The Indiana Utility Regulatory Commission (IURC) has approved a proposed large-scale battery storage project being developed by a regional utility subsidiary of AES Corp in the United States.
AES Indiana said late last week (January 26) that regulators have approved a 200MW/800MWh battery energy storage system (BESS) project in Pike County, Indiana. The stand-alone battery storage asset is expected to come online this December.
The asset is being constructed onsite at the AES Indiana Petersburg coal-fired power plant, the last coal plant in its portfolio and parent AES’ fleet.
With AES having committed to exiting coal, the 2,146MW plant’s coal-fired units will close in 2025, and AES has proposed converting the facility to natural gas in addition to developing hundreds of megawatts of wind, solar PV and batteries in the area.
The project will interconnect to the Midcontinent Independent System Operator (MISO) grid and ISO wholesale markets. AES Indiana, formerly Indianapolis Power & Light Co. (IPL), serves about 500,000 customers in Indianapolis and central Indiana, said it expects the BESS to come online for the 2024-2025 MISO winter when demand is usually at its peak.
The utility issued a request for proposals (RFP) in February 2022 seeking completed system delivery on a turnkey basis rather than a power purchase agreement (PPA) or other third-party contract. The BESS will connect to AES Indiana's transmission lines via a new substation.
Key drivers for robust BESS demand in US Midwest
In AES Indiana's recently filed 2022 Integrated Resource Plan (IRP), the company identified that by 2027, its portfolio will increase by 1,300MW of wind, solar PV and battery storage, up from around 400MW today.
The utility has come under criticism for choosing to replace part of its coal generation capacity with natural gas, but believes the combination of renewables and natural gas will provide the optimal blend for maintaining supply reliability year-round and meeting growing peak demand needs.
Overall, the MISO and US Midwest has traditionally been very reliant on coal-fired generation. Michigan recently passed a state-level target of 2,500MW of storage deployments by 2030, becoming the first state in the Midwest to adopt a 100% clean energy standard by 2040.
At the end of last year, with the passing of clean energy legislation, Michigan set the pace for energy transition in the Midwest. With coal plant retirements, the Midwest needs capacity to make up for supply shortfalls and with demand also increasing with electrification, it means the fundamentals are in place for the Midwest to become one of the biggest battery storage markets in the US.
At the end of 2022, MISO added storage to its wholesale market portfolio using the storage resource (ESR) definition employed by the Federal Energy Regulatory Commission (FERC). MISO modeled its portfolio on 4-hour lithium-ion battery storage, resulting in developers proposing BESS projects of that duration like AES Indiana's Pike County project.
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