AEP Sustainability - Generation

Traditional Generation

According to the 2020 Sustainable Energy in America Factbook, coal met 45% of the U.S. demand in 2010 compared with 23% in 2019. The abundance of low-cost natural gas, the near-doubling of renewable generating capacity in the U.S., and a decade of research and technological innovation have hastened the retirement of coal-fired generation.

In 2019, we completed our scheduled retirements of Conesville Units 5 and 6, with a combined capacity of 820 MW.

The picture is similar for AEP’s coal fleet. At the end of 2019, coal represented 45% of AEP’s generating capacity, compared with 70% in 2005. And, in the past decade, AEP has sold, retired or converted to natural gas a total of 12,339 MW of coal-fueled generating capacity. By 2030, more than half of AEP’s coal units will be within 10 years of reaching the end of their depreciable life.

In 2019, we completed our scheduled retirements of Conesville Units 5 and 6, with a combined capacity of 820 MW. In 2020, we plan to retire 1,111 MW of coal generating facilities, including the 460 MW (AEP’s ownership) Oklaunion Plant in Oklahoma and the 651 MW (AEP’s ownership) Conesville Unit 4 in Ohio. AEP’s interest in the Oklaunion Plant is co-owned by AEP Texas and Public Service Company of Oklahoma.

In early 2020, Southwestern Electric Power Company (SWEPCo) said in an Arkansas rate case settlement agreement that it would seek regulatory approval to retire the Dolet Hills Power Station by the end of 2026. SWEPCo owns 40% of the facility, which generates 650 MW of power (SWEPCo’s share is 257 MW). Cleco Corp. owns 50% and operates the facility located at Mansfield, Louisiana.

In April 2020, SWEPCo and Cleco jointly filed a letter notifying the Louisiana Public Service Commission that SWEPCo subsidiary Dolet Hills Lignite Company (DHLC) would cease lignite mining in June 2020. DHLC provides 100% of the fuel supply to the plant from the Oxbow Mine, which is jointly owned by SWEPCo and Cleco. Based on the remaining estimated fuel supply for Dolet Hills Power Station’s seasonal operations, SWEPCo revised the expected retirement date of the plant to September 2021. The permanent mine closure and plant retirement require regulatory approvals.

If AEP’s plans are approved, we will retire more than 3,700 MW of coal generation from 2020 through 2030.

While our strategy is to invest in cleaner energy options, we are committed to mitigating risk around our current coal fleet through this transition. That means we are managing our remaining coal fleet to reduce the need for capital investment over time while continuing safe and reliable operation of the units. We will seek opportunities, as appropriate for our customers and when approved by regulations, to accelerate retirement dates and associated accounting depreciation rates. This has the potential to mitigate risk to both our customers and shareholders while providing a reliable source of electricity.

Our remaining coal units are available to provide critical 24/7 energy and other services to the grid and are equipped with environmental controls to assure compliance with current regulations. AEP expects to make additional investments in future years in order to comply with air and water quality standards.

Although we have no plans to build another coal plant, we continue to monitor the development of new technologies, including carbon capture and storage for both coal and natural gas. Should any of these technologies be demonstrated commercially to improve the scalability, we would want to have those technology options available for consideration.

Learn more about AEP’s strategic vision for reducing carbon emissions.

Natural gas is a fundamental part of our portfolio, and we expect that will continue into the future. High-efficiency combined-cycle natural gas plants play a key role in a diverse resource portfolio. As wind and solar generation capacity increase, natural gas gives us the flexibility needed to ensure the grid operates uninterrupted when intermittent, renewable resources are unavailable.

Because natural gas facilities rely on a constant supply of fuel to operate, it is critical that we maintain a steady flow of natural gas to our generation plants at all times. This is why several of our natural gas units are directly connected to multiple pipelines, which offer differing degrees of flexibility. Another challenge we face is an aging and highly utilized natural gas infrastructure, which sometimes affects our ability to receive natural gas to meet demand during peak periods. Although pipeline operators are becoming more flexible in terms of offering rate schedules that are more conducive to power generators, we continue managing risk when procuring and scheduling natural gas delivery for our units.

Nuclear energy is one of the most reliable carbon-free sources of electricity. The Donald C. Cook Nuclear Plant in Bridgman, Michigan, can provide 2,288 MW of electricity when operating at full power. The plant’s two units are located along Lake Michigan’s eastern shore, producing carbon-free electricity to serve our customers in Michigan and Indiana.

Cook’s two units originally were designed for a 40-year life, but, in 2005, the licenses were extended by 20 years to 2034 for Unit 1 and 2037 for Unit 2. In 2019, the plant completed two refueling outages.

In addition to refueling the reactor and performing regular maintenance and testing activities, crews performed reactor vessel inspections, replaced mechanical parts and made other repairs. The work inside the reactor was an important milestone because it showed that previous efforts to maintain and protect the integrity and longevity of the reactor have been successful.

The Cook Plant is part of an industrywide, multiyear strategy to transform the industry and ensure the plant’s long-term viability. The strategy identifies efficiency measures, adopts best practices and applies new technology solutions that improve operations, reduce costs and drive regulatory and market change to ensure nuclear energy facilities are fully recognized for their value and don’t succumb to premature reactor retirements.

Another clean energy resource serving our customers for more than a century is hydroelectric power. AEP has 933 MW of hydro and pumped storage on its system, serving customers in five states. In March 2020, AEP announced a study of 10 hydro plants, totaling approximately 113 MW, for potential sale. This is the result of our ongoing strategic evaluation of our generating assets to ensure our investments are going to support infrastructure and the energy innovations that our customers want and need. With all of our assets, we look at the possible risks and value they bring to AEP and what part each plays in the portfolio of assets managed by the company.

If this study results in the sale of these facilities, there is the possibility for impacts to employees at the plants and in other areas that support these facilities. As we have done before, we will work with our employees through this transition. Any potential sale would not occur before late 2020 at the earliest.