Wind Stakeholder Interview: AEP Energy Services
Wind Stakeholder Interview: AEP Energy Services
Location: Dallas, TX
"While trying to implement wind power as an important asset in our utility's portfolio, we had to address concerns related to unfamiliarity with the technology, the intermittent nature of wind, and perceptions that the cost of wind energy was significantly higher than it really was. The biggest lesson we learned was that wind energy, with the Federal tax credit, can be cost-competitive with traditional sources of energy in areas with excellent winds and available transmission capacity." Rick Walker, Director of Renewable Energy Business Development, AEP Energy Services, Inc., Dallas, Texas.
AEP Energy Services, Inc. looks at unregulated business opportunities for American Electric Power. AEP's renewable energy development group is primarily focused on wind energy projects right now, although we are working to increase our knowledge of biomass opportunities as well. My primary responsibilities are developing wind projects in Texas and Oklahoma, where we have been collecting wind data since 1993.
In 1993, the former Central and South West Corporation (CSW), now part of AEP, began taking a serious look at wind energy development with the implementation of a fairly extensive wind monitoring program. This led to the construction of the first utility-scale wind project in Texas, a 6-MW facility located near Fort Davis. It was constructed by CSW in 1995-1996, and it utilized the first commercially produced turbines of Zond Systems, Inc. (now GE Wind). This was also the first project constructed under the Department of Energy (DOE)/Electric Power Research Institute (EPRI) Turbine Verification Project (TVP).
The DOE's TVP program allowed CSW/AEP to expand our first planned wind project from 2 MW to 6 MW. This program and participation in the Utility Wind Interest Group (UWIG) helped us become comfortable with the technology. They also identified several areas within wind turbine technology, such as lightning protection, that needed to be improved in order for wind power to enjoy widespread use in Texas and other areas of the mid-continent United States. The TVP and UWIG program have been excellent vehicles for information exchange about turbine technology, which was beneficial to the projects that followed.
Shortly after the construction of CSW's Fort Davis project, Kenetech constructed a wind project in the Delaware Mountains of Texas, with the energy being sold to the Lower Colorado River Authority (LCRA). Successively larger projects were constructed at Big Springs, Texas (York Research/TXU Electric) and Southwest Mesa (FPL Energy/CSW). Enron Wind (now GE Wind) constructed a second project in the Delaware Mountains. All of these projects happened prior to any type of renewable energy mandate in Texas. Senate Bill 7 spurred additional development of wind energy projects in Texas, although several of the projects built last year were for companies not subject to the mandate, such as City Public Service Company of San Antonio, LCRA, and Austin Energy.
CSW decided to get into wind energy development well before the implementation of a renewable energy mandate because Ed Gastineau, CSW's director of research in the early 1990s, convinced the company's senior management that wind energy was going to be price competitive in the near future as long as the Federal wind energy production tax credit was available. CSW's wind monitoring program subsequently identified several high-wind sites. In 1999, CSW Renewable Energy was formed to develop commercially viable wind sites. The Trent Mesa site was one of the sites developed by CSW Renewable Energy. Following the merger between CSW and AEP, the AEP Board of Directors approved construction of the Trent Mesa site.
We'll continue to see some additional wind power development in the near-term, but we'll have to add significant amounts of new transmission capacity from west Texas to east Texas if we are going to be able to match the development that occurred in Texas during 2001.
My advice to members of the wind advocacy community who are working with their utilities to move the wind agenda forward is this: Find a way to work with the utilities so both groups can go in together to propose legislation. In most politically conservative states, wind advocates will find it difficult to get legislation passed without the support of utilities. Issues such as transmission capacity need to be addressed at the same time.
Siting wind projects is not easy. Utilities or developers desiring to construct wind energy projects should investigate all the issues before starting this process. Pay particular attention to transmission availability, including scenarios assuming the addition of other wind projects or large gas-powered units in the same area.
This information was last updated on August 02, 2011