AEP gets green light to buy gigawatt of solar and wind from Invenergy

Southwestern Electric Power (Swepco) has obtained final regulatory approval to buy about 1GW of solar and wind generation capacity for $2.18bn from developer Invenergy that will partly replace fossil capacity and help plug a looming deficit.

Invenergy anticipates the 201MW Diversion wind farm in north Texas will enter full commercial operation in December 2024. The 598MW Wagon Wheel wind facility in north-central Oklahoma and 200MW Mooringsport PV plant in northwestern Louisiana will be fully online in December 2025.

The wind facilities will have a 30-year design life and employ GE Renewable Energy turbines with a 3.4MW nameplate rating and a cold weather package for low temperature operation. Mooringsport will have a design life of 35 years.

“Swepco’s analysis of our generation needs showed that the lowest cost, best value option for capacity was adding wind and solar resources,” said Brett Mattison, the utility’s president.

According to a filing with the Louisiana Public Service Commission, Swepco expects the projects will have $43/MWh levelised cost of energy. When federal production tax and renewable energy credits and other benefits are factored in, this will cut reduce final cost by $1.38/MWh.

New rules set by the Southwest Power Pool (SPP) require utilities to have available additional generation capacity to support reliability. SPP is the 14-state grid-balancing authority that includes regions of Arkansas, Louisiana, and Texas.

Swepco, which serves western Arkansas and western Louisiana, and east Texas, faces a capacity deficit beginning in 2023 that grows to 1.58GW in 2028, according to the utility. It is one of seven utility subsidiaries owned by parent Ohio-based American Electric Power and serves 551,000 customers.

Swepco’s long-term strategy calls for more than one-third of its SPP-accredited capacity to be satisfied with wind and solar resources.

The settlement agreement approved late last week by the Louisiana commission came one month after a similar green light from regulators in Arkansas.

AEP, among the largest US utility holding companies, is counting on renewables and energy storage to play a major role in helping it achieve net-zero carbon emissions by 2050.

Plans call for its regulated subsidiaries to add about 15.7GW of new renewables and storage over the next decade. Capital investment will total $9bn over the next five years.