ’22e ’23e ’24e ’25e ’27e’26e ’28e
1
PTC phaseout
WY CA, CO, NM, NY, TX IL, IA, KS, MI, MN, NE, ND, OK, SD
After the stepdown of the PTC, utility solar
will beat onshore wind on an LCOE basis in
5 of the 15 top wind markets
Solar to wind LCOE ratios of top 15 wind states by installation total, 2019e to 2028e

-
200
400
600
800
1,000
1,200
2019RetailSales(TWh)
California Full Democratic Control
10 states equaling 2.5
California’s propose
100% targets
New York
Illinois
Washington
New Jersey
Colorado
Oregon
Nevada
Connecticut
New Mexico
Maine
80% targets represents
2 California’s
Split Control
3 ‘split’ states
equaling 0.75
California’s
propose 100%
targets
Wisconsin
Minnesota
Massachusetts
Republican Control
2 Republican
states equaling
1.25 California’s
propose 100%
targets
Arizona Florida
A 60% target across these
states represents 3
California’s
The United States could add three California’s before the 2020 election

100%
82%
70%
55%
18%
25%
32%
5%
11%
2%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2020 2021 2022 2023 2024
%ofProjectssafeharbored
byCODyear
30% ITC 26% ITC 22% ITC 10% ITC
10,003
8,514
6,059
4,751
1,869
2,129
2,721
467
956
210
9,287
10,003
10,383
8,655 8,638
9,287
-
2,000
4,000
6,000
8,000
10,000
12,000
2020 2021 2022 2023 2024
MWdcofprojectssafeharbored
byCODyear
30% ITC 26% ITC 22% ITC 10% ITC
Demand for projects to qualify for commence construction
Utility PV will aim to safe harbor 70% of 2020-2023 projects (29.3 GWdc) to the 30% ITC

Solar-plus-storage past
present and future

52%
45% 43%
13% 32% 40%
35%
23% 17%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
30-minute 2-hour 4-hour
%ofTotalSystemCost-2018
BOSStack
Hardware & Controls Cost EPC Cost Interconnection Cost
Co-siting provides a myriad of benefits outside of the ITC
• Software and controls represent ~20% of
hardware and controls costs
• Co-siting reduces costs for site preparation - not
a significant driver of storage system costs.
• Interconnection costs vary dramatically but
can exceed $140/kW, with as much as
$80/kW added for high voltage connections.
• Using an existing interconnection can reduce
the cost of a project by as much as 5-15%,
depending on regional interconnection rules.
Cost savings are critical for energy storage’s competitiveness

Solar-plus-storage deployments driven by utilities in the front-of-the-meter
space and incentives behind-the-meter
165 MW of FTM energy storage in
the US is solar-paired.
7 states (including Puerto Rico)
have more than 10 MW of solar-
paired storage.
5 more have 1 MW or more.
12 states have more than 1.6 GW of
solar-paired storage contracted or
under procurement
Solar-plus-storage’s reach is widening, but much of its
value outside incentive states is contingent on the ITC

Front of the Meter Solar-Plus-Storage Forecast
0
200
400
600
800
1,000
1,200
1,400
1,600
California
Arizona
Hawaii
Florida
Colorado
Nevada
Texas
NewYork
Massachusetts
NewJersey
PJM(Exc.NJ)
AllOthers
InstalledEnergyStorage
Capacity(MW)
2018 2019 2020 2021 2022 2023 2024
Solar Plus Storage MW Installations by State (MWac)

$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
Tucson Electric Power Xcel Energy NV Energy Hawaiian Electric
PPApricing($/MWh)
PPA pricing with declining premiums on storage will continue apace
While 2018 saw the lowest-ever solar-plus-storage PPA pricing on an annual basis, the first week
of 2019 brought new record-low contracts
2017 2018 2019
Recent solar-plus-storage PPA prices, 2017 – 2019 ($/MWh)

PPA pricing with declining premiums on storage will continue apace
While 2018 saw the lowest-ever solar-plus-storage PPA pricing on an annual basis, the first week
of 2019 brought new record-low contracts
• In 2017 Tucson Electric Power signed a solar-plus-storage contract for 100 MW
of solar paired with 30 MW of storage at less than $45/MWh, setting the record
for the lowest-ever recorded price at the time.
• In 2018, utilities in Colorado (Xcel Energy) and Nevada (NV Energy) came out
with unprecedented prices for solar-plus-storage projects.
• In the first week of 2019 Hawaiian Electric submitted solar-plus-storage projects
with over 1 GWh of storage and 260 MW of solar for regulatory review.

The new foundation for hybrid energy storage systems: recognizing value
True value for hybrid storage systems lies at the intersection of green policy and system needs
• National Energy Policy Act:
1992 Deregulating energy markets
• Example market: Texas
• Iowa launches the first Renewable Portfolio
Standard: 1983
• Example market: Hawaii (100%)
• Reliability Pricing Model: 2007 PJM
capacity market acknowledges that
availability during peak times matters
• Example market: Kentucky
• Massachusetts’s An Act to Advance
Clean Energy: 2018
• Example market: only Massachusetts
(for now!)
Competitive markets can help drive down costs Not all MWh are created equal…
Keep it
simple:
secure MWh
of energy
Not all
hours have
the same
need…

The new foundation for hybrid energy storage systems: recognizing value
True value for hybrid storage systems lies at the intersection of green policy and system needs
• As you move in either direction, either towards valuing renewables, or valuing
delivery during peak hours, storage’s value increases.
• As you move in both directions, valuing renewables during certain hours,
storage’s value increases exponentially.
• The clean peak standard, if it becomes a model as capacity markets and the
RPS did, could drive massive storage growth.

Thank You!
Dan Finn-Foley
Principal Analyst
Finn-Foley@woodmac.com
Colin Smith
Senior Analyst
Colin.Smith@woodmac.com

Colin Smith and Dan Finn-Foley

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