Fueling the Future
While our use of coal to produce electricity is declining, coal remains vital for a reliable and secure energy future. That said, we must have a diverse fuel mix to reduce the potential exposure of our company and customers to fluctuations in market prices, costs, regulations and electric demand. Too great a reliance on any one energy source – particularly those with a history of price volatility – creates significant risk exposure to rising prices and supply disruptions.
AEP has added approximately 5,000 MW of natural gas-fueled generation to our resource portfolio since 2004, enabling us to switch between fuel sources based on price changes over time. An attractive characteristic of natural gas is that it produces significantly lower CO2 and other emissions when burned than does coal.
We project AEP’s generating capacity to shift from approximately 61 percent coal and 23 percent natural gas in 2014 to approximately 49 percent coal and 28 percent natural gas in 2026. The remainder of our resource needs will be supplied by renewable energy, nuclear, hydroelectric and pumped storage, energy efficiency and demand response programs. Transmission expansion and smart grid technology deployments are other tools that can help us address the changes in generating capacity.
In 2013, AEP consumed over 158 billion cubic feet (bcf) of natural gas to generate electricity. This was 28 percent less than in 2012 and reverses an upward trend that began in 2010. The decrease was driven primarily by higher natural gas prices. In some regions of the country, the pipeline infrastructure also constrains capability to expand the use of natural gas.