AEP outlines its strategy to invest in its regulated businesses, accelerate clean energy
American Electric Power laid out its financial plan and strategy this week to invest in its regulated businesses, accelerate its carbon reduction targets, and streamline its operations.
Specifically, the company will invest $40 billion in capital from 2023 through 2027, emphasizing transmission, distribution, and renewable energy. Further, AEP will allocate $26 billion to transmission and distribution operations to build a more efficient and resilient energy grid. In addition, about $9 billion will be invested in regulated renewable generation.
“Nearly all of our capital will be allocated to our regulated businesses, and 90% of our future investment will focus on wires and renewables,” Julie Sloat, AEP president and chief financial officer, said. “This approach will enable us to enhance service for customers, advance the clean energy transition and take advantage of a robust pipeline of growth opportunities in the grid and renewable energy space. Our high-growth transmission business has a long runway of investment opportunities focused on improving system performance, increasing reliability and resiliency, and enhancing market efficiency.”
Also, AEP is adjusting its carbon dioxide emission reduction target from a 2000 baseline to a 2005 baseline. As a result, they are upgrading an 80 percent reduction by 2030 target to include full Scope 1 emissions. The company is also accelerating its net-zero goal by five years to 2045.
“AEP has a proven track record of reducing fleet emissions and repeatedly has reached our goals ahead of schedule,” AEP Chair and CEO Nicholas Akins said. “Raising our carbon reduction targets reflects our progress in reducing our environmental footprint and delivering more low-emissions energy to our customers. We’re confident we can continue this momentum to a net-zero future by integrating more clean energy resources, strengthening the energy grid, and harnessing the power of emerging technologies. In addition to environmental benefits, renewable resources offer stability for customers from fuel price volatility.”
In addition, AEP expects to complete the sale of its Kentucky operations to Liberty in January 2023. Earlier this year, the company said it would sell its portfolio of contracted, unregulated renewable energy assets. The sales process for those renewable resources began in August 2022 and should close in the second quarter of 2023.
“The sale of our unregulated, contracted renewable assets and our Kentucky operations will allow us to shift capital to revitalize our transmission and distribution systems and implement energy solutions to benefit our customers and communities,” Sloat said. “We’re beginning a strategic review of our retail business as we focus on growth in our regulated businesses and simplify the structure of the company.”
American Electric Power, based in Columbus, Ohio, delivers power to 5.5 million regulated customers in 11 states. Its utilities include AEP Ohio, AEP Texas, Appalachian Power (Virginia and West Virginia), AEP Appalachian Power (Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (Arkansas, Louisiana, east Texas, and the Texas Panhandle).
