North America | March 1, 2022

AEP shifting $1.5B in capital to transmission

USA: American Electric Power this year will launch a process to sell some or all of the company’s unregulated contracted wind and solar energy assets.

 

AEP solar

Image source: T&D World

USA: American Electric Power this year will launch a process to sell some or all of the company’s unregulated contracted wind and solar energy assets.

The company will redirect capital previously allocated to that business to their transmission assets.

The plan to unload up to 1,600 MW of capacity will add $1.5 B in capital spending to the transmission business between now and 2026, growing its share of Columbus-based AEP’s total $38  B capex plan to $14.4 B. Those numbers are likely to grow further once the company completes the sale of its Kentucky subsidiary for more than $2.8 B.

“Our transformation strategy is working, and the investments we are making will continue to support our solid earnings growth and results,” CEO Nick Akins told analysts on a 24 Feb conference call after announcing fourth-quarter earnings that showed load growth for the year of 2.1 %, the company’s strongest number in more than a decade. “AEP stands poised to make great headway in 2022 and continue to capitalize on this momentum.”

For the fourth quarter, AEP reported net income of $539 B on $4.1 B in revenue. Those numbers were up from $435 M and $3.6 B, respectively, in the last three months of 2020. Operating profits rose to $496 M from $433 M. Akins and CFO Julie Sloat said they expect AEP’s load growth in 2022 to be only slightly slower than last year’s and added that, between that and their confidence in investments like those in transmission and regulated renewables, they are lifting their long-term earnings growth target to a range of 6 % to 7% from the previous 5 % to 7 %.

Investments in regulated renewables will play a big role in that: AEP plans to put to work $8.2 B in the next five years and sees a total renewables opportunity of 16 GW by 2030. The 2022–2026 capital plan calls for the addition of nearly 4.7 GW of wind energy and more than 1.1 GW of solar across AEP’s portfolio.

 

Source: T&D World