Why Does AEP Want PATH?

Those of us in WV see AEP as a coal burning giant.  Which they are.  But they are also very smart business people with their eyes on the future.  AEP is a huge company with lots of capital at their disposal.  They are positioning themselves so that they can close their coal fired plants whenever the politicians stop responding to their massive campaign donations.

AEP is making huge bets on land based wind power in the middle of the US.  This investment move is in direct conflict with the development of offshore wind farms close to all of the US’s major population centers.  Land based wind farms are cheaper to build and have not been the victims of the active suppression that offshore wind has faced for the last twenty years.

So here’s a story from the Des Moines, IA Register that shows you exactly what AEP is up to:

MidAmerican Energy of Des Moines is out with the announcement of 593.4 megwattts of new wind capacity in five western Iowa counties.MidAmerican’s announcement can be read here.

The Des Moines-based utility, which serves not only Iowa’s largest city but also Sioux City, Council Buffs, Waterloo, Davenport and Iowa City, won the right to expand its wind capacity in Iowa by 1,000 megwatts from the Iowa Utilities Board last year.

MidAmerican was candid in saying that Iowa doesn’t have an immediate need for the extra generation, a point driven home repeatedly by NextEra Energy in its unsuccessful opposition to the plan in hearings before the IUB.

The utility company said Tuesday that the wind generation, which will amount to 26 percent of MidAmerican’s capacity when completed, will help MidAmerican comply with any environmental laws or regulations that may come along.

Longer term MidAmerican and its partner, American Electric Power of Columbus, O., could use the wind capacity as the feedstock for a proposed mulitstate transmission line that would take wind energy from Iowa and the Upper Midwest and send it to more populated markets east of the Mississippi River. [emphasis mine]

Why do AEP and MidAmerican think their projects are a good investment?  The article goes on to fill us in:

The biggest waves in what has been an otherwise slack year for wind energy has been announcement of proposals for offshore wind generation projects in the Atlantic Ocean from Masssachusetts to the Carolinas.

Those offshore projects, while having overcome initial objections by environmentalists (most notably from wealthy vacationers on Nantucket and Martha’s Vineyard islands),  still face the fact that offshore wind now is about 50 percent more expensive than land-based projects.

You can’t get a clearer picture than that.  It’s not about wind power, it’s not about coal power, and it’s certainly not about serving MidAmerican’s local customers.

It’s about AEP’s profit, plain and simple.  And what is AEP’s future profit based on?  The construction of new transmission to tie together its scattered land based wind farms, blocking and delaying offshore wind development, and the construction of PATH as a gateway to east coast markets.  It’s all right there in this short article.

The key point that the article misses is that while offshore wind farms are more expensive to build, they require almost no new land based transmission lines to bring their power to market.  They do require significant new transmission investment in offshore backbones, like the one just starting on the east coast.  Transmission needed for offshore wind is dwarfed by AEP’s estimates of $100 billion required for land based transmission to tie land based wind farms into the US grid.

The total cost of land based wind PLUS new transmission needed to bring it to population centers is much more than offshore wind construction plus the modest new transmission that it needs.  AND, offshore wind development requires relatively little seizure of private or public land for power lines.  Considering the total cost to consumers, offshore wind is a much better investment than massive expansion of land based wind power and the massive amounts of new power lines it requires.