Having a modern, reliable, resilient and secure grid is critical to a clean energy future. From 2020 through 2024, we plan to invest approximately $26 billion on transmission and distribution infrastructure to expand, strengthen and modernize our network. We are installing new equipment and facilities that support and integrate renewable and distributed energy resources, and we are using analytics and other tools to monitor and predict potential reliability and security risks. We are leveraging the convergence between the electric utility and, system communications, and transportation industries to modernize the grid and address critical socio-economic needs. Through this, we are providing customers with access to reliable, affordable and cleaner energy options and opening access to broadband opportunities in underserved areas.
- Reliability Investments
Maintaining the approximately 260,000 miles in our transmission and distribution network comes with an array of challenges even as we upgrade our infrastructure to meet modern-day needs. While our transmission and distribution system is built to last, equipment naturally wears over time, which can increase the risk of failure, outages and efficiency loss. It also affects the customer experience. Making investments to upgrade and replace our aging transmission and distribution grid is essential to maintaining the highest levels of reliability, resilience and customer satisfaction.
AEP works to maintain and expand our transmission system for the needs of our customers. However, at this point, much of our system is nearing or past the end of its useful life. This is a situation being faced by AEP and other utilities across the country. The Edison Electric Institute estimates that 30% of the U.S. transmission system is at, or near, the end of its useful life. We proactively identify equipment that could be a risk to system reliability. We identified nearly 10,600 miles of power lines and more than 360 transformers expected to exceed their design life in the next decade.
Although AEP actively maintains all infrastructure on our grid, there comes a time when replacement is more appropriate than rehabilitation based on condition, performance and risk of failure. As equipment approaches the end of its useful life, there are consequences to consider. Tower structures become weaker, other parts deteriorate and lines have a higher risk of frequent and prolonged outages due to failure. These can also lead to safety considerations for workers and the public. AEP wants to ensure our system remains strong, resilient and safe for generations to come. Therefore, we plan to continue our investments to replace and upgrade equipment and facilities that have the most direct reliability benefit to customers.
AEP’s distribution system is no exception. The average age of our distribution poles is 31 years, with more than 1 million poles older than 45 years. Our Operating Companies utilize asset programs to replace and upgrade the aging infrastructure on the distribution system. These programs include replacements of poles, small conductor, service transformers, and protective and voltage regulator equipment. The replacements are planned based on the age and condition of the assets and are prioritized into the overall Operating Company budget for reliability improvement.
To address these aging distribution infrastructure needs requires $2.7 billion in annual on-system capital investment simply to maintain the current age profile of our system.
While our aggregate load growth is low across the system, there are pockets of higher load growth driven by mixtures of industrial, commercial and residential development. We update annual load forecasts for substations and circuits and plan necessary capacity additions to assure that the growing load can be served reliably. These capacity improvements typically provide incremental reliability improvement by reducing the exposure of existing circuits, adding capacity for recovery of customers during abnormal conditions, and strengthening the circuits both physically and electrically.
We also leverage data analytics and digital technology to reduce failures, increase safety, improve grid reliability and reduce risks. For example, AEP’s Asset Health Center (AHC) provides proactive operational and predictive awareness that allows us to make informed decisions about transmission assets that need maintenance or replacement. This helps us reduce risk by identifying safety issues in real time and informs our capital investment strategy. Since 2012, we have also installed and managed real-time performance monitors, saving the company up to $45 million by preventing transformer failures. The deployment of monitoring and analytics to the grid have been a priority for AEP. These enhanced tools will allow for us to better monitor the system, improve resilience and improve response times to outage conditions.
We are also developing data analytic and visibility tools that make it easier for our distribution engineers and operations personnel to visualize where high-value reliability improvements can be implemented. More detailed reports to analyze specific outage causes and locations are then utilized to develop and prioritize reliability improvement investments. Along with traditional solutions, innovative solutions being considered to improve reliability include distributed generation, energy storage and microgrids.
- Vegetation Management
When it comes to vegetation management, AEP has some of the most challenging geography and terrain across the nation. This makes prevention of outages and equipment failures from overgrown and/or fallen vegetation one of our biggest and most expensive challenges. In addition to maintaining what is growing inside our rights-of-way (ROW), we also evaluate the health of trees outside the ROW as part of our management process.
We manage vegetation growth immediately surrounding our power lines – within our defined easements for operational integrity – with a combination of performance-based (such as targeting low-performing circuits) and cycle-based (regularly scheduled) maintenance strategies. Executing an effective vegetation management program across our service area is a significant expense that has a direct effect on service reliability and customer satisfaction. We carefully manage our programs to ensure they are cost-effective, using a variety of tools and techniques. This includes helicopters for aerial inspections, approved herbicide applications and tree trimming. We also continuously evaluate new, more efficient equipment in the field while integrating artificial intelligence solutions into our planning process to maximize cost efficiency.
Our operating companies work with state regulatory commissions for approval to implement more aggressive and proactive cycle-based vegetation management programs. We have successfully done this in Ohio, Oklahoma, West Virginia, Indiana and Kentucky.
Vegetation Management at AEP:
- During the past five years, AEP has spent more than $1.89 billion on vegetation management, including $539 million in 2019.
- Since 2010, Kentucky Power has cleared nearly 10,000 miles of overhead lines in its service territory, reducing outages caused by trees inside the ROW by over 70%.
- In 2019, falling trees accounted for approximately 29% of the total AEP customer minutes of interruption.
- Leveraging Drone Technology
Drones are an effective means of inspecting power lines for regular maintenance and surveilling damage after storms. Since 2017, we have tested and used camera-equipped drones for power line patrols and inspections. We also use drones to conduct inspections of generation, transmission, system communications and distribution equipment. Our drone governance structure ensures we comply with specific requirements regarding physical and cybersecurity, corporate risk assessments and federal regulations.
The Advantages of Drones Include:
- Cameras can capture images underneath components on a structure, such as insulator assemblies, while helicopter pilots and observers can only look down.
- Working conditions are safer because no one is required to climb a tower or ride in a helicopter.
- Drones can access hard-to-reach areas possibly not accessible by helicopter.
- Drones are quieter than helicopters, which is a benefit when flying in populated areas.
- Drones provide the ability to assess damage more quickly after an outage.
In 2019, Public Service Company of Oklahoma (PSO) completed a second round of transmission line inspection testing using drones and visual observers on land owned by the Choctaw Nation of Oklahoma (CNO). This collaboration between PSO, CNO and AirXOS (part of GE Aviation) helped to prove the safety and effectiveness of drone flights using Beyond Visual Line of Sight (BVLOS) technology. This clears the way for future tests without visual observers as we continue to study the feasibility of extending our use of drones.
- Grid Assurance
While the nation has improved its ability to respond to the major disasters and power outages that result from catastrophes, there are increasing threats that present new challenges for protecting and recovering quickly from a catastrophic power outage. These include more frequent and extreme weather events and physical, cyber or electromagnetic attacks. Maintaining an adequate inventory of vital equipment needed to replace critical infrastructure in the case of such an event is one challenge to improving grid resiliency.
Transmission components are expensive and often difficult to transport over long distances. In addition, the manufacturing process itself is complex, with lead times for ordering new equipment often extending more than a year. As a result, it is expensive for individual companies to purchase and keep a large quantity of spare transmission equipment on standby. For this reason, in 2018, AEP joined seven other major utility companies in becoming founding subscribers of Grid Assurance, LLC.
Grid Assurance helps members restore power more quickly following a high-impact, low-frequency event by providing a cost-effective method of meeting the collective resilience needs of the transmission grid. The new company’s inventory of long-lead-time critical transmission equipment, such as transformers and circuit breakers, is arriving at secure storage facilities. The first assets arrived in late 2019, and arrivals will continue until the final assets are delivered in late 2020. As a subscriber, AEP will have faster access to the equipment and logistical support necessary for prompt deployment after a catastrophic event.
- Distributed Energy Resources & Reliability
Distributed Energy Resources (DERs) have the potential to provide society with increased energy reliability and security while reducing our reliance on traditional large, centralized generating stations. DERs include rooftop solar panels, wind turbines, home energy management systems and battery storage systems. As these decentralized, local sources of energy generation and control become more widespread, we need the infrastructure in place to integrate them with the grid safely and efficiently.
As power from more alternative energy sources enters the grid, we face some significant challenges, such as maintaining grid reliability when voltage levels vary. This includes balancing the load when excess power is generated and flows back through the grid from DERs. We need to understand and plan for these dramatic changes so we can integrate them into our operation of the grid. We are making progress to address these challenges.
Many of our large commercial and industrial (C&I) customers have been early adopters of private generation, such as rooftop solar. These users want more control over their systems, as well as lower costs and increased reliability of the power that drives their businesses and keeps them competitive. As the economics of DERs such as private solar continues to improve, C&I customers are increasing their adoption rate.
DERs may be changing the way we view the electric power system, but they will not change our need for a resilient, reliable system that provides customers with the energy and capacity they need all day, every day. All customers – including those with installed private generation – require constant connection to the grid not only to export excess generation to the utility but also to provide generation at all times when their consumption of energy exceeds their ability to generate for themselves. AEP’s investments in our transmission and distribution systems are preparing the grid for this – a dynamic grid where the direction and magnitude of energy flows looks very different than has historically been the case.
In 2019, Southwestern Electric Power Company (SWEPCo) piloted the Helia EDGE platform, developed by Helia Technologies, Inc., in Shreveport, Louisiana, to better integrate DERs and improve the grid’s resiliency. The Helia platform aides in voltage support and corrects power factor (PF) through DERs. The pilot project allows for SWEPCo to call on customer owned DERs to support the grid for voltage, frequency, energy, and power factor support during extreme weather events, such as heat waves. With the Helia platform and distribution system working together, customers connected to the circuit do not experience low voltage under high-load circumstances.
AEP supports a customer’s right to install their own generating equipment, but it is imperative that the company continues to pursue rates for those customers that reflect the true cost to serve them. Rate structures like traditional net metering, which shifts costs from customers with generation to non-generating customers, must be addressed to more fairly compensate the benefits private generation provides to the grid.
- NERC Compliance
We have a responsibility to our customers to keep their lights on 24/7. The growing reality of cyber and physical threats to our industry’s infrastructure is raising concerns with regulators and customers alike. As a result, the Federal Energy Regulatory Commission (FERC) is driving the North American Electric Reliability Corporation (NERC) to develop unparalleled regulations for our industry. These regulations protect the grid and keep it safe, reliable and secure. Our challenge is that the regulations are constantly evolving and new rules are being developed. NERC’s Critical Infrastructure Protection (CIP) Standards reflect the increased focus on protecting the grid from cyber threats.
Today, there are approximately 900 continually evolving requirements in effect within the NERC Standards. AEP must meet each of these requirements to remain in full compliance and avoid harsh financial penalties, often in the millions of dollars. To manage the risk of non-compliance, AEP is increasing the number and sophistication of proactive controls as one of several methods we are developing to track, manage and prioritize the ever-growing list of NERC obligations. Due to the increased number and complexity of the NERC Standards, along with AEP’s significant geographic footprint, we are continually in the process of completing or preparing for compliance audits. We must maintain a constant state of audit readiness across AEP. To prepare, we maintain a strong focus on outreach efforts across AEP to communicate new changes and requirements to the NERC Standards.
AEP’s NERC compliance governance structure was developed specifically to respond to the current compliance environment and provides the direction, agility and organizational support needed to implement an industry-leading NERC compliance program. This governance structure, in collaboration with regulators and industry leaders, has resulted in the implementation of a three-year strategic plan for achieving operational excellence in NERC compliance. In addition, AEP’s safety culture provides a strong foundation for ensuring that compliance is one of the essential elements of the program’s strategic plan. Every employee at AEP has a role in delivering reliable, safe, secure electricity to all of our customers, and compliance plays a critical role in achieving this goal.