AEP Texas sees batteries as cheaper alternatives to local grid upgrades

AEP Texas North (TNC) applied Sept. 16 at the Public Utility Commission of Texas for approvals related to installation of lithium-ion batteries at the Woodson and Paint Rock sites in Texas.

TNC is proposing to install a lithium-ion battery in the two locations on its distribution system in order to increase the reliability of its distribution system. Due to the first-of-its-kind nature of this distribution installation in Texas, TNC is requesting in this application commission confirmation that its proposed installtion of batteries complies with Texas law and will be considered distribution assets whose cost will be eligible for inclusion in the company’s distribution cost of service. The company is also requesting approval to apply a 6.67% depreciation rate to the property, which represents an estimated 15-year useful life.

TNC said it has determined that two locations on its distribution system could benefit from system upgrades, and in each of those instances, the installation of a lithium-ion battery would be less costly than more traditional solutions.

  • Woodson is a rural community in Throckmorton County, about 118 miles west of Fort Worth. TNC services approximately 217 customers in Woodson. This rural community is currently served by a radial 12-mile distribution feeder from the Bush Knob Substation. It is difficult to access the line to restore service in outage situations. In the past five years, Woodson has experienced an average of four outages and eight hours of outage time annually. The average customer in Woodson saw approximately three times the outages and was out of power for three times as long as the average TNC customer during the same time period. A utility-scale báttery could be installed on the radial distribution feeder near Woodson so that it could provide power during an outage of either the transmission or radial distribution line that currently serves Woodson. Currently, a one mega-watt battery capable of supplying two mega-watt hours of power (1MW/2MWh) could be installed at an estimated cost of $1.6 million. This is less than the cost of more tradifional solutions (i.e., either the construction of a new transmission line and substation in Woodson or the construction of a new distribution line), which range in cost from $6 million-$17.2 million. Once installed, the battery would effectively remove all need for further major reliability upgrades in the Woodson area for not only TNC’s 10-year planning horizon, but also for the foreseeable future.
  • Paint Rock is a rural town located in Concho County, about 32 miles east of San Angelo. TNC serves approximately 273 customers in Paint Rock. It is served by a single 1.0 MW distribution substation located in the eastern part of town. The peak load on the Paint Rock substation transformers is 1.1 MW, which represents a 10% overload. The load at Paint Rock has peaked above the rating of the substation transformers in each of the past five years. At this peak load level, there is no ability to add any new electrical load in the Paint Rock area without system upgrades. The installation of a battery on the distribution system in Paint Rock would allow the company to forgo a $5.3 million substation upgrade for both the entirety of TNC’s 10-year planning horizon and for the foreseeable future. The estimated installation cost of the 500kW/1,000kWh battery is $700,000, around 13% of the cost of a more traditional solution.

Lithium-ion batteries are the preferred choice right now

Lithium-ion batteries were considered by the company for installation at  the two locations because they are the best performing and most efficient utility-scale batteries currently available. However, TNC said it monitors and evaluates available technology and would install another type of battery with alternative battery chemistry at the two locations if it proved to be more beneficial and cost effective. The expected useful life of the batteries is 15 years. This 15-year estimated useful life is consistent with the accounting treatment that was approved for the three distribution-level batteries installed by other American Electric Power (NYSE: AEP) affiliates.

Each of these batteries will be able.to provide its rated load output for two hours. The duration of the continued service would be dependent on the loading on the battery during the outage. At rated loading, a battery could supply an area for up to two hours; if the load at the time was half the rated output of the battery, it could supply power to the area for up to four hours.

Judith E. Talavera, the President and Chief Operating Officer of AEP Texas, AEP Texas Central and AEP Texas North, said in supporting testimony: “Battery technology is becoming more mature and cost effective for a number of applications in today’s world. AEP believes that battery technology can be a useful tool for transmission and distribution (T&D) purposes and is interested in deploying this technology in areas where it makes sense from a T&D perspective. While AEP has experience with battery deployment in limited areas across its service territory, we are now interested in incorporating battery technology into our distribution planning process in order to maintain our goal of providing safe and reliable service in the least-cost manner to our customers.”

Talavera added about the company’s experience with past projects: “AEP gained sorne operating experience with those projects, and in order to advance its efforts to incorporate battery technology into its planning process, AEP partnered with Greensmith Energy, a provider of energy storage software and battery integration services. Greensmith Energy provides software technology that allows a utility to determine the best battery technology for a certain set of circumstances. Greensmith Energy’s technology is battery agnostic, meaning that there is no preference given to a certain battery technology or manufacturer when determining the best technology.”

A project contact is: Jennifer J. Frederick, American Electric Power Service Corp., 400 West 15th Street, Suite 1520, Austin, Texas 78701, (512) 481-4573, jjfrederick@aep.com.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.