Grid Modernization

Modernizing the Grid

Having a modern, reliable, resilient and secure grid is vital to our clean energy transformation. Investing in the grid enables AEP’s decarbonization strategy as we prepare to accommodate new, cleaner grid resources, grow load in our service territory, and open the door to future customer-driven growth opportunities. This is essential to serving evolving societal, economic and customer needs as well as meeting our net-zero carbon goals.

Our network of 260,000 miles of distribution and transmission lines presents the challenge of ongoing maintenance and operational needs. While our transmission and distribution systems are built to last, equipment naturally wears over time, which can increase the risk of failure, outages and efficiency loss. We continue to invest in maintenance and equipment upgrades to meet customers’ expectations for reliability and to provide them with an optimal experience.

From 2022 through 2026, AEP plans to invest $38 billion in capital with an emphasis on transmission, distribution and regulated renewable energy. Approximately $24.8 billion of capital, or 65%, will be allocated to transmission and distribution operations to construct a more efficient grid and deliver custom energy solutions to customers. Our flexible capital investment pipeline provides us with the ability to quickly redeploy transmission and distribution investments where needed while mitigating customer bill impacts.

Our transmission strategy focuses on leveraging technical innovation to deliver low-cost, high-value solutions as rapidly and efficiently as possible. From 2022 through 2026, AEP plans to invest $14.4 billion, or approximately 50% of transmission capital investment, to modernize the transmission grid and enhance reliability and resilience. Our five-year transmission capital investment portfolio will deliver significant customer benefits across AEP’s broad geographic footprint and four regional energy markets. Benefits include optimizing the grid’s performance, reducing congestion, enabling the deployment of new technology, improving reliability and resilience, lowering energy costs and directly connecting renewables and other generation to the grid. Investments in transmission also enable public policies and customer demand for clean energy, as well as economic development.

We are also leveraging data analytics and digital technology, such as Geographic Information System (GIS), to reduce system failures, increase safety, improve grid reliability and minimize risks. Approximately $2.7 billion of annual on-system capital investment is required to replace and enhance all transmission assets beyond life expectancy over the next 10 years. This is determined based on performance, condition and risk. AEP’s Asset Health Center (AHC) uses operational and predictive data as an indicator for proactive system maintenance and equipment replacement needs. We minimize risk by identifying safety issues in real time and by prioritizing urgent needs to maintain a robust grid.

Reliably delivering electricity to our customers’ homes and businesses requires investments in our distribution system. From 2022 through 2026, we are allocating $10.4 billion to improve the reliability of our distribution systems. Distribution investments will be focused on renewing and replacing assets; responding to customer requests such as new services or upgrades; implementing technology automation; performing storm restoration; installing smart meters; investing in fiber to provide broadband to rural communities; and investing in energy efficiency and supporting electric charging vehicle charging infrastructure. Learn more about our investments in broadband in the Broadband Accessibility section.

Extreme weather events such as hurricanes and ice storms, or cybersecurity threats and other disruptions can leave customers without power – sometimes for prolonged periods of time. Catastrophic events, whether natural or man-made, can cause damage to our equipment, making it costly to repair and challenging or dangerous for our line crews to restore. The increased frequency, intensity and impact of these events reinforces the essential need to harden and build a more resilient grid.

We have a long history of investing in grid reliability, resilience and security. Our capital investment strategy, changes to design standards for vulnerable infrastructure, increased automation and digitization, and efforts to have critical spare parts at the ready, are all part of our grid modernization plan to better enable our clean energy transition.

Throughout our history, extreme precipitation events have often had operational impacts to AEP facilities and infrastructure. For example, increased precipitation could lead to the flooding of substations or landslides. Similarly, a decrease in precipitation could increase the risk of wildfires and drought. In 2020, AEP conducted an informal assessment of climate impacts to the transmission network and identified nearly 260 transmission and distribution substations located within 100-year flood plains. In response, we are prioritizing higher risk stations for remedial action, including deploying sensors and control technology, strengthening components, and even moving substations out of flood prone areas.

More recent extreme weather events, such as the deep freeze that significantly impacted the Texas energy system in 2021, are a sobering reminder of the critical need for specific policy changes and investments to support reliability and resilience of the power grid. As an industry, we must be better prepared to counteract the impacts of severe weather. We will continue to engage in the policymaking process at the federal, state and local levels to ensure the best interests and needs of our customers and communities are met, as we grow and transition to a clean energy future.

Having access to critical spare assets for the grid, such as transformers or breakers, is also important to grid resilience. AEP is a founder of Grid Assurance, an industry-led initiative to enable quicker recovery of the transmission grid resulting from a catastrophic event, natural or man-made. Grid Assurance’s framework models for high-impact, low-frequency events. It includes maintaining an inventory of critical spare assets that can be promptly deployed. This is especially important in light of current supply chain disruptions, which temporarily halted production and limited availability of some critical equipment. Grid Assurance hit a major milestone in 2021, securing its full on-site inventory and providing the critical inventory its subscribers need to fully and quickly recover if a catastrophic event would happen to occur.

Keeping power lines clear of vegetation is a priority for electricity reliability. It’s also an expensive and challenging task because AEP’s service territory includes some of the most rugged 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. During the past five years, we have spent approximately $2.6 billion on vegetation management, including $647 million in 2021.

AEP operating companies work with state regulatory commissions to proactively manage vegetation in regularly scheduled maintenance cycles. We have successfully done this in Ohio, Oklahoma, West Virginia, Tennessee, Indiana and Kentucky. Executing an effective vegetation management program across our service area involves a significant expense that has a direct effect on service reliability and customer satisfaction.

We carefully manage our programs for efficiencies and savings, using a variety of tools, techniques and technologies. This includes drone technology and artificial intelligence to maximize effectiveness and lower our costs.