Specialist
Former senior executive at Enel X Srl
Agenda
- Battery buying criteria, customer preferences and demand growth
- Impact of Investment Tax Credit in the Inflation Reduction Act
- Contracting, service and systems integrator market dynamics
- Availability and supply disruptions
Questions
1.
What are you seeing around the battery supply chain? The supply chain of materials for batteries has been heavily scrutinised. Has cost inflation started to subside?
2.
What difference did the Inflation Reduction Act announcement make on the ground? Was it an immediate jump in orders?
3.
What is the typical approach to dealing with some supply disruptions? Perhaps they’ve come down a bit, but have buyers’ approaches changed as well? What do you have to do to make sure that you can smooth out your supply chain and deal with sourcing problems?
4.
What are typical buying criteria across the industry for selecting suppliers? Is it just the price? Are there other factors in terms of reliability of supply?
5.
Are you seeing any kind of move to alternative chemistries? You mentioned some challenges with lithium-ion. What are you seeing across the industry around how people are thinking about other sources or suppliers?
6.
Are you seeing impacts from the discussions about potentially onshoring some battery supply? I think Fluence has made some commitments or at least set some goals to diversify supply from outside of China. Do you see that making a significant impact in the near-to-mid-term?
7.
What are your cost expectations over the next 1-2 years? Do you think they’ll continue to go down? What should we look out for?
8.
What typically drives customer interest in battery systems on the non-utility BTM [behind-the-meter] side?
9.
When it comes to the number one driver – money – how do customers typically approach measuring or quantifying their need for these storage systems in the beginning of the process?
10.
You said customers can typically trim 50% of their demand. Could you expand on that?
11.
You mentioned there are many tariffs you can put customers on. Could you elaborate on that?
12.
I have been hearing a lot about potential market changes from the ISOs [independent system operators] and RTOs [regional transmission organisations]. Are you monitoring anything on the near-term horizon regarding these market changes? How big a change would they make to battery storage products from the ISOs?
13.
When you begin a planning or sales process with a customer, how is the design and siting typically executed? How much expertise does a typical BTM customer have when it comes to battery storage energy management?
14.
What are the most challenging aspects for a customer to figure out regarding energy management or a battery project? What are the real hurdles?
15.
You said a lot of customers don’t really understand their demand profiles and charges. What does that mean in terms of the battery project? What do you have to do to go from zero knowledge to understanding how the demand will function with the battery?
16.
How important is the battery performance to the 40% of customers who know a bit more? Are there particular customer groups that are most sensitive to the technical aspects and the most demanding with the battery’s performance requirements?
17.
You said very variable demand tends to equate to larger cost savings with an energy storage product. Does that mean the higher-value products are inherently riskier?
18.
You discussed footprints around the flow batteries, but how much of a challenge is the actual siting and finding of that footprint? Is it a challenge for many customers, or does it not tend to be an issue?
19.
Do you see significant pricing competition with some BTM customers? There’s plenty for them to think about – you mentioned the importance of performance and reliability. How important is the price to them?
20.
Are you seeing any mentality changes around how customers look at energy management overall? Programmes such as demand response and demand response aggregation have taken off recently. Is this a tailwind for storage companies, or does it favour companies that take a broader approach to energy management and perhaps emphasise the demand response over the battery itself?
21.
How do you assess the ability of other slightly unconventional players to play in the BTM residential or business storage space? Could a company such as Generac, which is already in the energy market, try to get into the energy management space?
22.
What might stand out in the competitive environment for the players you mentioned? What factors should we look at?
23.
Could you provide some context on the technical challenge between having the AC- [alternating current] and DC [direct current]-connected batteries? Is it just the engineering issue?
24.
In terms of the larger end users you said were volatile, such as smelting and bakeries, should we monitor any particular customer groups that you think could unlock some growth for the industry? What are some other trends worth highlighting?
25.
Do you have any other thoughts on the BTM category?
26.
On the FTM [front-of-meter] side, how different are the buying criteria for the utility customers? Could you rank the top priorities for a utility FTM buyer?
27.
You said FTM projects are much bigger and that it’s very challenging to work in larger batteries. How different is that expertise? What differentiators would set someone apart that can make a 100MW plant? What do they know that’s different?
28.
You mentioned safety as a key differentiator. What are you seeing in the competitive landscape on the safety side? Have the approaches changed? What are the key differentiators in terms of safety?
29.
Given the public attention on the incidents you mentioned, are you seeing the industry invest significantly here? Has the approach changed?
30.
Are utilities generally more demanding customers on the safety or price sides?
31.
You said many players are moving into focusing almost entirely on the FTM market. What is stopping utilities from doing a lot of this system innovator work themselves, either with the help of EPC [engineering, procurement and construction] companies or the module suppliers, given they have so much expertise with the electricity markets already and installing projects in general?
32.
When it comes to the bids you mentioned, there are a few players. Is there still a lot of cost competition though? How demanding are utilities on the price side? They’re facing regulatory pressure.
33.
Are more software-focused players at a disadvantage when it comes to a utility that just wants a big battery that discharges along with the duck curve?
34.
What do you see being more important on the software side – the battery management, the response time, the bidding or the integration with the electricity market?
35.
How important is regional knowledge of electricity markets and the constant tariff changes? Does that become a big competitive differentiator on both the FTM and BTM sides?
36.
Is it a challenge for a new ISO or RTO to get into new markets without a track record? How are they assessing your ability to keep track of those tariffs and make the necessary changes?
37.
Where do you see interesting markets for storage evolving from either the FTM or BTM sides? I’ve heard a bit recently about New York and we hear a lot about ERCOT [Electric Reliability Council of Texas] all the time, but what do we need to see in the near-to-mid-term?
38.
Competitive differentiation in software has attracted a lot of attention. Are the software innovations you’re seeing pretty defensible? Do their advantages quickly dissipate as people follow on?
39.
What is happening more broadly in the PPA [power purchase agreement] space? Customers don’t necessarily know what they’re signing on for. How are things changing?
40.
Do you have any final thoughts? Is there anything around US grid-scale battery storage we should monitor, or any important trends we might have missed?
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