Some of the comparably-sized utilities in the Southeast could aspire to the renewable energy ambition that AEP, American Electric Power, has expressed.
The vast majority of AEP operations are outside the Southeast where SACE focuses. That said, however, the plan AEP announced this week to reduce greenhouse gas (GHG) emissions 60% by 2030 and 80% by 2050 did catch my attention and I want to acknowledge their leadership.
In this plan, AEP will be adding 8 gigawatts (GW) of renewable energy. This will be comprised of some 3 GW of solar and more than 5 GW of wind power, including their $4.5 billion investment in the 2 GW Wind Catcher project in Oklahoma.
Comments from AEP chairman, president and chief executive officer, Nicholas K. Akins, suggest that he really gets it. “Our customers want us to partner with them to provide cleaner energy and new technologies, while continuing to provide reliable, affordable energy. Our investors want us to protect their investment in our company, deliver attractive returns and manage climate-related risk. This long-term strategy allows us to do both.“ [emphasis added]
There is no inherent conflict between clean energy and affordability. As summarized by my colleague, Simon Mahan, when Lazard Associates published their annual report on the Levelized Cost of Energy in November, Wind, solar are cheapest options, NOW.
Interestingly, AEP serves a very small portion of Tennessee in the Kingsport area. The rest of Tennessee is served by TVA (Tennessee Valley Authority). Aside from them both using a three-letter acronym, they seem to have very little in common. While AEP sees clean energy as the way to keep rates affordable, neighboring TVA seems stuck with outdated information (and an outdated vision) that clean energy would necessarily cost more.
These utilities are comparably-sized. They each serve around 5 million customers (AEP slightly more, TVA slightly less). But, while AEP is spinning up 5 GW of wind power, TVA is winding down plans for additional wind power (including decisions that cratered Clean Line wind transmission into the Southeast). While the sun is rising on 3 GW of solar for AEP, TVA is throwing shade on solar power by requesting proposals last year for a token 200 MW of solar and restructuring their rooftop solar program, Green Power Providers, to make it unattractive for homeowners and small businesses.
We have previously pointed out renewable energy leadership from the south and east of TVA territory. This ambitious plan from AEP offers an opportunity to compare/contrast from the north of Tennessee, as well.
I don’t want to ignore the fact that the AEP plan still anticipates coal representing about 1/3 of their generation capacity in 2030. But the plan asserts that “AEP does not anticipate building new coal units” and even with the additional natural gas capacity (1.4 GW) envisioned in the plan, the percentage contribution from natural gas will drop to 24%.
The encouraging sign is that renewables (hydro, wind, solar and pumped storage) will represent 30% of AEP’s capacity in 2030. And this figure actually excludes the proposed Wind Catcher project, so the percentage from renewables by 2030 is likely to be even higher.
This seems to represent a practical vision for the future and the level of ambition (gigawatt-scale renewables each year) that comparably-sized utilities in the Southeast should be considering in their own planning exercises.