AEP to deploy additional large-scale batteries on distribution grid

Installations will boost reliability, integrate wind generation, prepare for future; new batteries a step toward AEP’s goal of 1,000 megawatts of advanced storage

COLUMBUS, Ohio.– American Electric Power (NYSE: AEP), as part of the company´s comprehensive effort to integrate new technologies for reliability, renewable energy and energy efficiency to meet customers’ future needs, is expanding its use of large-scale battery technology on its electricity grid.

AEP, the only U.S. utility currently using advanced energy storage technology as part of its electricity infrastructure, will be adding stationary sodium sulfur (NAS®) battery technology in its West Virginia and Ohio service territories next year.

The company will also work with wind developers to identify a third location within AEP’s 11-state service territory for NAS battery deployment next year, using the storage capability to help offset the intermittent nature of wind generation.

AEP has placed an order for the three new NAS batteries with NGK Insulators Ltd. of Japan, the manufacturer and co-developer, along with the Tokyo Electric Power Co., of the technology. AEP anticipates delivery in spring 2008.

The six megawatts added to AEP’s system during this deployment is a step toward the company’s goal of having 1,000 megawatts of advanced storage capacity on its system in the next decade.

“We are extremely impressed with both the performance and the potential of this technology after using it in real-world applications and from experience we’ve gained through our long relationship with NGK,” said Michael G. Morris, AEP´s chairman, president and chief executive officer. "These new installations will move us a step closer to the full potential of advanced energy storage technologies in areas like reliability improvement, peak-load shaving and the use of stored energy from renewable sources like wind to supplement available generation resources.

“We’re first movers on advanced storage among U.S. utilities, a position we’ve held on a wide number of technologies in our century of existence,” Morris said. “Our near-term goal is to have at least 25 megawatts of NAS battery capacity in place by the end of this decade. But this is just a start. Our longer-term goal is to add another 1,000 megawatts of advanced storage technology to our system in the next decade. We will look at the full spectrum of technologies – flow batteries, pumped hydro, plug-in hybrid vehicles and various other technologies in early stages of development today – to determine their feasibility and potential for commercial application.”

In our view, advanced storage technologies, like NAS batteries, and other emerging technologies to increase customers´ ability to benefit from energy efficiency will play equally important roles in delaying or avoiding costly future investments in new energy delivery or generation infrastructure" Morris said. “I believe other companies will begin deploying storage technologies in the coming years.”

AEP plans to add two megawatts of NAS battery capacity near Milton, W.Va., to enhance reliability and allow for continued load growth in that area. AEP will also add two megawatts of NAS battery capacity near Findlay, Ohio, to enhance reliability, provide support for weak sub-transmission systems and avoid equipment overload.

A specific site for the third NAS battery, which is expected to be integrated with wind generation, will be announced in the coming weeks.

The combined cost for the three installations, including associated site preparation, equipment and control systems, will be approximately $27 million.

AEP has identified other potential sites for future deployment of advanced storage technologies.

In 2006, AEP installed the first megawatt-class NAS battery system to be used on a U.S. distribution system. That installation, on a substation near Charleston, W.Va., operated by AEP utility unit Appalachian Power, delayed the need for upgrades to the substation. A similar, but much smaller, NAS-based system installed in 2002 at an AEP office park in Gahanna, Ohio, was the first U.S. demonstration of the NAS technology.

The agreement to purchase additional NAS batteries was reached during an August visit to NGK in Japan by Holly Koeppel, AEP’s chief financial officer.

“AEP and NGK have had a very close business relationship for more than five years,” Koeppel said. “Our meeting in August generated the agreement for our deployment of additional batteries, but it also provided an opportunity for us to arrange an upcoming meeting with NGK for other Ohio utilities and state officials. Advanced storage technologies like NAS batteries are important to our industry’s future. That’s why we continue to lead the public policy and technology integration efforts.”

The deployment of additional advanced storage capacity is part of a comprehensive AEP initiative focused on preparing the company’s 11-state distribution system to meet future needs of customers.

“We’re looking at where we need to be in the year 2020 and will be making changes to transition our system to the grid of the future,” Morris said. “We have teams of employees examining the current and likely future needs of customers as well as the variety of technologies under development that could meet those needs. We’re looking at ways to improve reliability and efficiency of our system as well as ways to reduce consumption, which delays or avoids the need for additional generation.

“Some elements, like additional large-scale storage systems to enhance reliability, advanced metering systems to provide customers with options for reducing energy use and further integration of renewable resources, are among the likely solutions customers will see in the near term,” Morris said. “We’re also testing distributed energy resources and ‘smart grid’ or ‘self-healing grid’ technologies designed to seamlessly separate sections of the distribution grid when problems develop elsewhere, with customers seeing no disruption in power supply or quality in situations where outages would be likely today. But implementation of these technologies is a bit further off.”