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Fayetteville.
Texarkana.
LOUISIANA.
ARKANSAS.
OKLAHOMA.
North Central Wind Facilities.
North Central Wind.
PSO Service Territory.
SWEPCO States Served by North Central Wind.
From 2015 – 2019, AEP Energy saw an 850% increase in Ohio residential customers enrolling in its Eco-Advantage 100% renewables product. These customers are choosing to invest in a renewable energy future, despite the fact that Eco-Advantage rates are often higher than their local utility’s default rates. Through these offerings, customers have invested in 271,429 megawatt hours of green energy — the equivalent of removing 41,461 passenger vehicles from the highway for one year.
ENERGY STORAGE.
As we increase the use of renewable generation in the energy mix, the need and uses for scalable, flexible and cost-competitive energy storage will expand. Energy storage helps to smooth out the variable flow of power from intermittent resources, like renewables, ensuring the supply of generation matches demand. Energy storage is part of the balancing act of managing the grid. It can also help to minimize the impact of an outage by meeting short-term power needs while repairs are made and service is restored. Energy storage helps to improve electric reliability by providing grid stability services, reducing transmission constraints, and meeting peak demand.
Energy storage will become increasingly critical in balancing short-term supply and demand to ensure we have adequate capacity to deal with fluctuations that occur in solar output over the course of day. Lithium-ion batteries may be well suited for these short-term storage issues. However, as renewables play a larger role in our.
Technology Chairman’s Message Introduction and TCFD Framework Transition Analysis Just Transition.
Physical Risks and Opportunities
38 AEP’s Climate Impact Analysis energy supply, energy storage will also be needed to cover demand when renewable output is not adequate over a longer period, such as an extended period of cloudy days with little wind. This will require a different level of energy storage and that is why we are looking at alternative energy carriers such as hydrogen to manage these periods.
The cost of commercially available energy storage technologies is declining, particularly those that leverage lithium-ion technology. According to the International Energy Association, global patents on new battery and other energy storage technologies grew four times faster than the average of all technology fields between 2005 and 2018. Innovation and collaboration among inventors and utilities are helping to fuel this growth.
Electric mobility is a big driver of advances in lithium-ion technology development as electric vehicle producers are focused on reducing costs while improving power output, durability, the speed of charge/discharge and recyclability. The growing need to integrate large amounts of renewable energy into electric power networks is also advancing storage technology development. AEP did not study the energy storage value chain; we assumed technology production would meet demand.
AEP is pursuing energy storage options in several ways. We have paired storage with renewables on a small scale in some of our competitive generation projects and are actively pursuing the application of Bulk Energy Storage Systems as transmission assets in situations where it is more affordable than building new transmission lines to maintain or improve reliability. We are also evaluating storage options on the distribution system to support local reliability.
Appalachian Power has filed a plan with Virginia utility regulators — as required by the Virginia Clean Economy Act — that outlines how it will become 100% carbon- free by 2050. Energy storage will play an important role as Appalachian Power adds 3,400 MW of solar, 2,200 MW of wind and 400 MW of energy storage to its current portfolio by 2050.
In Ohio, energy storage is part of AEP Ohio’s first microgrid project that now powers the Columbus Zoo and Aquarium’s Polar Frontier exhibit. A 308-panel solar array charges a pair of batteries to support the exhibit, providing an experimental glimpse into the future of electrical service and energy conservation. The solar panels have the potential to supply 25% of the water filtration system’s annual energy needs, and the data collected from this microgrid operation will enable AEP Ohio to simulate outages to test its operational capability. The company expects to expand similar pilot projects at two additional sites in the state.
NUCLEAR ENERGY.
Nuclear energy has been used as an electricity source within the United States for nearly 70 years. Today’s commercial reactors safely and reliably provide carbon-free electricity. Carbon-free nuclear power is an important resource to meet customer demand for clean energy, but the cost to build new, large-scale reactors and concerns about spent nuclear fuel present a significant challenge. The most recent nuclear power plant under construction in the U.S. has cost more than.
The 138 kilowatt solar panels and pair of batteries (pictured) will help the zoo cut energy costs and reduce its carbon footprint.
Technology Chairman’s Message Introduction and TCFD Framework Transition Analysis Just Transition.
Physical Risks and Opportunities
39 AEP’s Climate Impact Analysis.
AEP owns and operates two nuclear units in Bridgman, Michigan. When both units of the Donald C. Cook Nuclear Power Plant are at full power, more than 2,100 MW of electricity are generated — enough to power 1.5 million homes. Our Fast Transition scenario assumed an additional 20 year license extension for both units.
$20 billion, exceeding initial estimates and remaining behind schedule for completion.
There are efforts underway to design new, smaller, less costly nuclear reactors that include passive safety systems. Small Modular Reactor (SMR) nuclear generation is the closest to reach commercialization. Some of the benefits of SMRs include improved efficiency, lower capital costs, a smaller physical footprint that offers flexibility with siting, and enhanced safety. This is an important technology for the future that is still under development. The first generation of this advanced technology is likely five to ten years away from deployment, and the costs of operation remain uncertain.
CONVENTIONAL FOSSIL-FUELED ENERGY.
Conventional power generation burns fossil fuels — coal and natural gas — to release stored energy and convert it into electrical energy in a combustion or steam turbine generator. But the combustion process creates byproducts, some of which are greenhouse gases that contribute to climate change. Due to current economics, the existing coal-fueled generating assets in the United States will not likely be replaced with new coal-fueled generation when they are retired. And, prior to such assets’ retirements, carbon legislation or regulatory constraints also could potentially limit their use.
Fossil-fueled generating resources have historically been the primary source to deal with fluctuations in electricity demand, hourly, daily and seasonally. The elimination of these dispatchable and flexible resources presents a significant near-term challenge for maintaining stability of the electricity delivery system, particularly with a greater reliance on renewable resources.
Natural gas is expected to be part of the resource portfolio to ensure reliability of the power grid. It is likely that gas-fired combustion turbines would be built mainly to act as a “fast-ramping” resource to provide power during peak demand periods and to meet capacity obligations. The intermittent operation of these units is not a significant contributor to the emissions profile, but the units still do emit some CO2. These gas units could be candidates for future fueling with green hydrogen, converting them to non-carbon-emitting assets. In addition, as we move toward net-zero carbon, these assets could be replaced with other, more expensive solutions, such as energy storage or carbon offsets.
FOSSIL ENERGY WITH CCUS.
Carbon capture with utilization or storage (CCUS) is one potential, but technically challenging, option to reduce the emission profile of fossil-fueled generation. CCUS works by capturing carbon dioxide (CO2) emissions and placing them deep underground for long-term storage or by using the CO2 in products such as concrete building materials, enhanced oil recovery or the accelerated growth of algae as feedstock for plastics. In any case, the carbon emissions entering the atmosphere are reduced or eliminated. R&D and demonstration projects have focused on capturing CO2 emissions from coal-fueled generation for the past two decades. However, going forward the research focus will need to shift towards CO2 emissions from natural gas. In addition to the high cost and energy consumption that is required to capture the CO2 from a power plant flue stream, safe storage of carbon dioxide is a significant barrier that currently makes CCUS technology infeasible on a large scale.
Technology Chairman’s Message Introduction and TCFD Framework Transition Analysis Just Transition.
Physical Risks and Opportunities
40 AEP’s Climate Impact Analysis.
AEP’s experience with CCUS demonstrated the high cost and inefficiency of the technology. The integrated carbon capture and storage validation facility installed at our 1,300-MW Mountaineer Plant in West Virginia showed that CCUS can work on a small scale. We successfully captured, transported and geologically stored CO2 emissions from an existing coal-fueled power plant for the first time in 2009. But it was very expensive and not without challenges. Mountaineer’s 20 MW project cost more than $5,000 per kilowatt (kW), without government subsidies. Regulators in Virginia disallowed recovery of a portion of the project’s expenses, signaling a greater reluctance by regulators to pay for developing technology. For CCUS to be a viable option for the future, public policies will have to change or financial incentives will have to be offered, or CCUS could further elude commercialization for the electric power sector.
HYDROGEN AND OTHER RESOURCES.
The production of hydrogen from renewable energy, known as green hydrogen, has the potential to help the world achieve net-zero emissions. Green hydrogen splits hydrogen molecules from oxygen molecules in water using renewable energy resources. The hydrogen can then be converted to electricity with combustion turbines or fuel cells.
Hydrogen as a non-emitting fuel is promising, but its commercial development will require substantial investment including advances in the production, transportation, storage and use of hydrogen as a fuel for electricity generation.
AEP’s participation in the Electric Power Research Institute’s Low Carbon Resource Initiative includes research to advance the use of hydrogen. Renewable natural gas, ammonia and other new fuel resources also could play an important role in the future of clean energy.
AEP’s 20 MW CCUS project at the Mountaineer Plant in West Virginia validated the technology but was very expensive and disallowed by regulators in Virginia.
Hydrogen-fueled Electricity Generation Technologies.
Scale /
Technology Application Comments.
Gas Turbines Large-scale Many commercial gas turbines generation in industrial settings use (small-scale hydrogen-rich gas. Efforts are “microturbine” underway by turbine manufacturers configurations to develop gas turbines that can also exist) operate on up to 100% hydrogen.
Reciprocating Distributed Original equipment manufacturers.
Engines generation (OEMs) report that current spark engines designed for natural gas can accommodate hydrogen blends.
Operation on 100% hydrogen is being explored.
Fuel Cells Distributed The largest stationary fuel cell generation deployments today are ~50 MW.
This scale would address distributed generation needs, such as back-up, off-grid, or smaller- scale flexible power.
Source: Low-Carbon Resources Initiative.
Technology Chairman’s Message Introduction and TCFD Framework Transition Analysis Just Transition.
Physical Risks and Opportunities
“Harness the collective energy and motivation of businesses in the Gulf Coast to create measurable, long-term impact in reducing carbon emissions in the region, and build a replicable model for business action in other regions.”
INDUSTRY-LED LOW-CARBON INITIATIVES.
LOW-CARBON RESOURCE INITIATIVE.
AEP is a founding member of the Low-Carbon Resource Initiative (LCRI), an industry and global partnership with the Electric Power Research Institute, the Gas Technology Institute, and technology developers. The five-year initiative, started in September 2020, will provide a framework, coupled with technology advancements, to leverage existing assets and provide the tools necessary for an economic transition to a lowcarbon future. The LCRI is intended to better coordinate efforts between the energy sector and government, and to align public policy and rulemaking with the need to incent research and deployment of technologies and alternative options. This includes advanced nuclear; CCUS; advanced compatibility between renewables and energy storage; gas technologies that burn carbon-free fuels, including ammonia and hydrogen; and “renewable” natural gas, among others. We are confident this consortium of industry sectors will enable us to leverage existing infrastructure while deploying new technologies that achieve deep carbon reductions cost-effectively.
41 AEP’s Climate Impact Analysis.
GULF COAST CARBON COLLABORATIVE.
AEP is a member of the Gulf Coast Carbon Collaborative, a multi-industry decarbonization effort in the Gulf region, led by the U.S. Business Council for Sustainable Development, with a goal to reduce carbon emissions while preserving and enhancing the region’s economic vitality. The Collaborative is seeking to identify strategies to advance equipment modernization; technology and operating improvements; electrification; shifts to renewable energy sources; land-based sequestration; and CCUS.
GLOBAL COLLABORATION.
AEP is a long-time member of the Global Sustainable Electricity Partnership (GSEP). This CEO-led alliance of leading global electricity companies advocates and promotes clean energy-sourced electrification and social advancement globally, including in their own businesses and communities. Together, GSEP members supply 25% of all electricity consumed globally — 70% of it is produced with clean resources. GSEP provides a forum to share experience and knowledge with stakeholders, including policymakers, serving as a global hub for all dimensions of electrification — clean energy, advanced technologies, partnerships, enabling public policies, strong economic growth, and customer relationships. AEP Chairman, President & CEO Nick Akins is the 2020 – 2021 Chair of GSEP. Under his leadership members are collaborating with customers and end users of electricity to learn how they want to accelerate the electrification of their businesses. The results will be released globally in May 2021.
Pathways to CO2 Mitigation.
The Source.
Displacement: Nuclear, Renewable,
Storage.
The Fuel.
Low Carbon Fuel: Hydrogen, Ammonia,
Biofuel.
The Process.
CO2 Capture: Pre-combustion, Post-combustion,
Oxy-combustion.
The Destination.
Carbon Dioxide Removal: Direct Air Capture,
Bio-energy with CCS, Land Use and Mineralization.
Technology Chairman’s Message Introduction and TCFD Framework Transition Analysis Just Transition.
Physical Risks and Opportunities
42 AEP’s Climate Impact Analysis.
DOWN-STREAM TECHNOLOGIES.
ELECTRIFICATION.
Electrification is the process of converting end-uses — such as HVAC, transportation, and industrial machinery — to electricity and away from fossil fuels. Economics and climate goals are key factors in the pace of electrification, as well as the availability and reliability of electric alternatives.
The advance of electrification of end-use technologies in industry, buildings and the transportation sector has the potential to accelerate the shift to renewables as well as drive up consumption of electricity. Electrification enables customers to be more energy efficient through the use of more — and increasingly cleaner — electricity while replacing direct fossil fuel use. This trend continues to grow as society seeks to replace fossil fuels with clean electricity to heat homes and buildings, power vehicles, and operate industrial equipment. The benefits are significant for the environment, society and business. However, the shift to an electrified economy requires planning to ensure infrastructure is in place to meet our customers’ needs and the right policies and regulations to support them.
Electrification of natural gas pipeline compressor stations is a growth opportunity for AEP. In addition to economic advantages, moving to electric motordriven compression requires a smaller footprint, reduces emissions at the site and makes operation and maintenance of the equipment more attractive. AEP is working with several pipeline companies to support their electrification efforts.
One of AEP’s large retail customers is using electricpowered forklifts and hand truck units in its newest distribution center in Longview, Texas. The main drivers for converting to an all-electric fleet were safety, cost, reliability, and federal incentives to support the conversion. The choice also improves indoor air quality, eliminating the hazard of carbon monoxide poisoning.
As efficient electric technologies become less expensive and more advanced, the business case for capital investment in electrification becomes more attractive. AEP is introducing programs and rates in the states where we operate to support consumer adoption of electric transportation, as well as to manage the charging of vehicles during times of peak demand. Doing so will allow us to maintain reliability and optimize the use of the grid while keeping costs low, benefiting all customers.
Learn more about electrification options at AEP’s Energy Conversion Hub.