AEP: Deploying the Future of Backyard Batteries

Does the battery-in-every-backyard concept of grid energy storage make technical and economic sense? Not yet, but it’s worth investigating. Imagine giving customers backup power to ride through outages or shift peak loads by an hour or two, or linking batteries to customers to let them stockpile power for when prices spike. That’s the genesis of utility American Electric Power (AEP)’s futuristic community energy storage (CES) project, which is using $75 million in federal grant money to plant 80 batteries in the backyards of the town of Gahanna, Ohio to see whether or not they can pay for themselves.

AEP has already deployed the first battery, a refrigerator-sized green box dug into the perimeter of one of its employee’s homes. Chicago-based S&C Electric is installing, networking and controlling the 25-kilowatt lithium-ion batteries, which are being built by Allentown, Pa.-based International Battery. The next step will be to link three more houses to the test battery to see if the system can manage multiple household loads at once.

By year’s end, AEP intends to have all 80 batteries installed, each backing up three to four houses, Terri Flora, AEP Ohio’s corporate communications director, told me in an interview last week. S&C is coordinating its charging and discharging capabilities, and now the utility is working on what to do with them.

First on the agenda is helping homes ride through power outages for an hour or two. That’s primarily a benefit to customers, though it could save the utility some money by letting it more efficiently prioritize outage repairs. The point is, AEP wants to concentrate on customer benefits right off the bat — prudent, perhaps, considering the customer backlashes we’ve seen to other smart grid projects that didn’t provide up-front customer benefits.

Customers can’t monitor their neighborhood batteries right now, let alone control them, but Flora said that AEP is considering in-home interfaces that could open up more uses for these batteries — a natural extension of the 110,000 smart meter rollout AEP is doing in the area, including Gahenna. Some customers might pay a premium for an uninterruptible power supply. Say, for example, small Internet businesses with always-on IT needs, or elderly people with electric-powered life-saving equipment at home. Others could use them to buy cheap power at night and use it when prices spike — an incentive that might make the idea of a utility-green high-voltage device buried in their backyard easier to swallow.

Right now, AEP is aiming for one CES battery system — that’s battery plus inverter, communications and grid interconnections — to cost less than $1,000 per kilowatt-hour, International Battery CEO Ake Almgren told me last week. That’s generally considered a bare minimum for lithium-ion batteries to compete against the sodium sulfur batteries that account for almost all the battery-based grid storage today.

The real savings for utilities will come with such functions as using battery power to replace expensive peak power. Farther down the road, AEP wants to use its batteries for ancillary services like regulating grid frequency and voltage. Indeed, cost remains by far the biggest barrier to battery-based community energy storage. Figuring out which technology and business models are the easiest to implement and fastest to pay themselves back at first may well determine whether later, more sophisticated and complicated solutions will have a chance to be deployed. Still, it would be nice to see which combination of customer and utility-side benefits emerge, and quickly. Smart meters, home energy controllers, rooftop solar panels, plug-in vehicles and other technologies are about to make managing power on distribution grids a lot more complicated. Some backyard batteries really could help.

Related Research: Beyond the Breakthrough: Building a Better Battery Business

Question of the week

Can community energy storage succeed on technical and economic terms?