In 2016, more than half of new generation sources brought online were renewables, according to the U.S. Energy Information Administration (EIA). The growth of renewable energy is expected to continue. Although many states set voluntary or mandated renewable portfolio standards, the driving force today is customers who want clean energy at a reasonable cost and ask their energy companies to work with them to make it happen. AEP’s current integrated resource plans (IRP) show that through 2030, a majority of our resources will encompass renewables and energy efficiency.
And, as technology advances, we envision universal solar or wind projects that incorporate low-cost energy storage to minimize or smooth intermittency on the grid. We are working with some of our large customers about this type of approach because it can provide a dual benefit of clean energy and resiliency for the customer and the grid.
We are best positioned to meet our customers’ clean energy needs. Owning, operating and maintaining large-scale energy infrastructure is what we do best. We can achieve economies of scale that individual customers cannot while also realizing the same environmental benefits and providing more effective integration with the grid. We have the knowledge and expertise to cost-effectively and efficiently develop universal solar projects to expand access to clean energy to more customers rather than the few who can afford private solar panels. We are also forming strategic partnerships to build upon our expertise and offer more choices to our customers.
Universal solar makes sense because we can provide it more cost-effectively to more customers. By making these investments on behalf of our customers, we can align universal solar with grid operations, preventing unnecessary costs of integration, such as the need to build additional transmission lines or substations. In addition, we have extensive power systems engineering experience and, as the largest transmission owner and operator in the U.S., we have an advantage in our ability to optimally integrate variable resources with the grid.
Private vs. Public Solar Market Growth
On a broad basis, the cost of solar continues to decline, albeit at a slower pace than in the past. The federal investment tax credits for solar power are scheduled to be reduced over time and may be eliminated. Therefore, while private solar generation will likely continue to grow, it could happen at a slower rate.
The areas of the country that continue to see the highest penetration of private solar generation are typically in places where subsidies are in place, and/or the average household incomes are higher, and/or the local energy company’s rates are relatively high. Customer adoption of local generation in AEP’s service territories, especially among residential customers, continued to be slower than some parts of the country.
Although the number of private solar generation customers on AEP’s system is relatively modest, it is increasing. Private solar generation among AEP’s 5.4 million regulated customers has increased marginally from 0.07 percent in 2015 to 0.08 percent in 2016.
Learn more about AEP’s first successful universal solar projects in Indiana and in Michigan.