American Electric Power has secured enough state regulator approvals to move ahead with a 1,485-megawatt wind power project in Oklahoma — even if Texas regulators end up denying its plans.
AEP announced on Wednesday that it has received approvals from Louisiana and Arkansas regulators that will allow its $2 billion North Central Wind project to move ahead. The wind farms being developed in Oklahoma by Invenergy and using GE wind turbines will supply 675 megawatts of power to AEP utility Public Service Co. of Oklahoma and 810 megawatts more to its Southwestern Electric Power Co. (Swepco) utility.
AEP, a major utility group based in Ohio, has already won approval for North Central Wind from Oklahoma regulators and the Federal Energy Regulatory Commission, leaving only Texas on the list of states it needs to greenlight the project. But its settlement agreement with the Louisiana Public Service Commission comes with an option to increase that allocation from the original 268 megawatts to up to 464 megawatts in the event that Texas does not also approve the Swepco proposal, the company said.
That agreement, along with the Arkansas Public Service Commission’s option to increase Swepco’s allocation, could protect AEP from having this project suffer the same fate as its more ambitious Wind Catcher project. That 2-gigawatt development was rejected by Texas regulators in August 2018 on the grounds that its $3 billion price tag and the need for a new $1.6 billion transmission line put too much financial risk on Swepco ratepayers.
That left AEP with little choice but to abandon the plan, since it relied on being able to capture the full value of the federal Production Tax Credit (PTC) before it declines from 100 percent in 2020 to 80 percent in 2021. North Central Wind is a scaled-down version that doesn’t require new transmission and will pencil out economically with a majority of the project receiving the 80 percent PTC available in 2021.
The North Central project is expected to provide roughly $3 billion in reduced power costs to customers of the Public Service Co. of Oklahoma and Swepco over its 30-year life.
While the COVID-19 pandemic has disrupted the supply chains and construction schedules of many renewable energy projects, it hasn’t stalled progress on North Central Wind, CEO Nick Akins said during AEP’s first-quarter earnings call earlier this month. Roughly $300 million of the project will be completed by the end of this year and receive the 100 percent PTC, while the remainder is on schedule for completion by the end of 2021, Akins said.
The Public Utility Commission of Texas is expected to decide whether to accept or reject the state’s portion of the project by the end of May or early June. “We will continue to seek approval to provide a share of this renewable energy to our Swepco customers in Texas,” Akins said in Thursday’s release.
AEP’s integrated resource plan calls for the building of more than 8,000 megawatts of wind and solar and 1,600 megawatts of natural gas between 2020 and 2030. Akins noted in this month’s conference call that “there is additional opportunity for renewables.”