1. Energy Storage Applications at AEP Emeka Okafor American Electric Power Presentation to SouthWest Electric Distribution Exchange May 7, 2009

2. Outline: 1. Challenges facing utilities 2. Energy storage to turn some of these challenges into opportunities 3. Energy storage deployment examples at AEP 4. AEP taking deployment of energy storage to the next level

3. Challenges to the Utility Business  Customer-controlled renewable DG on AEP grid has grown from 1kW to 1MW in a decade. It is expected to exceed 1GW in the next decade.  Customer renewable DG is intermittent, often not available when needed and out of utility control.  Utilities need a buffer between customer- controlled DG and electric grid.  Increasing demand for improved service quality and reliability  PHEV load (grid impact)

4. Converting Challenges to Opportunities Energy Storage:  Buffers between unpredictable customer generation and grid  Decouples load from generation  And offers other benefits as well …

5. 2006 - Battery in a Substation for Capital Deferral  Installed 1MW, 7.2 MWh of NAS battery on a feeder to defer building a new substation for three years  Daily Peak Shaving –summer  Three years of operation Tyler Mountain Feeder 12 kV bus North Charleston Feeder West Washington Feeder Voltage Regulator 46kV/12kV Transformer 12/16/20 MVA 46 kV bus

6. Peak shaving (load leveling).

7. Increased Reliability with Dynamic Islanding (Backup Power) for new installations  Three installations (2008):  Churubusco, IN (2MW, 14.4MWh)  Bluffton, OH (2MW, 14.4MWh)  Milton, WV. (2MW, 14.4MWh)  Loss of power.  Pick up island.  Power electronics and communication.  Return load to grid when fault is cleared.

8. 2MW, 14.4 MWh in Bluffton, Ohio Two other identical sites in West Virginia and Indiana (2008) All with dynamic islanding 2008 Projects 2008 Projects – To Improve Service Reliability

9. 2MW, 14.4 MWh in Milton, WV 2008 Projects 2008 Projects – To Improve Service Reliability 2MW, 14.4 MWh in Churubusco, IN

10. Load Following - with new battery installations.

11. 7 hours of backup power will ensure that over 95 percent of AEP Ohio customers will not experience an outage. Assumption: excludes traditional major events and momentary outages. Benefit of Islanding – How many hours of backup power is needed?

12. East Busco Station Battery Islanding Zones.

14. System Normal : Grid connected. Battery disconnected.

15. Fault at F8; loss of grid power. All reclosers and switches in the island open.

16. Battery picks up island based on last load information.

17. Grid power restored.

18. Battery disconnected. Load connected back to the grid.

19. Building on Success … AEP is very pleased with the performance of its substation batteries … But we need to get MORE out of energy storage: More value to our customers Better cost by leveraging the electric transportation Better fit into Smart Grid, the way of future utilities

20. Community Energy Storage (CES)  Uses New or Used PHEV batteries – Low Cost  Offers All Values of Substation Batteries when aggregated,  Offers Backup Power to customers  Buffers Customer Renewable Generation  Makes PHEV Charging Time an irrelevant issue CES is a small distributed energy storage unit connected to the secondary of transformers serving a few houses or small commercial loads for:

21. Value Associated with Storage Locations on the Grid 120/240 V 69 kV 4 to 34 kV 480 V 138 kV345 kV 765 kV Storage Value Devaluators:  Limited Value to Customer  High Security Risk  Does not remove Grid Constraints Devaluators:  Aesthetics  O&M? CES (Community Energy Storage) NAS (Substation Battery) Central Generation Load Distribution circuits appear to offer most value for hosting storage

22. CES Key Functions Local Controls/Benefits: 1) Backup power for the local need of the few houses connected to it 2) Voltage correction Grid Controls/Benefits: 3) Load Leveling based on substation and grid needs 4) Power Factor Correction 5) Ancillary services through further aggregation at the grid level

23. Advantages of Using PHEV Battery 1. Safe for public deployment 2. Low cost - Fierce global competition - US national priority - Option to use used PHEV batteries 3. Compact 4. Reliable 5. Efficient 6. Wide operating temperature 7. Easy recycling & lower environmental issues

24. Advantages of CES to Substation Battery 1. Higher electric service reliability to customers 2. Easier installation (a 240 V appliance) 3. Easier maintenance (lower required skills) 4. More likely to be a standardized commodity 5. Unit outage is less critical to the grid (smaller) 6. Lower resistive loss in wires (closer to customer) 7. A better fit into the Smart Grid programs

25. CES Key Specifications Key ParametersValue Power (active and reactive)25 kVA Energy50 kWh Voltage120V / 240V Round Trip AC Energy Efficiency> 85% Life> 3000 cycles, 15 years Audible Noise< 48dBA (no fans or filters) SizeComparable to a 25kVA transformer Most common distribution transformer size in AEP is a 25kVA unit that serves 3-5 houses.

26. CES Cost Forecast PHEV, and its battery development, is a US National Priority as well as having extensive global competition Pending the successful market penetration of PHEV, CES cost forecast over the next five years is:  $1000 /kW Commodity Pricing will keep this number low or  $500 /kWh PHEV penetration will push this number down

27. Putting It Together on Distribution Distribution Operations Utility OperationsCustomer Premise Adapted from EPRI source image PHEV Customer Portal or Meter LG Electronics

28. Putting It All Together - The Virtual Power Plant 2015 and Beyond

29. Conclusions. Energy Storage will be essential to meet the needs of the future grid. AEP has shown success with the use of NAS substation battery. AEP sees greater value to using Community Energy Storage to meet these new demands.

30. Questions? 2015 and Beyond