American Electric Power to Use More Renewable Energy in Ohio

American Electric Power AEP has announced that its unit AEP Ohio filed a proposal with the Public Utilities Commission of Ohio (PUCO) to support the development of 400 megawatts (MW) of new solar generation resources in Ohio by purchasing renewable power for its customers.

The 300 MW Highland Solar and 100 MW Willowbrook Solar projects are being developed and owned by Hecate Energy Highland LLC and Willowbrook Solar LLC, respectively. These projects are expected to begin commercial operation from 2021, subject to regulatory approval.

AEP Ohio secured two 20-year Renewable Energy Purchase Agreements for power produced at these facilities. Customers of AEP Ohio are going to use clean energy and are expected to save nearly $200 million during this 20-year time frame compared with the projected cost of power in the future.

American Electric Power’s Renewable Plan

American Electric Power plans to invest approximately $24 billion between 2018 and 2021 in its core regulated operations and contracted renewables. The company’s investment strategy also includes incremental investment in renewable generation projects throughout the United States. Its latest plan includes capital expenditure expectations of $1.5 billion in contracted renewables between 2018 and 2021.

American Electric Power’s intermediate-term goal is to reduce carbon dioxide emission by 60% in 2030 from 2000 levels and the long-term goal is to lower 80% carbon dioxide emission by 2050 from 2000 levels.

At present, the company’s renewable portfolio includes 4,198 MW of wind and solar today. By 2030, it anticipates adding another 3,065 MW of solar, 5,295 MW of wind and 1,407 MW of natural gas in its generation. Moreover, American Electric Power is retiring its aging coal-powered unit to lower carbon footprints. The company recently announced to retire its 650 MW coal powered Oklaunion plant in Texas by September 2020.

Rising Renewable Investment

Per the U.S. Energy Information Administration (“EIA”), as of February 2018, renewables accounted for 22% of the total U.S. electricity generating capacity. The percentage of renewables in the total generation mix is expected to rise, cutting the share of fossil fuel generation.

Despite efforts of the new administration to revive usage of coal in different industries, we could notice that large utilities like NextEra Energy NEE and Dominion Energy D are increasingly investing in renewable, and lowering emission.

Price Movement

In the last six months, the company gained 1.6% comapred with its industry’s return of 0.5%.

 

Zacks Rank & Stock to Consider

American Electric Power currently has a Zacks Rank #3 (Hold). A better-ranked stock in the same industry is PPL Corporation PPL, with a Zacks Rank #2 (Buy). You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

PPL Corporation’s earnings estimates have moved up 0.4% to $3.34 in the past 60 days. Its long-term earnings growth is pegged at 5%.

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