Coal-Fired Power Producers Announce a New Game Plan: Wind, Wind, Wind

August 4, 2017 | 1:07 pm
Department of Energy
Julie McNamara
Senior Energy Analyst

Quick quiz: What does the nation’s top emitter of power sector carbon dioxide have in common with the largest-ever wind project in the US?

More than just superlatives, if American Electric Power (AEP) gets its way.

Last week, AEP—one of the largest power producers in the US, serving 5.4 million customers across 11 states with a generation portfolio that has long been heavily reliant on coal—announced plans to purchase Wind Catcher, a 2,000 megawatt (MW) wind farm under construction in the Oklahoma panhandle.

But as incredible as the AEP news was—2,000 MW! 800 turbines! Enough electricity to power nearly a million homes each year!—it was also incredibly just one of several recent blockbuster announcements by major power producers.

This clean energy momentum thing? It’s happening.

Out with the coal, in with the new

For a company with a power portfolio still dominated by coal, AEP’s record-breaking wind announcement made for quite a splash. But the biggest headline of all in this $4.5 billion pivot to a cleaner energy profile? The project isn’t expected to raise customer rates at all. In fact, it’s projected to save customers $7 billion over the course of 25 years.

Hard to argue with that.

Nor did Wall Street try to argue: In the aftermath of the announcement, AEP’s shares went up, up, up.

And this isn’t the first sign of a shift in AEP-land. Just a few months earlier, Appalachian Power, an AEP subsidiary serving 1 million customers in Virginia, West Virginia, and Tennessee, signaled similar future changes to its generation mix: hot on clean, cold on coal.

In an interview with the West Virginia Gazette, the company’s president, Chris Beam, reiterated his response to West Virginia Governor Jim Justice’s desire to see the utility burn more coal: “We’re not going to build any more coal plants. That’s not going to happen.”

But clean energy? That’s where he sees Appalachian Power’s future. Beam explained that major potential electricity customers (like an Amazon or a Google sitinf a new data center) increasingly have requirements for being able to source clean energy to power their operations. Beam thus reasoned:

“At the end of the day, West Virginia may not require us to be clean, but our customers are. So if we want to bring in those jobs, […] they have requirements now, and we have to be mindful of what our customers want.”

This July, Appalachian Power followed through, announcing plans to acquire two new wind projects in Ohio and West Virginia.

The customer is always right, and corporate entities are increasingly interested in clean energy to power their business operations. Credit: Renewable Energy Choice.

And AEP is not alone.

Xcel Energy, another of the country’s largest coal-fired power producers, has also been making the leap from coal to wind. Even after the Trump administration’s handcuffing of the Clean Power Plan, Xcel CEO Benjamin Fowke declared, “I’m not going to build new coal plants in today’s environment. And if I’m not going to build new ones, eventually there won’t be any.”

Xcel’s appetite for wind, on the other hand? It’s starting to seem insatiable.

Already sourcing nearly 20 percent of its power from wind, in March the company proposed a sprawling 7-state, 11-wind farm initiative to bring 3,380 MW of new generation onto its system by 2021—upping its share of wind to nearly 35 percent of its energy portfolio. Said Fowke:

“We’re investing big in wind because of the tremendous economic value it brings to our customers. With wind energy at historic low prices, we can secure savings that will benefit customers now and for decades to come.”

And indeed, savings is what they expect to see. For the 1,230 MW proposed in Texas and New Mexico, Xcel projects savings of $2.8 billion over 30 years; for the 1,550 MW in the Upper Midwest, savings of more than $4 billion; and for the 600 MW in Colorado, savings of $1.1 billion.

Across the board: real wind, real savings, real progress.

Wind for today, wind for the future

Here’s a critical point about the above efforts. For climate change, when we look to the future, to the near-term, to now, it’s painfully clear that utilities cannot simply supplement their portfolios with wind and other renewable resources—they need to be simultaneously dialing back their use of fossil fuels, and fast.

That’s why it is such a big deal to see moves like those by AEP and Xcel, which highlight that the calculus for utilities is changing; renewable energy is not an add-on, but an increasingly central, critical, and non-negotiable part of the story. And thus we expect that this is just the start of utilities standing up to make the leap from coal to a new goal: wind, wind, wind.

Posted in: Energy

Tags: Clean Energy Momentum

About the author

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Julie McNamara is a senior energy analyst with the Climate & Energy program at the Union of Concerned Scientists. Her research focuses on policies and measures that facilitate a rapid, sustained, and broadly beneficial transition of our nation’s energy system.