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AEP to ramp up clean energy, grid investments as it cuts emissions significantly

American Electric Power Co. Inc. will add more than 8,000 MW of solar and wind generation to its portfolio in the next 12 years as part of the company's long-term plan to drastically cut carbon dioxide emissions.

AEP on Feb. 6 unveiled its strategy to reduce emissions from its power plants by 60% from 2000 levels by 2030 and 80% from 2000 levels by 2050. This plan would cut CO2 emissions to 33 million metric tons in 2050 from 167 million metric tons in 2000.

The Ohio utility said it expects to achieve this goal through increased natural gas generation, as well as heavy investments in renewable generation and advanced technologies, transmission and distribution systems, and expanded demand response and energy efficiency programs.

AEP's resource plans include adding 3,065 MW of solar and 5,295 MW of wind generation to its regulated portfolio by 2030. These planned renewables investments do not include the $4.5 billion Wind Catcher Wind Farm in Oklahoma.

Under a plan announced in late July 2017, the 2,000-MW Wind Catcher project under development in the Oklahoma panhandle by Invenergy LLC will be acquired by AEP subsidiaries Public Service Co. of Oklahoma and Southwestern Electric Power Co.

Wind Catcher will be the largest contiguous wind farm in the U.S. and is expected to deliver nearly 9 million MWh of low-cost wind energy annually to customers in Oklahoma, Arkansas, Louisiana and Texas, AEP said in a news release. The company pointed out that regulatory approval of its investment in the massive wind farm would "accelerate how quickly AEP can add new wind generation to its portfolio."

AEP also plans to invest about $1.2 billion in contracted renewables and renewables integrated with energy storage between 2018 and 2020.

The company still expects to invest the bulk of its CapEx, or approximately $13 billion, over the next three years in transmission and distribution.

"AEP is focused on modernizing the power grid, expanding renewable energy resources and delivering cost-effective, reliable energy to our customers," AEP Chairman, President and CEO Nicholas Akins said in the news release. "Our customers want us to partner with them to provide cleaner energy and new technologies, while continuing to provide reliable, affordable energy. Our investors want us to protect their investment in our company, deliver attractive returns and manage climate-related risk. This long-term strategy allows us to do both."

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The company pointed out that it has already reduced emissions by 44% since 2000, reducing coal-fueled generation capacity from 70% in 2005 to 47% today and increasing natural gas capacity to 27% from 19% in 2005. AEP also has increased its renewable generation capacity to 13% from 4% in 2005.

"In addition to being consistent with AEP's current resource plans, these goals are consistent with the intent to limit the global average temperature rise to less than 2 degrees Celsius above pre-industrial times," the company wrote in its report. "Although the United States is not a party to the Paris Climate Accord, stakeholders continue to use the 2 degree target as a framework for evaluating carbon reduction plans."

AEP, however, said it will continue to invest in coal as part of its "all of the above" strategy toward a diversified portfolio.

"While coal is a smaller proportion of our resource mix than in the past, it remains important to the reliability and resiliency of the grid," Akins wrote in an open letter to stakeholders.

AEP's emissions reductions beyond 2030 will be met as the company's coal units "reach the expected end of their useful lives" and are replaced with renewables and natural gas.

"AEP does not anticipate building new coal units," the company wrote. "However, if technological (e.g., carbon capture) and economic barriers are overcome, that could possibly change."