A subsidiary of AEP has agreed to donate $1.5 million toward the city of Columbusâ€™ political campaign to persuade voters to pass a green-energy electricity aggregation program in November.
The contribution is spelled out in a â€śmemorandum of understanding,â€ť or MOU, signed by the city and AEP Energy on Aug. 17. The payments, for â€śeducation and outreach efforts,â€ť are to go to the Clean Columbus campaign committee. The money will be paid in three $500,000 installments, with the first payment scheduled last Thursday.
The second installment is due Sept. 4 and the last on Oct. 2, according to the MOU, a written agreement that typically is not considered a binding contract but serves as a negotiating outline.
If voters approve the aggregation program, AEP Energy would lock in most of Ohioâ€™s largest city as its power customer for up to 15 years; the program would be the largest outside California, the company says.
Aggregation requires no tax expenditures, but rather pools customers together to increase their purchasing power, typically resulting in lower rates and cleaner energy. Columbus has chosen an â€śopt outâ€ť program, which requires public approval because every residential and small-business electricity customer would be automatically enrolled in the aggregation program with AEP Energy. Customers would have to opt out to sign with a different power producer.
AEP Energy told The Dispatch previously that it will build or be the contractor for about $1 billion in new Ohio wind and solar generation, with plans to complete that work by the end of 2022, if possible. That power will be fed into the grid in equal amounts to Columbusâ€™ total electricity load, giving the city the claim to being 100% green-powered.
The MOU doesnâ€™t explicitly say that AEP Energy must carry out its pledge to build $1 billion in new Ohio clean-power generation facilities.
Robin Davis, Mayor Andrew J. Gintherâ€™s spokeswoman, said in an email that AEP Energy is required by the MOU to carry out its stated plan in good faith, and if it didnâ€™t, â€śthe city could determine how best to remedy such failure.â€ť The company understands that it must provide a reliable power supply that is competitively priced, she said.
The MOU says that AEP Energy must work with the city and its aggregation consultant, Trebel LLC, a Mansfield-based energy consulting firm, to develop a â€śmaster supply agreementâ€ť satisfactory to the cityâ€™s goal of 100% green energy by 2022. That agreement, which would be signed after the election, must be consistent with AEP Energyâ€™s written July 6 proposal, which says it would serve â€ś100% of the cityâ€™s program load from newly built, local wind and solar projects.â€ť
AEP Energy has said that it defines â€ślocalâ€ť as anywhere in Ohio but as close to central Ohio as possible, and that it anticipates that Columbus will need at least 700 megawatts of new green-energy capacity.
The companyâ€™s winning proposal, chosen from four submitted, says it expects about 260,000 residential and business customers to be eligible for aggregation, and 10% to 20% of them to ultimately opt out.
â€śAEP Energy will shoulder the responsibility to create a portfolio of assets that is large enough to cover all the aggregationâ€™s needs,â€ť either by building facilities or signing power-purchase agreements to underwrite facilities of third parties, the proposal says.
â€śAEP Energy has already entered into nearly 1,000 MW (megawatts) of to-be-built wind and solar (purchase agreements) located in (the Midwest transmission grid), including nearly 500 MW in Ohio, that will be available to serve the communityâ€™s electric load â€” with more to be transacted soon. 200 MW of this capacity is in counties contiguous to Franklin County.â€ť
AEP Energyâ€™s proposal says that â€śdistributed solar,â€ť which includes homeowners and businesses installing solar panels and windmills to produce power, â€ścan certainly be part of the community plan.â€ť
â€śAEP Energy can design and implement any distributed solar installations the City would like to incorporate as part of the renewable strategy,â€ť the proposal says.
However, it would take a lot of rooftop solar panels to meet the cityâ€™s total demand â€” up to 15,000 acres of them. Therefore, AEP Energy recommends covering the bulk of demand with â€ślarge, utility-scale assetsâ€ť while â€śselectively supplementing the supply with cost-effective, distributed options.â€ť
Mixing many power-generation assets together will improve reliability and reduce costs, AEP Energy said.
Scott Slisher, AEPâ€™s project manager for the Columbus aggregation program, said last week that the company is in talks with BQ Energy to buy power.
BQ Energy, a developer of wind and solar energy farms based in New York state, announced in July that it will lease 173 acres of a closed South Side landfill along Interstate 71 north of Interstate 270 from the Solid Waste Authority of Central Ohio for 25 years to operate Columbus Solar Park, which is to generate 50 megawatts per year, enough to power about 5,000 households.
However, because the solar panels will sit atop a landfill, the park canâ€™t use â€śtrackingâ€ť panels that slowly spin to point at the sun as it moves across the sky, Slisher said. Thatâ€™s because the landfillâ€™s clay seal canâ€™t be pierced by the heavier foundations needed for tracking panels. The project will be less efficient as a result.
â€śLandfills have some interesting opportunities, but challenges as well,â€ť Slisher said. â€śItâ€™s a really great way to use effectively land thatâ€™s otherwise prohibitive, but it can have cost challenges as well.â€ť