AEP on the verge of exploiting grid-efficiency ‘cash cow’
The executive board of AEP Ohio knows what a cash cow looks like in the distance, and they’re not averse to rolling up their sleeves and milking a few for all they’re worth when opportunity knocks.
The American Recovery and Reinvestment Act of 2009 (ARRA) made $4.5 billion available to the nation’s energy producers, primarily to improve the grid’s efficiency. AEP accessed $92.5 million in grants for two specific projects having immediate area impact.
One (co-funded by the federal Department of Energy) was $17.5 million for carbon sequestration at the West Virginia Mountaineer plant. At a total cost of $102 million, AEP and Alstom (the technology manufacturer) managed to sequester 1.2- 3.5 percent of Mountaineer’s annual 8.5 million metric tons of CO2 over a 1.75 year period.
Using those numbers, 100 percent carbon sequestration (a physical impossibility) would cost $2.9 billion to $8.5 billion, or $2.05 – $5.99 per watt, based upon Mountaineer’s average output of 1420 mWs.
With solar photovoltaic and wind at $2 to $3 per watt installed, AEP finally realized that the least-cost method to sequester carbon is to leave it in the ground.
In AEP’s favor, it also pursued an ARRA grant to develop a pilot “smart grid” in the Columbus area. Some 110,000 meters, networking and 70 distribution circuits were installed or upgraded to “gridSMART®” at a cost of $133.8 million, or $1,215 per meter.
Smart meter installations around the country for the same period reveal an average cost of $221 – a low of $81 to a high of $532.
Which begs the questions, “What is AEP’s actual cost to implement gridSMART® technology across its 1.5-million customer base – a large part of the reason it’s seeking a 120 percent distribution charge increase?
With that increase generating $1.17 billion by 2024 if passed – $780 charged to each customer – where will AEP dedicate the balance once gridSMART® costs are subtracted?