Southwestern Electric Power Co., an American Electric Power utility, will buy 1 GW of wind and solar being built by Invenergy for about $2.2 billion under a settlement agreement approved Thursday by the Louisiana Public Service Commission.
The PSC decision, along with the Arkansas Public Service Commission’s June 1 approval of the purchases, allows SWEPCO to move ahead with its plan to buy the wind and solar projects, according to the utility.
The projects have an expected $43/MWh levelized cost of energy, but including $1.1 billion in estimated production tax credits and other benefits are forecast to save SWEPCO $1.38/MWh, according to a filing at the PSC.
"SWEPCO's planning process has shown that adding more renewable resources sooner rather than later would reduce customer costs while maintaining reliability,” Simon Mahan, Southern Renewable Energy Association executive director, said Friday. “The Louisiana Public Service Commission's approval of SWEPCO's plan to buy a significant amount of wind and solar resources will help keep rates low for years to come."
The PSC’s approval of SWEPCO’s proposal marks another step in AEP’s shift towards renewable energy across its footprint. The company plans to spend about $8.6 billion on renewables through 2027 in an effort to cut its carbon emissions 80% from 2005 levels by 2030.
SWEPCO said buying wind and solar is a least-cost option for meeting a capacity shortfall. Following the retirement of several power plants and changes to Southwest Power Pool’s reserve requirements, SWEPCO faces an estimated shortfall that grows to about 1,834 MW in 2028, according to the utility.
The approved projects include the 200-MW Mooringsport solar farm in Caddo Parish, Louisiana; the 201-MW Diversion wind farm in Baylor County, Texas; and the 598-MW Wagon Wheel wind facility in Garfield, Kingfisher, Logan, Payne, and Noble counties in Oklahoma. The projects have 237 MW of accredited Southwest Power Pool capacity.
The Diversion project is expected to be operating by the end of next year and the Wagon and Mooringsport projects are set to come online a year later.
AEP plans to pay for the purchases with 50% debt and 50% equity.
The projects grew out of a request for proposals SWEPCO issued in mid-2021. As part of the settlement agreement, SWEPCO will seek power purchase agreements in its next power supply RFP.
SWEPCO, based in Shreveport, Louisiana, serves about 551,000 customers in Arkansas, Louisiana and Texas.
