As we diversify our resource portfolio, we are also reconfiguring the grid to support further integration of distributed energy resources, increased energy efficiency and demand response, and other customer-driven technologies.
Current economics dictate that high-efficiency combined-cycle natural gas units are the logical choice for new 24/7 power sources. In addition, the efficiency and cost improvement in smaller, modular natural gas-fueled distribution generation, such as aero-derivative turbines and reciprocating engines, may provide the highest value for the grid and customers due to their flexibility, small footprint and relative ease of permitting and siting. Wind and solar generation continue to gain momentum in the mix as they become more cost-competitive at grid-scale as an intermittent energy resource that aligns with regulatory mandates and customer preferences.
We often are asked if we factor the cost of carbon into our resource planning. The answer is yes. The potential for carbon regulation has been part of our integrated resource planning process for many years and provides an important market signal when we are determining resource needs and costs. AEP’s planning process helps our states plan their energy and capacity needs over time and considers available resource and market options to achieve the right mix of resources at reasonable costs for our customers.
Several AEP operating company subsidiaries are required to develop periodic integrated resource plans (IRP) that are filed with state public utility commissions. IRPs help companies and state regulators plan for meeting customers’ capacity and energy needs over a certain period of time. The plans take into account available resource and market options to achieve the right balance of resources at reasonable costs for our customers. In most cases, there are robust stakeholder processes in place to support this planning.
Current IRPs call for significant increases in renewable and natural gas capacity, if approved by regulators. These plans are integral to meeting customer needs as well as the shift to a clean energy future.
Although these plans have long-term time horizons, they are updated at regular intervals, in accordance with state requirements, for current market and other emerging external conditions, as well as for changing customer energy and capacity needs.
Learn More About Resource Planning At AEP.