According to the U.S. Energy Information Administration (EIA), total renewables consumption for electric power and heat generation will increase by 4.5 percent in 2015. Electricity generation from wind alone is expected to contribute 4.7 percent of total electricity generation in 2015.
During the last decade, AEP has been steadily increasing its renewable energy portfolio through renewable energy power purchase agreements.
With significant growth in renewable energy in the U.S. over the past decade, AEP’s vast transmission network serves a critical function in connecting these resources and delivering them to customers across the country. Over 7,500 MW of renewable generation is interconnected via AEP’s transmission system today, and considerably more is in the queue for the future. AEP has also received approval from RTOs for over $2.2 billion in new regional transmission projects intended to directly support renewable resource integration.
Seven states where we operate have laws or regulatory orders that set forth requirements or goals for renewable and alternative energy sources. These are Indiana, Louisiana, Michigan, Ohio, Oklahoma, Texas and Virginia. The requirements in Indiana, Oklahoma and Virginia are voluntary whereas the others are mandatory. On Feb. 3, 2015, West Virginia’s governor signed legislation repealing that state’s Alternative & Renewable Energy Portfolio Act. In Indiana, the state legislature approved additional legislation to further define the original framework.
During the last decade, AEP has been steadily increasing its renewable energy portfolio through renewable energy power purchase agreements. At the end of 2014, our operating companies were receiving deliveries of renewable energy from projects with long-term contracts for 2,183 MW of wind (which includes 200 MW added at the end of the year for I&M) and 10 MW of solar power. Recent advancements in technology have allowed for significant gains to be realized in the efficiencies and cost-effectiveness of solar energy. As solar energy becomes more viable and customers are more interested in it as a resource, now is the right time to move forward with a utility-scale solar power pilot project. This project is an opportunity that helps us to innovate to serve our customers in new and better ways and offer them the choices they want.
While solar growth has historically been concentrated in customer-sited distributed generation installations, utility-scale solar capacity slightly more than doubled in 2013. The EIA expects that utility-scale solar capacity will nearly double again between the end of 2013 and the end of 2015.
On February 4, 2015, AEP’s Indiana Michigan Power Company (I&M) received approval to build a Clean Energy Solar Pilot Project from the Indiana Utility Regulatory Commission. The pilot project will consist of four to five separate solar facilities totaling 15.7 MW, most of which will be on property on or near existing and future substations. Locating them in this way helps to minimize the cost of delivering the energy to the transmission grid. The addition of solar also meets the increasing interest of customers who want to use more renewable energy to meet their needs.
This is AEP’s first self-built utility-scale solar project and would further broaden the diversity of our generation sources in a logical, progressive and disciplined manner. Significantly, this project would give I&M and AEP hands-on experience in the design, deployment and operation of utility-scale solar projects, integrating it reliably into the PJM Interconnection transmission grid.
When the renewable projects that are under development and/or pending regulatory approval are added to AEP’s renewable portfolio, AEP will have a total of 2,715 MW to serve our regulated operating company customers, net of one wind contract (151 MW) that will expire at the end of 2015.
In 2014, Ohio and Indiana each passed legislation impacting their states’ mandated energy efficiency requirements. Ohio placed a two-year freeze on the mandated levels while a legislative committee reviews whether changes should be made. While this issue is resolved, AEP Ohio intends to continue to offer energy efficiency programs to its customers. Renewable contracts designed to meet the standard will also remain in place.
Indiana law set aside an energy efficiency mandate, statewide energy efficiency targets and the statewide third-party administrator program – all created by a prior regulatory order. The 2014 legislation allowed utilities to instead propose energy efficiency program levels to the regulators for approval. In 2015, the state legislature is poised to approve additional legislation to further define the original framework.
Overall, we expect renewable energy to become an increasingly larger piece of our energy portfolio across AEP.