Why batteries are making AES more attractive to investors

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Quick Take:  AES Corporation (NYSE: AES) is a global power company that operates electricity generation and distribution businesses in 21 countries, including two U.S. utilities: Indiana Power and Dayton Power and Light. A recent story at The Motley Fool investment site highlights its progress in energy storage. What's more, it recommends AES's storage experimentation as a reason to invest in the company.

 

The investment community used to punish utilities who were too forward leaning. Are we nearing an inflection point? Are investors coming to believe that progressive utilities are a safer bet? Should your utility be undertaking storage projects as well? - Jesse Berst

 

AES has installed grid-scale battery storage at Dayton Power and Light in southwest Ohio. The 40 MW system frees up expensive reserve capacity, helps satisfy peak demand, and buffers intermittent generation from wind and solar. With this latest installation, AES now owns and operates over $100 million of storage assets globally.

 

The storage is located at Dayton Power and Light's Tait generating station in Moraine, Ohio. It provides fast-response frequency regulation and grid stabilization services to PJM. It thus benefits financially from PJM's new tariff for fast-response regulation. FERC Order 755, enacted in 2011, increases the tariff rate for "fast" responding sources like batteries or flywheels that are bidding into frequency regulation service markets. AES Storage has now installed 100 MW of storage in PJM's territory.

 

California here we come

The Motley Fool reports that California is next for AES. It hopes to cash in on the recent California Public Utilities Commission order requiring the state's largest utilities to procure more than 1 GW of energy storage by 2020.

 

AES hopes to operate as a systems integrator and aggregator of many storage projects. It is also teaming with Google to develop a 265 MW photovoltaic project, which will include a significant energy storage component.

 

Jesse Berst is the founder and Chief Analyst of SGN and Chairman of the Smart Cities Council, an industry coalition.

 

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