AES Building World’s Largest Lithium-Ion Battery Grid Projects

Updated. Power company AES (s AES) has been experimenting with using lithium-ion batteries (large forms of those found in your laptop and mobile phone) as energy storage for the power grid, and currently has several pilot projects underway. But now AES tells me it’s in the process of scaling up its lithium-ion grid battery projects to a commercial size, and by the third quarter of this year, plans to start operating a 32 MW lithium-ion battery project in conjunction with grid operator PJM in West Virginia.

That 32 MW li-on battery project could be one of the largest of its kind in the world when built. AES Energy Storage’s VP, Deployment and Operations, John Zahurancik, told me in an interview this week that AES’s 12 MW lithium-ion battery grid storage project in Chile (see photo below) was the largest of its kind when that was built. AES also has a 40 MW lithium-ion battery project in the pipeline in Texas.

Using lithium-ion batteries for grid scale storage, and frequency regulation for utilities, is working and has been proving itself economically at the pilot scale, says Zahurancik. AES’s pilot projects include a one-MW pilot with PJM in Pennsylvania Nebraska (photo above), a two-MW project in Huntington Beach, Calif., a one-MW project in Houston, Texas, an eight-MW project in New York that AES is scaling to 20 MW, and a 12-MW project in Chile.

AES has been running its one-MW pilot project with PJM for a couple of years, and now will be decommissioning that project to make way for its 32-MW project with PJM. Zahurancik tells me that AES learned a lot from the PJM pilot project about how to move to more of a digital and IT architecture in the power industry. “In the IT world, it is assumed that devices are connected in a two-way fashion, making them highly manageable. That’s not so true in the power industry,” said Zahurancik. The batteries are remotely managed with IT.

The one-MW PJM project used Altairnano batteries, but AES hasn’t yet disclosed which company’s batteries it will use for its commercial project — whether those are from A123 Systems (s AONE), Altairnano (s ALTI), Samsung, Sanyo or BYD. Zahurancik tells me the newer players like A123 and Altairnano have been improving and scaling up production of their grid-scale batteries over the years, while the old-school battery companies in Asia are starting to become more aggressive with their grid products.

Commercializing these types of  lithium-ion battery projects will be important as a way to help power companies integrate more clean power. Batteries can act as an on-demand way to provide power when it’s needed — particularly when the sun doesn’t shine or the wind doesn’t blow — and are being used today as a regulation for the frequency of the grid.

Currently, the biggest problem with lithium-ion batteries for the grid is cost. According to a report issued last week by the Electric Power Research Institute (EPRI) lithium ion batteries are among the most expensive choices for utilities that want storage to help them manage the grid and for industrial/commercial applications.

However, EPRI pegs this year and 2012 as turning points for the grid energy storage market, because by then, companies that have collectively received more than $250 million in federal stimulus funding are expected to complete research and development work and move into field trial stages in the U.S.