Southern California Edison wants A123 Systems to build the world's biggest lithium-ion grid storage battery, and it's asking the Department of Energy for $25 million to help.

That's just one of the new technologies that the utility wants to test in two projects worth an estimated $120 million that Paul De Martini, Southern California Edison's vice president of advanced technologies, outlined Tuesday.

The other, a roughly $70 million regional smart grid integration project, would include smart appliances, home energy management systems, distribution grid and wireless communications – including WiMax and proprietary 900-megahertz technologies – from General Electric, De Martini said.

IBM and Cisco may also play a part in the project, for which the utility is seeking about $35 million from the DOE.

Both grant requests are aimed at the $615 million smart grid demonstration grant program created in June, he said. That's the smaller of two programs that have a combined $3.9 billion available to help build smart grid projects (see DOE Issues Rules for $3.9B in Smart Grid Stimulus Grants).

The bigger, $3.4 billion pool for commercial-scale projects has already seen the first application deadline pass (see Green Light post).

But the $615 million pool has seen few publicly announced applicants, beyond a set of previously funded projects that were awarded $47 million in July (see DOE Hands Out $47M For Smart Grid Demos). Tomorrow is the first application deadline for the smart grid demonstration grant program.

SCE has lined up supporters and partners including the University of Southern California, University of California at Irvine, Electric Power Research Institute and fellow utilities Pacific Gas & Electric, Sempra Energy and Idaho Power, De Martini said. That could give it a boost in securing the grants, which are expected to see the first round of approvals later this year, he said.

The approval of SCE's application could be big news for A123's push into grid storage batteries.

The Watertown, Mass.-based developer of lithium-ion batteries has been making batteries for portable and vehicle power applications, and landed a $249 million DOE grant to build a battery factory in the United States (see By The Numbers: A123's IPO Papers).

But it's also worked with GE and utilities on batteries for grid storage (see A123 Batteries to Help Stabilize the Electric Grid). While lithium ion batteries remain expensive today compared to grid storage alternatives like flow batteries or sodium sulfur batteries, industry observers say they could come down in price as their mass manufacturing ramps up (see Green Light post).

In SCE's case, it wants A123 to assemble a 32-megawatt-hour battery out of racks of smaller batteries in a 8,000-square-foot building at a substation in the Tehachapi Mountains. That battery would stabilize the flow of wind power from the mountains to the utility's load centers to the west and south, De Martini said.

That could free up about 300 megawatts of wind power that might otherwise be undeliverable if the utility had transmission line problems in the region, he said.

The utility expects to have about 4,500 megawatts of wind turbines in the Tehachapi region by 2015 or so, and finding ways to store and manage that power will be critical to linking it to the grid at large, he said.

SCE's other demonstration project involves what De Martini called a "deep vertical slice" into smart grid technologies to be tested in Irvine, Calif. That includes test homes outfitted with GE's smart appliances and home energy management systems, he said (see GE's Smart Appliances: Smarter With GE Home Energy Manager).

Those homes will also have solar panels from SunPower and small-scale, 50-kilowatt batteries from a yet to be determined vendor, he said. Those will all be connected to a distribution grid outfitted with the latest in GE's distribution automation technology, he said.

GE will also provide a communications network for the project, including WiMax and another, proprietary wireless technology, he said. Texas utility CenterPoint Energy is using GE WiMax radios for similar purposes, and San Diego Gas & Electric wants DOE stimulus grants to help pay for WiMax radios in a project it's proposing as well (see Green Light post).

As for securing the system, SCE is looking to Boeing, which has developed secure communications in work with the U.S. military, De Martini said. Boeing has not yet been an often-named player in smart grid technologies, but it and other military contractors like Lockheed Martin could have some advantages when it comes to meeting security requirements being developed for the smart grid (see Green Light post).

SCE may use one of A123's trailer-sized batteries for grid storage in the Irvine project, De Martini added.

Interact with smart grid industry visionaries from North American utilities, innovative hardware and software vendors and leading industry consortiums at The Networked Grid on November 4 in San Francisco.

Tags: a123 systems, boeing, cisco, general electric, ibm, southern california edison, sunpower, wimax