Bernstein Innovative Energy Technologies Conference

Transcription

1 Bernstein Innovative Energy Technologies Conference Ram Sastry Director, Distribution Services Support March 25, 2014

2 Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of Although AEP and each of its Registrant Subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forwardlooking statements are: the economic climate, growth or contraction within and changes in market demand and demographic patterns in our service territory, inflationary or deflationary interest rate trends, volatility in the financial markets, particularly developments affecting the availability of capital on reasonable terms and developments impairing our ability to finance new capital projects and refinance existing debt at attractive rates, the availability and cost of funds to finance working capital and capital needs, particularly during periods when the time lag between incurring costs and recovery is long and the costs are material, electric load, customer growth and the impact of retail competition, particularly in Ohio, weather conditions, including storms and drought conditions, and our ability to recover significant storm restoration costs through applicable rate mechanisms, available sources and costs of, and transportation for, fuels and the creditworthiness and performance of fuel suppliers and transporters, availability of necessary generating capacity and the performance of our generating plants, our ability to recover increases in fuel and other energy costs through regulated or competitive electric rates, our ability to build or acquire generating capacity, and transmission lines and facilities (including our ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms and to recover those costs (including the costs of projects that are cancelled) through applicable rate cases or competitive rates, new legislation, litigation and government regulation including oversight of nuclear generation, energy commodity trading and new or heightened requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances or additional regulation of fly ash and similar combustion products that could impact the continued operation, cost recovery and/or profitability of our generation plants and related assets, evolving public perception of the risks associated with fuels used before, during and after the generation of electricity, including nuclear fuel, a reduction in the federal statutory tax rate could result in an accelerated return of deferred federal income taxes to customers, timing and resolution of pending and future rate cases, negotiations and other regulatory decisions including rate or other recovery of new investments in generation, distribution and transmission service and environmental compliance, resolution of litigation, our ability to constrain operation and maintenance costs, our ability to develop and execute a strategy based on a view regarding prices of electricity and other energy-related commodities, prices and demand for power that we generate and sell at wholesale, changes in technology, particularly with respect to new, developing or alternative sources of generation, our ability to recover through rates or market prices any remaining unrecovered investment in generation units that may be retired before the end of their previously projected useful lives, volatility and changes in markets for capacity and electricity, coal, and other energyrelated commodities, particularly changes in the price of natural gas, changes in utility regulation and the allocation of costs within regional transmission organizations, including PJM and SPP, the transition to market generation in Ohio, including the implementation of ESPs, our ability to successfully and profitably manage our Ohio generation assets in a start-up, nonregulated, merchant business, changes in the creditworthiness of the counterparties with whom we have contractual arrangements, including participants in the energy trading market, actions of rating agencies, including changes in the ratings of our debt, the impact of volatility in the capital markets on the value of the investments held by our pension, other postretirement benefit plans, captive insurance entity and nuclear decommissioning trust and the impact on future funding requirements, accounting pronouncements periodically issued by accounting standard-setting bodies and other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes, cyber security threats and other catastrophic events. Investor Relations Contacts Bette Jo Rozsa Managing Director bjrozsa@aep.com Julie Sherwood Director jasherwood@aep.com 2

3 The Evolution of the Electric Utility System Before Smart Grid: One-way power flow, simple interactions, limited sources of renewable generation After Smart Grid: Two-way power flow, multi-stakeholder interactions, increased penetration of renewable generation Adapted from EPRI Presentation by Joe Hughes NIST Standards Workshop April 28,

4 Smart Grid Enables Energy Storage.but benefits will drive technology choice & applications. Adapted from EPRI Presentation by Joe Hughes NIST Standards Workshop April 28,

5 Drivers for Energy Storage Deployments Source: NaatBatt/KEMA Survey 5

6 Utilities Barriers to Energy Storage Deployments Source: NaatBatt/KEMA Survey 6

7 Energy Storage System Comparisons Maturity Installed cost $/kw Levelized Cost $/kw-yr Energy Density (Wh/L) Roundtrip Efficiency (%) Lifecycle Sodium Sulfur (NaS) Mature years/4500 cycles Lithium Ion (various applications) Pre-Commercial % 10 years/1000 cycles Sodium-Nickel-Chloride Demo cycles Vanadium Redox Pre-Commercial years/10000 cycles Zinc Air Laboratory/Demo % 10 years/10000 cycles Lead Acid (various applications) Commercial cycles Zinc Bromine Demo years/2000 cycles Pumped Hydro Mature N/A 80 >20 years Data from SANDIA REPORT- DOE/EPRI 2013 Electricity Storage Handbook in Collaboration with NRECA, AEP study, EPRI studies 7

8 Energy Storage Locations 8

9 AEP s First Substation Battery MW, 7.2MWh of NaS battery Deferred new substation 46 kv bus 46kV/12kV Transformer 12/16/20 MVA Voltage Regulator 12 kv bus Tyler Mountain Feeder North Charleston Feeder West Washington Feeder Chemical Station Charleston, W.VA. AEP S&C NGK This first U.S. utility-scale NAS project was partially funded by DOE/Sandia 9

10 Storage Deployments at AEP 1MW, 7.2MWh installed in 2006 Deferred substation upgrades 3 2MW, 14.4MWh commissioned in 2009 Demonstrated load following and islanding (backup power) 4MW, 25MWh substation commissioned in 2010 Islanding town of Presidio, Texas The new islanding feature is partially funded by DOE/Sandia 10

11 Islanding (Backup Power) Events Event 1 Event 2 Event 3 Event 4 Location Milton, WV Milton, WV Milton, WV Milton, WV Customers on Backup Power Duration on Backup Power 1hr 17 mins 10 hours 4 hours 3hr 7 mins Cause of Outage Vehicle Accident Electrical Fault Fault Fallen Tree Date Nov 2010 Mar 2011 Aug 2011 June 2012 *Last 4 Events. 11

12 Relative benefits from an AEP installation 12

13 Community Energy Storage (CES) CES is a fleet of small distributed energy storage units connected to the secondary of transformers serving a few houses controlled together to provide feeder level benefits. Key Parameters Power Energy (Goal) Voltage - Secondary Round Trip AC Energy Efficiency Value 25 kw 75 kwh 240 / 120V > 85% Functional Specifications for CES are OPEN SOURCE In 2009 EPRI hosted open webcasts to solicit industry wide input. 13

14 CES - Benefits to the Customer Local Benefits: Backup power Renewable integration Voltage correction CES Substation Power Lines Communication and Control Links CES is operated as a fleet offering multi-mw, multi-hour storage 14

15 CES - A Virtual Substation Battery Local Benefits: Backup power Renewable integration Voltage correction Grid Benefits: Load leveling at substation Power factor correction Ancillary services Communication & Control Layout for CES Integration Platform CES Control Hub Utility Dispatch Center/SCADA CES CES Substation CES CES Power Lines Communication and Control Links CES is operated as a fleet offering multi-mw, multi-hour storage 15

16 Sustainable Future Deployments TECHNOLOGY Validate energy storage technology can meet grid requirements Three Tiers for Sustainable Energy BUSINESS PLAN Credible financial benefit to customers Storage Deployments REGULATORY Ensure favorable rate recovery treatment 16

17 Conclusion AEP has successfully deployed Energy Storage Systems Energy storage system cost must reduce significantly to become economically justifiable for utility deployment Market predictions indicate that near-term costs for energy storage may broaden deployment opportunities 17