AEP Maps Out Billions of Dollars in U.S. Transmission Growth

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Researched by Industrial Info Resources (Sugar Land, Texas)--American Electric Power Company Incorporated (NASDAQ:AEP) (AEP) (Columbus, Ohio) is bracing for a massive, long-term buildout across its service territory, as shifting population trends and the rapidly rising demand for data-center services will force it to find creative and heavy-duty solutions. The company offered a glimpse at its ambitious project slate, which includes hundreds of miles of new and reconstructed transmission line. Industrial Info is tracking more than $11 billion worth of active and planned projects from AEP, about $2.7 billion of which is nearing or under construction.

Click on the image at right for a graph detailing AEP's active and planned projects, by U.S. state.

"Across the AEP system, I see the need to increase capital spend in the future, including incremental investment related to commercial load growth from data centers and resiliency spend," said Ben Fowke, the interim chief executive officer of AEP, in a quarterly earnings-related conference call. "Specific to load growth, the amount of service request is truly staggering and ranges between 10 to 15 gigawatts of incremental load by the end of the decade, in addition to many, many more gigawatts from hundreds of inquiries."

Peggy Simmons, the executive vice president of AEP's Utilities business, added: "We continue to advance our five-year, $9.4 billion regulated renewable capital plan and have a total of $6.6 billion approved by state commissions" at subsidiaries Appalachian Power, Indiana Michigan Power, Public Service Company of Oklahoma and Southwestern Electric Power Company.

Among the toughest challenges facing AEP and other energy providers is the startling growth across the U.S. in data-center projects, which consume massive amounts of power for even their most basic operations. Ohio, in particular, has become a hotspot for these investments, and AEP recently proposed the state's Public Utilities Commission require a 10-year commitment for data centers and cryptocurrency miners to pay for a minimum of 90% of the electricity they request, even they don't actually use it. For more information, see May 16, 2024, article - AEP Asks Ohio for Pay Commitments as Influx of Data Centers Squeezes T&D Infrastructure.

"Weather-normalized retail load grew 2.9% in the first quarter, highlighted by a remarkable 10.5% increase in our commercial load, which is where the data center load is classified," said Charles Zebula, the chief financial officer of AEP, in the earnings call. "This is a trend we expect to continue over the next several years, as the growth of AI [artificial intelligence] and other technologies boost the need for additional data storage and processing. [It is] driving the demand our existing and new projects that have ramped up more quickly than first anticipated, especially with some of our largest customers in Ohio and Texas."

Although Ohio accounts for more AEP projects than any other state, Texas accounts for more investment from the company. About half of the Lone Star State's total investment is attributed to the Rio Grande Valley Improvement Project, which was spurred by calls from the Electric Reliability Council of Texas (ERCOT) and the Public Utilities Commission of Texas (PUCT) for improved transmission-service reliability in the southernmost region of Texas. AEP is proposing a multi-phase process that, as currently envisioned, would add about 190 miles of 345-kilovolt (kV) transmission line and two substations to the Texas grid by the end of 2026.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can read detailed reports on the various phases of the Rio Grande Valley Improvement Project, including:

• a 36.5-mile line from Rio Grande City to Mission, Texas; see project report
• a 54-mile line from Rio Grande City to Realitos, Texas; see project report
• an 11-mile line from Sarita to Falfurrias, Texas; see project report
• a 48-mile line from Realitos to Falfurrias; see project report
• a 69-mile line from Laredo to Realitos, Texas; see project report
• the Cruce Substation in Realitos; see project report
• the Reforzar Substation in Falfurrias; see project report
• the Frontera Substation in Mission; see project report

Among AEP's projects under construction in Ohio is its multi-phase Hillsboro-Portsmouth Transmission Line Rebuild, which began in 2022 and is expected to wrap up in the fourth quarter. The project, which will improve reliability in the Adams, Highland, Pike and Scioto counties in the state's southcentral region, involves upgrading at least five substations and replacing about 50 miles of outdated line, including:

• a 30-mile line from Hillsboro to Lucasville, Ohio; see project report
• a separate, 14-mile line from Hillsboro to Lucasville; see project report
• a five-mile line from Lucasville to Portsmouth, Ohio; see project report
• a four-mile line from Portsmouth to Millbrook Park, Texas; see project report

Fowke said in the earnings call that while Ohio is "the biggest driver" of projected load growth within the area serviced by the PJM Interconnection, "Indiana is definitely getting its share. And I suspect we will have to do incremental RFPs [request for proposals] to capture that load."

Earlier this month, Amazon.com Incorporated (NASDAQ:AMZN) (Seattle, Washington) and Google parent Alphabet Incorporated (NASDAQ:GOOGL) (Mountain View, California) announced plans to build large data centers in AEP's Indiana service territory. AEP completed three phases of its Fort Wayne-Richmond Transmission Line Rebuild in the summer of 2023, and is preparing to complete the remaining four before the end of 2024:

• a 26.6-mile line from Union City to Richmond, Indiana; see project report
• an 11-mile line from Dunkirk to Portland, Indiana; see project report
• a 12-mile line from Portland to Union City; see project report
• a 12-mile line from Richmond to Union City; see project report

Earlier this week, AEP agreed to sell its distributed resources business, AEP OnSite Partners, to Basalt Infrastructure Partners LLC (New York, New York) for roughly $315 million, subject to customary closing adjustments. The deal is expected to close in the third quarter of 2024, pending regulatory approvals. OnSite's portfolio consists of more than 300 megawatts (MW) of projects at almost 100 sites across the U.S.

Subscribers to Industrial Info's GMI Project and Plant databases can click here for a full list of detailed reports for projects mentioned in this article, and click here for a full list of related plant profiles.

Subscribers can click here for a full list of reports for active and planned projects from AEP.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).