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Duke Energy makes business case for installing battery storage in regulated territories

Duke Energy looking to make the leap from pilot projects to commercial installations of batteriesto store energy in its regulated electricity markets, signaling another stage inthe maturity of battery storage technology.

While just a few years ago a vertically integrated utility wouldstruggle to find a business case for installing a battery storage system due tolack of support from regulators and a lack of price signals, the fact that Dukeis looking at such a project is a sign of how far battery costs have come down,according to Mike Rowand, Duke's director of technology development.

"Two years ago we wouldn't even consider it," Rowandsaid in an interview at the Energy Storage Association annual conference in Charlotte,N.C.

The company's interest comes at a time when battery storage projectsare exploding in popularity around the country, potentially transforming the deliveryof electricity by allowing power from renewable energy sources to flow when windis not blowing or the sun is not shining. Installed battery capacity in the U.S.has grown from about 300 MW three years ago to 887 MW as of early this year, accordingto data from the Electric Power Research Institute.

Duke has pursued several battery pilot projects within its regulatedbusiness to test the cost-effectiveness, capabilities and practicality of differentbattery technologies. The company is likely not going to launch more pilots andis exploring opportunities for a project aimed at actually deploying — not justtesting — the technology to make money, according to Rowand.

The impetus for the project will likely be a specific problemthat batteries could address, such as an area where a substation is needed but buildingit would be very expensive, Rowand said. Batteries can help a utility avoid thoseincremental costs by storing and discharging energy to smooth out flows of electricity,making transmission grid upgrades less necessary.

Examples of Duke's regulated battery pilot projects include asystem at the Rankin substationin Gaston County, N.C., that tests sodium ion batteries from Pittsburgh-based AquionEnergy. In addition, in 2012 Duke commissioned a 250-kW battery that runs at a solarpanel-testing facility at a site built on a coal ash basin near Duke's Steam Station coal-firedpower plant. This battery, a lithium polymer battery from South Korean manufacturerKokam, dispatches energy when cloud cover rolls in, thus smoothing out the variabilityof solar energy.

But competitive, deregulated markets have provided more fertileground for battery projects in the last few years. In contrast to regulated markets,Duke has already been involved in commercial battery installations on the unregulatedside of its business. In 2012, Duke fired up one of the largest and earliest commercialbattery storage projects in the country at the Notrees Windpower project in West Texas, where a 36-MW batterysystem provides frequency regulation for the Electric Reliability Council of Texas Inc.

Compared to regulated states, competitive markets such as thoserun by PJM Interconnection LLChave been an easier sell for battery storage projects because those markets senda clear price signal for the value of batteries, Rowand said. In regulated environments,the value is heavily influenced by whether regulators allow utilities to chargecustomers for the technology.

The battery storage projects in the pipeline could the amount of battery storagecapacity in PJM by more than 50%. Duke has been part of this growth, recently completinga 2-MW storage system, the W.C.Beckjord Battery Storage facility at a site at the retired W.C. Beckjordplant in Ohio. That facility is used to help regulate grid frequency. Duke had alreadyinstalled a separate 2-MW ToshibaCorp. lithium-ion battery system at Beckjord.

Batteries are becoming commercially feasible in Duke's regulatedstates because regulators are starting to see the value of batteries, and Duke haslearned from its pilot programs how to more efficiently operate these battery facilitiesto be more competitive with other methods of grid support, Rowand said. Duke doesnot disclose specific figures on the costs of electricity from its battery projects,according to a spokesman.

Duke owns utilities that provide electricity to 7.4 million customersin North Carolina, South Carolina, Florida, Ohio, Kentucky and Indiana.