AEP proposes mechanisms to procure 900 MW of wind, solar projects

As America’s utilities move to a future of renewable energy, storage and electric vehicles, some have to be prodded along, and others are being dragged kicking and screaming into the 21st century.

While this week pv magazine has reported on major settlements in Florida and Colorado which will result in up to 1.4 GW of new solar coming online, we and many other media outlets missed a settlement between Ohio’s AEP and environmental groups last Friday which finalizes a 2015 agreement for the utility to procure and/or build 400 MW of solar and 500 MW of wind in Ohio over the next four years.

Specifically, the settlement spells out mechanisms for AEP to either procure this solar or build it itself, in either case paid for through a rider on customers bills. The utility will also have the option to participate in power purchase agreements between large commercial and industrial customers and third-party-owned wind and solar projects – an approach that has been increasingly popular for utilities that want to still get in on the action when such customers seek out renewable generation on their own.

In addition, under the settlement AEP is withdrawing a more than three-fold proposed increase in fixed charges for its residential customers. This charge will now remain at $5 per month instead of the $18.40 which the utility had sought, a major win for distributed solar and energy efficiency.

Additionally AEP will invest $10.5 million in one or more microgrid projects and $10.5 million in an electric vehicle charging rebate program, as well as implementing a new cost recovery mechanism for projects related to the state’s PowerForward grid modernization effort, as well as the Smart City program in Columbus.

These are significant victories for Sierra Club as well as Environmental Defense Fund (EDF) and Ohio Environmental Council (OEC), which later joined the settlement. However, these organizations were not able to stop a coal bailout and AEP will still receive funding through 2024 for its share of two ancient coal plants owned by the Ohio Valley Electric Corporation (OVEC).

The OVEC bailout is currently being contested at the Ohio Supreme Court, and is being challenged through various means by Sierra Club, EDF and OEC. Significantly, the OVEC payments are procedurally separate from the solar and wind procurement, meaning that if they are overturned the wind and solar procurement will not be affected.

The entire package now goes to the Public Utility Commission of Ohio (PUCO), but as of yet no timeline for the process or a decision has been set.