Opportunities & Risk

Renewable Energy

As we transition our generation business to a more balanced resource mix, renewable energy will become a larger part of our portfolio. Seven of our states have laws or regulatory orders that establish requirements or goals for renewable and alternative energy sources, such as Renewable Portfolio Standards (RPS) or Alternative Energy Portfolio Standards (AEPS): Indiana, Louisiana, Michigan, Ohio, Oklahoma, Texas and West Virginia. The requirements in Indiana, Oklahoma and Virginia are voluntary; the others are mandatory.

Without state requirements in place and/or a clear path for utilities such as AEP to recover what are usually above-market costs for renewables in its rates, investing in or committing to additional renewable energy can create significant financial risk for AEP.

From 2007 to 2012, AEP’s operating companies entered into 1,984 MW of long-term wind contracts and 10 MW of long-term solar contracts, bringing our total to 1,994 MW toward our 2,000 MW goal. Regulatory approval for an additional proposed 49.9-MW solar project in Ohio was denied by the Public Utilities Commission of Ohio in January 2013. The commercial solar facility, planned to be built on approximately 750 acres of reclaimed mine land, would have helped AEP Ohio meet the solar load requirements of Ohio Substitute Senate Bill 221, while giving Ohio a unique opportunity to leverage new in-state manufacturing jobs and make an environmental investment.

Through a modification of our New Source Review Consent Decree, we will add 200 MW of additional wind by the end of 2015 to serve our I&M customers, once the decree is approved by the court.

The “fiscal cliff” legislation passed by Congress on Jan. 1, 2013, extended tax credits related to renewable energy, energy efficiency and alternative fuel tax credits, one of them being the Production Tax Credit (PTC). The PTC, which supports the development of wind generation and other renewables, not only extended the tax credit by one year, but made a policy change that allows for the credit to be claimed if construction begins on a renewable energy facility before the end of 2013. The Investment Tax Credit (ITC) was also significantly expanded, allowing renewable developers to claim a one-time tax credit of 30 percent, which can be claimed if their project begins construction during 2013, rather than having to go into commercial service by the end of this year, as was previously required. The 30 percent Solar Investment Tax Credit remains in effect for projects completed and placed in service by the end of 2016.

By extending and expanding the PTC and ITC tax credits, Congress has given the renewable industry more time and financial stability to complete projects currently under development, while securing jobs and helping to make renewables more affordable for utility customers.

AEP Renewable Portfolio Standards By State

AEP’s Transmission Strategy

AEP’s transmission strategy is supporting economic development and job growth, while bringing us closer to our supply line.

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