Renewable energies and storage systems

The sun and the earth are the two main natural sources of renewable energy. The sun is also responsible for the developmental cycles of water, tides, wind, and plants, as it generates sufficient heat. In the course  of using sunlight, it  produces relatively little waste and harmful pollutants.

Renewable energy is derived from sources that nature continuously replenishes, as opposed to non-renewable energy, whose reserves are depleted. Energy storage is crucial for the growth of intermittent renewable energies like solar and wind, which are affected by the weather and the solar energy's day/night cycle. The energy that was thus saved throughout the day might be redistributed on the networks in the evening when there is a higher demand.

By reducing the variations brought on by the intermittent generation of the ENR, storage also helps to sustain the quality of the electrical network. Finally, stationary storage enables the fulfillment of requirements for remote places that are challenging for distribution networks to supply.

The integration of storage technologies into power grids raises questions about the choice of the most appropriate technology. Indeed, each technology has its specificities in terms of size, the power delivered, cost, the number of cycles, durability, energy density, technological maturity, etc.

Massive energy storage technologies fall into four categories:

1) Mechanics (potential or kinetic): gravity storage by pumping (STEP), storage by compressed air (CAES), flywheels

This storage system is based on the gravitational energy principle. It represents nearly 99% of the world's massive energy storage capacity, with nearly 400 STEPs with a total capacity of about 125 GW.

2) Electrochemical and electrostatic: batteries, capacitors, and superconductors.

With this mode of storage, the working principle is based on the conversion of chemical energy into electrical energy, through batteries and accumulators.

3) Thermal and thermochemical: sensible heat or latent heat, energy by sorption.

Heat storage mainly concerns the heating (or air conditioning) of buildings, which accounts for almost 50% of energy consumption in Europe.

4) Chemical: hydrogen, methanation, etc.

Beyond its applications as fuel, hydrogen, and energy vector, could constitute a source of heat and electricity for buildings or places hardly connected to the network. In the event of overproduction, excess electricity would be used to produce hydrogen that could be stored and re-converted to electricity at the time of need.

Main players

China and the United States are the two countries that produce the most renewable electricity in terms of volume in the world, with respectively 949.2 and 536.9 TWh in 2021. However, these productions constitute limited electric mixers (19.2% and 12.5%).

Globally, renewables have supplied nearly 20.9% of the electricity produced in 2021. Twenty countries produce more than half of their electricity from renewables. Among them are Brazil (82.7% of EnR in its electric mix) and Canada (62.5%). The renewable electricity production of these two countries comes from more than 90% of hydroelectric power stations. In Brazil, they supplied 416.8 TWh in 2012, slightly more than nuclear production in France that year.

In proportion, other countries with more limited electricity requirements rely even more on renewable energies. Iceland produces all its electricity through its hydro and geothermal power plants (1). Ethiopia (99.9%) and Norway (98%) also rely almost exclusively on their hydraulic facilities to produce electricity.

It should be noted that all these countries rely mainly on "predictable", non-intermittent, renewable energies. Risks to supply and investment in networks and storage systems are therefore lower than in other countries such as Germany, where intermittent renewable units (wind, photovoltaic) supply the bulk of electricity production of renewable origin.

Main Players:

Economic model

Energy storage solutions have finally found their market. With the improvement of technologies, the accelerated development of intermittent renewable energies and, above all, the fall in battery prices, they have become essential in the management of electricity networks.

The year 2015 was marked by a real take-off of the market at the global level while a growing number of players took a stand: battery manufacturers, energy companies, start-ups, etc. In France, the market also grows, but does not get carried away, the needs are very limited. If the initiatives of the national actors are not lacking, their development in the storage of energy inevitably passes through the export.

At present, Japan has with the largest battery with a power of 50 MWh and capable of producing 300 MWh, however, China is designing a battery far superior to that of Japan because it will have a power of 800 MWh.

Investments in "renewables" amounted to $ 286 billion in 2015, 3% above the previous record set in 2011. "This is more than double the investments made in coal and gas , Estimated at $ 130 billion, "said the 10th Annual Report on Global Trends in Investment in Renewable Energy by the United Nations Environment Program (UNEP), published by the Frankfurt School-UNEP Collaborating Center Climate and Energy Financing and Sustainable Energy Financing and Bloomberg New Energy Finance (BNEF).

The main countries investing in renewable energy:

China: 110 billion

United States: $ 56 billion

Japan: $ 43 billion

United Kingdom: $ 23 billion

India: $ 10.9 billion

Germany: EUR 10 billion

Brazil: $ 7.5 billion

France: 2.9 billion

South Africa: $ 4.5 billion

Mexico: $ 4.2 billion

Canada: $ 4.1 billion

Morocco: $ 2 billion

The world's largest energy consumers:

Iceland (18.774 kg)

Qatar (17.418 kg)

Trinidad and Tobago (15.691 kg)

Kuwait (10.408 kg)

Brunei (9.427 kg)

Luxembourg (7.684 kg)

United Arab Emirates (7,407 kg)

Canada (7,333 kg)

United States (6.793 kg)

Finland (6.183 kg)

Renewable energy storage from recycled batteries 

Introduction: 

• Investor A  has partnered with Voltbag and plans to expand its business into renewable energy storage by installing an energy storage facility.

• Investor A  is currently in the process of installing a solar module production facility in Istanbul, Turkey.

• Once commissioned (expected in November 2016), the production plant’s output will be 200 MW per annum, which will be entitled to exports to all the important world markets.

• Investor A  has partnered with a Turkish business partner, to run its solar module facility and to sell the energy storage product to its client group in Africa and other markets.

• The purpose of this document is to brief potential lenders on this opportunity and to invite indicative term sheets for a partnership. A term sheet has been provided by the Turkish business partner for part of the required funding of $3 million.

• The document provides information about Investor A and an overview of the opportunity.

Background to the Group

​The Shareholders

Investor A: The fair value of Group assets is in the excess of USD 100m.

Know How the owner is the developer for the construction of the solar power project. 

He has his own entity established in the Netherlands for the management and exploitation of energy storage product. As a partner in the project, he will act as the company that delivers a competitive off-grid product to be used in the existing markets of the Group.

Opportunity overview

Investor A requires funding to cover the capital expenditure of the energy storage production plant; the group can provide markets for the product sales 

Investor A has identified an opportunity to enter the growing energy storage sector in Africa. To this end, Easy Solar has agreed to develop a competitive storage product that runs on waste from existing batteries.

• The market is located in East Africa, in a region where Investor A's partners have existing partnerships to deliver Turkish products. Africa has virtually no electricity grid available and has a rapidly increasing power demand.

• One of the key markets in Ghana. One of Investor A's partners is already active in Ghana and has high-profile local contacts, therefore, the new venture can benefit from a lower-risk profile.

• The key rationale for this investment is to enter the fast-growing energy storage market. The production plant will produce off-grid electricity products that can be sold immediately. Investor A  partners have been asked to deliver 30.000 units of off-grid storage power. Depending on the structure choices of the investor, payment and as such any AR risk can be eliminated. 

• Investor A seeks financing from 3m for the capital expenditures of the production plant. The expenditure may be lower when any new partner owns the required production equipment.

• Investor A has a working prototype and is in the process of further developing it to decrease the time-to-market.

The product

• The product is a recycled off-grid energy storage battery.

• The unique feature of the product is that it uses waste (disused battery packs) as its main raw material.

• Further features are remote monitoring, to keep track of the condition of the battery.

• Also, the capacity of the battery can be increased to any desired size through a modular system.

• The product will allow renewable off-grid storage to become available for the masses due to its very cheap price. 

The Project economics for annual production and sale of renewable energy storage products

• The production process is based on conventional technology, so there is a low risk of operational problems in the production plant

• Each sale will be 100% AR-risk covered, issued by the concerned government on behalf of the Turkish partner of Investor A

• Project documentation on relevant legislation can be made available, as can insight into our legal team's support of the compliance of permits required for such operation

• Besides a strong legal team, we have  an organization very well connected in Ankara, enabling us to quickly apply for documents needed

• Our local advisor is well connected in Morocco and Ghana, to monitor any relevant law  provisions, as well as in Ankara, to stay in close contact with Islamic funds that we may ask for support or incentives

• With a cost per unit of approx USD 150 whilst competitive products  (Tesla Powerwall) cost E 3600 per unit in Western Europe, our financial projection shows ample opportunity for making a sound gross margin. This projection does not include any available government subsidies

• Besides a possible local government subsidy, we may apply for support at the Islamic Development Bank as well as local banks, considering we have local partners there and the fact we will contribute to the electrification of Africa and directly apply the concept of recycling

• A Somalian government official has offered to jointly develop a 50 MW power plant, including off-grid storage units in Somalia. Considering the very high electricity price in Somalia, the acceptable tariff is $ 0,20/W. Besides residential units, Investor A can also serve this utility-scale storage business

• Our financial model includes an important feasibility justification, and additional information for your consideration. The regular SPPA-guided solar power project justifies the investment in off-grid, which in itself has a low payback period. Please refer to the attached Excel model

Project requirements

Investor A  seeks funding of up to USD3m to finance the installment of production capacity for its energy storage product

Sources and uses of funds

The Group seeks funding in the amount of USD3m to finance the acquisition of the power plant. The sources and uses of funding will therefore be as follows:

Sources

Uses

Potential security package

• The Turkish business partner already active in Africa will provide 100% AR security; therefore, zero exposure to payment risks remains.

• Protective measures from local governments can be sought upfront, in order to address security issues such as stock and property.

• The lender would also have a first floating charge on the cashflows of the production plant once it is operational.

• Additional security may be considered at the request of the new partner.

Process considerations

Management is available to meet and present this opportunity.

We invite you to consider this opportunity and provide an indicative term sheet, specifying the loan amount, interest rate if any, repayment profile, and your loan security requirements.

Our aim is to receive indicative term sheets by November 2016. 

Risk analysis and contingency

Bibliography

CEA.fr

C2ES (2021) Renewable Energy. Available from: https://www.c2es.org/content/renewable-energy/ [Accessed 20 December 2022] 

CDE.org

Global Energy Review (2021) Renewables. Available from : https://www.iea.org/reports/global-energy-review-2021/renewables [Accessed 20 December 2022]

Les Echos

IFP energies Nouvelles