Storing for the Future

Maciej Nowicki Ι Martin Weiss Ι Vladimir Zejda Ι Pawel Zoltko

Beating the Elite

The Challenge

“How can DONG Energy leverage its portfolio of technologies and partnership to profitably lead the next revolution in the energy sector – providing a clean yet reliable energy supply?”

We were asked:

And answered:By concentrating on a new strategy that follows the 3 key pillars of DONG Energy:

Clean

Reliable Profitable

Utilizes the company’s key strengths and

is focused on the long term profitability.

While operating in an environment that is: increasingly competitive and consolidated & focused on clean energy.

Evaluating DONG’s Technology Portfolio

Renewables

Generation

Exploration&

Production

Wind

Hydro

Coal

Biomass

Gas

Oil

Gas

CurrentFocus Clean

Longterm Growth

PotentialReliable TOTAL

13

10

9

10

12

11

12

DONG has a great potential in the growing European wind energy market

Global leader in offshore windparks30% market shareExtensive experienceDecided expansion plans

DONG MARKET

Wind Energy Market: Target & Consumption (Europe)

Growth to 34GW by 2020EU supportRenewable energy advancement (German phase-out,...)

Energy storage as a solution to low reliability

The great downside of wind power farms is their unpredictability.

UnreliabilityFluctuations in outputWeather

EnergyStorage

Efficient wind energy management

Reliable power supply & stable power networkLong term competitive advantage in the renewable energy sector

Improved trading opportunitiesAn edge in the new trends emergence (e-cars, smart grids)

Drivers & Constraints of energy storage

DRIVERSCO

NSTRAIN

TS

Impact: high medium low

Intermittent nature of renewable energyGrowth of electric vehicles/smart grids

Expensive grid upgrades deferred

EU legislation and efforts (20-20-20)

High investment costs

Long implementation period

Low energy density

1-2yrs 3-5 yrs 6-10 yrs

1-2yrs 3-5 yrs 6-10 yrs

Reducing risks

This means risk.Energy storage is a new territory for DONG Energy.

Strategic partnership w/ a energy storage specialized company/-ies

Lack of technological know-how

Capital intensive project (lack of resources)

toGain access to R&D, knowledge,lower the project costs,and attract external investors.

Choosing the right partners

Storage EnergyPlayers Chosing the solutution Potential Partners

Technology

Battery

CAES

Hydrogen

Preference Used for

Likely impl. in the long term

Farms located near caverns

Prefered in windfarms

PROS CONSStorage has relatively high efficiency: as

high as 90% or better Expensive

Flexible implementation High maintenance and have limited lifespans

Battery technology

High potential for development – costs likely to drop considerably, efficiency to riseCOSTS

From $508/kWh for a 10MW, 10MWh unit to $196/kWh for a 10MW, 40MWh unitTotal plant costs: $227/kWh for a 100MWh plant

$810/kWh for a 10MWh plant

Conclusion

The energy storage project will lead to:

Efficient wind energy management

Reliable power supply & stable power networkLong term competitive advantage in the renewable energy sectorAn edge in the new energy industry trends emergence (e-cars, smart grids)

Answers the call to utilize the technology and partnerships portfolio asked by the management in a clean, reliable, and profitable way.

Improved trading opportunities