In 2019, according to the U.S. Energy Information Administration (EIA), renewables accounted for 19% of the nation’s electricity generating mix and are projected to grow to 38% by 2050. The EIA forecasts that 76% of new capacity additions in 2020 will be from solar and wind. The EIA also projects that by 2021, electricity generation from renewables will exceed that of coal and nuclear and will overtake natural gas by 2045.
As renewable resources become more affordable due to advances in technology and support from federal tax credits, we see these clean options capturing larger and larger shares of our integrated resource plans (IRPs). In addition, AEP’s transition to a clean energy future is tied to our grid modernization investments.
Our goal, as outlined in our IRPs, is to increase regulated renewable energy on our system by approximately 8,000 MW by 2030. At the same time, we are expanding our renewable footprint beyond our traditional service territory. We plan to invest $2.1 billion in contracted renewables from 2020 through 2024. Through our competitive operations, we offer low cost of capital and energy project expertise to potential partners, creating attractive energy solutions for customers. This is especially appealing to companies, universities and municipalities that often have their own renewable energy goals.
The North Central Wind Energy Facilities project and AEP Renewables, a subsidiary of AEP Energy Supply, are leading the charge for our renewable energy strategy.
North Central Wind Energy Facilities Project
In 2019, Southwestern Electric Power Company (SWEPCO) and Public Service Company of Oklahoma (PSO) filed proposals to acquire and jointly own three wind generation facilities in north central Oklahoma. The North Central Wind Energy Facilities (NCWEF) will provide 1,485 MW of new wind capacity, with 810 MW allocated to SWEPCO customers across Arkansas, Louisiana and Texas and 675 MW to PSO customers in Oklahoma. The facilities are strategically located to tap into the region’s wind resources and AEP’s existing transmission systems, which allows for easy interconnection to the regional power grid.
In February 2020, the Oklahoma Corporation Commission unanimously approved a settlement agreement allowing PSO to move forward with the project. Once the facilities are in operation, PSO’s use of wind energy will increase from 22% to 34%. In May 2020, SWEPCO received final approval in Arkansas by the Arkansas Public Service Commission. SWEPCO continues to work through the regulatory process to gain approval in Louisiana and Texas.
The plan includes provisions for states to increase their portion of the project in the event another state decides not to move forward with its share of the project.
If approved by the state regulatory commissions, the project would provide more than $3 billion in energy savings to our customers in Oklahoma, Arkansas, Louisiana and Texas over the 30-year life of the facilities. In addition to lowering bills, NCWEF will help insulate customers from energy price volatility over the life of the project. The project, which is eligible for the federal Production Tax Credit once approved, is scheduled to come online in 2020 and 2021.
AEP Renewables, a subsidiary of AEP Energy, develops, owns and operates utility-scale wind and solar energy generation projects throughout the United States. These renewable energy facilities sell the energy they produce to utilities, electric cooperatives, municipalities or corporate customers.
2019 was a transformational year for AEP Renewables, as we invested $1.4 billion in contracted renewables, bringing to 13 the number of projects we now have in 11 states. In April 2019, we acquired Sempra Renewables, LLC and its 724 MW of operating wind generation, including a battery storage asset. The deal included seven operating wind farms in Colorado, Hawaii, Indiana, Kansas, Michigan, Minnesota and Pennsylvania, all with long-term power purchase agreements in place for 100% of the energy produced.
In July 2019, we completed the purchase of 75% stake (227 MW) of the Santa Rita East Wind Project near San Angelo, Texas. With the addition of these new projects, the AEP Renewables portfolio now includes 1,302 MW of renewable generation.
Through these acquisitions, we now have a greater ability to expand our development of contracted renewable projects. For example, AEP Renewables signed a long-term purchase agreement with Evergy to buy the energy from Flat Ridge 3, a 128 MW wind farm that is currently under construction and expected to be operational by the end of 2020.