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BUILDINGS AND CARBON.
Buildings account for nearly 40% of annual global greenhouse gas emissions. In 2019, according to the International Energy Agency (IEA), the fastest-growing end-uses are space cooling, appliances and electric plug loads. AEP Ohio has launched a building electrification initiative to work closely with developers to design efficient uses of electricity in buildings. We are providing information on end-use applications that reduce carbon emissions and costs.
Among the reasons businesses are choosing electric forklifts over other types include no tailpipe emissions, they are quieter and do not require outside storage of fuel tanks, they require minimal maintenance, and the total cost of ownership is lower.
Technology Chairman’s Message Introduction and TCFD Framework Transition Analysis Just Transition.
Physical Risks and Opportunities
43 AEP’s Climate Impact Analysis.
EV Sales in the United States (more than 1.5 million EVs are on U.S. roads) 1,600,000 1,400,000 1,200,000 1,00,000 800,000 600,000 400,000 200,000 0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020.
Source: Edison Electric Institute and Atlas Public Policy, EV Hub.
Number of EVs on the road in the U.S.
ENERGY MANAGEMENT.
While we encourage our customers to electrify portions of their energy consumption, we also want to maintain the focus on efficiency. Energy efficiency and demand response programs can effectively reduce customer energy use and reduce the need for additional electricity capacity.
AEP also is increasingly considering Distributed Energy Resources (DERs) to meet customers’ specific energy needs at times of peak demand and to alleviate the need for more costly transmission and distribution investments. They also provide a self-sufficient generation resource that can be isolated from the rest of the grid in the event of an outage. These are all important attributes for grid resiliency and reliability.
ELECTRIC TRANSPORTATION.
Transforming the transportation sector to move people and goods using electricity as a fuel is integral to achieving long-term carbon reductions and enhancing the nation’s energy and economic security. According to the Edison Electric Institute (EEI), CO2 emissions for the electric power sector are now 15% below transportation sector emissions.
Today, there are more than 1.5 million Electric Vehicles (EVs) on U.S. roads. EVs are cost-effective, saving drivers both fuel and maintenance costs. EEI estimates EV drivers spend the equivalent of about $1.20 per gallon, based on average residential electric rates, and this can be significantly less where off-peak charging programs are offered.
Benefits of electrifying transportation: • EVs are approximately 3 times cheaper to fuel than gas-powered vehicles.
• EVs are 2 times cheaper to maintain than gas-powered vehicles.
• EVs don’t have tailpipe emissions, which improves public health by reducing emissions where we live, work, and play, especially in areas where people already experience unhealthy levels of air pollution.
• EV adoption results in less overall greenhouse gas emissions and the benefits will grow as the grid continues to get cleaner.
• Improved driving experience — powerful, smooth, quiet, and dynamic.
• Improved fueling experience — no out-of-the-way gas station visits or harmful fumes, just charge where you park.
Technology Chairman’s Message Introduction and TCFD Framework Transition Analysis Just Transition.
Physical Risks and Opportunities
AEP’s Electric Transportation Strategic Framework.
Education & Outreach • Proactively engage customers to normalize electric car ownership • Advise customers on benefits, economics and program offerings.
Lead by Example • Procure AEP fleet EVs • Increase employee access to charging at.
AEP workplaces.
Increase Off-Peak Load • Deploy residential solutions to accommodate load and move charging off-peak • Design and deploy customer fleet charging solutions.
Improve Public Infrastructure • Design and deploy customer workplace charging solution • Advise and support municipalities on electric transit opportunities and vehicle corridors.
Get the Rules Right • Advocate for policies that support increased EV sales and access to charging infrastructure • Advocate for active utility role in transportation electrification 44 AEP’s Climate Impact Analysis.
ELECTRIC HIGHWAY COALITION.
In March 2021, AEP joined five other major utilities in announcing a plan to ensure that electric vehicle (EV) drivers have access to a seamless network of charging stations connecting major highway systems from the Atlantic Coast, through the Midwest and South, and into the Gulf and Central Plains regions.
The Electric Highway Coalition — made up of American Electric Power, Dominion Energy, Duke Energy, Entergy Corporation, Southern Company, and the Tennessee Valley Authority — announced a plan to provide EV drivers with seamless travel across major regions of the country through a network of DC fast chargers for EVs. The companies are each taking steps to provide EV charging solutions within their service territories. This represents an unprecedented effort to offer convenient EV charging options across different company territories and allow EV travel without interruption. Sites along major highway routes with easy highway access and amenities for travelers are being considered as coalition members work to determine final charging station locations. Charging stations will provide DC fast chargers that are capable of getting drivers back on the road in approximately 20-30 minutes.
As of September 2020, there were more than 17,300 EVs in AEP’s 11-state service territory. All-electric vehicles surpassed plug-in hybrid EVs as the leading vehicle type for the first time in March 2020, and growth rates suggest this trend will continue. Ohio leads the way with adoption in AEP’s service territory, aided by the Columbus metropolitan region. At AEP our electric transportation mission is to increase adoption of electric vehicles in our service territory and provide customer charging options that optimize the use of the grid for the benefit of all customers. We continue to pursue this mission within our strategic framework. The map shows the Electric Highway Coalition connections across portions of the United States.
Electric Highway Coalition.
Technology Chairman’s Message Introduction and TCFD Framework Transition Analysis Just Transition.
Physical Risks and Opportunities
Across our service territory, AEP’s operating companies are working with regulators to create programs that benefit all our customers, such as off-peak charging programs, incentives for charging station installations, energy efficiency rebates, and consultative services to encourage electrification.
In AEP Ohio’s service territory, Smart Columbus has been a catalyst for promoting EV adoption. In 2018, AEP Ohio launched a $10 million program to deploy 375 charging stations in partnership with local governments, workplaces, and multi-family dwellings to increase publicly available charging sites. The program also demonstrated the benefit of public-private partnerships. The program included a requirement that 10% of charging stations would be in low-income areas, a benchmark that we exceeded. By early 2020, the program was fully subscribed, quadrupling EV charging infrastructure in the city of Columbus and supporting customer EV adoption throughout our Ohio service territory.
There are many programs throughout our service territory to support EV adoption, including: • A residential off-peak charging program in Virginia for Appalachian Power customers, provides accurate and reliable on-bill EV usage information, as well as credits for charging during off-peak hours.
45 AEP’s Climate Impact Analysis.
A Level 3 Charging Station in Breaux Bridge, Louisiana.
• Indiana Michigan Power’s IM Plugged program offers fast charging for residential, multi-family dwellings, fleet, workplaces, and transportation corridors.
• In Louisiana and Texas, customers of PSO and SWEPCO are eligible for energy efficiency rebates on qualified EV chargers.
• Additional programs are pending for AEP Ohio, Kentucky Power and SWEPCO.
• Virginia launched Destination: Zero Carbon — the state’s campaign to electrify all new cars in the state by 2035.
AEP Electric Transportation Programs.
Program Legend.
Residential Off-peak.
Multi-family Dwelling.
Fleet.
Workplace.
Corridor Fast Charging.
Energy Efficiency.
Residential Off-peak.
Multi-family Dwelling.
Fleet.
Workplace.
Corridor Fast Charging.
Energy Efficiency.
Approved Pending.
M ichigan.
Ohio.
Virginia.
W est Virginia Indiana.
Tennessee.
Kentucky.
Oklahoma.
Arkansas ginia.
Tennessee.
Technology Chairman’s Message Introduction and TCFD Framework Transition Analysis Just Transition.
Physical Risks and Opportunities
AEP has partnered with ChargePoint™ to offer tailored evaluations for commercial and industrial customers considering electrifying their fleets. This partnership helps streamline the information gathering and decisionmaking process for businesses interested in switching their fleets to EVs.
In 2020, AEP committed to converting our own fleet of vehicles from diesel- or gasoline-powered to electric. We announced a new goal to replace 100% of AEP’s 2,300 cars and light-duty trucks with EV alternatives by 2030. In addition, AEP will convert medium- and heavy-duty vehicles as electric or hybrid models become available, resulting in the electrification of 40% of AEP’s entire 8,000 vehicle, on-road fleet in less than a decade.
To demonstrate our commitment to EVs, AEP set a goal to convert our diesel and gasoline-powered vehicle fleet to electric.
46 AEP’s Climate Impact Analysis.
AEP expects to realize first-year fleet emissions reductions of up to 70% while also reducing fuel and maintenance costs by more than 50%. In addition, AEP will electrify 50% of its forklifts by 2030. The switch to EVs is estimated to save more than 10 million gallons of fuel, amounting to a $40 million reduction in fuel costs over the life of the vehicles.
We are also working directly with customers to support their plans to electrify their fleet vehicles. For example, we are working with the Edison Electric Institute, peer utilities, and industry vendors to identify solutions and improved processes for customers who want to electrify their fleet vehicles. This collaboration allows us to share best practices while providing the best experience for our customers.
Technology Chairman’s Message Introduction and TCFD Framework Transition Analysis Just Transition.
Physical Risks and Opportunities
PHYSICAL RISKS AND OPPORTUNITIES 47 AEP’s Climate Impact Analysis.
Technology Chairman’s Message Introduction and TCFD Framework Transition Analysis Just Transition.
Physical Risks and Opportunities
PHYSICAL CLIMATE IMPACTS.
Climate change presents physical risks for the AEP system as well as business opportunities. AEP operates a large interconnected network of facilities that generate, transport and deliver electricity across the United States to serve approximately 5.5 million residential, commercial, industrial and wholesale customers. Within these diverse operations, equipment, facilities operations, and employees are exposed to environmental variables that may be influenced by a changing climate. In this section, we highlight some of the potential physical risks and opportunities posed by climate change, risk mitigation measures and lessons learned from past events, and how interrelated factors may affect our long-term business strategy.
Changes that cause the most concern are generally subtle but are more severe in extremes. For example, the frequency of storms may be slightly higher, but the severity of them is increasing. Rain events may be shorter in duration but more intense, resulting in flash flooding. These variations, which are geographically dispersed, are gaining more attention from insurance underwriters, investors, lenders and others who are concerned about financial and operational risks associated with the physical aspects of climate change as they affect AEP.
The February 2021 deep freeze that crippled the Texas energy system is a sobering reminder of the critical need for specific policy changes and investments to support reliability and resilience of the power grid. The industry must be better prepared to counteract the frequency, intensity and impact of severe weather.